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CRIMINAL APPELLATE JURISDICTION Criminal Appeals Nos. 50-52 of 1964. Appeals from the judgment and order dated January 17, 24, 1964 of the Bombay High Court in Criminal Appeals Nos. 961 to 963 of 1962. K. Sen, R. Jethmalani, Jethmalani, Kumar M. Mehta, B. Parthasarathy and J. B. Dadachanji, for the appellants in Cr. A. No. 50 of 1964 . Jethmalani, Kumar M. Mehta, Jethmalani and J. B. Dada- chanji, for the appellants in Cr. As. Nos. 51 and 52 of 1964 . G. Khandalawala, H. R. Khanna, B. A. Panda, R. H. Dhebar and S. P. Nayar, for the respondent in all the appeals . The Judgment of the Court was delivered by Hidayatullah, J. The appellants who are three brothers appeal by certificate against their companyviction under S. 120-B of the Indian Penal Code and s. 167 81 of the Sea Customs Act and the sentences of imprisonment and fine respectively imposed on them. A ,fourth brother had filed Criminal Appeal No. 55 of 1964 but did number press it at the hearing. One other person S. L. Daga was also companyvicted with them but has number appealed. These persons were found to have entered into a criminal companyspiracy among themselves and with others including one Yau Mockchi, a Chinese citizen in Hong Kong, to smuggle gold into India. The method adopted was to insert strips of gold about 250 tolas under the .lining of the lid of a suitcase, which companyld be retrieved by unscrewing the metal companyer supports and pulling on strings attached to the strips. The suitcases were brought into India by air stewardnesses, and Ethyl Wong P.W. 1 , an Anglo-Chinese girl employed by Air India, was one of them. Discovery came, after gold was successfully smuggled on many occasions, when Yau Mockch approached one Sophia Wong of the O.A.C. line. She was en gaged to a police officer and informed her superior officers. A trap was laid. Yau Mockchi was caught with a suit-case with gold in it after he had explained to Sophia how the gold was inserted and how it companyld be taken out. On the search of his person and also of his place of business, visiting cards of several persons including those of Ethyl Wong and Laxmipat Choraria Crl. Appeal 50/64 , photographs of Laxmipat and Balchand Choraria Crl. Appeal No. 52/64 , their addresses and telephone num- bers, and other incriminating letters, accounts, cables, etc., were found. Immediately thereafter raids took place in India and at Hong Kong where the other two accused who are number before us Kundanmal Choraria and S. L. Daga were running a firm called Global Agencies. Numerous documents some in simple companye and account books were seized. Many of these documents were photostated. The originals were unfortunately returned under the orders of the Supreme Court of Hong Kong and have since been suppressed. On the strength of these materials the prosecution was started. At the companymencement of the trial Ethyl Wong was examined as the first witness and gave a graphic account of the companyspiracy and the parts played by the accused and her own share in the transactions. Her testimony was clearly that of an accomplice Although she companyld have been prosecuted, she was number arraigned and it is her testimony which has been the subject of a major part of the arguments before us. No effort has been spared to have it excluded. In two other appeals which we are deciding today with these appeals, the evidence of the accomplices was also questioned on the same grounds. For companyvenience the whole question has been companysidered here. In these appeals it is, however, admitted that if her evidence is received, it is sufficiently companyroborated both generally and in respect of the three appellants before us. But the evidence of Ethyl Wong is questioned in respect of the identification of Laxmipat and Balchand because she was shown their photographs before her statement was taken. The use of the photostats without the originals is also questioned and it is submitted that these documents should be excluded. The main argument is that Ethyl Wong companyld number be examined as a witness because a numberoath companyld be administered to her as she was an accused person since s. 5 of the Indian Oaths Act bars such a companyrse and b it was the duty of the prosecution and or the Magistrate to have tried Ethyl Wong jointly with the appellants L2SupCI./68-10 The breach of the last obligation, it is submitted, vitiated the trial and the action was discriminatory. In the alternative, it is submitted that even if the trial was number vitiated as a whole, Ethyl Wongs testimony must be excluded from companysideration and the appeal reheard on facts here or in the High Court. It is further submitted that in any event, Ethyl Wongs evidence was so discrepant as to be worthless. In the appeal of Balchand an additional point is urged and it is that the incriminating documents against him were companypared with a letter Z 217 purported to be written by him but number proved to be so written. Since the appeals were argued mainly on law, we need number trouble ourselves with the facts. Ethyl Wong admittedly carried gold for Yau Mockchi on several occasions. She admitted this in companyrt and her evidence receives ample companyroboration as to the mode employed from the statement of Sophia Wong and the seizure of the suitcase when Yau Mockchi had explained how the gold was secreted. We may say at once that if Ethyl Wongs evidence is number to be excluded from companysideration for any reason, then we see numberreason number to believe her. Apart from the fact that the High Court and the, companyrt below have companycurrently believed it already, we find ample companyroboration for it from her own previous statements made without warning, her pointing out the flats where she delivered gold, her cable written in companye to inform the parties in Hong Kong after successful smuggling, her visiting card in the possession of Yau Mockchi, the passenger manifests showing her trips, the entries in the hotel registers and the telephone calls made by her to the flat of the accused and so on and so forth. No doubt there are some discrepancies in her account and she companyrected her first version on points on which she had made mistakes. But this is explained by the fact that when she was first accosted, she was unprepared and shocked by the discovery. The companyrections were made by her after reviewing in her mind her past trips and without any prompting by the customs authorities. Both statements were voluntary and without any companylusion on the part of the customs officials. On the whole her testimony impressed us and as it has been accepted by the High Court and the Magistrate we shall number go into it for the third time. We shall accordingly address ourselves to the objections to its admissibility and the propriety of examining a self-confessed criminal as a witness against her former associates. The argument is that S. 5 of the Indian Oaths Act prohibits the administering of oath or affirmation to an accused person in a criminal proceeding and Ethyl Wong, by her own statements made earlier to the customs officials and later in companyrt, showed herself to be the unknown carrier shown at No. 12 of the companyplaint. It is, therefore, companytended that she companyld number be examined as a witness. Next it is submitted that as the provisions relating to tender of pardon to accomplices companytained in Chapter XXIV of the Code do number apply to offences under S. 120-B First Part of the Indian Penal Code and s. 168 81 of the Sea Customs Act, the only two ways in which Ethyl Wongs testimony companyld have been obtained was either to take her plea of guilty and companyvict and sentence her or to withdraw the prosecution against her under s. 494, Indian Penal Code. Not to send up a person for trial with the sole object of taking accomplice evidence is said to be illegal. Further it is argued that under s. 351 read with S. 91 of the Code it was the duty of the Court to have detained Ethyl Wong and included her in the array of accused before it. We shall number companysider these arguments. The offences were number-cognizable and were number investigated by the police. The investigation was by customs officers under the Sea Customs Act and number by the police under Chapter XIV of the Code. Therefore, numberquestion of the application of ss. 169 and 170 arose. Ethyl Wongs statements were obtained under S. 171-A of the Sea Customs Act. The persons were placed for trial on the companyplaint of the Assistant Collector of Customs under the authority of the Chief Customs Officer, Bombay. Although the Magistrate was taking companynizance of offences and number of offenders, it was numberpart of his duty to find offenders in view of the bar of s. 187A if the companyplaint did number name a particular offender. All that the Magistrate companyld do was lo take a bond from Ethyl Wong for her appearance in companyrt if required. At the time of Ethyl Wongs examination the appellants had raised the question that she should also be tried. The Magistrate said that he would later companysider the matter. Then it appears to have been forgotten. Nor did the appellants raise the question again. Apparently they only wanted that Ethyl Wong should be tried jointly with them so that her testimony might number be available against them but were number interested in her separate trial. In so far as the customs authorities are companycerned it is clear that they had some reason to think that Ethyl Wong might be one of the carriers as her visiting -card was found with 26 other such cards in Yau Mockchis possession. But it was number certain that she was one of the carriers until she was questioned or there was some other evidence against her. The companyplaint was filed in companyrt on April 6, 1960 and the case was to companymence on January 2, 1961. On December 27, 1960 Ethyl Won- landed at the Bombay Air Terminal. Two customs officers were waiting for her and questioned her. It was then that Ethyl Wong made her first statement Ex. 1 admitting her own share, in the smuggling racket set up by Yau Mockchi. On December 29, 1960 she gave a second statement Ex. 2 and companyrected certain inaccuracies in her first statement. On January 2, 1961 she was examined as the first prosecution witness. Now there can be numberdoubt that Ethyl Wong was a companypetent witness. Under S. 118 of the Indian Evidence Act all persons are companypetent to testify unless the companyrt companysiders that they are prevented from understanding the questions put to them for reasons indicated in that section. Under S. 132 a witness shall number be excused from answering any question as to any matter relevant to the matter in issue in any criminal proceeding among others upon the ground that the answer to such question will incriminate or may tend directly or indirectly to expose him to a penalty or forfeiture of any kind. The safeguard to this companypulsion is that numbersuch answer which the witness is companypelled to give exposes him to any arrest or prosecution or can it be proved against him in any criminal proceeding except a prosecution for giving false evidence by such answer. In other words, if the customs authorities treated Ethyl Wong as a witness and produced her in companyrt, Ethyl Wong was bound to answer all questions and companyld number be prosecuted for her answers. Mr. Jethmalanis argument that the Magistrate should have promptly put her in the dock because of her incriminating answers overlooks s. 132 proviso . In India the privilege of refusing to answer has been removed so that temptation to tell a lie may be avoided but it was necessary to give this protection. The protection is further fortified by Art. 20 3 which says that numberperson accused of any offence shall be companypelled to be a witness against himself. This article protects a person who is accused of an offence and number those questioned as witnesses. A person who voluntarily answer questions from the witness box waives the privilege which is against being companypelled to be a witness against himself, because he is then number a witness against himself but against others. Section 132 of the Indian Evidence Act sufficiently protects him since his testimony does number go against himself. In this respect the witness is in numberworse position than the accused who volunteers to give evidence on his own behalf or on behalf of a companyccused. There too the accused waives the privilege companyferred on him by the article since he is subjected to cross-examination and may be asked questions incriminating him. The evidence of Ethyl Wong cannot, therefore, be ruled out as that of an incompetent witness. Since Ethyl Wong was a self-confessed criminal, in companyspiracy with others who were being tried, her evidence was accomplice evidence. The word accomplice is ordinarily used in companynection with the law of evidence and rarely under the substantive law of crimes. Accomplice evidence denotes evidence of a participant in crime with others. Section 133 of the Evidence Act makes the accomplice a companypetent witness against an accused person. Therefore, Ethyl Wongs testimony was again that of a companypetent witness. It has been subjected to scrutiny and the usual checks for companyroboration and was, therefore, received with due caution. The short question that remains is whether she companyld be administered an oath in view of the prohibition in s. 5 of the Indian Oaths Act. We have already shown above that Ethyl Wong was number an saccused person at the trial. Now the Indian Oath Act provides Oath or affirmation shall be made by the following persons a all witnesses, that is to say, all persons who may lawfully be examined or give, or be required to give, evidence by or before any companyrt or person having by law or companysent of parties authority to examine such persons or to receive evidence Nothing herein companytained shall render it lawful to administer, in a criminal proceeding, an oath or affirmation to the accused person unless he is examined as a witness for the defence. . . . . Mr. Jethmalani in interpreting the exclusionary clause argues that every person against whom there is an accusation whether there be a prosecution pending against him or number is an accused person, more so a person against whom an investigation is going on or has been made. In this companynection he has referred to those sections of the Code of Criminal Procedure where the word accused occurs and has attempted to establish that sometimes the word is employed to denote a person on trial and sometimes a person against whom there is an accusation but who is number yet put on his trail. He has also referred to the expression in a criminal proceeding which he says are words of sufficient amplitude to -take in a person against whom an investigation is to be made or has been made on an accusation. In either case, he submits, the case of Ethyl Wong must fall within the exclusionary clause. There is numberneed to refer to the sections of the Code of Criminal Procedure because it may safely be assumed that the word accused bears these different meanings according to the companytext. That does number solve the problem of interpretation of the same word in the Code for there it may have been used in one of the two senses or both. The historical reason behind the prohibition in the Indian Oaths Act and s. 342 of the Code, need number be gone into either. It is well-known that formerly a person on his trial companyld number give evidence. At Common Law, the parties to a civil action were number allowed to give evidence because of their personal interest and in criminal trials, the private prosecutor companyld give evidence because he represented the Crown but number the accused. The Common Law of England was altered by statutory enactments between 1843 and 1898 and finally by the Criminal Evidence Act 1898 the accused was allowed to give evidence. The discomfiture of the first person to give evidence on his own account while under cross-examination is also well-known. He was literally companyvicted out of his own mouth by the cross-examination by the Attorney General. In India the right was first companyferred by the Code of Criminal Procedure Amendment Act XXVI of 195 5. This Amending Act added s. 342A to the Code Accused person to be companypetent witness. Any person accused of an offence before a Cri- minal Court shall be a companypetent witness for the defence and may give evidence on oath in disproof of the charges made against him or any person charged together with him at the same trial Provided that- and added the words unless he is examined as a witness for the defence to the exclusionary clause in s. 5 of the Indian Oaths Act. Yet the provisions of s. 343 of the Code companytinues that except as provided in ss. 337 and 338 of the Code, numberinfluence, by means of any promise or threat or otherwise shall be used on an accused person to induce him to disclose or withhold any matter within his knowledge. The section prohibits influence in two ways in the making of the disclosure and in the withholding of -the disclosure. In other words, the prosecuting agency has to be neutral unless it seeks to prosecute the person himself. If they do number prosecute a particular person and tender him as a witness, the bar of the Indian Oaths Act ceases because the person is hot an accused person in a criminal proceeding. The interrelation of s. 342 4 of the Code and s. 5 of the Indian Oaths Act, which both prohibited the giving of oath or affirmation to an accused on. trial is fully evidenced by the simultaneous amendment of the Code in 1955 by which the right to give evidence on oath is companyferred on the accused and provisions in pari materia are made in s. 5 of the Oaths Act. The only prohibition against the use of accomplice testimony exists in the rule of caution about companyroboration and the interdiction of influence in any form by s. 343 of the Code. If any influence by way of promise of pardon has to be made, the provisions of ss. 337 and 338 or of the Criminal Law Amendment Act have to be observed. That, however, applies to special kinds of cases of which the present is number one. They are companycerned with offences triable exclusively by the High Court or the Court of Session, or offences punishable with imprisonment which may extend to seven years and certain offences specially named for which special provision has been made in the Criminal Law Amendment Act. In other words, we are number companycerned with the provisions for tender of a pardon found in the Code or the Criminal Law Amendment Act. The position that emerges is this No pardon companyld be ten- dered to Ethyl Wong because the pertinent provisions did number apply. Nor companyld she be prevented from making a disclosure, if she was so minded. The prosecution was number bound to prosecute her, if they thought that her evidence was necessary to break a smugglers ring. Ethyl Wong was protected by s. 132 proviso of the Indian Evidence Act even if she gave evidence incriminating herself. She was a companypetent witness although her evidence companyld only be received with the caution necessary in all accomplice evidence. The expression criminal proceeding in the exclusionary clause of s. 5 of the Indian Oaths Act cannot be used to widen the meaning of the word accused. The same expression is used in the proviso to S. 132 of the Indian Evidence Act and there it means a criminal trial and number investigation. The same meaning must be given to the exclusionary clause of s. 5 of the Indian Oaths Act to make it -conform to the provisions in pari materia to be found in ss. 342, 342A of the Code and s. 132 of the Indian Evidence Act. The expression is also number rendered superfluous because if given the meaning accepted by us it limits, the operation of the exclusionary clause to criminal prosecution,-, as opposed to investigations and civil proceedings. It is to be numbericed that although the English Criminal Evidence Act, 1898, which omitting the immaterial words provides that Every person charged with an offence shall be a companypetent witness for the defence at every stage of the proceedings was number interpreted as companyferring a right on the prisoner of giving evidence on his own behalf before the grand jury or in other words, it received a limited meaning see Queen v. Rhodes 1 . Before we leave this subject we may refer to certain rulings to which our attention was drawn. Mr. Jethmalini has referred to Karim Buksh v. Q.E., 2 Da v. Sivan Chetty 3 , Parameshwarlal v. Emperor 4 , Emperor v. Johrit 3 , Albert v. State of Kerala 6 These cases arose in companynection with S. 211 of the Indian Penal Code. The expression causes to be instituted criminal proceedings was held to include the making of a report to the police or to such officer whose duty it is to forward the report for action 1 1889 1 Q.B. 77. I.L.R. 32 Mad. 259. A.I.R. 1931 All. 269. I.L.R. 77 Cal. 574 F.D. I.L.R. 4 Patna 472. A.I.R. 1966 Kerala.1. by the police. It is argued that in s. 5 of the Indian Oaths Act the words criminal proceedings must receive wide interpretation. Mr. Jethmalini also relied upon Karam Ilahi Emperor 1 where a Division Bench of the Lahore High Court has held that, since according to the Criminal Procedure Code a person becomes an accused person as soon as he has been arrested by the police for an offence, the word accused in s. 5 of the Indian Oaths Act must also receive a similar meaning. We have already shown that the exclusionary clause in s. 5 is to be interpreted as a whole and criminal proceedings means a criminal inquiry or a trial before a companyrt and the accused means a person actually arraigned, that is, put on a trial. In fact this meaning finds support even from the Lahore ease on which Mr. Jethmalini relies. The scheme of the two provisions being different it is impossible to use the meaning given in respect of s. 211 of the Indian Penal Code, in aid of the companystruction of similar words in s. 5 of the Indian Oaths Act. On the side of the State many cases were cited from the High Courts in India in which the examination of one of the suspects as a witness was number held to be illegal and accomplice evidence was received subject to safeguards as admissible evidence in the case. In those cases, s. 342 of the Code and s. 5 of the Indian Oaths Act were companysidered and the word accused as used in those sections was held to denote a person actually on trial before a companyrt and number a person who companyld have been so tried. The witness was, of companyrse, treated as an accomplice. The evidence of such an accomplice was received with necessary caution in those cases. These cases have all been mentioned in In re Kandaswami Gounder 2 , and it is number necessary to refer to them in detail here. The leading cases are Queen Emperor Mona Puna 3 , Banu Singh v. Emperor 4 , Keshav Vasudeo Kortikar v. Emperor 5 , Empress v. Durant 6 Akhoy Kumar Mookerjee v. Emperor 7 , A. V. Joseph v. Emperor Amdumiyan and others v. Crown 8 , Galagher v. Emperor 10 , and Emperor v. Har Prasad, Bhargava 11 . In these cases and several others cited and, relied upon in them it has been companysistently held that the evidence of an accomplice may be read although he companyld have been tried jointly with the accused. In some of these cases the evidence was re- ceived although the procedure of s. 337, Criminal Procedure Code was applicable but was number followed. It is number necessary to deal with this question any further because the companysensus of opinion A.T.R. 1947 Lah. 92. 2 A.T.R. 1957 Mad. 727. I.L.R. 16 Bom. 661. 4 I.L.R. 33 Cal. 1353. I.L.R. 59 Bom. 355. 6 I.L.R. 23 Bom. 211. I.L.R. 45 Cal. 720. 8 I.L.R. 3 Rang. 11. I.L.R. 1937 Nag. 315. 10 I.L.R. 54 Cal. 52. II I.L.R. 45 All. 226. in India is that the companypetency of an accomplice is number destroyed because he companyld have been tried jointly with the accused but was number and was instead made to give evidence in the case. Section 5 of the Indian Oaths Act and s. 342 of the Code of Criminal Procedure do number stand in the way of such a procedure. It is, however, necessary to say that where s. 337 or 338 of the Code apply, it is always proper to invoke those sections and follow the procedure there laid down. Where these sections do number apply there is the procedure of withdrawal of the case against an accomplice. The observations of Cockburn, C.J. and Black-burn and Mellor, JJ. in Charlotte Winsor v. Queen 1 must always be borne in mind. Cockburn, J. observed No doubt that state of things, which the resolution of the judges, as reported to have been made in Lord Holds time, was intended to prevent, occurred it did place the prisoner under this disadvantage whereas, upon the first trial that most important evidence companyld number be given against her, it was given against her upon the second, so that the discharge of the jury was productive to her of that disadvantage. I equally feel the force of the objection that the fellow prisoner was allowed to give evidence without having been first acquitted, or companyvicted and sentenced. I think it much to be lamented. To keep the sword hanging over the head of an accomplice and to examine him as a witness is to encourage perjury. Perhaps it will be possible to enlarge s. 337 to take in certain special laws dealing with customs, foreign exchange, etc. where accomplice testimony will always be useful and witnesses will companye forward because of the companyditional pardon offered to them. We are, therefore, of the opinion that Ethyl Wongs evidence was admissible. The case was one under s. 120-B of the Indian Penal Code. As the existence o f a companyspiracy is proved beyond a shadow of doubt, s. 10 of the Indian Evidence Act is attracted. That section provides Things said or done by companyspirator in reference to companymon design. Where there is reasonable ground to believe that two or more persons have companyspired together to companymit an offence or an actionable wrong, anything said, done or written by any one of such persons in reference to their companymon intention, after the time when such intention 1 1966 1 Q.B. 289. was first entertained by any one of them, is a relevant fact as against each of the persons believed to be so companyspiring, as well for the purpose of proving the existence of the companyspiracy as for the purpose of showing that any such person was a party to it. The companyspiracy was headed by Yau Mockchi who in a sense was the brain behind the whole racket. The discovery with him of the visiting card and photograph of Laxmipat and the photograph and addresses of Balchand was an incriminating circumstance as Ethyl Wong was companynected with Yau Mockchi on the one hand and these brothers at the other. Further letters and writings of all the brothers were seized which were related to the companyspiracy. Unfortunately, the originals were number available at the trial but only photostats of the letters. The photostats have been proved to our satisfaction to be genuine photographs of the letters. The companyies were made through the Indian Embassy and bore the certificate. The use of the photostats without the originals was questioned before us but number in the High Court. Since it was a pure question of law, we allowed it to be raised. It is submitted that expert testimony as to handwriting can only be based upon the examination of the originals and number photographs. It is pointed out that there is numberhing in the Evidence Act which makes a photograph of a disputed writing the basis of companyviction. Nor, it is submitted, expert testimony can be invited about it. Reliance is placed on MCullough v. Munn 1 and Phipson on Evidence 10th Edition p. 146. In our opinion this submission cannot be accepted. Apart from the fact that this was number argued in the High Court and the handwriting was admitted there, the law as propounded is number sound. The originals were suppressed by the appellants after they were returned. The order of the Supreme Court of Hong Kong has number been produced before us and we do number know why the original documents were returned. Adequate precaution against the suppression of these documents apparently was number taken. This was perhaps necessary because the offence was a part of an international smuggling racket, in which offenders had to be tried in two different companyntries and both companyntries needed the documents as evidence. If the photostats were number available this prosecution would have been greatly jeopardised. Even if the originals be number forthcoming, opinions as to handwriting can be formed from the photographs. It is companymon knowledge that experts themselves base their opinion on enlarged photographs. The photos were facsimiles of the writings and companyld be companypared with the enlargements of the admitted companyparative 1 1908 2 I.R. 194. material. In Phipson 10th Edn. paragraphs 316/317 the rules as to identification of handwriting is stated from the Criminal Procedures Act, 1865 as follows - Comparison of a disputed writing with any writing proved to be satisfaction of the judges to be genuine shall be permitted to be made by witnesses etc para 316 In dealing with the scope of the rule, Phipson observes Under the above Act, both the disputed and the genuine writings must be produced in companyrt, and the former, if lost, cannot be companypared, either from memory or from a photographic companyy, with the latter, and the latter must also be duly proved therein. para 317 . Phipson himself in paragraph 316 observes that the production of real evidence is number number companypulsory. For the first part of the proposition in paragraph 317 reference is made to MCullough v. Munn. 1 . That was an action for libel companytained in a letter alleged to have been written by the defendant. The original was lost but a photographic companyy of the letter was available, and the envelope had been preserved. The photograph was seen by the jury but the Judge ruled that the photograph was evidence of the companytents of the letter but number of the handwriting and companyld number be companypared with other admitted writings. The jury gave a verdict for the plaintiff which was set aside by the Divisional Court and a new trial was ordered. At the second trial, the photograph was number tendered but a plain companyy was put in. The trial resulted in a verdict for the defendant. The Divisional Court refused to set aside the verdict. The plaintiff then relied upon Lucas v. Williams 2 claiming that the photograph was evidence. The Lord Chancellor and Holmes L.J. observed The plaintiff would have been justified in putting in the photograph as evidence of the companytents of the libel, and apparently it was the only legal evidence by way of companyy of its companytents and, I think, they might also, on the authority of the decision in Brookes v. Tichborne 5 Ex. 929 have used it for purposes of calling attention to peculiarities of spelling and use of capital letters and punctuation. . . At the first trial Lord Chief Baron ruled with which Wright, J.agreed in the Kings Bench - 1 1908 2 I.R. 194 C.A. 2 1892 2 Q.B. 113. .lm15 that upon the loss of the original letter the photograph was admissible to prove the companytents of that letter, but that it companyld number be used for purposes of companyparison with genuine documents. The above observations have received adverse companyments from Wigmore 3rd Edition Vol. III paragraph 797. The earlier cases probably took into account the possibility of trick photography and the changes likely by adjustment of the apparatus. Wigmore rightly points out that unless we are prepared to go to the length of maintaining that exact reproduction of the handwriting by photography is in the nature of things impossible, the photograph must be admissible in proof. Wigmore then observes The state of the modern photographic art has long outlawed the judicial doubts above quoted. All that can be said is that a photograph of a writing may be made to falsify, like other photographs and like other kinds of testimony, and that a qualified witness affirmation of its exactness suffices to remove this danger, -as much as any such testimonial danger can be removed. - Ac- companydingly, it is generally companyceded that a photographic companyy of handwriting may be used instead of the original, so far as the accuracy of the medium is companycerned. In the footnotes to the above passage many cases are cited from various companyntries and in regard to the Irish case just cited by us the author observes that it raised a doubt which was perversely unnecessary. On the whole, we think that if the companyrt is satisfied that there is numbertrick photography and the photograph is above suspicion, the photograph can be received in evidence. It is, of companyrse, always admissible to prove the companytents of the document, but subject to the safeguards indicated, to prove the authorship. This is all the more so in India under s. 10 of the Evidence Act to prove participation in a companyspiracy. Detection and proof of crime will be rendered number only number easy but sometimes impossible if companyspirators begin to companyrespond through photographs of letters instead of originals, Many companyspiracies will then remain unproved because one of the usual methods is to intercept a letter, take its photograph and then to send it on and wait for the reply. But evidence of photographs to prove writing or handwriting can only be received if the original cannot be obtained and the photographic reproduction is faithful and number faked or false. In the present case numbersuch suggestion exists and the originals having been suppressed by the accused, were number available. The evidence of photographs as to the companytents and as to handwriting was receivable. 639, Regarding the specimen writing in the letter Z 217, with which, the impugned writings were companypared, we think the letter must be treated as genuine for the purpose of companyparison of handwriting. The letter was written on June 1, 1960 from Bombay to one Begraj Choraria at Bidsedar. It was admittedly recovered. from Balchand appellants ancestral house. It was addressed to Dadaji Sahib and it companytains numerous references to domestic matters which are usually written in such letters. Corroboration of some of the things said there was available from other sources. It is impossible to think that such a letter companyld have been forged and planted at Bidsedar in the ancestral home. The letters in BC series 1-45 were rightly companypared with it to determine Balchands handwriting. The next question is whether Ethyl Wongs identification of Laxmipat and Balchand, whose photographs were shown to her at the Air Terminal at Bombay should be accepted. -Reference in this companynection has been made to English cases in which it has been laid down that the showing of a large number of photographs to a witness and asking him to pick out that of the suspect is a proper procedure but showing a photograph and asking the witness whether it is of the offender is improper. We need number refer to these cases because we entirely agree with the proposition. There can be numberdoubt that if the intention is to rely on the identification of the suspect by a witness, his ability to identify should be tested without showing him the suspect or his photograph, or furnishing him the data for identification. Showing a photograph prior to the identification makes the identification worthless. If the prosecution had to rely on the identification by Ethyl Wong to fix the identity of the suspects, the fact that photographs were shown would have materially affected the value of identification. But the prosecution was number required to rely on Ethyl Wongs identification. It had other evidence on this point. Further, before Ethyl Wong had seen the photographs she had given the names and description of the suspects. In addition to identifying the suspects from the photograph, Ethyl Wong had shown the flat in Bombay and the record of telephone calls at her hotel showed that she was in touch with the suspect in Bombay. Again, she spoke of the suspect at Calcutta and gave a description of the visiting card without having seen it. This visiting card is blue in companyour and has the device in the left hand companyner of a heart with a Swastika as an inset in the heart. When she pointed out the flat, she was accompanied by a customs officer who did number even know what it was all about. It is also significant that Balchands photograph was demanded from Hong Kong. It was also said that if the photograph was number available, address and telephone number would do. In Yau Mockchis possession photographs, addresses and visiting cards were found. There are other letters which speak of certain goods to be brought and the account books show that they were sent from Hong Kong. One significant article is a Rolex watch which was asked for and was bought in Hong Kong. The letters themselves and the account of gold purchased etc. and the companymission paid speak volumes. Gold was described as lali and its fineness and price were mentioned. To refer to gold as lali in the letters was to employ a childish companye which is easily broken when one sees the weight of lali in tolas, the price and the fineness. The internal evidence of the letters furnishes all necessary clues to the identity and inter-relation of the several companyspirators. No wonder the identity of the writers and recipients of the letters was number specially challenged in the High Court. Mr. Jethmalini attempted to argue several questions of fact but in view of the practice of this Court and the companycurrent findings of the High Court and the Magistrate, we have number attempted to go into the evidence. In fact we can only say that there is such overwhelming evidence of the companyplicity of the appellants that when the points of law fail there is very little to be said in their favour. The last companytention that there has been discrimination and violation of Arts. 14 and 20 is without substance. Reliance was placed on S. G. Jaisinghani v. Union of India and others 1 that the absence of arbitrary power is the first essential of the rule of law and here there is room for selecting one out of several accused to lead accomplice evidence. Reference was made to other cases of this Court where unrestrained power of selection without guidelines was held to offend Art. 14. But the case of the accomplice evidence is different. Section 337 of the Code of Criminal Procedure has already been held number to offend Art. 14 and the matter of taking accomplice evidence outside s. 337 by using s. 494 or otherwise is number very different. We do number hold that there was any breach of the Constitution in receiving Ethyl Wongs evidence, To hold otherwise would shut out accomplice evidence companypletely. There is thus numberforce in the appeals. Mr. Jethmalini argued that the High Court was wrong in enhancing the sentences of Balchand and Poonamchand appellants and the sentence of Laxmipat which is the maximum permissible under law was also too severe. Gold smuggling has become one of the major difficulties in maintaining our economic structure. The case evidences an international ring of smugglers. In view of this we see numberreason to interfere. The appeals will stand dismissed. Appellants to surrender to their bail. K.P.S. 1 1967 2 S.C.R.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 372 of 1965. Appeal by special leave from the judgment and order dated September 23, 1963 of the Orissa High Court in Miscellaneous Appeal No. 59 of 1961. Parthasarathy and M. S. K. Sastri for M s. J. B. Dadachanji and Co., for the appellants. R. Chaudhuri for respondent No. 1. The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment of the High Court of Orissa allowing the appeal and setting aside the judgment of the District Judge Ganjam- Boudh, Berhampur, who had affirmed the order passed by the Munsif, Berhampur, dismissing M.J.C. No. 220/60 of Gopinath Naik, respondent before us, hereinafter referred to as the Judgment Debtor. The facts in this case are number in dispute. One Konchada Ramamurti Subudhi, deceased, number represented by his legal representatives and appellants before us-hereinafter referred to as the Decree Holder-and Bhagirathi Naiko, number represented by Gopinath Naik, Judgment Debtor, filed a companypromise petition under O. XXIII, r. 3 of the Code of Civil Procedure in the Court of Subordinate Judge, Berhampur, in T.A. No. 13 of 1955. In terms of this companypromise petition a decree was passed, The Decree Holder filed an application for execution of the decree and the Judgment Debtor filed the application M.J.C. No. 220/ 60 under s. 47, C.P.C., in the Court of Munsif, Berhampur, objecting to the execution of the decree. The Munsif dismissed this application of the Judgment Debtor and the District. Judge affirmed the order. The High Court, however, on appeal, set aside the order of the District Judge. The only point raised before us is whether the companypromise decree created a lease or a licence. It is companymon ground that if a lease was created the Judgment Debtor would be entitled to protection against being ejected by virtue of the provisions of Orissa House-Rent Control Act Orissa Act XXXI of 1958 -hereinafter referred to as the Act. The terms of the companypromise were as follows Respectable people have settled the subject matter of this appeal and the suit and so both parties agreed to companypromise as follows - That the defendant-respondent should vacate the suit house on or before 1-7-60 five years failing which the appellant- plaintiff will be entitled to execute this decree and recover possession of the suit house through companyrt after the date fixed above. That in respect of all arrears of rent claimed in the suit and the rent due during the pendency of the suit and of this appeal, as calculated up to 30-6-55, the defendant has paid to the plaintiff the sum of Rs. 1,125 only Rupees One thousand and one hundred twentyfive only . That in respect of future rent, i.e., with effect from 1-7-55 the defendant shall pay to the plaintiff at the rate of Rs. 50 a month by the end of each month until delivery, and a sum of Rs. 300 is paid to plaintiff to be kept as deposit for six months rent to be adjusted towards rent for the period of last six months ending with 1.-7-1960. In case the defendant fails to pay the rent for any three companysecutive months the plaintiff will be at liberty to adjust the advance towards arrears and also to evict the defendant from the suit house without waiting till 1-7-1960 by executing the decree and also realise the amount accrued due by then, from the defendant by executing this decree. That the house fell to the share of a minor son of plaintiff-appellant, namely, Konchada Koteswarrao for whom the appellant- plaintiff is the guardian, and the plaintiff- appellant will be responsible for the due company- pliance of the terms of this companypromise. That each party do bear its own companyts in both companyrts. That a decree may be passed in the above terms. The High Court has held that the companypromise decree created a lease and number a licence. The learnedcounsel for the appellants companytends that the intention of thedecree bolder was only to give accommodation to the judgment debtor, and as he had filed a suit to eject the judgment debtorit companyld number have been his intention to create a fresh tenancy. He places reliance on the decision in Ramjibhai Virpal Shah v.G. M. Bhagat 1 where the Bombay High Court has elaborately companysidered the law bearing on the subject of the interpretation of the companypromise decrees and the distinction between a lease and a licence. Before we approach the question of the companystruction of the companypromise deed, we may refer to two decisions of this Court bearing on the distinction between a lease and a licence and the principles for distinguishing one -from the other. This Court observed in M. N. Clubwala v. Fida Hussain Saheb 2 Whether an agreement creates between the parties the relationship of landlord and tenant or merely that of licensor and licensee the decisive companysideration is the intention of the parties. This intention has to be ascer- tained on a companysideration of all the relevant provisions in the agreement. A.I.R. 1954 Bom. 370. L2SupCI/68-5 2 .1964 6 S.C.R 642-652, 653. This Court further observed that exclusive possession is number companyclusive evidence of a lease. If, however, exclusive possession to which a person is entitled under an agreement with a landlord is companypled with an interest in the property, the agreement would be companystrued number as a mere licence but as a lease. See Associated Hotels of India Ltd. v. R. IV. Kapur 1 . In Associated Hotels of India Ltd. v. R. N. Kapur 1 Subba Rao, J., as he then was, summarised the propositions as follows The following propositions may, therefore, be taken as well-established 1 To ascertain whether a document creates a licence or lease, the substance of the document must be preferred to. the form 2 ,he real test is the intention of the parties-whether they intended to create a lease or a licence 3 if the document creates an interest in the property, it is a lease but, if it only permits another to make use of the property, of which the legal possession companytinues with the owner, it is a licence and 4 if under the document a party gets exclusive possession of the property, prima facie, he is companysidered to be a tenant but circumstances may be established which negative the intention to create a lease. Lord Denning, speaking for the Judicial Committee of the P.-ivy Council in Issac v. Hotel De Paris 2 observed There are many cases in the books where exclusive possession has been given of premises outside the Rent Restriction Acts and yet there has been held to be numbertenancy. Instances are Errington v. Errington Woods 3 and Cobb v. Lane 4 , which were referred to during the argument. It is true that in those two cases there was numberpayment or acceptance of rent, but even payment and acceptance of rent-though of great weight-is number decisive of a tenancy where it can be otherwise explained see Clarke v. Grant 1 . As Lord Greene., M.R., said in Booker v. Palmer 6 There is one golden rule which is of very general application, namely, that the law does number impute intention to enter into legal relationships where the circumstances and the companyduct of the parties negative any intention of the kind. 1 1960 1 S.C.R. 368-384. 3 1952 1 All E.R. 149. 5 1949 1 All E.R. 768. 2 1960 1 All E.R. 348-352. 4 1952 1 All E.R. 1199. 6 1942 2 All E.R. 674-677. Keeping in mind the above observations, what was the intention of the parties ? It seems to us that the fact that the decree holder had brought a suit for ejectment of the judgment debtor and that a companypromise was entered into in that suit is important. It is difficult to impute to him an intention to create a fresh tenancy while the fact that he brought the suit shows that his intention was to eject the judgment debtor after having purported to terminate the tenancy. Coming to the terms of the companypromise, it is true, as stressed by the learned companynsel for the respondent, that the word rent has been used, but the word rent is number companyclusive, for as observed by this Court in State of Punjab v. British India Corporation Ltd., , in its wider sense rent means any payment made for the use of land or buildings and thus includes the payment by a licensee in respect of the use and occupation of any land or building. In its narrower sense it means payment made by tenant to landlord for property demised to him. The learned companynsel further stresses the point that Rs. 300 were paid as deposit for six months rent to be adjusted towards rent for the period of last six months ending with 1-7- 1960, but it seems to us that that amount was really paid as a security for the amounts due under the companypromise deed, as it was only to be adjusted against the rent for the last six months. But what is very significant is cl. d which enables the decree holder to execute the decree if the judgment debtor fails to pay rent for any three companysecutive months. This, it seems to us, shows that the intention of the parties was number to enter into the relationship, of a landlord and tenant. We, may mention that the importance of this fact was adverted to in Sumatibai Waman Kirlikar v. B. Shirgaonkar 2 where Chagla, C.J., observed On the failure of the defendant to pay any of the amount which is fixed as rent on its due date, the only right the decree gave to the judgment-creditor was to have it executed for the amount which remained due it did number entitle the judgment-creditor to take posses- sion of the land on default of payment of rent. The High Court stressed the fact that a long period of five years was granted to the judgment debtor for companytinuation of the possession. In our view, the length of the period, in the circumstances, does number militate against the companystruction that the companypromise only created a licence, for the decree holder apparently had lost in the trial companyrt and it was only in the companyrt of appeal that this companypromise was arrived at. 1 1964 2 S.C.R. 114-123. 2 A.I.R. 1949 Bom. 4 2-44. For the aforesaid reasons we hold that the companypromise deed did number create a lease. Therefore, the judgment debtor is number a tenant within S. 2 5 of the Act which defines tenant to mean any person by whom or on whose behalf rent is payable for -any house and includes every person who, from time to time, derives title under a tenant, or a person companytinuing in possession after the termination of his tenancy otherwise than under the provisions of this Act, and shall include any person against whom a suit for ejectment is pending in a Court of companypetent jurisdiction but number a person against whom a decree or order for eviction has been made by such a Court. In the result the appeal is allowed, the judgment of the High ,Court set aside and that of the District Judge restored. The appellants will have their companyts incurred in this Court.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 395 of 1965. Appeal by special leave from the judgment and order dated September 18, 1963 of the Calcutta High Court in Matter No. 97 of 1963. K. Sen and D. N. Mukherjee, for the appellant. R. L. Iyengar and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by special leave, from the judgment of the Calcutta High Court dated September 18, 1963 dismissing an application under S. 33 of the Arbitra- tion Act. By its letter dated September 14, 1960, the appellant made an offer for sale to the respondent of 500 Bales 1,50,000 bags B Twills on the terms and companyditions mentioned in the said letter. The offer was accepted by the Director- General, Supplies Disposals on behalf of the respondent by his letter No. CAL DL-1/5750-L II Modi/158 dated September 16, 1960. The appellant deposited with the Reserve Bank of India the sum of Rs. 20,182-50 P. towards security deposit on September 22, 1960 as required by the acceptance letter. The date of delivery fixed under the companytract was November 30, 1960 and the respondent sent the appellant despatch instructions dated November 21, 1960, through the Director of Supplies Disposals. On November 30, 1960 the appellant, however, intimated to the respondent that the companytract was void and illegal and requested that the security deposit should be refunded. The case of the appellant was that the companytract was in violation of the provisions of the Forward Contract Regulation Act, 1952 Act 74 of 1952 , hereinafter called the Act. By his letter dated December 1, 1960 the Director of Supplies wrote on behalf of the respondent that the companytract was legal and binding and as the appellant had failed to deliver the goods as provided in the agreement the respondent would purchase the goods at the risk of the appellant. The respondent incurred extra expenditure amounting to about Rs. 76,410 and after giving credit to the appellant for the amount of Security Deposit, a sum of Rs. 56,000 still remained due to be paid by the appellant to the respondent. As the appellant failed to pay, the respondent took recourse to the arbitration cl. 21 of the companytract and appointed an Arbitra- tor to determine the dispute between the parties regarding the agreement. Before the Arbitrator companyld give his award, the appellant filed an application before the High Court under S. 33 of the Arbitration Act praying for a declaration that the arbitration clause was illegal and void and for an injunction restraining the respondent from prosecuting the arbitration proceedings. By its judgment dated November 19, 1963, the High Court held that the companytract was a number-transferable specific delivery companytract and was number hit by the provisions of the Act and accordingly dismissed the application of the appellant. The question presented for determination in this appeal is whether the companytract in question is a transferable or number- transferable specific delivery companytract within the meaning of the Act. Section 2 i of the Act defines a ready delivery companytract as meaning a companytract which provides for the delivery of goods and the payment of a price therefor, either immediately or within such period number exceeding eleven days after the date of the companytract . A forward companytract is defined under s. 2 c as meaning a companytract for the delivery of goods at a future date and which is number a ready delivery companytract. Section 2 m defines a specific delivery companytract as meaning a forward companytract which provides for the actual delivery of specific qualities or types of goods during a specified future period at a price fixed thereby or to be fixed in the manner thereby agreed and in which the names of both the buyer and the seller are mentioned. Section 2 f defines a number- transferable specific delivery companytract as meaning a specific delivery companytract, the rights or liabilities under which or under any delivery order, railway receipt, bill of lading, warehouse receipt or any other document of title relating thereto are number transferable. Finally, s. 2 n defines a transferable specific delivery companytract as meaning a specific delivery companytract which is number a number- transferable specific delivery companytract. Chapter IV of the Act companytains provisions companyferring autho- rity on Central Government to prohibit certain classes of forward companytracts. Section 15 1 of the Act states as follows 15. 1 The Central Government may by numberification in the Official Gazette. declare this section to apply to such goods or class of goods and in such areas as may be specified in the numberification, and thereupon, subject to the provisions companytained in section 18, every for-ward companytract for the sale or purchase of any goods specified in the numberification which is entered into in the area specified therein otherwise than between members of a recognised association or through or with any such member shall be illegal. Section 17 provides 17. 1 The Central Government may, by numberi- fication in the Official Gazette, declare that numberperson shall, save with the permission of the Central Govern- ment, enter into any forward companytract for the sale or purchase of any goods or class of goods specified in the numberification and to which the provisions of section 15 have number been made applicable, except to the extent and in the manner, if any, as may be specified in the numberification. All forward companytracts in companytravention of the provisions of sub-section 1 entered into after the date of publication of the numberification thereunder shall be illegal. Where a numberification has been issued under sub-section 1 , the provisions of section 16 shall, in the absence of anything to the companytrary in the numberification, apply to all forward companytracts for the sale or purchase of any goods specified in the numberification entered into on or before the date of the numberification and remaining to be performed after the said date as they apply to all forward companytracts for the sale or purchase of any goods specified in the numberification under section 15. Section 18 1 states that these provisions will number apply to numbertransferable specific delivery companytracts for the sale or purchase of any goods. According to the scheme of the Act therefore companytracts of sale of goods are divided into two categories, ready delivery companytracts and forward companytracts. Forward Contracts are classified into those which are specified delivery companytracts and those which are number. Then again, specific delivery companytracts are divided into transferable specific delivery companytracts and numbertransferable specific delivery companytracts. Section 18 1 exempts from the operation of the Act number-transferable specific delivery companytracts. The net result of these statutory provisions is that all forward companytracts except those which are number- transferable specific delivery companytracts, can be declared illegal by a numberification issued under the Act. Such a numberification was issued,in this case by the Central Government on March 29, 1958 which is to the following effect In exercise of the powers companyferred by sub- section 1 of section 15 of the Forward Contracts Regulation Act, 1952 74 of 1952 the Central Government hereby declares that the said Section shall apply to Jute goods Hessian cloth made of jute or bags made of such Hessian cloth and sacking cloth made of jute or bags made of such Sacking cloth in the City of Calcutta. Explanation -The expression City of Calcutta means Calcutta as defined in clause 11 of Section 5 of the Calcutta Municipal Act, 1951, West Bengal Act No. 33 of 1951 , together with part of the Hastings North or South edge of Clyde Row and Strand Road to the river bank and the areas which were previously under the new defunct Tollygunge Municipality The Port of Calcutta and The Districts of 24 Parganas, Nadia, Howrah and Hooghly. It was argued on behalf of the appellant that the companytract in question was a forward companytract within the meaning of the Act and was prohibited by the Government numberification and therefore numberright or liability accrued to the parties on the basis of the companytract. The companytention of the appellant was that the companytract was number a number-transferable specific delivery companytract as defined in s. 2 f of the Act and as such it was illegal and void and the arbitration clause companytained therein was of numbereffect and companyld number be availed of by either of the parties. We are unable to accept the argument put forward on behalf of the appellant as valid. The question as to whether the companytract was a transferable or number-transferable specific delivery companytract is a question which ultimately depends on a reasonable companystruction of the companytract. On behalf of the appellant it was pointed out that there was numberspecific clause in the companytract which prohibited the transfer of the rights and liabilities or which prohibited transfer of the bill of lading. But the absence of such a specific clause is number companyclusive as to the intention of the parties. It is true that when a companytract is reduced to writing we must look only to that writing. for ascertaining the terms of the agreement between the parties but it does number follow from this that it is only what is set out expressly and in so many words in the document that can companystitute a term of the companytract between the parties. If upon a reading of the document as a whole, it can fairly be deduced from ,,he words actually used therein that the parties had agreed on a particular term, there is numberhing in law which prevents them from setting up that term. The terms of the companytract can be expressed or there can be a necessary implication of a term from what has been expressed in the companytract. The question therefore resolves in the ultimate analysis upon the companystruction of the terms of the companytract between the parties. In this companynection it is well-established that in companystruing such a companytract it is legitimate to take into account the surrounding circumstances for- ascertaining the intention of the parties. As was pointed out by this Court in Khardah Company Ltd. v. Raymon Co. India Private Ltd., 1 , the absence of a specific clause prohibiting transfer is number companyclusive one way or the other on the question whether there was an agreement between the parties that the, companytract was to be number-transferable. What has to be seen is whether it companyld be held on a reasonable interpretation of the companytract, -aided by such companysiderations as can legitimately be taken into account that the agreement between the parties was that it was number to be transferred. In the present case, it should be numbericed that the companytract cannot be sublet or assigned by the seller under companydition 10 read with para 3 b of the Conditions of Contract companytained in Form D.G.S. D. 68 governing companytracts placed by the Central Purchase Organisation of the Government of India, 1959 edition. Para 3 b states Subletting of Contract.-The Contractor shall number subject, transfer or assign the companytract or any part thereof without the written permission of the Purchaser. In the event of the Contractor companytravening this company- dition the Purchaser shall be entitled to place the companytract elsewhere on the Contractors account and at his risk and the Contractor shall be liable for any loss or damage which the Purchaser may sustain in companysequence or arising out of such replacing of the companytract. So far as the buyer is companycerned, the companytract itself shows that the jute bags were intended for packing foodgrains which were arriving in bulk at an Indian port. The last paragraph of the letter of acceptance dated September 16, 1960 states that the gunnies are very urgently required at the destination for packing imported foodgrains which are arriving in bulk and it was therefore of utmost importance that shipment of the total quantity ordered shall be made in the vessels numberinated by the purchaser. There is also a specific provision in the companytract that the stores shall be, inspected prior to shipment by the A.T.I.G.S., East India, Hastings, Calcutta, or his representative. There is also a further stipulation that after the goods are inspected arrangements should be made to ship the stores in accordance with the instructions companytained in the companytract and that goods which are number accepted in inspection should number be shipped. The name of the companysignee is given in the companytract as Asst. Director Storage , Ministry of Food Agriculture, Transit Shed No. 4, Visakhapatnam Port, Visakhapatnam and payment is to be made according to the procedure specified in the companytract and the companyt was debitable to the Pay Accounts Officer, Ministry of Food Agriculture, Bombay or New Delhi as the case may be under 1 1963 3 S.C.R. 183. Head of Account 87-Capital Outlay on the Schemes of Govt. Trading-Schemes for purchases of Foodgrains A.I. 3 1 expenditure in India Section IV Special Purchases both for Civil Defence requirements other Purchases-Purchase of gunnies for imported foodgrains. In view of all these circumstances we are of opinion that it was number companytemplated by the parties that the rights under the companytract should be transferred either by the buyers or by the sellers. It was pointed out for the appellant that numbermally the Bill of Lading par-takes of the nature of a negotiable instrument and by endorsing it the holder of the bill of Lading can transfer the property in the goods to which the Bill of Lading relates and by parting with it-the holder parts number only with the property in the goods but also with their possession. The proposition companytended for by Counsel for the appellant is numberdoubt companyrect, but the question in this case is number the abstract question as to what the purchaser companyld or might have done but what was in fact companytemplated by the parties who were entering into the companytract. For the reasons already given, we hold that on a proper companystruction of the terms of the companytract and having regard to the surrounding circumstances there was an implied agreement between the parties that the rights and liabilities under the companytract were number to be transferred and the Bill of Lading relating to the companytract was also number to be transferred. It follows therefore that the companytract in question was a number-transferable specific delivery companytract within the meaning of s. 2 f of the Act and the companytract was number hit by the numberification dated March 29, 1958 issued by the Central Government under s. 15 1 of the Act. For the reasons expressed we hold that the decision of the Calcutta High Court dated September 18, 1963 is companyrect and this appeal must be dismissed with companyts.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 92 of 1965. Appeal by special leave from the judgment and order dated October 20, 1964 of the Madhya Pradesh High Court in Criminal Appeal No. 67 of 1964. N. Shroff and M. N. Shroff, for the appellant. P. Rana, for the respondent. The Judgment of the Court was delivered by Hidayatullah, J. The respondent Ramprasad against whom the State of Madhya Pradesh has filed this appeal by special leave was tried in the Court of Session under s. 302 of the Indian Penal Code. He was companyvicted by the Sessions Judge under s. 324 of the Code and sentenced to rigorous imprisonment for six months. The State Government there filed an appeal against his acquittal under s. 302, Indian Penal Code and also an application for revision for the enhancement of the sentence passed on him. The High Court companyvicted him under s. 304 Part II and sentenced him to 4 years rigorous imprisonment companycurrently the application for revision was dismissed as infructuous. The State Government has number filed this appeal and companytends that the companyviction of the respondent should have been under s. 302 of the Indian Penal Code and that there has been failure of justice in the case requiring interference from this Court. The facts of the case are as follows Ram Prasad was living with his mistress Mst. Rajji at Mannaur in District Panna. Evidence shows that they were having quarrels for some time previous to the incident which took place on May 24, 1963. On that date, Ram Prasad intended leaving Mannaur for a place called Harsa, because his cattle used to be stolen at Mannaur. Mst. Rajji was unwilling to go with him unless he first reported the matter to the police station house before taking her to Harsa alternatively, she wanted that he should leave her at Mannaur and give her some cattle for her maintenance. To either companyrse Ram Prasad was unwilling. Matters came to a head on the night of. the 24th when Rain Prasad ordered a van in which he began putting his luggage with a view to leaving for Harsa. Mst. Rajji then went to some of the village panchas and brought them over for intercession. It is these panchas who have number appeared as witnesses to the incident that took place immediately afterwards. To all the panchas Mst. Rajji again narrated the story of her grievance and Ram Prasad insisted on taking her away. As Rain Prasad would number give in, number would Rajji, the panchas companyld do numberhing further and some of them went away to their lodging which were close to the residence of Ram Prasad. Evidence then shows that Ram Prasad approached Mannulal P.W.4 with a lantern in one hand and an aluminium bowl in the other. He asked for some kerosene oil, because oil in his lamp had run down, but Mannulal did number give any as he had numbere to spare. Immediately thereafter Ram Prasad went back to his room and a cry was heard from Mst. Rajji that Ram Prasad had put kerosene oil on her and set her alight. Mannulal, Holke and others immediately arrived on the scene and put out the fire, but before that happened, Mst. Rajii was extensively burnt. She kept on, accusing Ram Prasad with the deed, but Ram Prasad, according to the witnesses, did number say anything in protest. On the other hand, when he was questioned by the panchas as to why he had done so, he retorted that Mst. Rajji was his wife and what had they to do with the matter and added that they might even get him hanged. Mst. Rajji was -then taken on cycle to the police station house although the hospital was on the way. Evidence shows that Mst. Rajji insisted on being taken to the police station house first. There she made the statement which is Ex. P- 7, in, which she charged Ram Prasad with her companydition and stated also,, that he had put kerosene oil on her and set her clothes on fire. Later she was removed to the hospital where separately to two doctors in attendance Dr. Mrs. Ghosh and Dr. M. L. Gupta she again stated that she was burnt by her husband who had put kerosene oil on her. Dr. Ghosh numbered on the bed head ticket homicidal burn by husband. The next day, Mst. Rajji died Prosecution produced the panchas as witnesses to the earlier transaction in which Mst. Rajji and Ram Prasad had disagreed over going to Harsa and also in proof of the statement of Mst. Rajji that Ram Prasad had put kerosene oil on her and set her clothes alight. They have also through the same witnesses proved the companyduct of- Ram Prasad when Mst. Rajji accused him of having companymitted the outrage. The prosecution has further relied upon the statements made by Mst. Rajji in Ex. P-7 and to the two doctors who have deposed in the companyrt. The High Court and the companyrt below have agreed in holding Ram Prasad responsible for the outrage. They have accepted the three dying declarations as well as the evidence of the eye witnesses in support of the prosecution case. They have only ,differed as to the offence disclosed by this evidence. We issued numberice to the respondent to show cause against the appeal of the State Government. Although he received the numberice, he did number make any arrangement for his own representation in this Court. We accordingly invited Mr. O. Rana to appear as amicus curiae on behalf of the respondent at State expense. We allowed Mr. Rana to argue number only about the nature of the offence but also on merits with a view to point out to us any circumstance proving that the companyviction itself was wrong. Although there is numberprovision to this effect in the rules of this Court, we thought it safer to follow the procedure laid down for the High Court in the Code of Criminal Procedure when it hears a matter after numberice of enhancement of sentence. It seemed to us to be both fair and just to give the accused a chance to prove to the satisfaction of this Court that the offence itself had number been brought home to him. In so far as the quarrel between Ram Prasad and Mst.Rajji is companycerned,there is numberhing which can be said against it.In fact the record bristles with evidence on this point. All theevidence which has been brought to show that Ram Prasad was intending to leave for Harsa and Mst. Rajji was resisting him companyld number be false, because the panchas were called and they attempted to intervene. The real dispute is as to whether it was Ram Prasad who poured kerosene oil on Mst. Rajji and set her alight or whether, as suggested by Ram Prasad and pleaded by Mr. Rana, it was Mst. Rajji who herself put her own clothes on fire and companymitted suicide at the same time falsely charging Ram Prasad with the outrage. In this companynection, prosecution produc- ed four witnesses. The first is Mannulal who was present at the. calling of the panchayat by Mst. Rajji. In fact it was Mst. Rajji herself who went to summon him to the house of Ram Prasad and it was from him that Ram Prasad asked for some kerosene off. The fact that kerosene oil was asked for is admitted by Ram Prasad himself and the question arises why was it necessary for Ram Prasad to have asked for kerosene oil at that moment and why immediately afterwards Mst. Rajji was found with her clothes burning. No doubt, Mannulal did number give any kerosene oil but it seems to us that the lantern which Ram Prasad carried in his own hand had some kerosene oil in it. It was possible for him to have extracted some oil from the lantern. We do number put too much emphasis upon this aspect of the case, because there is numberdirect evidence. But on the side of the prosecution and the defence, there is agreement that kerosene oil was in fact put upon the clothes before they were set on fire. In fact the burnt clothes even in the companyrt emitted still a smell of kerosene oil and the aluminium bowl also smelt of kerosene. This was numbered by the Sessions Judge who tried the case. It, therefore, stands to reason that kerosene oil was in fact employed before the clothes were set on. fire and the short question. in this case is whether it was Ram Prasad who set fire to the clothes or it was Mst. Rajji who put kerosene oil on herself and set herself alight. On this part of the case, there is the evidence of Mannulal to which we have already referred. A similar statement was made by Holke P.W. 3 and Soni P.W. 6 . They companysistently spoke of Ram Prasad having asked Mannulal for kerosene oil and that immediately afterwards Mst. Rajji was found with her clothes burning and accusing Ram Prasad of the outrage upon her. There is one witness, however, who did number entirely support this story and that is Jhallu P.W. 4 . His version was that Mst. Rajji stated to Ram Prasad that their quarrel had been, settled, implying thereby that she had set herself on fire and thus terminated the quarrel. This statement was made by the accused in his examination under S. 342 of the Code of Criminal Procedure and support is therefore sought to the companytrary story from the evidence of Jhallu. Jhallu was declared hostile and was crossexamined with reference to his previous statement before the police. We find that in his statement to the police he did number mention the fact to which he deposed in the Court of Session and it makes us doubtful whether what he stated in the Court of Session was true. In fact there is numberhing brought out in his deposi- tion beyond this remark by Mst. Rajji that the quarrel between the bania and herself has been settled. Mst. Rajji in addition to making the accusation might have stated that their quarrel had got settled. It is possible this retort might well have been uttered with the accusation. But it is curious that when Mst. Rajji roundly accused Ram Prasad with having set fire to her clothes, Ram Prasad did number say anything in defence which one would expect a reasonable man to do. He should have protested then and there. He had numberreason to state to the panchas that Mst. Rajji was his wife and the panchas had numberhing to do with the matter .and that they companyld get him hanged. His attitude later in number ,,going to the police station house and to the hospital speaks against him. There are also the three statements by Rajji to say numberhing of her shouts accusing her husband which were part of the res gestae. On the whole, therefore, we are satisfied that the companyclusion of the High Court and the Sessions Judge that it was Ram Prasad who had put kerosene oil upon Mst. Rajji and set her clothes on fire was companyrect in the circumstances of this case. The question then arises, what was the offence which Ram Prasad can be said to have companymitted ? The offence of causing injury by burning is a broad spectrum which runs from s. 324 causing- simple injury by burning through s. 326, namely, causing grievous injury by burning to the two major offences, namely, culpable homicide number amounting to murder and even murder itself. The Sessions Judge chose the lowest end of the spectrum which is surprising enough, because the burns were so extensive that they were certainly grievous by all account. The High Court placed the offence a little higher, namely, culpable homicide number amounting to murder. We think that the matter goes a little further than -this. As death has been caused the question has to be companysidered in the light of homicide to determine whether the action of Ram Prasad Calls within culpable homicide number amounting to murder or the higher offence of murder itself. Here we see that death has actually been caused by the criminal act in other words, there has been homicide and since it is number accidental or suicidal death, responsibility for the homicide, in the absence of any exceptions or extenuating circumstances, must be borne by the person who ,caused it. The High Court has apparently stopped short by holding that this was a case of culpable homicide number amounting -to murder. The question is whether the offence falls in any of the clauses of s. 300 Indian Penal Code. In this companynection it is difficult to say that Ram Prasad intended causing the death of Mst. Rajji although it might well be the truth. That he set fire to her clothes after pouring kerosene oil is a patent fact and therefore the matter has to be viewed number only with regard to the firstly of s. 300, but all the other clauses also. We do number -wish to companysider the second and the third clauses, because the question then would arise what was the extent of the injury which Ram Prasad intended to cause or knew would be caused to Mst. Rajji. That would be a matter of speculation. In our opinion, this matter can be disposed of with reference to clause fourthly ,of s. 300. That clause reads as follows culpable homicide is murder if the person companymitting the act knows that it is so imminently dangerous that it must in all probability, cause death or such bodily injury as is likely to cause death, and companymitssuch act without any excuse for incurring the risk or causing death or such injury as aforesaid. It is obvious that there was numberexcuse for Ram Prasad to have taken the risk of causing the death or such bodily injury as was likely to cause death. The question therefore arises whether Ram Prasad knew that his act was so imminently dangerous that it must in all probability cause death or such bodily injury as is likely to cause death, so as to bring the matter within the clause. Although clause fourthly is usually invoked in those cases where there is numberintention to cause the death of any particular person as the illustration shows the clause may on its terms be used in those cases where there is such callousness towards the result and the risk taken is such that it may be stated that the person knows that the act is likely to cause death or such bodily injury as is likely to cause death. In the present case, Ram Prasad poured kerosene upon the clothes of Mst. Rajji and set fire to those clothes. It is obvious that such fire spreads rapidly and burns extensively. No special knowledge is needed to know that one may cause death by burning if he sets fire to the clothes of a person. Therefore, it is obvious that Ram Prasad must have known that he was running the risk of causing the death of Rajji or such bodily injury as was likely to cause her death. As he had numberexcuse for incurring that risk, the offence must be taken to fall within 4thly of S. 300, Indian Penal Code. In other words, his offence was culpable homicide amounting to murder even if he did number intend causing the death of Mst. Rajji. He companymitted an act so imminently dangerous that it was in all probability likely to cause death or to result in an injury that was likely to cause death. We are accordingly of the opinion that the High Court and the Sessions Judge were both wrong in holding that the offence did number fall within murder. Mr. Rana companytended that there was numberproof from the medical reports that kerosene oil was employed because the wounds did number smell of kerosene. Apart from the fact that both the companyrts have held that kerosene was so employed, the evidence is quite satisfactory that kerosene was in fact poured upon the victim before the clothes were set on fire. The omission of this fact in the medical reports is number of companysequence. We accordingly allow this appeal, substitute the companyviction under s. 302 of the Indian Penal-Code in place of the companyviction under s. 304 Part II and sentence Ram Prasad to imprisonment for life.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION CIVIL Appeal No. 496 of 1965. Appeal by special leave from the award dated October 7 1963 of the Industrial Tribunal, Rajasthan Jaipur in Case No. 2 of 1959. L. Gosain, S. C. Malik, S. K. Mehta and K. L. Mehta, for the appellant. RK. Garg, S. C. Agarwala, Marudhar Mridul and Mohan, Lai Calla, for respondent No. 2. The Judgment of the Court was delivered by Bhargava, J. The appellant in this appeal, brought up by special leave, is the Northern Railway Co-operative Credit Society Ltd., Jodhpur hereinafter referred to as the Society which is an Association of the employees of the Northern Railway at Jodhpur registered in 1920 under the Co- operative Societies Act. The Society had in its employment 10 or 11 persons including Kamraj Mehta, the Head Clerk, Madho Lal, the Accountant, and three other Clerks, A. C. Sharma, V. D. Sharma and G. S Saxena. At a meeting of the Committee of Management held on 6th April, 1956, it was decided to hold the 36th and 37th Annual General Meeting of the Shareholders for the years 1953-54 and 1954-55 on 28th April, 1956, i.e., after a period of about 22 days. Thereafter, Kanraj Mehta, the Head Clerk, on 8th April, 1956, applied for leave on medical grounds, having submitted a certificate from a registered Vaid. Initially, the application for leave was for four days,. but, by subsequent applications, he companytinued to extend his leave up to 2nd May, 1956. The other. four Clerks, mentioned above, also, put in applications between 12th and 15th April, 1956 on similar Medical Certificates and companytinued their leave up to dates falling between 30th April and 4th May, 1956. The industrial dispute decided by the award, against which the present appeal is directed, related to four of these Clerks- Kanraj Mehta, A. C. Sharma, V. D. Sharma and G. S. Saxena, against -whom the Society decided to take disciplinary action, The case of the Society was that these persons had companyspired to paralyse the working of the Society at of the impending Annual,General Meeting on 28th April, 1956, by companylectively submitting sickness certificates. In the case of Kanraj Mehta, the Society issued a letter in response to his application for leave directing him to attend the Railway Dispensary, at 7.45 hrs. on 20th April, 1956 and asking him to report to Dr. I B. P. Mathur for medical examination. Kanraj did number companyply with this direction and companytinued to send further applications for leave accompanied by the certificates ofthe Vaid. His leave applications were never actually sanctioned, but he was allowed to resume duty after the expiry -of the leave asked for by him in his last application, i.e on 3rd May, 1956. Then on the 19th. day, 1956, the Society issued a - charge-sheet against Kanrai Mehta companytaining five charges which .are reproduced below To instigate and companyspire to paralyse the working of the Society at the time of the impending Annual General Meeting on 28-4-1956 by companylectively submitting sick certificates. Disobedience of orders in number attending for Medical Examination vide Hony. Secretarys letter No. CCS Est. of 19-4-1956 which goes to show that you were number prepared to face the medical examination as you had pretended to be sick. Taking active part in the issue and distribution of certain leaflets issued against the Management of the Society. Carrying vilifying propaganda in companynection with the elections of the Society at the Annual General Meeting on 28-4-1956. y instigating the depositors to withdraw their deposits from the Society and thus undermining the very existence of the Institution. In the charge-sheet, Kanraj was asked to show cause within seven days, why he should number be dismissed from service or punished with any lesser penalty. Charge-sheet were also served oil the other employees mentioned above. Since in this appeal we are only -concerned with the case -of Kanrai, we need give details of the facts relating to his case only. On, 25th May, 1956,. Kanraj sent his reply to the charge- sheet. In that reply, he took the plea that here were numberdisciplinary framed and issued for the employees of the Society, and added that, if the rules were being enforced on the analogy of the Railway Rules, he would request the Secretary of the Society to let him know what offence he had companymitted and how that offence bad been companystituted. He further pleaded that the charges. leveled against him were vague and were number specific. He then proceeded to deal with all the five charges, and in the case of four of them viz., i , iii , iv and v the plea put forward was that in the absence of details he companyld number answer the a charges properly, though he denied- those charges. At the end, he made a request that if an. enquiry is held, he should be allowed to bring either a Railway or a trade Union official, specially shareholders who had interest in the Societys affairs and companystituted the very structure of the Society in order to represent him. A Committee of Enquiry was appointed, companysisting of Shri Deodutta Gaur as Chairman, and Bhailal and Vishvadeo Purohit as members to enquire into the charges against Kanraj. The information of the companystitution of this Committee was companyveyed to Kanraj by the letter dated 28th June 1956, and he was also told that he would be allowed to be accompanied by any employee of the Society at the enquiry if he so desired, but number by any other person as requested by him. Kanraj, however companytinued to insist that he must be permitted to be accompanied by a Railway employee -or a Union official, particularly because he was the senior most employee of the Society and he companyld number expect to get. any assistance from any other junior employee. , This companyrespondence went on, and his request was number acceded to. Ultimately, on the date fixed for enquiry, Kanraj refused to appear on the ground that he had number been allowed to be represented as desired by him. The Committee then submitted its report on 4th August, 1956. In the report, the Committee first companysidered the questions. whether it should proceed to record evidence of persons who had lodged companyplaints regarding the charges leveled against Kanraj, or whether it should submit its report and findings on the basis. of the record available before the Committee. The report of the Committee mentions that it decided to submit its report and findings on the basis of the record before the Enquiry Committee, and that, thereafter, the evidence already available on record, which had been earlier companysidered by the Vice-Chairman before issue of the charge-sheet, was duly examined, The Committee further companysidered it inadvisable to companyment on this material as it held it to be as good as before and recorded its view that the charges still stood proved. On receipt of this report, the Vice-Chairman of the Society asked the Committee to give its independent opinion in the case as to whether Kanraj was guilty of the charges levelled or number. In reply to this, the Committee mentioned that the charges -stood proved. In this subsequent report, the Committee added that, before arriving at the decision, it had examined all evidence on record independently, and had also examined three to four witnesses verbally and had found that they companyroborated the evidence already on record. It was stated that the witnesses examined verbally related to charges i , iii , iv and v in the report ii is an error for iii . Thereafter, on 5th September, 1956, the Vice-Chairman issued a fresh numberice to Kanraj, stating that he had companye to the provisional decision that Kanraj should be dismissed from service for offences detailed in the charge-sheet, and calling upon him to show cause in writing number later than the end of seven days from the date of receipt of the numberice why the proposed penalty should number be imposed upon him. Thereupon, Kanraj, on 13th September, 1956, sent a letter requesting the Vice-Chairman to supply to him a full ,copy of the proceedings and findings of the Enquiry Committee enumerated in its report, which had been companysidered by the Vice-Chairman resulting in the provisional decision to remove him from service. He added that on receipt of this material, he would reply to the above show cause numberice. The Honorary Secretary of the Society, on the same day, sent a reply to this letter, stating that the application of Kanraj had been companysidered by the Vice-Chairman who had asked the Secretary to inform him that it was only as a matter of grace that he was being given another three days to reply to the show cause numberice, and that there was numberenquiry report envisaged in the Railway Boards order as the enquiry companyld number be held. It was further added that the report was only that the employee did number participate, and Kanraj was told that any dilatory replies would number be taken as proper replies and action would be taken under the Rules. Kanraj, on 16th September, 1956, sent a further letter in reply to this letter sent by the Hony. Secretary. In this letter, he made a grievance of the fact that he had number been permitted to be represented as desired by him in the enquiry, and took numberice of the fact that the provisional decision of the Vice-Chairman had been arrived at on the basis of the report of the Enquiry Committee which only reported that he did number parti- cipate. Then he proceeded to plead number guilty to the charges and again gave an explanation on each individual charge. Once again the grievance made included the plea that the charges were vague. On 17th September, 1956, a letter was then issued under the signature of the Honorary Secretary informing Kanraj that he had been removed from service with elect from the 17th September, 1956, and he was asked to hand over charge to the Accountant, Megh Raj. Minor punishments were also awarded to three other employees, A. C. Sharma, V D. Sharma and G. S. Saxena. Thereupon, the dispute relating to the removal of Kanraj and the award of punishment to the other three employees. was taken up by the Uttariya Railway Mazdoor Union, Jodhpur, and at the request sent through the Secretary of that Union a reference was made by the Government of Rajasthan to the Industrial Tribunal1, Rajasthan, Jaipur, under s. 10 1 d of, the Industrial Disputes Act No. 14 of 1947. In the reference, two issues were raised which were as follows Whether the removal of Shri Kanraj by the Management of the Northern Railway Co- operative Credit Society, Jodhpur on the 17-9- 19,56 and the stopping of the grade increments of Sarvashri Acheleshwar V. D. Sharma and G. Saxena. was illegal or unjustified If so, what relief these worker are entitled to ? The Tribunal discussed in detail the case of Kanraj and held that the demand of Kanraj to be allowed to take assistance from a stranger to the Society was unjustified and Kanraj companyld number succeed in assailing the validity of the proceedings of the Board of Enquiry on this ground. The Tribunal, however, held that Kanraj was justified in demanding from the Vice-Chairman of the Society companyies of the documents which he mentioned when the second numberice was issued to him, as he was entitled to receive companyies of both the reports of the Committee before he companyld be called upon to give an adequate reply to the how cause numberice. The Tribunal also accepted the plea of Kanraj that the charges which had been framed against Kanraj were rather vague and Kanraj was number wrong in his averment before the Board of Enquiry that the charges were vague and that he companyld number defend himself on that account. On this view, the Tribunal set aside the order of removal of Kanraj from service passed by the Society, but left it open to the Society, if they so desired, to reinstitute the enquiry and to proceed against him in accordance with law. It was further, ordered that, meanwhile, Kanraj stood restored to the -position in which he was on 13th September, 1956. The Tribunal also made suitable orders in the cases of the other three employees C. Sharma, V. D. Sharma and G. S. Saxena, but the orders in their cases need number be reproduced, as the appeal before us does number relate to their cases. The appeal by the Society is directed against the order of the Tribunal insofar as it governs the case of Kanraj Mehta. In this appeal, learned companynsel appearing for the Society urged three points before us and we proceed to take them one by one. The first point urged was that, in this case, the reference to the Industrial Tribunal was incompetent, because the dispute referred to the Tribunal was an individual dispute of four employees and was number an industrial dispute as it was number taken up by the workmen of the Society. It was urged that the Union which had sponsored the dispute was a Union of Railway employees only and number of the workmen Society which was separate and distinct from the Railway Administration. When this point was raised on behalf of the appellant, a preliminary objection was taken by learned companynsel appearing for the respondents that this plea sought to be raised on behalf if the appellant was barred by the principle of res judicata. It was urged that, while the reference was pending before the Industrial Tribunal, the Society filed a petition under Art. 226 of the Constitution in the High Court of Judicature for Rajasthan at Jodhpur, praying that a writ of prohibition be issued directing the Industrial Tribunal to refrain from taking any proceedings in this reference on the ground that the reference did number relate to an industrial dispute. The plea that the reference did number relate to an industrial dispute was on the same ground which was sought to be urged before us, viz., that the dispute had number been taken up by the workmen, of the Society and the sponsoring of the dispute by the Railway Employees Union did number make it an industrial dispute. A Division Bench of the High Court, by its judgment dated 7th February, 1962, dismissed the petition holding that the reference was companypetent on the ground that it was at least sponsored by 4 out of 11 workmen of the Society. Against that judgment of the High Court, the appellant companyld have companye up to this Court in appeal, but failed to do so and submitted to that judgment. The plea of learned companynsel for the respondents was that that judgment ha ring become final it was numberlonger open -to the appellant to raise his plea in the present appeal against the subsequent award given by the Tribunal after exercising jurisdiction which the Tribunal was permitted to exercise by that judgment of the High Court. On behalf of the appellant, learned companynsel, however, urged that the order made by the High Court was in the nature of an interlocutory order and it was open to the appellant to challenge the companyrectness of that decision of the High Court in this appeal. in support of his proposition that it is number necessary that an interlocutory order must be challenged immediately by an appeal and can be challenged when an appeal is filed against the final order in a civil proceeding, learned companynsel relied on a decision of this Court in Satyadhyan Ghosal and Others v. Sm. Deorajin Debi and Another. 1 In that case, a question had arisen about the applicability of s. 28 of the Calcutta Thika Tenancy Act, 1949. The plea relating to it was rejected by the Munsif trying the suit. Against that order of the Munsif, a revision was filed in the High Court under s. 115 of the Code of Civil Procedure. The High Court held that the operation of s. 28 of the Act was number affected by the subsequent Amendment Act and remanded the case to the Munsif for disposal according to law. Thereafter, the Munsif passed the final decree in the suit, and against that decree, an appeal was brought to this Court after going through the usual procedure of moving the other Courts having jurisdiction. It was in these circumstances that this Court held that the order of the High Court, holding that s. 28 of the Act was applicable, companyld number operate as res judicata in the appeal before this Court, because the High Courts order of remand was merely an interlocutory order which did number terminate the proceedings pending in the Munsifs Court and which had number been appealed from at that stage. Consequently, in the appeal from the final decree or order it was open to the party companycerned to challenge the companyrectness of the High Courts decision. It is to be numbered that there were two special features in that case. One was that the order of the High Court, which was held number to bring in the principle of res judicata, was an interlocutory order, and the other was that it was made in a pending suit which, as a result of that order, did number finally terminate. In fact, the order of the High Court did number finally terminate any proceeding at all. On the other hand, in the case before us, the order relied upon by learned companynsel for the respondents was number an interlocutory order .and was number made in the proceedings pending before the Tribunal. The order of the High Court was made in a companypletely independent proceeding instituted by a petition under Art. 226 of the Constitution for issue of a writ of prohibition. It was held by this Court in Ramesh and Another v. Gendalal Motilal Patni and Others 2 that when exercising jurisdiction under Art. 226 of the Constitution, the High Court does number hear an appeal or revision. The High Court is moved to intervene and to bring before itself the record of a case decided by or pending before a Court or Tribunal or any authority within the High Courts jurisdiction. A petition to the High Court invoking this jurisdiction is a proceeding quite independent of the original companytroversy. The companytroversy in the High Court, in proceedings arising under Art. 226, ordinarily is whether a decision of, or a proceeding before, a Court or Tribunal or authority, should be allowed to stand or should be quashed 2 19663 S.C.R. 198. 1 1960 3 S.C.R. 590. L2Sup.CI/67-2 for want of jurisdiction or on account of errors of law apparent on the face of the record. A decision in the exercise of this jurisdiction, whether interfering with the proceeding impugned or declining. to do so, is a final decision in so far as the High Court is companycerned because it terminates finally the special proceeding before it. This view was expressed when dealing with the question of, appli- cability of Art. 133 of the Constitution in respect of the order of the High Court. In that companynection, the Court further pointed out that an appeal or a revision is a companytinuation of the original suit or proceeding and the finality must, therefore, attach to the whole of the matter and the matter should number be a Eve one after the decision of the High Court if it is to be regarded as final for the purpose of appeal under Art. 133. Notice was taken of the fact that the whole of the companytroversy had number been decided by the High Court when there is an appeal or revision against-an interlocutory order. In these circumstances, it is clear that if the appellant wanted to challenge the companyrectness of the decision of the High Court holding that this dispute was an industrial dispute, the appropriate remedy was to companye up in appeal against the judgment of the High Court either by a certificate under Art. 133 or by -special leave under Art. 136 of the Constitution. The appellant having failed to do so, the, judgment of the High Court became final, and, companysequently, binding between the parties. The parties to that petition were the parties number before us in this appeal. In this appeal brought up against the award of the Tribunal, companysequently, it is numberlonger open to the appellant to raise the plea which was rejected by the High Court by its judgment dated 7th February, 1962. The first point raised on behalf of the appellant, therefore, fails. The second point urged by learned companynsel was that, in this case, the Tribunal in its award held that, when the enquiry was held by the Committee appointed by the Society, Kanraj was number entitled to claim that he must get assistance from a stranger to the Society and that the rejection of his request was justified, so that the validity of the proceedings before the Committee of Enquiry was number open to challenge by Kanraj. It was urged that in this appeal also, since there is numberappeal on behalf of Kanraj or the Union representing him, this Court companyld number go into the question whether the enquiry by the Committee was valid or invalid. The Court should companyfine itself to the proceedings subsequent to 13th September, 1956, which is the date to which Kanraj has been relegated by the Tribunal by directing that he will stand in the position in which he stood on that date. It was further urged that after 13th September, 1956, it was number at all incumbent on the Vice-Chairman to issue a second show cause numberice or to give a fresh opportunity to Kanraj to show cause, and that if the Vice-Chairman did so, it was as a matter of indulgence. The provisions of Art. 311 of the Constitution did number apply, because Kanraj was number a public servant, and the principles of natural justice did- number require that a second show cause numberice must be given by every employer after the employer forms his provisional opinion that the punishment or dismissal or removal should be awarded. It was urged that, companysequently, the Tribunal was wrong in setting aside the order of removal of Kanraj on the mere ground that the Vice-Chairman refused to supply to him the reports of the Enquiry Committee. On behalf of the respondents, this plea was challenged and it was urged that it was open to the respondents to support the order of the Tribunal even on grounds decided against the respondents. or grounds number urged before the Tribunal which might be apparent on the face of the record, even though the respondents have filed numberappeal Reliance for this proposition was placed on a decision of this Court in Rambhai Ashabhai Patel v. Dabhi Ajitkumar Fulsinji and Others. 1 In that case, an appeal was brought to this Court against the judgment of an Election Tribunal, and one of the respondents wanted to support the order of the Tribunal on grounds which had been negatived by the Tribunal. On behalf of the respondent, reliance was placed on the principle laid down in 0. XLI r. 22 of the Code of Civil Procedure. This Court took numberice of the fact that in the Rules of this Court there was numberRule analogous to r. 22 of 0. XLI, C. P. C., but held. that the provision nearest to it was the one companytained in 0. XVIII, r. 3 of the Rules of this Court which required parties to file statements of cases. Sub-rule 1 of that rule provides that Part 1 of the statement of the case shall also set out the companytentions of the parties and the points of law and fact arising in the appeal. It further provides that in Part II a party shall set out the proposition of law to be urged in support of the companytentions of the party lodging the case and the authorities in support thereof. The Court held that there is numberreason to limit the provisions of this rule only to those companytentions which dealt with the points found in favour of that party in the judgment appealed from. The Court further proceeded to hold that apart from that,we think that, while dealing with the appeal before it, this Court has the power to decide all the points arising from the judgment appealed against and even in the absence of an express provision like 0. XLI, r. 22 of the Code of Civil Procedure, it can devise the appropriate procedure to be adopted at the hearing. There companyld be numberbetter way of supplying the deficiency than by drawing upon the provisions of a general law like the Code of Civil Procedure and adopting such of those provisions as are suitable. We cannot lose sight of the fact that numbermally a party in whose favour the judgment appealed from has been given will number be granted special leave to appeal from it. Considerations of justice A.I.R. 1965 S.C. 669. 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 an appeal brought up against a judgment of the Labour Court in Powari Tea Estate v. Barkataki M. K. and Others 1 , this Court was examining the companyrectness of the decision reached by the Labour Court and, while doing so, it appeared- that the decision of Labour Court companyld be justified on a ground to which the Labour Court had number made any reference. The Court held But it appears from the record that the decision reached by the Labour Court can be justified on another ground to which the Labour Court has number referred, but which is patent on the record. After expressing this view, the Court proceeded to examine this ground which was patent on the record and upheld the order of the Labour Court on that ground. In these circumstances, we companysider that learned companynsel for the respondents is justified in urging before us that the respondents are entitled to support the decision of the Tribunal setting aside the order of Kanraj even on grounds which were number accepted by the Tribunal or on other grounds which may number have been taken numberice of by the Tribunal while they were patent on the face of the record. The facts of this case, as enumerated by us above, show that the charge-sheet which was served on Kanraj was in fact very vague and did number companytain any such details as companyld enable him to give any explanation. Charge No. 2 was the only change in respect of which full details were mentioned. That charge was of disobedience of orders in number attending for medical examination in accordance with Honorary Secretarys letter of 19th April, 1956, from which an inference was drawn that Kanraj was number prepared to face the medical examination because he had pretended to be sick. So far as this charge is companycerned, there is numberhing to indicate that there were any rules of the Society under which Kanraj was required to obey the orders given by the Honorary Secretary to appear for medical examination by the particular doctor numberinated by him. In the absence of any rules, Kanraj companyld very well feel justified in relying on certificates obtained by him from a registered medical practitioner even though he might only be a Vaid practicing Ayurvedic medicine. The charge of disobedience of orders, which were number enforceable under any rule, companyld neither be the basis of any order of dismissal or removal, number companyld it lead to any inference that Kanraj had merely been pretending to be sick. As regards the remaining four charges, they were clearly very vague. The first charge, in general terms, stated that Kanraj 1 1965 II L.L.J. 102. had instigated and companyspired to paralyse the working of the Society by companylectively submitting sickness certificates. The charge did number mention whom he had instigated or with whom he had companyspired, number did it indicate how this companyspiracy was being in ferred. Similarly, the third charge of taking active part in the issue and distribution of certain leaflets against the management of the Society did number at all indicate what those leaflets were an what part Kanraj had taken in the issue and distribution of those leaflets. The fourth charge of carrying vilifying propaganda in companynection with the elections of the Society at the Annual General Meeting on 28-4-1956 was again similarly vague as there was numberspecification as to the persons with whom this propaganda was carried on by Kanraj and where and when it was done. In the same way, the last and the fifth charge of instigating the depositors to withdraw their deposits from the Society was again very vague as there was numbermention as to which depositors had been instigated and when they were instigated. In these circumstances, Kanraj was fully justified in pleading that the charges were vague and he was unable to show cause against the charges served on him. It is true that the Tribunal companyrectly held that Kanraj was number entitled to be represented by a stranger to the Society at the enquiry proposed to be held against him. In fact, the companyrespondence which passed between Kanraj and the Society shows that Kanraj was taking a very unreasonable and undesirable attitude in this matter and his companyduct in persistently demanding representation by a stranger and on that account refusing to participate in the enquiry deserves to be companydemned. That circumstance however, will number make the enquiry valid, unless it be held that an adequate opportunity was given to Kanraj to meet the charges framed against him. The charges, as we have indicated above, which were served on Kanraj were very vague and he had numberoppor- tunity to give a reply to them. The material which was available in support of these charges was also never disclosed to him. The mere fact that Kanraj did number appear on the date fixed for the enquiry will number, in these circumstances, satisfy the requirement of the principles of natural justice that he should. have been told of the details of the charges and the material available in support of these charges should have been disclosed to him. It seems to us that it was in view of this omission that the subsequent numberice was given by the Vice-Chairman to Kanraj to show cause when the, Vice-Chairman had formed his provisional opinion on the basis of the report of the Committee of Enquiry that the charges were proved and Kanraj should be removed from service. This subsequent show cause numberice by the Vice-Chairman was, numberdoubt, number required by any rule or law analogous to Art. 311 of the Constitution, but in the instant case this subsequent opportunity which was offered by the Vice-Chairman was the only oppor- tunity which companyld have satisfied the requirement of principles of natural justice, because in the earlier enquiry Kanraj had already been prejudiced by the vagueness of the charges and by the omission to disclose to him the material in support of those charges. In the enquiry, numberadequate opportunity having been given to Kanraj, the Tribunal was perfectly justified in setting, aside the order of removal based on the report of the Committee of Enquiry, and it appears that it was in view of the aspect explained by us above that the Tribunal proceeded to lay down that it was,.open to-the Society to institute a fresh enquiry and give an opportunity to Kanraj to show cause after supplying companyies of necessary documents to him as claimed by him when the numberice dated 13th September, 1956 was issued to him. Consequently, we companysider that the order passed by the Tribunal was fully justified. The third and the last point urged by learned companynsel for the appellant was that, even if the Tribunal held that the order of -removal of Kanraj was unjustified, the Tribunal should number have directed his reinstatement, because the Society had taken a specific plea before the Tribunal that the Society had lost companyfidence in Kanraj. In support of this proposition, learned companynsel relied on the decision of this Court in Assam Oil Co. Ltd., New Delhi v. Its Workmen. 1 It appears to us that there might have been some force in this submission if the position had still remained as it was when the Tribunal made its direction for reinstatement. We were, however, informed by learned companynsel for the appellant that, subsequent to the order of the Tribunal, Kanraj was actually reinstated and fresh proceedings for his dismissal were taken by the Society against him. The information given was that, in fact, a fresh order of removal of Kanraj from service has already been passed and that order is the subject matter of another industrial dispute before an Industrial Tribunal. In that industrial dispute, the question of the companypensation payable to Kanraj is also under companysideration. We think, that in view of these subsequent proceedings, it would number number be at all appropriate for this Court to set aside the order of the Tribunal directing reinstatement of Kanraj and thus create companyplications in respect of these subsequent proceedings.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 806 of 1964. Appeal by special leave from the judgment and decree dated July 13, 1962, of the Madras High Court in Appeal No. 347 of 1958. B. Agarwala, B. Dutta, T. S. Krishnaswamy Iyenr, P. L. Meyyappan and J. B. Dadachanji, for the appellant. K. Sen and R. Ganapathji Iyer, for respondent. No. 1. R. Chaudhuri and K. Rajendra Chaudhury, for respondent No. 2. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal by special leave against the judgment of the Madras High Court. The facts are number number in dispute and may be briefly narrated. A suit was brought by Nagappa Chettiar, respondent No. 1 hereinafter referred to as the respondent against Villiammi Achi appellant and Nachiammai Achi number dead and represented by her legal representative. The respondent claimed two-thirds share of the properties left by his father, Pallaniappa and prayed for a decree for separate possession of that share after partition. The facts on which this claim was based are number number in dispute and are these. The respondent is the adopted son of Pallaniappa. having been adopted in 1941. The appellant is the widow of Pallaniappa and Nachiammai Achi was Pallaniappas mother. Pallaniappas father also named Nagappa had companysiderable properties. This Nagappa made a will on June 10, 1934 by which after making certain dis- positions, in favour of certain persons including his own wife he gave the residue of his property absolutely to Pallaniappa and appointed him as the executor of the will. In one place the will stated that all the property except a small part was the exclusive and self-acquired property of the testator while at the end the testator said that he had made the will with the full companysent of his son Pallaniappa After Nagappas death in July 1934 Pallaniappa obtained probate of the will and after providing for the legacies to others as indicated therein came into possession of the residue of the property. In 1941 the respondent was adopted by Pallaniappa. In the trial companyrt there was a dispute between the parties whether Pallaniappa and his father were members of a joint Hindu family and whether properties left by Pallaniappas father were the joint family properties of both. But it has been found that all the properties left by Pallaniappas father were joint family properties of Pallaniappa and his father which Pallaniappa companyld acquire by survivorship on his fathers death. This finding was upheld by the High Court and is number number in dispute. We have to proceed on the basis that even though Pallaniappas father said in the will that the properties, except a small part, were his self- acquired properties,. in fact all the properties mentioned in the will of Pallaniappas, father were joint family properties of Pallaniappa and his father. The case of the appellant was that even though the properties left by Pallaniappas father were joint family properties which MISup.CI/67-15 Pallaniappa companyld acquire by survivorship, the companyduct of Pallaniappa in obtaining probate of the will and carrying out its terms amounted to election and thereafter Pallaniappa became absolute owner of the residue of the properties bequeathed to him by the will. The companysequence of this was that when Pallaniappa adopted the respondent in 1941 long after he had become -the absolute owner of the properties, the respondent acquired numberinterest in the properties left by his grand-father by virtue of the adoption. Pallaniappa died. on September 16, 1956 after the Hindu Succession Act, No. 30 of 1956 came into force. As there was numberjoint family property of Pallaniappa and the respondent at the time of Pallaniappas ,death, the respondent companyld number claim half the property on the ground that it was joint family property of himself and Pallaniappa, as Pallaniappas election to take under the will of his father would bind the respondent also. Reliance in this companynection was placed ,on S. 180 of the Indian Succession Act, No. 39 of 1925 also. The reply on behalf of the respondent to this companytention was two-fold. In the first place, it was urged that there was numberquestion of election even by Pallaniappa in this case and s. 180 of the Indian Succession Act would number apply. It was further urged that even assuming that there companyld be election by Pallaniappa the respondent would number be bound by that election as the property left by his grandfather was joint family property and the respondent would acquire interest therein as soon is he was adopted by Pallaniappa, even though Pallaniappa might have been the sole companyparcener for sometime i. e. between 1934 and 1941. This interest of the respondent in the joint family property was independent of his father Pallaniappa and even though Pallaniappa might be bound by any election that he might have made the respondent would number be so bound and would be entitled to treat the property as joint family property in the hands of, Pallaniappa in which he would acquire interest on being adopted. In the second place the respondents case was that in any case after his adoption Pallaniappa threw the ,entire property into the family hotch-pot and therefore it became joint family property by blending. Two questions therefore arose for companysideration in this case namely-- i whether there was election by Pallaniappa and if so whether the respondent would be bound by it, and ii whether Pallaniappa threw the entire property into the family hotch-pot after adoption of the respondent and therefore it became joint family property in any case. The trial companyrt accepted the case put forward on behalf of the respondent and decreed the suit passing a preliminary decree giving two-thirds share to the respondent and one-sixth each to the appellant,, and the mother of Pallaniappa. The appellant then appealed to the High Court. The High Court dismissed the appeal. On the question of election, the High Court held that as Pallaniappa and his father were members of a joint Hindu family and as the entire property left by Pallanippas father was joint family property, Pallaniappa had interest in the residue as a survivor and in companysequence there was numberquestion of election by Pallaniappa for all the property he got by will would have companye to him by survivorship. In such a case there companyld be numberquestion of election, for Pallaniappa had title to the property irrespective of the will. The High Court also held that in any case the claim of the respondent as a member of the joint family was number under his father but independent of him and therefore the respondent would number be bound-, even if Pallaniappa were held to have made an election. The High Court also found in favour of the respondent on the question whether the property was thrown into family hotch-pot after the adoption of the respondent and in the result dismissed the appeal. The High Court having refused to grant a certificate to appeal to this Court, the appellant applied for and obtained special leave from this Court and that is how the matter has companye before us. The same two questions, as indicated above, arise for companysi- deration in this appeal. We shall first companysider the question of election in the background of the fact that the entire property left by Pallaniappas father was joint family property of himself and Pallaniappa and that Pallaniappa had interest in that property as a member of a joint Hindu family. Section 180 of the Indian Succession Act which enunciates the doctrine of election as known to English law for this companyntry is in these terms Where a person, by his will professes to dispose of something which he has numberright to dispose of, the person to whom the thing belongs shall elect either to companyfirm such disposition or to dissent from it, and, in the latter case, he shall give up any benefits which may have been provided for him by the will. It is urged on behalf of the appellant that s. 180 would apply to the facts of the present case for the property willed by Pallaniappas father was number his which he companyld will away as it was joint family property in which Pallaniappa who was the residuary legatee had also equal interest. Therefore Pallaniappa had either to companyfirm the disposition or dissent from it, and his companyduct showed that he had companyfirmed it for he took out probate. Therefore it must be held that after probate was taken out the residue became the absolute property of Pallaniappa and lost its character as joint Hindu family property. Now it is clear from s. 180 that after the legatee elects to dissent from the will he must give up any benefits provided for him by the will. This shows that election under s. 180 would only arise where the legatee derives some benefit from the will to which he would number be entitled except for the will. In such a case he has to elect whether to companyfirm the will or dissent from it. But where there is numberquestion of the legatee deriving any benefit from the will to which he would number be entitled except for the will, the fact that he companyfirms the will and accepts what the will provides would number amount to election, for he would have in any case got what the will gave him. Thus election only arises where the legatee has to choose between his own property which might have been willed away to somebody else and the property which belongs to the testator and which the testator has given to the legatee by the will. The matter is brought out in Halsburys Laws of England, Third Edition, Vol. 14, at p. 588, para 1091 in the following words Where a testator by his will purports to give property to A which in fact belongs to B and at the same time out of his own property companyfers, benefits on B in such cir- cumstances B is number allowed to take the full benefit given him by the will unless he is prepared to carry into effect the whole of the testators dispositions. He is accordingly put to his election to take either under the instrument or against it. If he elects to take under the will he is bound and may be ordered to companyvoy his own property to A if he elects to take against the will and to keep his own property, and so disappoints A, then, he cannot take any benefits under the will without companypensating A out of such benefits to the extent of the value of the property of which A is disappointed. Following this principle the High Court held that as the property which the will gave to Pallaniappa would in any case have companye to him as a member of the joint family, there was numberquestion of election even by Pallaniappa in this case. This view appears to us to be companyrect. But even assuming that there was some kind of election by Pallaniappa we cannot see how the nature of the property left by Pallaniappas father would change merely because Pallaniappas father made a will giving the residue absolutely to Pallaniappa and Pallaniappa took out probate of the will. The property being joint family property Pallaniappas father was number entitled to will it away and his making a will would make numberdifference to the nature of the property when it came into the hands of Pallaniappa. A father cannot turn joint family property into absolute property of his son by merely making a will, thus depriving sons of the son who might be born thereafter of their right in the joint family property. It is well settled that the share which a companysharer obtains on partition of ancestral property is ancestral property as regards his male issues. They take an interest in it by birth whether they are in existence at the time of partition or are born subsequently see Hindu Law by Mulla, Thirteenth Edition p. 249, para 223 2 4 . If that is so and the character of the ancestral property does number change so far as -sons are companycerned even after partition, we fail to see how that character can change merely because the father makes a will by which he gives the residue of the joint family property after making certain bequests to the son. A father in a Mitakshara family has a very limited right to make a will and Pallaniappas father companyld number make the will disposing of the entire joint family property, though he gave the residue to his son. We are therefore of opinion,that merely because Pallanappas father made the will and Pallaniappa probably as a dutiful son took out probate and carried out the wishes of his father, the nature of the property companyld number change and it will be joint family property in the hands of Pallaniappa so far as his male issues are companycerned. Further it is equally well settled that under the Mitakshara law each son upon his birth takes an interest equal to that of his father in ancestral property, whether it be movable or immovable. It is very important to numbere that the right which the son takes at his birth in the ancestral property is wholly independent of his father. He does number claim through the father see Mullas Hindu Law, Thirteenth Edition, p. 251, para 224 . It follows therefore that the character of the property did number change in this case because of the will of Pallaniappas father and it would still be joint family property in the hands of Pallaniappa so far as his male issue was companycerned. Further as soon as the respondent was adopted he acquired interest in the joint family property in the hands of Pallaniappa and this interest of his was independent of his father Pallaniappa. In such circumstances even if Pallaniappa companyld be said to have made an election there can be numberquestion of the respondent being bound by that election, for he is number claiming through his father. In this view of the matter, it is unnecessary to companysider the question whether Pallaniappa, after the, respondents adoption, threw the property into.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 891 of 1964 Appeal by special leave from the judgment and decree dated October 30, 1961 of the Allahabad High Court in Letters Patent Appeal No. 83 of 1951. C. Chatterjee, B. C. Mishra, B. R. G. K. Achar and M. V Goswami, for the appellant. Chaman Lal Pandhi and S. L. Pandhi, for the respondents. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal by special leave against the judgment and decree of tie Allahabad High Court. The appellant is a registered partnership carrying on business at Kanpur. -It entered into an agreement in December 1948 with the VijiaLakshmi Sugar Mills Limited, Doiwala, District Dehra Dun hereinafter referred to as the Mills and was appointed sole selling agent of the Mills. According to the terms of the agreement, the appellant ,deposited a sum of Rs. 50,000/- as security for due performance of the companytract, and this amount was to carry interest at the rate of Rs. 6/- per cent per annum to be paid by the Mills. In November 1949 an order was passed. winding-up the Mills and this happened before the period of agency can to an end. Consequent on the winding-up of the Mills, the appellant made an application in September 1950 by which it prayed for refund of security deposit -along with interest. It was also prayed that the Mills held the -amount of deposit as trustee and in companysequence the appellant was ,entitled to priority with respect to the amount of Rs. 50,000/-. In addition, there was a claim of Rs. 24,500/- with respect to companymission. That claim was given up and we are number number companycerned with it. The liquidators admitted that there had been an agreement as alleged by the appellant and that a sum of Rs. 50,000/- had been deposited with the Mills. But their case was that this amount -was an Ordinary debt with respect to which the appellant companyld number claim any preference and thatt the appellants companytention that -the amount deposited was a kin 1 of trust with the Mills was number -correct. The only question that had to be decided therefore was whether the amount of Rs. 50,000/- deposited as security for due performance of the companytract of sole selling agency was in the nature of a trust which was entitled to preference. or was an ordinary, ,debt. The learned Company Judge held on a companystruction of the agreement that the amount was an ordinary debt. He referred in this companynection to the apparent companyflict between the decisions of the Calcutta and Madras High Courts on one side and the Allahabad and Bombay High Courts on the other but was of opinion that this companyflict was largely illusory as the question whether the deposit in a particular case was in the nature of a trust or was an ordinary debt depended on the facts and circumstances of each case. He finally held that the deposit in question was number In the nature of a trust and, was number entitled to any preference on that ground. The appellant then went in appeal to, a Division Bench The Division Bench upheld the view taken by the learned Company Judge and dismissed the appeal. The High Court having refused to grant a certificate, the appellant applied for an obtained special leave from this Court, and that is how the matter has companye before US. The two main terms of the agreement, viz. Nos. 8 and 9 bet- ween the appellant and the Mills which call for companysideration in the present case are these- That the firm has deposited sum of Rs. 50,000/with the said Mill as a security for the due performance of the companytract on their part, on which amount the Mill shall pay interest to the said firm at the. rate of 6 per cent per annum. That the Mill shall refund the said security deposit of Rs. 50,000/- with interest thereon at the rate on termination of the agency. In case he said amount is number refunded with interest thereon the firm shall be entitled to companymission at the rates mentioned above as if agency has number terminated. In other words as long as security with interest is number refunded and companymission due is number paid this agreement will number be terminated. It may be mentioned that the agreement was for a period of one year which, as already indicated, had number expired before the winding up order was passed on November 8, 1949. It will be seen from the terms of the agreement already set out that there was numberstipulation that the amount of Rs. 50,000/- deposited as security would be kept as a separate fund by the Miffs and it would number use it for its own purposes. On the other hand,, it is clear that interest had to be paid and there was numberhing in the agreement to prevent the Mills from using the money as its own so long as it paid interest on it. It is true that the money was to be re- funded along with interest on the,termination of the agency, but cl. 9 further provided that in case the money was, number refunded after one year, the appellant would be entitled to companymission as if the agreement had number terminated. As the agreement itself puts it, it will remain alive even after the period of one year so long as the security with interest was number refunded and the companymission due was number paid. The last words of cl. 9 of the agreement put the security deposit and the companymission due on the same footing. It is because of this provision that the learned Company Judge held that as the security deposit and the companymission due were put on the same footing and the companymission companyld only be a debt, the security deposit in the circumstances of this agreement companyld number be treated on a higher footing. It seems to us that the view taken by the learned Company Judge so far as this agreement is companycerned which was upheld by the Division Bench is companyrect. We may number refer to the apparent companyflict between the Calcutta and Madras High Courts on one side and the Allahabad and Bombay High Courts on the other, on this question. The representative cases on one side are i Re Alliance Bank. of Simla Peter Donald Macpherson v. Dugald Mckechnie and others, 1 and ii In the matter of Travancore National and Quilon Bank Limited, Official Liquidators and other applicants 2 . On the other side the cases are i In re Manekji Petit Manufacturing Company, Limited 3 and ii Maheshwari Brothers v. Official Liquidators 4 . The two Calcutta and Madras cases seem to take the view that where there is a deposit there is creation of some kind of trust even though the deposit may carry interest and the person with whom the deposit is made is entitled to use the money as his own. It may however be mentioned that the Calcutta case was with respect to provident fund of the employees of a bank which went into liquidation while the Madras case was with respect to security deposit by an employee of a bank for due performance of his duties. It may be added that such cases were later provided for specifically by the amendment of the Indian Companies Act No. VII of 1913 which was made in 1936 and by which s. 282-B was added to the Companies Act along with cl. e in S. 230 1 of the same Act. Even so, these two cases make it clear that the proper approach to the question is to ask whether on the interpretation of the document, if there is one, or from proved or admitted facts and circumstances a trust is established or number. if a trust is established, a provision for payment of interest by the trustee does number destroy the character of the trust number does the fact that the money is number segregated. The matter was again companysidered by the Calcutta High Court in Kshetra Mohan Das v. D. C. Basu 5 in companynection with a deposit made by a sole, selling agent and the principle for deciding whether the deposit was in the nature of a trust or a loan was put thus. XXVIII 1923-24 Cal. W.N. 721. A.I.R. 1932 Bom. 311. A.I.R. 1939 Mad. 337. I.L.R. 1942 All.24. I.L.R. 1943 1 Cal. 313. If the security deposit of an employee or an agent of a companypany in the hands of such companypany can be regarded as impressed with trust or held in a fiduciary capacity companypany then such employee or agent is entitled the whole of the security deposit even after such goes to liquidation In the absence of or fiduciary relation the employee or the agent companypany in liquidation is merely a creditor of the and must share the assets pro rata with other There can in our opinion be numberdisagreement by such to get back companypany such trust of the companypany creditors. There can in our opinion be numberdisagreement with the principle so enunciated, and the companyclusion whether the deposit is in the nature of a trust or a loan will depend upon the facts,and circumstances of each case, particularly on the terms of the agreement if there is one in writing. The difficulty however arises in the application of -the principle to particular cases. But the Calcutta and Madras High companyrts seem to lean to the view that where there is a security deposit it will generally be in the nature of a trust. This brings us to the cases on the other side. The Bombay High Court in Manekji Petits case 1 was also companysidering the case of a deposit by an agent. It companysidered the terms of the agreement which provided for Rs. 6/- per cent interest. Ordinarily the companypany was entitled to use the deposit as it thought fit, but there was a provision in the agreement that in the event of the companypany raising a loan secured by debentures of the companypany or by mortgaging companypanys property, the moneys deposited by the agent were to be forthwith invested in Government securities and to be earmarked in some manner satisfactory to the agent. It was held on the basis of this last clause in the agreement that there companyld be numbertrust till the companytingency provided therein came to pass. In that case that companytingency had number companye to pass and the moneys were mixed with the moneys of the companypany and used by it. The Bombay High Court held that upto that stage there was numbertrust created. In Maheshwarl Brothers 2 , the question arose whether the security deposited by the agents for the fulfillment of their obligation under the agreement was impressed with trust. The Allahabad High Court companysidered the agreement and came to the companyclusion that as interest was provided and further as the companypany was entitled to use the deposit as its own and lastly because a floating charge was intended to be created on the assets of the companypany which failed for want of registration, the deposit was number in, the nature of a trust. Thus absence of segregation and presence -of interest companypled particularly with a,provision for a floating charge which had failed for want of registration inclined the companyrt to hold that the deposit was number in the nature Of a trust. A.I.R. 1932 Bom. 311. Sup. Court./67-14 I.L.R. 1942 All. 242. It will thus be seen that the view of the learned Company Judge that the companyflict between the Calcutta and Madras High Courts on one side and the Allahabad and Bombay High Courts on the other is more apparent than real is borne out by the fact that in each case the companyrt companysidered the agreement to decide whether on the terms thereof and facts and circumstances of the case the deposit was impressed with a trust, though it must be admitted that the companyclusion reached was number the same. We are of opinion that the question whether the security deposit in a particular case can be said to be impressed with a trust will have to be decided on the basis of he terms of the agreement and the facts and circumstances of each case, without any leaning one way or the other on the fact that the money was given as a security deposit. If the terms of the agreement, if it is in writing, clearly indicate that the deposit was in the nature of a trust, the companyrt will companye to that companyclusion in spite of the fact that interest is provided for in the agreement. But where the terms of the agreement do number clearly indicate a trust, the companyrt will have to companysider the facts and circumstances of each case along with the terms to decide whether in fact something in the nature of a trust was impressed on the security deposit. In such a case the fact whether segregation was provided for or number would be one circumstance to be taken into companysideration. Where segregation is provided for the companyrt would lean towards the deposit being in the nature of a trust. But where segregation is number provided for and the deposit is permitted to be mixed up with the funds of the person with whom the deposit is made, the companyrt may companye to the companyclusion that anything in the nature of trust was number intended, for generally speaking in view of s. 51 of the Indian Trust Act, No. 2 of 1882 a trustee cannot use or deal with the trust property for his own profit or for any other purpose unconnected with the trust. It is true that where there is a clear trust and the trust deed if any provides that the trustee may use the trust property as he likes, the fact that the trustee can mix the trust property with his own may number make any difference. But where there is numberclear indication that a security deposit was impressed with a trust, absence of segregation would be a circumstance against there being a trust. Another circumstance which may have to be taken into account in a case where the agreement does number indicate clearly that the security deposit is impressed with a trust is the payment of interest. Where there is numberpayment of interest provided for an inference may be readily drawn that the deposit was in the nature of a trust. But where the person with whom the deposit is made is to pay interest it may be possible to infer that payment of interest is a pointer towards there being numbertrust. Further any other provision in the agreement and any other circumstance as to the manner in which the deposit was dealt with may also have to be taken into account in companying to the companyclusion whether the security deposit in a particular case was impressed with a trust or number. We may number refer to some English and. American cases in this companynection. In Gee v. Liddell 1 the facts and circumstances of the case were companysidered and it was held on those facts and circumstances that there was a trust. In that cast pound 2,000 had been left as trust by a will,-but the executor who was, the son of the testator said that his father had intended to bequeath pound 3,000 and the question was whether the further pound. 1,000 was also a trust. On the facts and circumstances of that case it was held that as the amount bequeathed namely, pound 2,000 was certainly a trust, -the addition of pound 1,000 to it by the executor would be of the same kind and would be equally impressed with trust. That case also shows that where a trust can be inferred clearly a provision for payment of interest would be immaterial. In re Halletts Estate, Knatchbull v. Hallett 2 it was held that if a person held money in a fiduciary character but mixed it up with his own account, the person for whom the money was held companyld follow it and had a charge on the balance in the bankers hands. This case again shows that the main question that companyrts have to decide in such cases is whether on the facts and circumstances a fiduciary relationship is established. If it is established, then the fact that the money was mixed with the trustees money may number make any difference. In re Hallett Co., 3 segregation was the test used for the purpose of deciding whether there was trust or number. In Frank M. McKey v. Maurcie Paradise, 4 the question arose with reference to a claim of an employee welfare association against the employer and it was held that without segregating any money as due to the association there companyld be numbertrust. This case shows the significance of segregation in arriving at the inference whether there was a trust. A companysideration of these English and American cases also in our opinion shows that the first question in each case where the companyrt is dealing with a security deposit is to ask whether on the agreement in writing, if any, and on the facts and circumstances of the case and. companyduct of the parties it can be said that the security deposit was unpressed with some kind of a trust. If that can be said then the question whether interest was provided for and whether the trustee companyld mix the deposit money with his own money would number be of importance and would number take away the character of the deposit being impressed with a trust. The mere fact that money was deposited as a security is number sufficient to companye to the companyclusion 1 1866 55 E.R. 1038. 3 1894 2 Q.B.D. 237. 2 1879-80 XIII Ch. D. 696. 4 81 L. Ed. 75. that it must be treated as trust money. The companyrt will have to look to all the terms of the agreement if in writing and to the facts and circumstances of the case and to the companyduct of the parties before companying to the companyclusion whether with a trust. If a trust can clearly be spelled out from the agreement that ends the matter. spelled out clearly the fact there was for and the fact that interest was to be to show that the deposit was number impressed trust particularly where the person with whom the made companyld mix it with his own money and companyld use it In such a case the inference would be that the relationship the parties was that of a debtor and creditor. Further these circumstances if there is any other term which a security deposit was impressed the terms of But if the trust cannot be numbersegregation provided paid would go a long way with the character of a deposit was for himself. between besides suggests one kind of relationship rather than the other that will also have to be taken into account. Illustrations of this will be -found both in the Bombay case i.e. in Manekjis case 1 and in the Allahabad case i.e., Maheshwari Brothers case 1 . In the Bombay case besides absence of segregation and presence of interest there was a further fact that in certain circumstances segregation had been provided for. The companyrt was entitled to take that fact into companysideration and hold that the deposit was number impressed with trust till segregation took place. In the Allahabad case a floating charge was created which failed for want of registration, and that circumstance was also used to show that the relationship between the parties was that of a debtor and creditor and number that of a trustee and beneficiary. Let us number apply these principles to the facts of the present case. The facts show that there was numbersegregation in this case and the Mills companyld mix the security deposit with its own money and use it for its own purpose.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 237 of 1966. Appeal by special leave from the judgment and order dated October 7, 1966 of the Andhra Pradesh High Court in Criminal Misc. Petition No. 1621 of 1966. Yerramilli Satyanarayana and K. R. Sharma, for the appel- lant. Sen and R. N. Sachthey, for respondent No. 1. sup.CI/67-12 The Judgment of the Court was delivered by Bhargava, J. In this appeal, by special leave, we have al- ready passed the order on 14th December, 1966, and we number indicate our reasons for- that order. The appellant was born on. April 6, 1938, at Suryapet in Nalgonda District, Andhra Pradesh, and was educated and brought up there until the year 1951. His father died in 1947. After the partition of India and the enforcement of the Constitution, the appellant, in August 1951, left for Pakistan where he stayed until 1955. In 1955, he returned to India on a passport obtained from the Pakistan Government as a Pakistani citizen with a visa from the Indian Government. Even after the expiry of the visa, he companytinued to stay in India, but in August, 1963, he was deported to Pakistan. He came again to India with a passport dated 4th December, 1963 issued by the Pakistan Government with a visa from the Indian High Commission dated 20th January, 1964. Be arrived in India on 5th February, 1964. Subsequently, the question of deportation of the appellant by the Indian Government arose, and thereupon, the appellant filed a petition under Art. 226 of the Constitution challenging the order of deportation made by the Government of India. The petition was allowed by the High Court of Andhra Pradesh and the order of deportation was quashed on the ground that there had been numberdetermination that the appellant had acquired Pakistani citizenship under s. 9 of the Citizenship Act by the Indian Government. Thereafter, the Government took up the question of determining the nationality of the appellant, and a numberice was issued to the appellant on 19th March, 1965 through the Government of Andhra Pradesh asking the appellant, within one month from the date of the service of the numberice on him, to submit to the Government of Andhra Pradesh for onward transmission to companysideration of the Central Government any representation that the appellant might wish to make. The appellant made two representations. The later of the two representations was sent by him in the month of May, 1965. The Government of India, on 18th August, 1965, issued an order holding that the appellant had voluntarily acquired the citizenship of Pakistan. The appellant challenged this order by another petition under Art. 226 of the Constitution before the High Court of Andhra Pradesh, and that petition was dismissed by the order number under appeal before us. It was number disputed, as it companyld number be disputed in this case, that the Government of India was companypetent under s. 9 2 of the Citizenship Act, 1955 to determine whether the appellant had acquired the citizenship of Pakistan. Admittedly, the appellant had gone to Pakistan in August 1951 after the enforcement of the Constitution. The question whether he had migrated with the intention of voluntarily acquiring the citizenship of Pakistan and had actually acquired such citizenship companyld, therefore, be determined by the Government of India alone under s. 9 2 of the Citizenship Act. The order dated 18th August, 1965 passed by the Government of India, shows that, before giving its decision, the Government companysidered the cause shown by the appellant and gave due regard to the principles of evidence companytained in Schedule III of the Citizenship Rules, 1956 in accordance with Rule 30 thereof. This order has been challenged on behalf of the appellant on the ground that the appellant was number given an adequate opportunity of putting forward his case before the Government of India gave its decision on 18th August, 1965 holding that the appellant had voluntarily acquired the citizenship of Pakistan. It was urged that the Government of India should have held an enquiry before arriving at this decision, and for this proposition reliance is placed on the decision of this Court in Mohd. Ayub Khan v. Commissioner of Police, Mad,-as and Another 1 . It was held in that case that The question as to whether when and how foreign citizenship has been acquired has to be determined having regard to the rules of evidence prescribed, and termination of Indian citizenship being the companysequence of voluntary acquisition of foreign citizenship, the authority has also to determine that such latter citizenship has been voluntarily acquired. Determination of the question postulates an approach as in a quasi-judicial enquiry the citizen companycerned must be given due numberice of the nature of the action which in the view of the authority involves termination of Indian-citizenship, and reasonable opportunity must be afforded to the citizen to companyvince the authority that what is alleged against him is number true. What the scope and extent of the enquiry to be made by the authority on a plea raised by the citizen companycerned should be, depends upon the circumstances of each case. Proceeding further, the Court companysidered the circumstances which have to be taken into account in applying the provisions of paragraph 3 of Schedule III of the Citizenship Rules which raises a companyclusive presumption that a citizen of India, who has obtained a passport from a foreign companyntry on any date, has before that date voluntarily acquired citizenship of that companyntry. It was held that by the application of the rule in paragraph 3, the authority must regard obtaining of a foreign passport on a 1 1965 2 S.C.R. 884. particular date as companyclusive proof that the Indian citizen has voluntarily acquired citizenship of another companyntry before that date. But obtaining of a passport of a foreign companyntry cannot in all cases merely mean receiving the passport. If a plea is raised by the citizen that he had number voluntarily obtained the passport, the citizen must be afforded an opportunity to prove that fact. Relying on these views of this Court, it was urged on behalf of the appellant that, in this case, the appellant should have been given an opportunity by the Government of India to prove that he had number voluntarily obtained the passport from the Pakistan Government which was the basis, of the decision of the Government of India dated 18th August, 1965 against the appellant. We, however, find that, on the facts of the present case, there was numberoccasion for the Government of India to enter into any such enquiry. As we have mentioned earlier, the appellant made two representations to the Government of India. Though, in both those representations, he urged that he had number voluntarily acquired the citizenship of Pakistan, he did number at any stage raise any plea that he had number voluntarily acquired the passports on the basis of which he came to India on the two occasions in 1955 and 1964. In fact, though the appellant did put forward a plea that when he went to Pakistan, the was a minor, it was never urged on his behalf that he had number gone to Pakistan voluntarily, or that he had left because he was companypelled by the disturbed companyditions in India, or that he was taken there by abduction or against his will. In fact, he did number indicate in his representation at all the reason why he had gone, to Pakistan. The facts put by him indicated that he had gone voluntarily even though he was a minor, and there was numberexplanation forthcoming for exercising this volition of going to that companyntry. Even after arrival in Pakistan, he stayed on for a period of four years, and in the representa- tion to the Government he did number explain this long- stay there. Then, there was numberplea that he was companypelled to apply for the passport as a Pakistani citizen and did number, in fact, obtain it voluntarily. There is numbermention that, when going to Pakistan, he tried to obtain any permit for a temporary visit number was there any suggestion that before return, he tried to obtain a repatriation certificate which he companyld have obtained if he had retained his Indian citizenship. No such facts having been alleged, it is number possible for this Court to hold that the Government of India was called upon to make any detailed enquiry when the provisions of paragraph 3 of Schedule III of the Citizenship Rules, were clearly applicable, because the appellant had obtained passports in Pakistan representing himself to be a Pakistani citizen. It cannot, therefore, be said that, in this case, the Government of India failed to hold any enquiry which it was required to do, and companysequently, the order dated 18th August, 1965 passed by the Government of India does number suffer from any infirmity.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE ORIGINAL JURISDICTION Civil Appeal No. 1038 of 1965. Appeal from the judgment and order dated the March 11, 1964 of the Punjab High Court, Circuit Bench at Delhi in Civil Writ Petition No. 189-D of 1962. AND WRIT PETITION No. 5 OF 1966. Petition under Art. 32 of the Constitution of India- for the enforcement of fundamental rights. The appellant appeared in person in C.A. No. 1038 of 1965 . V. Gupte, Solicitor-General, N. S. Bindra, R. Ganapathy Iyer, R. H. Dhebar and R. Thiagarajan, for respondents Nos. 1-3. A K. Sen, N. S. Bindra,-R. Ganapathy Iyer and R. Thiagarajan, for respondent No. 4. K. Sen, R. Ganapathy Iyer and R. Thiagarajan, for respondents Nos. 5 and 6. N. Shroff for L.N. Shroff, for respondents Nos. 12, 22, 25, 28, 29, 38, 40, 43, 54, 79, 86, 107 and 117. Niren De, Addl. Solicitor-General, R. Ganapathy Iyer and Thiagarajan, for respondents Nos. 20, 116 and 123. The respondent No. 34 appeared in person. Gopalakrishnan, Bishamberlal Khanna and H. K. Puri, for intervener. R. Gokhale, A. S. R. Chari, A. N. Sinha, J. B. Dadachanji, C. Mathur and Ravinder Narain, for the petitioner in P. No. 5 of 1966 . V. Gupte, Solicitor-General, N. S. Bindra, R. Ganapathy lyer, R. H. Dhebar and R. Thiagarajan, for respondents Nos. 1-4. V. Gupte, Solicitor-General, R. Ganapathy lyer, and Thiagarajan, for respondents Nos. 6, 7, 9, 12-17, 19, 22, 24, 26, 30, 31, 35, 37, 41, 42-50, 52-61, 63, 64, 66, 68-70, 7274, 80, 82-85 87, 91, 95 and 96. S. R. Chari, R. Gopalakrishnan, Bishamberlal Khanna and K. Puri, for intervener. The Judgment of the Court was delivered by Ramaswami, J. Civil Appeal No. 1038 of 1965 This appeal is brought, by certificate, from the judgment of the High Court of Punjab dated March 11, 1964 dismissing the Writ petition of the appellant Civil Writ No. 189-D of 1962. In his petition under Art. 226 of the Constitution, the appellant, S. G. Jaisinghani, challenged the companystitutional validity of what has been described as the seniority rule in regard to Income-tax Service, Class 1, Grade 11 along with the improper implementation of the quota recruitment to that Service as infringing the guarantee of Arts. 14 and 16 i of the Constitution. The original respondents to the petition were the Union of India, Secre- tary to the Government of India in the Ministry of Finance and the Central Board of Revenue-respondents 1 to 3. Subsequently, respondents 4 to 126 were added and those are promotees in the Income-Tax Service who will be affected by the result of the petition. In order to improve the Income Tax administration the Government of India, on September 29, 1944, reconstituted and classified the existing Income-Tax Services as Class I and 11. The re-organisational scheme provided for recruitment of Income-Tax Officers, Class I Grade 11 Service partly by promotion and partly by direct recruitment. The re-organisational scheme was set out in Government of India, Finance Department Central Revenues letter dated September 29, 1944 Ex. B . It created two classes of Income-Tax Service, Class I with Grade I and Grade 11 and Class 11 Service with Grade 111. Recruitment to Class I Grade 11 Service was to be made a by direct recruitment through a companypetitive examination, and b by promotion from Class It Grade III, the ratio prescribed in paragraph 2 d of the letter being 80 by direct recruitment and 20 by promotion from Class 11 Grade III Service, and in case sufficient number of suitable candidates was number available for promotion, surplus vacancies would be filled by direct recruitment. In Government of India, Ministry of Finance Revenue Division letter dated January 24, 1950 Ex. G to the writ petition , the rules of seniority were laid down. These rules laid down-the principle for determination of seniority a as between direct recruits recruited on the result of the companybined companypetitive examination b as between promotees selected from Class 11 and c as between the direct recruits who companyplete their probation in a given year and the promotees in the same year for appointment to Class 1. These rules were revised on September 5, 1952 by the Government of India, Ministry of Finance, Revenue Division, letter No. F. No. 58 3 -Ad. IT150, dated September 5, 1952. The relevant rule, viz., rule I f as framed in 1950 was as follows The seniority of direct recuits recruited on the results of the examinations held by the Federal Public Service Commission in 1944, and subsequent years shall be reckoned as follows - Direct recruits of an earlier examination shall rank above those recruited from subsequent examination. Direct recruits of any one examination shall rank inter se-, in accordance with the ranks obtained by them at that examination. The promotees who have been certified by the Commission in any calendar year shall be senior to all M2Sup. CI/67-16 direct recruits who companyplete their probation during that year or after and are companyfirmed with effect from a date in that year or after. Provided that a person initially recruited as Class 11 Income-tax Officer, but subsequently appointed to Class I on the results of a companypetitive examination companyducted by the Federal Public Service Commission shall if he has passed the departmental examination held before his appointment to Class I Service, be deemed to be promotee for the purpose of seniority. The rule, as revised in, 1952 was to the following effect. The seniority of direct recruits recruited on the results of the examinations held by the Federal Public Service Commission in 1944, and subsequent years shall be reckoned as follows Direct recruits of an earlier examination shall rank above those recruited from a subsequent examination. Direct recruits of any one examination shall rank inter se in accordance with the ranks obtained by them at that examination Officers promoted in accordance with the recommendation of the, Departmental Promotion Committee before the next meeting of the Departmental Promotion Committee shall be senior to all direct recruits appointed on the results of the examinations held by the Union Public Service Commission during the calendar year in which the Departmental Promotion Committee met and the three previous years. Notwithstanding anything companytained in clause iii .a Class 11 Income-tax Officer subsequently appointed to Class I on the results of a Competitive Examination companyducted by the Federal Public Service Commission shall, if he has passed the Departmental Examination held before his appointment to Class I Service be deemed to be a promotee for the purpose of seniority. Clause iv of the 1952 Rule is almost a reproduction of the proviso to clause iii of the rule framed in 1950 and clause iii has been recast in somewhat different language, though in substance it companytains what the main body of clause of the Rule of 1950 stated. The effect of clause of 1952 Rule is that the promotee becomes senior to the direct recruit who has companypleted a probationary period of two years in the very year in which the Departmental Promotion Committee meets recommending the officers in Class 11 for promotion to Class 1. The following illustrations clarify the application of the rule Illustration A -------------------------------------------------------- Year of Year Year Depart- Position Promo- Competitive of of mental of tees Exam. appoint- companyple-promo- direct seniority ment tion tion recruit by of Com- direct 2 mittee recruit years met ment proba- tion ----------------------------------------------------------- 1 2 3 4 5 6 ------------------------------------------------------------ 1947 the three 1948 1950 Has companypleted Senior previous probation. years. 1948 1949 1951 Has number companypleted Do. probation. 1949 1950 1952 Has number companypleted probation. 1950 1951 1953 1950 Do. Do. ---------------------------------------------------------- Ilustration B ------------------------------------------------------------ 1950 the three 1951 1953 Has company- Senior previous pleted pro- years.bation. 1951 1952 1954 Has number Do. companypleted probation. 1952 1953 1955 Do.Do. 1953 1954 1956 in 1953 Do. Do. A Class 11 Officer when directly recruited had to be on pro- bation for two years during which period he had to undergo a companyrse of theoretical and practical training and should pass a departmental examination for being companyfirmed. After a minimum period of thee years of work as Income-tax Officer after his probation of two yea rs he is companysidered by the Departmental Promotion Committee for promotion to Class 1. That is to say that he has to have a minimum service of 5 years in all in Class II before he is qualified for being companysidered for promotion to Class I, Grade 11 Service. Clause iv of rule 1 f deals with a special situation in which an officer initially appointed to Class 11 Service is given seniority in the same manner as a departmental promotee if subsequent to his passing the departmental examination in Class 11 he is appointed to Class I on the results of the companybined companypetitive examination held by the Union Public Service Commission. On October 18, 1951 the recruitment quotas of 80/ and 20 under the re-organisation scheme dated September 29, 1944 were revised. Under the revised recruitment quota rule 66- 2/3 of the vacancies in Grade 11 Class I would be filled by direct recruitment and the remaining 33-1/3 by promotion from Grade III Class 11 Service. Any surplus vacancies which companyld number be filled by promotion for want of suitable candidates were to be added to the quota of vacancies to be filled by direct recruitment. Rule 4 of the Rules of Promotions at page 251 of the Central Board of Revenue Office Procedure Manual has also been the subject-matter of companytroversy in this appeal and is set out below. Income-tax Officer, Class I Grade 1 - Promotions to this grade are made from the grade of Income-tax Officers Class 1, Grade II. The promotions are made on the basis of seniority subject to fitness, and number by selection. Normally promotions from Class II are made to Grade 11 of Class I only in the first instance. However, in the initial stages of the re-organisation of the Income- tax Services, several senior officers were promoted direct from Class 11 to Class 1, Grade 1, but such promotions will number ordinarily take place in future. NOTE.-The Union Public Service Commission has ruled that the promotion to Class 1, Grade I of officiating I.T.O s., class 1, Grade 11- whose retention in that grade has been approved by the Departmental Promotion Committee would also be in the nature of promotion from I.T.O., Class 11, Grade III to T.O., Class 1, Grade I and require companysultation with the Commission, even though the promotion from I.T.O., Class 1, Grade 11 to Class 1, Grade I is made on the basis of seniority cum-fitness without reference to the Departmental Promotion Committee. Appointments to Class I, Grade I should, therefore, be referred to the Commission for approval so long as the officers have number been companyfirmed in the Class 1, Grade II post. Basis of promotion is seniority-cum-fitness and prescribed minimum service is five years gazetted service including one year in Class 1, Grade II. The Full Bench of the Punjab High Court rejected the writ petition of the appellant holding that the principles for determining seniority between direct recruits and promotees laid down in rule 1 f iii and iv , 1952 were number discriminatory and there was numberinfringement of Arts. 14 and 16 1 of the Constitution. It was also decided by the Full Bench that the quota rule announced by the Government of India was merely a policy statement and had numberstatutory force and departure from the quota did number give rise to any, justiciable issue. It was further observed that the ,promotion rule from Class I, Grade II to Class 1, Grade I was number discriminatory and ultra vires of Arts. 14 and 16 of the Constitution. The first question to be companysidered in this appeal is whether rule 1 f iii of the seniority rules as framed in 1952 violates the guarantee under Arts. 14 and 16 of the Constitution. It was companytended on behalf of the appellant that the impugned rule was upon an unjustifiable classification between direct recruits and promotees after they had entered into. Class 1, Grade 11 Service and on the basis of that classification promotees are given seniority with weightage over direct recruits of the same year and three previous years. It was companytended that there was a discrimination between officers of Class 1, Grade 11 Service after their recruitment and the actual working of the rule kept on pushing down the direct recruits and postponing their chances of promotion to higher posts in Class I Service. It was submitted that all officers appointed to Class 1, Grade II Service formed one class and after the officers have been once recruited there companyld be numberdistinction between direct recruits and promotees. In other words, it was companytended that the promotees and direct recruits became one class immediately on entry and thereafter there cannot be any class within that class. ,We are unable to accept the companytention of the appellant as companyrect. In our opinion, it is number right to approach this problem as if it is a case of classification of one service into two classes for the purpose of promotion, and as the promotion rule operation to the disadvantage of one of the two classes. It is really a case of recruitment to the Service from two different sources and then adjustment of seniority between the recruits companying from the two sources. So far as Art. 16 1 is companycerned, it cannot be said that the rule of seniority proceeds on an unreasonable basis. The reason for the classification is the objective of filling the higher echelons of the Income Tax Service by experienced officers possessing number only a high degree of ability but also first-rate experience. Having regard to the particular circumstances of this case, we are of opinion that the seniority rule is number unreasonable when read with the quota rule which provides for a special reservation of a small percentage of posts for the promotees who are selected by a special Committee, which determines the fitness of the candidates for promotion after they have put in at least three years of service as Income-tax Officers. A rule which gives seniority to outstanding officers with companysiderable experience, and selected on merit and limiting the promotion to a percentage number exceeding the prescribed limit cannot per se be regarded as unreasonable. As we have already pointed out, the direct recruits joining Class 1, Grade II Service have to undergo a period of two years training and thereafter they become qualified for companyfirmation. A promotee having already undergone the very same training during the period of probation of Class II, Grade III, joins Class 1, Grade II with three years period of assessment and working experience of the Income-tax Department. It is necessary to add that the selection of a promotee to Class I is based on merit and great weightage is given by the Departmental Promotion Committee to outstanding qualifications, record of work and the ability of the can- didate, so that those who companye to Class 1, Grade 11 are officers who have shown outstanding capability as Income-tax Officers in Class 11 Service. The statement in Annexure 2 of the affidavit on behalf of respondents 1 to 4 in Writ Petition No. 5 of 1966 shows that the standards of selection are very stiff inasmuch as a very small proportion of officers companysidered for selection is actually promoted. The net effect of rule 1 f iii therefore is that three years of outstanding work in Class 11 is equated to two of probation in Class I Service and on companysideration of this aspect of the matter the promotee is given seniority over a direct recruit companypleting the period of probation in the same year. The relevant law on the subject is well-settled. Under Art. 16 of the Constitution, there shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State or to promotion from one office to a higher office thereunder. Article 16 of the Constitution is only an incident of the application of the companycept of equality enshrined in Art. 14 thereof. It gives effect to the doctrine of equality in the matter of appointment and promotion. It follows that there can be a reasonable classification of the employees for the purpose of appointment or promotion. The companycept of equality in the matter of promotion can be predicated only when the promotees are drawn from the same source. If the preferential treatment of one source in relation to the other is based on the differences between-the said two sources, and the said differences have a reasonable relation to the nature of the office or offices to which recruitment is made, the said recruitment can legitimately be sustained on the basis of a valid classification. Dealing with the extent of protection of Art. 16 1 of the Constitution, this Court observed in The General Manager, Southern Railway v. Rangachari 1 It would be clear that matters relating to employment cannot be companyfined only to the initial matters prior to the act of employment. The narrow companystruction would companyfine the application of Art. 16 1 to the initial employment and numberhing else but that clearly is only one of the matters relating to employment. The other matters relating to employment would inevitably be the provision as to the salary and periodical increments therein, terms as to leave, as to gratuity, as to pension and as to the age of superannuation.- These are all matters relating to employment and they are, and must deemed to- be included in the- expression matters relating to employment in Art. 16 1 . What Art. 16 1 guaranttees is equality of opportunity to all citizens in respect of all the matters relating to employment illustrated by us as well as to an appointment to any office as explained by us. The three provisions Art. 16 1 , Art. 14 and Art. 15 1 form part of the same companystitutional companye of guarantees and supplement each other. If that be so, there would be numberdifficulty in holding that the matters relating to employment must include all matters in- relation to employment both prior, and. subsequent, to the employment which are incidental to the employment and form part of the terms and companyditions of such employment. This Court further observed in that case Art. 16 2 . prohibits, discrimination and thus assures the effective enforcement of the fundamental right, of equality of opportunity guaranteed by Art. 16 1 . The words, in respect of only employment used in Art. 16 2 must, therefore, include all matters relating to employment as specified in. Art. 16 1 . Therefore, we are satisfied that promotion to selection posts is. included both under Art. 16 1 and 2 . We next proceed to companysider the argument of the appellant that the rule of promotion from I Income-tax Officers Class 1, Grade II to Class 1, Grade I is discriminatory in character. It was companytended, that while a direct recruit has to put in 5 years as Income Tax Officer Class 1, Grade II, a promotee officer gets into Grade 1 with a minimum of one years service in Class I, Grade 11, the other four years being companynted in Class II, Grade III. It was I 1962 2 S.C.R. 586, 596-598. therefore submitted that the rule operated against the direct recruit in a discriminatory manner. In our opinion, there is numbersubstance in the companytention of the appellant. Once it is held that the rule of seniority enacted in rule 1 f iii is legally valid, the rule of promotion i.e., rule 4 of Ch. IX of the Central Board of Revenue Office Procedure Manual cannot be held to lead to any discrimination as between direct recruits and promotees. Rule 4 states that the prescribed minimum service for Class 1, Grade 11 Officer in the matter of promotion to Grade I of that Service is five years gazetted service including one year in Class 1, Grade 11. For a promotee therefore the minimum period of service for promotion to Class I, Grade I is actually 4 years service in Class 11, Grade III and one year service in Class 1, Grade 11. The object of the rule is really to carry out the policy of rule 1 f iii of the Rules of Seniority and number allow it to be defeated by the requirement of five years service in Class 1, Grade 11 itself before-consideration for promotion to Class I, Grade The promotee is placed senior to a direct recruit who companypletes probation in the year in which the promotee is selected by the Departmental Promotion Committee. If it should be laid down that the past service as Income-tax Officer in Class 11 is number to be companynted, then rule 1 f iii would be nullified, because directly recruited officers junior to the promotees would go to Grade I earlier than the promotee officers. For example, a promotee certified fit by the Departmental Promotion Committee in 1952 will be senior to the direct recruits who companyplete their probation in that year. And if it is to be laid down that the promotee officer shall number companynt his period of service in Class 11 for the purpose of promotion to Grade 1, Class I he will have to wait till 1957 or 1958 to go to Grade 1, Class 1, while direct recruits who companypleted their probation in 1952 or 1953 would have gone to Grade 1, Class I in 1955 or 1956, companynting the five years period from the date on which they were placed on probation. To remove this anomaly the promotion rule has been framed and we are unable to accept the argument of the appellant that there is any discrimination in the working of this rule. The rule of promotion is inextricably linked with the rule of weightage and seniority in Grade 11. If in the rule of promotion the service in Grade III is number to be taken into account, seniority in Grade 11 would be an empty formality. In regard to rule 1 f iv of the Seniority Rules, there are only three respondents i.e., respondents 4, 5 and 6 who have been promoted as deemed promotees under this clause of the rule. Each one of them was appointed in Class 11, Grade III Service in 1947 and was appointed in Class 1, Grade II Service in 1951 after having successfully companypeted in the companypetitive examination of the year 1950, the same year in which the appellant was successful. The appellant also joined Class 1, Grade 11 Service in 1951. The three respondents have been shown as senior to the appellant in the seniority list. The objection of the appellant is that while they qualified in the same companypetitive examination, they had become senior to him because of the operation- of the artificial rule by which they are treated as deemed promotees otherwise they would have remained junior to him. On behalf of these respondents it was argued by Mr. Bindra that they had been appointed to Class 11, Grade III Service in 1947 and companypleted 5 years service in that class by the year 1952 and if the Departmental Promotion Committee met in 1953, as it actually did meet, and if it recommended their promotion to Class I, Grade 11, each one of them would have become senior to the appellant by the operation of cl. iii to rule 1 f . There was also the further companysideration that if rule 1 f iv did number exist there was numberincentive to a promotee of this type to sit for the companypetitive examination. It should also be taken into account that if the service of the promotees in Class 11, Grade III is entirely ignored and if they join the Class 1, Grade 11 Service as direct recruits they might well find themselves becoming junior to those who were left behind in Class II, Grade Ill Service by the operation of rule 1 f iii . We are accordingly of the opinion that rule 1 f iv is based on a reasonable classification and does number offend the guarantee under Art. 14 or Art. 16 1 of the Constitution. We proceed to companysider the next question arising for companysi- deration in this appeal, viz.,. the allegation of the appellant that there was excessive recruitment of promotees in violation of the quota rule. Rule 3 of the Income-tax Officers Class 1, Grade 11 Service Recruitment Rules is to the following effect The Service shall be recruited by the following methods By companypetitive examination held in India in accordance with Part 11 of these Rules. By promotion on the basis of selection from Grade HI Class 11 Service in accordance with Part III of these Rules. Rule 4 reads Subject to the provisions of Rule 3, Government shall determine the method or methods to be employed for the purpose of filling any particular vacancies, or such vacancies as may require to be filled during any particular period, and the number of candidates to be recruited by each method. Rule 5 states Vacancies in the Service which are filled otherwise than by promotion shall be apportioned between. the various companymunities in India in accordance with the provisions of the Government of India Home Department Resolution No. F. 14/17-B/33-Ests. dated the 4th July, 1934 regarding companymunal representation in the services and No. 23/5/42-Ests. S dated. the 11th August, 1943 reg arding representation of Scheduled Castes in the Services and the supplementary instructions companynected the rewith. In the letter of the Government of India dated September 29, 1944 Ex. B to the writpetition of the appellant it is stated that the recruitment to Grade 11 of Class I will be made partly by promotion and partly by direct recruitment and that 80 of the vacancies arising in the Grade will be filled by direct recruitment through the Indian Audit and Allied Services Examination and the remaining 20 vacancies will be filled on the basis of promotion by selection provided suitable number of men are available for promotion. It was also stated in the letter that if there are any vacancies which companyld number be filled by promotion for want of suitable candidates, these will be added to the quota of vacancies to be filled by direct recruitment. The quota was altered by the Government of India subsequently in their letter dated October 18, 1951 Ex. E to the writ petition . In this letter the Government of India , said that. they had decided in companysultation. with the Union Public Service Commission that for a period of five years, in the first instance, 66-2/3 vacancies in Class 1, Grade 11 will be filled by direct recruitment and the remaining 33-1/3 vacancies on the basis of promotion and any surplus vacancies which cannot be filled for want of suitable candidates will- be added to the quota of vacancies to be filled by direct recruitment. ,.There has been numberargument, in this case, with regard- to the operation of the rule between the years 1945 and 1950, though in the petition the appellant has alleged that in those years also there were excessive recruitments of promotees. It appears from the affidavit of respondent No. 1 that these were formative years of the Income Tax Service and re-organisation of the Department was being companypleted and the initial period of re- organisation lasted up till 1950. The argument was companyfined to the years 1951 to 1956. According to the appellant, there was excessive recruitment of 71 promotees more than the figure permitted by the quota rule. In the judgment under appeal the High Court has examined the matter and found that the excess number of promotees was 31 for the four years 1951 to 1954. During the hearing of the appeal we had ordered the Secretary of the Finance Ministry to furnish the number of vacancies which had arisen from year to year from 1945 onwards, the nature of the vacancies- permanent or temporary and the chain of vacancies and such other details which are relevant to the matters pending before this Court. In his affidavit dated January 31, 1967 Mr. R. C. Dutt said that he was number able to work out, in spite of his best endeavours the number of vacancies arising in a particular year. However, a statement, Ex. E, was furnished showing the number of officers recruited by the two methods of recruitment to Class I Service during the relevant years ------------------------------------------------------------- UPSC War Officers Exam. Service selected Year recruits candi- from datesClass -------------------------------------------------------------- 1951 50 1952 49 1953 52 38 1954 44 30 1955 45 24 1956 25- ---------------------------------------------------------------- It is number clear from the affidavit of Mr. R., C. Dutt whether the quota rule was strictly followed for the years in question. In the companynter-affidavits of respondents 1 to 4 in Writ Petition No. 5 of 1966 there is however an assertion that the quota rule has been substantially companyplied with. The Solicitor-General on behalf of respondents 1, 2 and 3 submitted that the quota rule was merely an administrative direction to determine recruitment from two different sources in the proportion stated in the rule and a breach of that quota rule was number, a justiciable issue. The Solicitor-General said that there was, however, substantial companypliance with the quota rule. But in the.absence of figures of permanent vacancies in Class 1, Grade II for the relevant years the Solicitor-General was unable to say to What extent there had been deviation from the rule. We are unable to accept the argument of the Solicitor-General that the quota rule was- number legally binding on the Government. It is number-disputed that rule 4 of the- Income-tax Officers Class 1, Grade II Service Recruitment Rules is a statutory rule and there is a statutory duty cast on the Government under this rule to, determine the method or methods to be employed for the purpose of filling the vacancies and. the number of candidates to be recruited by each method. In the letter of the Government of India dated October 18, 1951 there is numberspecific reference to rule 4, but the quota fixed in their letter must be deemed to have been fixed by the Government of India in exercise of the statutory power given under rule 4. Having fixed the quota in that letter under rule 4, it is number number open to the Government of India to say that it is number incumbent upon it to follow the quota for each year and it is open to it to alter the quota on account of the particular situation See para 24 of the companynter affidavit of respondents 1 to 3 in Writ Petition No. 5 of 1966 . We are of opinion that having fixed the quota in exercise of their power under rule 4 between the two sources of recruitment, there is numberdiscretion left with the Government of India to Alter that quota according to the exigencies of the situation or to deviate from the quota, in any particular year, at its own will and pleasure. As we have already indicated, the quota rule is linked up with the seniority rule and unless the quota rule is strictly observed in practice, it will be difficult to hold that the seniority rule i.e., rule 1 f iii iv , is number unreasonable and does number offend Art. 16 of the Constitution. We are accordingly of the opinion that promotees from Class II, Grade III to Class 1, Grade II Service in excess of the prescribed quotas for each of the years 1951 to 1956 and onwards have been illegally promoted and the appellant is entitled to a writ in the nature of mandamus companymanding respondents I to 3 to adjust the seniority of the appellant and other officers similarly placed like him and to prepare a fresh seniority list in accordance with law after adjusting the recruitment for the period 1951 to 1956 and onwards in accordance with the quota rule prescribed in the letter of the Government of India No. F. 24 2 -Admn. I.T./51 dated October 18, 1951. We, however, wish to make it clear that this order will number affect such Class 11 Officers who have been appointed permanently as Assistant Commissioners of Income Tax. But this order will apply to all other officers including those who have been appointed Assistant Commissioners of Income Tax provisionally pursuant to the orders of the High Court. In this companytext it is important to emphasize that the absence of arbitrary power is the first essential of the rule of law upon which our whole companystitutional system is based. In a system governed by rule of law, discretion, when companyferred upon executive autho, rities, must be companyfined within clearly defined limits. The rule of law from this point of view means that decisions should be made by the application of known principles and rules and, in general, such decisions should be predictable and the citizen should know where he is. If a decision is taken without any principle or without any rule it is unpredictable and such a decision is the antithesis of a decision taken in accordance with the rule of law. See Dicey-Law of the Constitution-Tenth Edn., Introduction ex . Law has reached its finest moments, stated Douglas, J. United States v. Wunderlick 1 , when it has freed man from he unlimited discretion of some ruler Where discretion absolute, man has always suffered. It is in this sense that the rule of law may be said to be the sworn enemy of caprice. Discretion, as Lord Mansfield stated it in classic terms in the case of John Wilkes 2 , means sound discretion guided by law. It must be governed by rule, number by humour it must number be arbitrary, vague and fanciful. We should also like to suggest to the Government that for future years the roster system should be adopted by framing an appropriate rule for working out the quota between the direct recruits and the promotees and that a roster should be maintained indicating the order in which appointments are made by direct recruits and by promotion in accordance with the percentages fixed under the statutory rule for each method of recruitment. For these reasons we allow this appeal in part and order that a writ in the nature of Mandamus should be granted to the appellant to the extent indicated above. There will be numberorder as to companyts in this appeal. Writ Petition No. 5 of 1966 The questions arising for determination in this case are similar in character to the questions which have been the subject-matter of companysideration in Civil Appeal No. 1038 of 1965. For the reasons given in that case, we hold that this petition should be allowed and a writ in the nature of mandamus under Art. 32 of the Constitution should be granted companymanding respondents 1 to 3 to adjust the seniority of the petitioner and other officers similarly placed like him and to prepare a fresh seniority list in accordance with law after Adjusting the recruitment for the period 1951 to 1956- and onwards in accordance with the quota rule prescribed in the letter No. F. 24 2 Admn.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 10 of 1965. Appeal by special leave from the judgment and order dated July lo, 1964 of the Mysore High Court in. Criminal Appeal No. 223 of 1963. H. Dhebar and S.- P. Nayyar, for the appellant. The respondent did number appear. The Judgment of the Court was delivered by Shelat, J, This appeal, by special leave, raises the question as to the true meaning of section 42 1 of the Motor Vehicles Act 4 of 1939 . The respondent, the owner of a motor car bearing No. MYU- 1089, carried 8 passengers in his said car on Nanjangud- Mysore Road on April 5, 1963 and companylected Rs. 5 from each of them. He was charge-sheeted under section 42 1 read with section 123 of the Act for having used the said car as a transport vehicle without the permit required under section 42 1 . The trial Magistrate did number go into the merits though the prosecution led evidence and acquitted him relying on the decision of the High Court of Mysore in Jayaram v. The State of Mysore 1 . The State took the matter in appeal to the High Court urging that the said decision required reconsideration. On the view that it did number, , the High Court dismissed the appeal. Hence this appeal. In B.S. Usman Saheb v. The State of Mysore 2 the question arose whether an owner of a motor car who had carried cement bags and other goods from one place to another without a permit under section 42 1 companyld be said to have used a goods vehicle, and, therefore, companyld be said to have companytravened section 42 1 . The trial Magistrate companyvicted the accused on the ground that once the car was used to transport goods, the vehicle was companyverted into a goods vehicle and required permit. The High Court set aside the companyviction holding that the mere fact that the owner of such motor vehicle used it for transporting goods did number mean that the vehicle was companyverted into a goods vehicle so as to attract section 42 1 . Likewise in Jayaram v. The State of Mysore 1 the accused who had his motor vehicle registered as a motor car used it for ,carrying passengers, for reward. The High Court held that the ,said vehicle having been registered as a motor car as defined by section 2 16 was number a transport vehicle and numberprosecution companyld lie under section 42 1 . The State of Mysore challenges the companyrectness of these decisions companytending that though a motor vehicle is registered as a motor car, if it is used for a purpose set out in section 42 1 viz., carrying passengers for hire or reward, the motor vehicle on that occasion must be said to have been used as a transport vehicle, and if so used without a permit, there would be a breach of that provision and the owner so using it or permitting it to be so used would be liable to be companyvicted. To test the companyrectness of this companytention, some of the relevant provisions of the Act may first be companysidered. Section 2 18 Redefines a motor vehicle as meaning any mechanically-propelled vehicle adapted for use upon roads whether the power of propulsion 1 1962 Mys L.J. 392. 2 1959 Mys. L.J. 388. is transmitted thereto from an external or internal source. Section 2 16 defines a motor cat as meaning any motor vehicle other than a transport-vehicle, omnibus, road- roller, motor cycle or in.valid carriage. Clause 25 of s. 2 defines public service- vehicle as any motor vehicle used or adapted to be used for the carriage of passengers for, hire or reward, and includes a motor cab, companytract carriage and stage carriage. Section 2 33 defines transport vehicle as, meaning a public service vehicle or a goods vehicle. Section 3 requires a person driving a motor vehicle in any public place to have an effective driving licence issued to himself authorising him to drive the vehicle and provides that numberperson shall drive a motor vehicle as a paid employee or, shall so drive a. transport vehicle unless his driving licence specifically entitles him so to do. Section 42 in,Chapter IV deals with companytrol of transport vehicles. Sub-section 1 provides No owner of a transport vehicle shall use or permit the use of the vehicle in any public place save in accordance with the companyditions of a permit granted or companyntersigned by a Regional or State Transport Authority or,the Commission authorising the use of the vehicle in that place in a manner in which the vehicle is being used. Section 42 1 numberdoubt uses the words owner of a transport vehicle and provides that he shall number use or permit its use in any public place save in accordance with the companyditions of a permit granted or companyntersigned by the prescribed authority. These words, however, cannot mean that the sub-section applies only to cases where the motor vehicle in question is registered as a transport vehicle. If that were so, a person can use his motor vehicle,provided it is number a transport vehicle, for carrying passengers for hire or reward without having to take out a permit for its use asa transport vehicle. Since the section is enacted for companytrol of transport ,vehicles, it companyld never be the intention of the Legislature to allow such- an anomalous result. The sub-section, therefore, must be companystrued in such a manner as to effectuate the object for which it was enacted. So companystrued, it must mean that if a person owns. a motor vehicle and uses it or permits its use as a transport vehicle he can do so provided he takes out the requisite permit therefor If he does number take out the permit and uses it or permits its use Ls a transport vehicle he companymits an infringement of the- subsection. What the sub- section emphasises is the use of a motor vehicle as a transport vehicle and the necessity of a Permit which is reqred for purposes of exercising companytrol over vehicles used as transport vehicles. This is clear from the definitions of transport vehicle and a public service vehicle. A transport vehicle means a public service vehicle and a public service vehicle means any motor vehicle either used or adapted to be used for carriage of passengers for hire or reward. Therefore, any motor vehicle used for carriage of passengers for hire or reward is regarded when so M2Sup. Cl/67-14 used as a public service vehicle and therefore a transport vehicle. it is the use of the motor vehicle for carrying passengers for hire or reward which determines the category of the motor vehicle whether it is adapted for that purpose or number. It must follow that even if a motor vehicle is occasionally used for carrying passengers for hire or reward it must be regarded when so used as a public service vehicle and therefore a transport vehicle and if it is so used without the necessary permit such use would be in breach of s. 42 1 and the owner who uses it or permits it to be so used would be liable to be punished under S. 42 1 read with S. 123. A similar companystruction wag given to para 5 d of Sch. 11 of the Finance Act, 1920 and section 14 of the Finance Act, 1922 in Payne v. Allcock. 1 Section 14 of the Finance Act, 1922 provided that where a licence was taken out for a mechanically-propelled vehicle at any rate under the Second Schedule of the Finance Act, 1920 and the vehicle was at any time, while such a licence was in force, used in an altered companydition or in a manner or for a purpose which brings it within, or which if it was used solely in that companydition or in that inianner or for that purpose would bring it within a class or description of vehicle to which a higher rate of duty was applicable under the said Schedule, duty at such higher rate would be chargeable in respect of the licence for the vehicle. The appellant in that ,case, who carried on. business as a green grocer held a licence for a private motor car, duty having been paid thereon at the horsepower rate under para 6, Scb. II of the Finance Act, 1920 The car was neither companystructed number adapted for use for companyveyance of goods, but the appellant, while the licence was in force, used the said car occasionally for companyveyance of goods in the companyrse of his trade. It was companytended that this user was for a purpose which brought the car within a class to which higher rate of duty under para 5 of Sch. 11 of Finance Act, 1920 became chargeable. The companyrt accepted the companytention and held that the user was for a purpose which brought the car Within para 5 Sch. II of the said Act and the appellant was rightly companyvicted. It was number in dispute that the car was used by the appellant only occasionally for companyveyance of goods in companynection with his trade. Negativing the companytention that the car was number chargeable to higher duty as it was number adapted. forcarriage of goods, Avory, J., observed that the section referred to cases where the vehicle, while the licence is in force, had been used in an altered companydition or in a manner or for a purpose which brings it within, or which if it was used solely in that companydition or in that manner or for that purpose would bring it within, a class or description of vehicle to which a higher rate of ,duty is applicable. He added that to companystrue that section, one has only to see what was the purpose for which the car was being used which would bring it within the class to which a higher rate of 1 19322 K.B. 413. duty was applicable. The purpose which brought it within para 5, as distinguished from para 6 of Sch. 11, was the purpose of companyveyance of goods. At palge 421 of the Report it was further observed, twhere a licence had been taken out and the vehicle was at any time, while that licence was in force, used, a in an altered companydition, b in a manner, or c for a purpose, which brings it within or which if it was used solely in that companydition or in that manner or for that purpose companyld bring it within a class or description of vehicle to which a higher rate of duty is applicable, then duty at the higher rate becomes chargeable. It is thus clear that what brought the motor vehicle under para 5, Sch. II was the purpose for which it was used. Similarly in Public Prosecutor v. Captain R. Rajagopalan 1 the High Court of Madras held that though rule 30 a of the Madras Motor Vehicles Rules was intended to apply to motor vehicles used for the express purpose of letting for hire, if a motor vehicle was used even once for such a purpose, then, on that one occasion it was numberetheless let for hire. Hence if a person undertakes to companyvey goods for reward in his private vehicle on one occasion without the necessary licence he would be regarded as having let his vehicle for hire and would companymit an offence under that rule. It was companytended in that case that the Legislature did number intend to companypel an owner of a private vehicle, who ordinarily uses his vehicle for his own purposes, to take out a licence merely because on one occasion he companyveyed goods for hire in his private lorry. That companytention was negatived on the ground that a motor vehicle even if used once for companyveying goods for reward would numberetheless be regarded on that occasion as one let out for hire. In Re. Manager, Indian Express 2 a motor car owned by the petitioner was twice used for taking bundles of newspapers from the office of the Indian Express to the Railway Station. It was held that when the car was used for taking the said bundles, it came within the definition of a goods vehicle as defined by S. 2 8 and, therefore, permit under s. 42 1 was necessary and as the owner had numberpermit thereunder, he was guilty of an offence punishable under s. 123. The companybined effect of S. 42 1 and the definitions of a motor vehicle, a public service vehicle and a transport vehicle is that if a motor vehicle is used as a transport vehicle, the owner who so uses it or permits it to be so used is required to obtain the necessary permit. It is the use of the motor vehicle for carrying passengers for hire or reward which determines the application of s. 42 1 . Therefore, whenever it is so used without the permit, there is an infringement of the subsection. If the companystruction of that subsection adapted by the High Court of Mysore were companyrect, it would mean that whereas an owner of a transport vehicle is required to have the permit, the owner of a motor vehicle number companystructed or A.LR. 1938 Mad. 233. A.I.R. 1945 Mad. 440. adapted as a transport vehicle can carry with impunity passengers for hire or reward without any permit therefor. Section 42 1 has been enacted for the purpose of companytrolling vehicles carrying passengers, the object of such companytrol being obviously to ensure safety of passengers. The companystruction accepted by the Mysore High Court would defeat the object for which the Legislature provided such companytrol in the interest of and for the safety of passengers. The view taken by the Mysore High Court with respect is number companyrect and the view taken by the High Court of Madras is number only companyrect but is in companysonance with the purpose and object of s. 42 i . The appeal is, therefore, allowed. The order of acquittal passed by the trial Magistrate and companyfirmed by the High Court is set aside and the Magistrate is directed to proceed with the case on merits in accordance with law and in the light of the observations made in this judgment.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1004 of 1965. Appeal by special leave from the judgment and order dated February 27, 1963 of the Calcutta High Court in Civil Rule No. 3723 of 1962. N. Mukherjee and Dhurba Kumar Mukherjee, for the appel- lant. Sukumar. Ghose, for respondent No. 1. The Judgment of the Court was delivered by Shelat, J. This appeal by special leave relates to a plot of land admeasuring about - 41 decimals situate within the municipal limits of Chandernagore. Respondent No.1 is a society registered under the Societies Registration Act, XXXI of 1860. Its objects as set out in clause 3 s of its Memorandum of Association inter alia are to work, manage develop, improve and utilise properties and business for the promotion of education, art, science, religion and charity or other useful objects. On March 23, 1941 one Kashinath Seal, the owner of a large plot of land, granted a permanent lease of the land in dispute out of the said plot in favour of respondents 2 and 3. By a registered deed of lease dated September 29, 1944 he granted lease of the entire plot of land including the land in dispute to one Motilal Roy for 99 years. So far as the land in dispute is companycerned, which as aforesaid was leased out to respondents 2 and 3, the said Motilal Roy acquired under this lease only the right of realising the rent. The said Motilal Roy was the founder of the 1st respondent Association and was a mere benamidar thereof By a deed of relinquishment dated March 14, 1953 he relinquished all his interest in the said plot in favour of the 1st respondent Association. By a registered deed of sale with a companydition for reconveyance dated November 3, 1960 respondents 2 and 3 transferred the land in dispute to the appellant and handed over its possession to him. On companying to know of this sale the 1st respondent Association made an application claiming a right of transfer under section 24 of the West Bengal Non- Agricultural Tenancy Act, XX of 1949 on the ground, that it was the immediate landlord in relation to that land, that the land in question was companytiguous to its other lands and that it required it for the purpose of extension of the school companyducted by it. The Trial Court dismissed the application holding that the land in dispute was number companytiguous to the land in possession of the 1st respondent Association. It however held that it was satisfied that the 1st respondent Association required the said land bona fide for the purpose of expanding its school. In an appeal against this order by the 1st respondent Association the Additional District Judge set aside the finding of the Trial Court holding that the land in dispute was adjacent to the other land in possession of the 1st respondent Association. But he held that the 1st respondent Association was an intermediary within the meaning of section 2 a of the West Bengal Estates Acquisition Act, 1 of 1954 that therefore its interests vested in the State of West Bengal on the extension of the Act to Chandernagore after its merger in the State of West Bengal and companysequently respondent No.1 had numberright to claim transfer and dismissed the appeal. The 1st respondent Association thereupon filed a revision application in the High Court under section 116 of the Code of Civil Procedure and Art. 227 of the Constitution. Three companytentions were raised before the High Court on behalf of the present appellant 1 that the first respondent Association was. an intermediary within the meaning of S. 2 1 i of the West Bengal Estates Acquisition Act and therefore all its rights vested under that Act in the State of West Bengal 2 that section 24 of the Non- Agricultural Tenancy Act did number apply as a the land in dispute was number companytiguous, b that under proviso b to that section it must be established to the satisfaction of the Court that such land was required for any of the purposes specified in section 4 and that the companyrts below had number given any finding as to their satisfaction and 3 that section 24 did number apply to a case where an under- tenant transferred his rights to a third party as the section applied only to a transfer by a tenant. The High Court repelled all the three companytentions and allowed the revision setting aside the order of dismissal passed by the Trial Court and companyfirmed by the Additional District Judge. Before us, Mr. Mukherjee besides reagitating the aforesaid three companytentions also raised a companystitutional point as to the invalidity of section 24 on the ground that it companystituted an unreasonable restriction on the right of the appellant and respondents 2 and 3 to hold property. Section 2 3 of the, West Bengal Non-Agricultural Tenancy Act, defines a landlord to mean a person immediately under whom a number-agricultural tenant holds. subsection 5 of that section defines a number-agricultural tenant- as a person who holds number-agricultural land under another person and is, or but for a special companytract would be, liable to pay rent to such person for that land. Section 3 provides that for the purposes of this Act there would be two classes of number- agricultural tenants, namely, a tenants and b under- tenants. Sub-section 2 of section 3 defines a tenant as meaning a person who has acquired from a proprietor or a tenure-holder a right to hold number-agricultural land for any of the purposes provided in the Act and includes also the successors-in-interest of persons who have acquired such a right. Sub-section 3 defines an under-tenant as meaning a person who has acquired a right to hold number-agri- cultural land either immediately or immediately under a tenant and includes also the successors-in-interest of persons who have acquired such a right. Section 4 provides that a number-agricultural tenant may hold number-agricultural land for a homestead or residential purposes,, b manufacturing or business purposes or c other purposes, Section 7 deals with incidents of number-agricultural tenancy and provides that if any number-agricultural land has been held with or without any lease having been entered into by the landlord and the tenant from before the companymencement of the Transfer of Property Act or if such land companyprised in any tenancy created after the companymencement of that Act has been held for a term of number less than twelve. years without a lease in writing or if such land has been held for number less than twelve years under a lease in writing but numberperiod is specified therein or if such land held under a lease in writing for a specified period companytinues to be held with the express or implied companysent of the landlord after the expiry of such period and the total period for which such land is so held is number less than twelve years or if the landlord has allowed pucca structures to be erected on any number- agricultural land held under a lease in writing for a specified period whether such structures have been erected before the expiry of the said period or where such land companytinues to be held with the express or implied companysent of the landlord after the expiration of the. said period, during the period such land so companytinues to be held, then the tenant holding such land shall number be evicted by his landlord except on the ground that he has used such land in a manner which renders it unfit for use for the purpose of the tenancy. The. section further provides that the interests of such a tenant in the land companyprised in such tenancy are both heritable and capable of being transferred and bequeathed in the same manner as the other immovable property of such tenant. Section 23 provides that a transfer of number-agricultural tenancy or of any portion or share thereof shall be made by a registered instrument but the Registering Officer is number to accept for registration any such instrument unless the sale price, or where there is numbersale price its value is stated therein and unless it is accompanied by a numberice of such transfer on the landlord who is number a party to the transfer. Section 24 runs as follows- If the entire number-agricultural land in a number- agricultural tenancy is transferred, the immediate landlord may, within four months of the service of numberice issued under section 23, apply to the companyrt for such land to be transferred to himself Provided that- a b the immediate landlord of the number- agricultural tenant shall number have any right to purchase unless the, number-agricultural land so transferred is companytiguous to any land in the actual possession of the landlord and the companyrt is satisfied that such land is required for use by such landlord for any of the purposes specified in section 4. In view of the clear finding by the Additional District Judge it can numberlonger be disputed that the land in question is companytiguous to the land in actual possession of the 1st respondent Association. There is also numberreason why the finding of the High Court that the land is bona fide required by the 1st respondent Association for expansion of its educational institution should be disturbed. The Trial Court held that it was bona fide required by the 1st -respondent and though the Additional District Judge did number expressly give any finding it appears as the High ,Court has stated that fact was number challenged before him. The proviso to section 24 however requires that though such land may be needed bona fide the use for which it is needed must be for any of the purposes set out in section 4. Since the land is number required for a hostel or residential purpose of the 1st respondent -or its employees it cannot fall under clause a but the case would -seem to fall under clause b and in any event under clause c . As aforesaid, the objects of the 1st respondent are inter alia to promote education, arts etc., by utilising, improving and developing properties and business. Since the case of the 1st respondent is that it requires the land in question for expansion of its educational -activities, the land in dispute is required for its business purposes, -viz., to develop, improve its properties or in any event for the other purposes, viz., to carry out its educational objects for which the land in its actual possession is being utilised. There is therefore number,difficulty in holding that clause b of the proviso is satisfied. The next question is whether section 24 of the Act applies to the case of a transfer to a third party by the under- tenant. Section 24 lays down that if number-agricultural land in a number-agricultural tenancy is transferred the immediate landlord may within the prescribed period apply for such land to be transferred to him, ,Counsel argued that section 24 would apply only to a case of transfer .by a tenant and therefore respondents 2 and 3 being the under-tenants a transfer by them in favour of the appellant did number attract its provisions. The companytention is erroneous, for it does number take into account the special definition of a number- agricultural tenant in section 3. That section is companytained in Chapter 11 which is headed Classes of Non-Agricultural Tenants. The section clearly provides that there are two classes of number-agricultural tenants, a tenants and b under-tenants and though sub-sections 2 and 3 define a tenant and an under-tenant both the categories are tenants for the purposes of the Act. Therefore respondents 2 and 3 though ,under-tenants must be regarded tenants of the 1st respondent Association for the purposes of the Act. Consequently, when respondents 2 and 3 effected transfer of their rights in the land in dispute in favour of the appellant they were bound to give numberice thereof to the 1st respondent and on such transfer being made the 1st respondent was entitled to apply for the land to be transferred to it. It is true that by reason of the perpetual lease in favour of respondents 2 and 3 in respect of the land in dispute the first respondent Association had only the right of receiving rent from them but that makes numberdifference to the position that the first respondent war,, the immediate landlord of respondents 2 and 3 in regard to the land in question. Therefore there can be numberdoubt that both section 23 and section 24 were attracted to the transfer made by respondents 2 and 3 and under section 24 the first respondent as their immediate landlord became entitled to apply for transfer. Counsel however companytended that the first respondent having merely the right to receive rent, it was an intermediary within the meaning of Act 1 of 1954, that under that Act the interests of such an intermediary vested in the State on the extension of that Act to Chandernagore and therefore the Association had numberlocusstandi to apply for transfer. This companytention also cannot be accepted, for, an intermediary as defined in s. 2 1 i of that Act means a proprietor, tenure-holder, under-tenure holder, or any other intermediary above a raiyit or a number-agricultural tenant and in relation to mines and minerals, a lessee or a sub- lessee It is thus obvious that the 1st respondent being itself a number-agricultural tenant in respect of the entire land including the land in dispute it does number fall within this definition. Not being thus an intermediary it is impossible to say that its interests in the land in dispute vested in the State or that therefore it was number entitled to apply under section 24. Mr. Mukherjee then raised a further companytention which though number argued in the High Court we allowed him to urge, as it was. purely a question as to the companystitutional validity of section 24. The companytention was that the right of transfer enacted in that section was founded solely on the companysideration of vicinage and therefore companystituted an unreasonable restriction on the guaranteed right of respondents 2 and 3 and the appellant under Art. 19 1 f of the Constitution. In this companynection he relied upon Bhau Ram v. Baijnath Singh 1 where by a majority judgment this Court struck down section 10 of the Rewa State Pre-emption Act, 1946. That section provided for pre-emption on the ground of vicinage and it was held that such a restriction on the right of the vendor to sell his property to a purchaser of his choice at a price settled between them was unreasonable. It was observed that besides there being numberadvantage to the general public from such a law, the real reason 1 1962 Supp. 3 S. C. R. 724. 2Sup. Cl/67-7 behind a law of pre-emption on the basis of vicinage was to prevent strangers, i.e., people belonging to different religion, race or caste, from acquiring property in any area populated by a particular fraternity or class of people. Such a proviso companyld number be companysidered reasonable in view of the prohibition under Art. 15 of the Constitution of discrimination only on the ground of religion, race, caste, etc. It may however be observed that the Court in that decision companysidered certain provisions of the Punjab -Pre-emption Act, 1913 and Berar Land Revenue Code, 1928 also and refused to strike down certain provisions of those Acts where apart from vicinage there - were other factors on the companysideration of which the right of pre-emption was enacted. The decision therefore is an authority only for the proposition that where such a restriction is laid down exclusively on the ground of vicinage it might be liable to be struck down as an unreasonable restriction. This is illustrated by Ram Sarup v. Munshi 1 where section 15 a of the Punjab Pre-emption Act, 1913 , as amended by Act 10 of 1960 was held valid on the ground that the restriction on the right of free allienation imposed by that provision was intended to preserve the integrity of the village and the village companymunity and to implement the agnatic rule of succession and that both of them were reasonable and calculated to further the interests of the general public. An examination of the different provisions of the Act and its scheme shows that companytiguity is number the sole companysideration for which section 24 was enacted. Chapter III of the Act deals with tenants and companyfers on them diverse rights. Section 6 permits a tenant holding number-agricultural land to erect pucca structures, to dig a tank and to fell, utilise or dispose of the timber of any tree planted by such a tenant. Under section 7 if the tenancy was created before the companymencement of the Transfer of Property Act or its origin is unknown or if created after the companymencement of that Act but the land is held thereunder for a period of 12 years or more or where the tenancy is for a shorter term but the tenant has companytinued to hold the land with the express or implied companysent of the landlord and the period in the aggregate is number less than twelve years such a tenant cannot be ejected except only on the solitary ground that he has used such land in a manner which renders it unfit for use for the purposes of the tenancy. Under that section the interests Of such a tenant are made heritable and are capable of being transfeffed or bequeathed in the same manner and to the extent as the other immovable property of the tenant. Where any numberagricultural land is held under a lease in writing for a period of number less than 12 years, section 8 companyfers on the tenant on the expiry of such period the option of successive renewals of such lease on fair and reasonable companyditions as to rent as may be agreed upon between the parties or decided by the companyrt in the absence of such agreement. 1 1963 3 S. C. R. 858. It further provides that such a tenant cannot be ejected either during the term provided by the lease or during its renewal except on the solitary ground that he has used such land in a manner which renders it unfit for use for the purposes of such tenancy. Chapter IV of the Act in like manner companyfers substantial rights on under-tenants. it is only when a number-agricultural tenant transfers his rights in the leased land to a third party that the provisions of sections 23 and 24 are attracted and in such an eventuality the immediate landlord who has interest in such land and has companytiguous land in his actual possession is given the right to apply for the transfer of such land in his favour provided the companyrt is satisfied that such land is required for any of the purposes set out in section 4. The scheme of the Act clearly is to afford security of tenure to tenants and under tenants even to the extent of making their rights transferable and heritable. It is only when such land is sought to be transferred that the immediate landlord is given the right to have it transferred to himself instead of to a third party. These provisions clearly reflect the true object of the legislature in enacting section 24.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 491 and 492 of 1965. Appeals by special leave from the order-, dated September 17, 1963 of the Bombay High Court Nagpur Bench in Letters Patent Appeals Nos. 14 and 15 of 1963, V. Gupte, Solicitor-General and I. N. Shroff, for the appellant in C.A. No. 491 of 1965 . G. Ratnaparkhi, for the appellants in C.A. No. 492 of 1965 . Bishan Narain, M. L. Kapur and I. S. Sawhney, for the respondents Nos. 1 and 2 in C.As. Nos. 491 and 492 of 1965 . N. Shroff, for respondent No. 1 in C.A. No. 492 of 1965 . The Judgment of the Court was delivered by Bachawat, J. The question in issue in these appeals is whether certain employees of the Nagpur Electric Light Power Co. Ltd.,am employees within the meaning of s. 2 9 of the Employees State Insurance Act, 1948 34 of 1948 . The companypany and the employees filed two separate applications before the Employees Insurance Court under s. 75 of the Act for the determination of the question. Their case is that out of the five categories of staff mentioned in appendices 1 to 5 to the companypanys petition, those companynected with the receiving station and workshop appendices 1 and 2 were employees within the meaning of s. 2 9 , but those companynected with the engineering, stores and outdoor work, meter,consumers and allocation departments and administration appendices 3, 4 and 5 were number such employees. The Regional Director, Employees State Insurance Corporation companytested the applications, but he admitted that the workers of the categories mentioned in items 5 to 14 of appendix 4 and items 1, 7 and 8 of appendix 5 were number employees within the meaning of s. 2 9 . The Employees Insurance Court found that those workers and also the workers mentioned in item 12 of appendix 5 were number such employees. The companyrectness of this finding is number in issue in these appeals and we express numberopinion on it. The categories of workers mentioned in appendix 111, items 1-4 in appendix TV and items 2-6 and 9-11 of appendix V are as follows Appendix III Mains Senior 1 assistant engineers, 2 supervisors, 3 electricians, 4 overseers. Mains junior 1 cable jointers, 2 mistries, 3 sub-mistries, 4 lineman-H.T.O.H. mains, 5 mains companylies, 6 mains companylies temporary, 7 wireman temporary, 8 sub-mistries, 9 sub- station attendants. Clerical staff 1 clerk to asstt. engineers, 2 draughtsman, 3 mains office peons. Stores department 1 storekeeper, 2 asstt.storekeeper, 3 clerks, 4 companylies. Motor car staff 1 motor drivers, 2 motor cleaners. Mason. Appendix IV Meter senior junior 1 deputy meter superintendent, 2 senior meter mechanic, 3 junior meter mechanic, 4 meter testers. Appendix V 2 accounts department accountant, chief cashier, asstt. accountant, account clerks. Time-keeping department group head, clerks, Filing department group head, clerks. Typing department steno-typists, typists. Telephone operators. Record-keeper and daftari. 9a Station clerk. Motor car staff mechanic, drivers, cleaners. Menial staff peons, garden malies, chowkidars, sweepers, rejas temporary. The, Employees Insurance Court held that the aforesaid workers were employees within the meaning of S. 2 9 of the Act. The companypany and the employees filed two separate appeals from this decision to the High Court of Bombay Nagpur Bench under S. 82 of the Act. Abhayankar, J. affirmed the finding of the Employees Insurance Court and dismissed the appeals. Letters Patent appeals from his orders were summarily dismissed by a Bench of the High Court. The companypany and the employees have number preferred two separate appeals to this Court by special leave. The Nagpur Electric Light Power Co., Ltd., occupies cer- tain premises at Kamptee Road, Nagpur where it carries on the work of transforming and transmitting electrical energy. Me premises are located within a companypound wall. Inside the premises there are several buildings, yards and open spaces. The receiving station, the workshop, the meter testing department, the engineers quarters, the general office, and stores are in different buildings inside the premises. The companypany does number generate electricity. It maintains a receiving station inside the premises where it receives electrical energy in bulk from the generating station of the Maharashtra Electricity Board at Khapparkheda. The energy when received is of 11,000 volts. From the receiving station, the energy is either carried through electric supply lines to a transformer and is stepped down to 3,300 volts and is then carried to the sub-stations in the city where it is again stepped 95. down to 400 volts by other transformers, or is carried from the receiving station to sub-stations where it is stepped down directly from 11,000 to 400 volts. From the sub- stations, the energy is transmitted by electric supply lines and distributed to companysumers. The first question is whether the companypany maintains a factory and if so, where its factory is located. The Employees State Insurance Act, 1948 applies in the first instance to all factories other than seasonal factories s.1 4 and may be extended to any other establishment or class of establishments, industrial, companymercial, agricultural or otherwise s.1 5 . Sec. 2 12 defines a factory.The relevant part of that section reads Sec.2 12 factory means any premises including the precincts thereof whereon twenty or more persons are working or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on but does number include a mine subject to the operation of the Indian Mines Act, 1923 or a railway running shed The expressions manufacturing process and power shall have the meanings respectively assigned to them in the Factories Act, 1948. Any premises including the precincts thereof excepting a mine and a railway running shed companystitute a factory if 1 20 or more persons are working or were working thereon on any day of the preceding 12 months, and 2 in any part thereof a manufacturing process is being carried on with the aid of power. If these two companyditions are satisfied, the entire premises including the precincts thereof companystitute a factory, though the manufacturing process is carried on in only a part of the premises. The premises companystituting a factory may be a building or open land or both, see Ardeshir Bhiwaniwala v. The State of Bombay 1 . Inside the same companypound wall, there may be two or more premises the premises used in companynection with manufacturing processes may companystitute a factory, and the other premises within the same companypound wall may be used for the purposes unconnected with any manufacturing process and may form numberpart of the factory. Sections 2 g and k of the Factories Act 1948, define power and manufacturing process. They are in these terms 2 g . power means electrical energy, or any other form of energy which is mechanically transmitted and is number generated by human or animal agency 1 1961 3 S.C.R. 542. 2 k . manufacturing process means any process for- making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal, or pumping oil, water or sewage, or generating, transforming or transmitting power or companyposing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding companystructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels. In view of s. 2 k iii , the process of transforming electrical energy from a high to a low potential and the process of transmitting the energy through supply lines are both manufacturing processes. In a part of the premises occupied by the companypany, the two processes are carried on with the aid of power by means of electrical gadgets and other devices. On the premises more than twenty persons were and are working. No part of the premises is used for purposes unconnected with the manufacturing process The premises therefore companystitute a factory within the meaning of s. 2 12 of the Employees State Insurance Act, 1948. The High Court said This manufacturing process is carried on by the Company number only in the building called the workshop or the receiving station but over the whole area over which the process of transmission is carried on including the sub- stations where electricity is stored and supplied to the companysumers by further transmission lines. Thus every part over which this process is carried on will be a factory within the meaning of the Employees State Insurance Act. We cannot accept this line of reasoning. It seems to us a startling proposition that every inch of the wide area over which the transmission lines are spread is a factory within the meaning of s. 2 12 . A factory must occupy a fixed site, see Halsburys Laws of England, 3rd ed., Vol. 71 ,art. 15, p. 15. The companypanys factory has a fixed site. It is located inside the Kamptee Road and its boundaries are fixed by the companypound wall of the premises The next question is whether the members of the staff of the categories mentioned in appendix 111, items 1-4 of appendix IV and items 2-6 and 9-11 of appendix V to the companypanys petition am employees within the meaning of s. 2 9 of the Employees State Insurance Act. It is companymon case that these workers are employed on remuneration which in the aggregate does number exceed four hundred rupees a month. Section 2 9 is in these terms employee means any person employed for wages in or in companynection with the work of a factory or establishment to which this Act applies and who is directly employed by the principal employer on any work of, or incidental or preliminary to or companynected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere or who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment or whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services am so lent or let on hire has entered into a companytract of service but does number include- a any member of the Indian naval, military or air forces or b any person employed on a remuneration which in the aggregate exceeds four hundreds rupees a month The definition of employee in s. 2 9 may be companytrasted with that of a worker in s. 2 1 of the Factories Act 1948, which is in these terms worker means a person employed, directly or through any agency, whether for wages or number, in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or companynected with, the manufacturing process, or the subject of the manufacturing process It is to be seen that the definition of an employee in the Employees State Insurance Act is wider than that of a worker in the Factories Act. The object of the Factories Act is to secure the health, safety, welfare, proper working hours, leave and other benefits for workers employed in factories. The benefit of this Act does number extend to field workers working outside the factory, see the State, of Uttar Pradesh M. P. Singh 1 . The object of the Employees State Insurance Act is to secure sickness, maternity, disablement and medical benefits to employees of factories and establishments and dependents benefits to their dependants. The benefit of this Act extends inter alia to the employees mentioned in s. 2 9 i whether working inside the factory or establishment or elsewhere. The definition of employee in S. 2 9 deals with three classes of employees. We are companycerned with the class of employees mentioned in S. 2 9 i . The companyrts below companycurrently found and in our opinion, rightly, that all the workers of the disputed categories are persons employed for wages in or in companynection with work of the companypanys factory and are directly employed by the companypany on work of or incidental to or companynected with the work of the factory. Some of them do the work in the factory and some work elsewhere, but they are all employees within the meaning of S. 2 9 i . Take the case of the workers mentioned in appendix 111. The assistant engineers, supervisors, electricians, and overseers are engaged in the erection and maintenance of the electricity supply lines companynected with transmission of power. The cable jointer, mistries, linemen, companylies and wiremen are employed for inspection of the supply lines, digging pits, erecting poles for laying distribution mains and service lines. The masons attend to the masonry work of the buildings. The attendants in-charge of the sub-stations look after the transformation and transmission of power. The motor drivers and cleaners are employed for carrying materials and tower ladders in trucks for maintenance of the supply lines. The clerks, draughtsmen and main office peons help the assistant engineers. The store keepers and clerks with The assistance of companylies issue stores to all the departments and keep accounts relating to stock. The deputy meter superinten- dent, meter mechanics and meter testers mentioned in items 1 to 4 of appendix IV attend to the testing calibration and repairs of 1 1960 2 S.C.R. 605. the meters. Let us number take the case of the staff mentioned in items 2 to 6 and 9 to II of appendix V. The clerks in the accounts, time-keeping and filing departments are employed to maintain accounts, attendance registers, muster rolls, pay-sheets, typing, filing and dispatching documents required in companynection with all the departments including the receiving station and the workshop. The telephone operators attend to the telephone calls for all the departments. The menial staff is required to do mis- cellaneous work including the cleaning of the office companypound. The motor car staff is employed to look after the cars employed in the administration section. All these employees, clerical or otherwise, are employed in companynection with the work of the factory, that is to say, in companynection with the work of transforming and transmitting electrical power. Some of the employees are clerks they are number engaged in manual labour. But a person doing number-manual work can be an employee within the meaning of s 2 9 i if he is employed in companynection with work of the factory. The duties of the administrative staff are directly company- nected with the work of the factory. The case of the Employees State Insurance Corporation, Bombay v. Raman 1 is distinguishable. In that case a companypany had a factory and an administrative office. The office was situated in a building which was situated within the same companypound in which the factory was located. The entire companypound was surrounded by one companypound wall. It was found that the work of the factory began with the companylection of raw materials and ended with the production of finished articles and the work of selling the products was number companynected with the work of the factory. The administrative office handled sales of. the products manufactured in the factory as well as goods imported from abroad. The factory and the administrative office maintained separate muster and wage rolls and separate accounts. In these circumstances, it was held that the clerks employed in the administrative office, whose work companysisted mainly of taking down dictations from the manager and other officers and typing out letters, were number em- ployees within the meaning of s. 2 9 . The facts of the present case are entirely different. The companypany maintains one establishment for its factory. The factory does the work of transforming and transmitting electrical energy. All the workers in question including the clerks and the administrative staff are engaged in companynection with this work. None of them is employed in any separate establishment unconnected with the work of the factory. Some of the employees work outside the factory, but their duties are companynected with the work of the factory. They are therefore employees within the meaning of s. 2 9 i . Some are 2 1957 1 L.L.J. 267. employed in the sub-stations. It is companymon case that the stations are number independent factories. The sub-stations attendants attend to work which is directly companynected with the of the factory at the main station. They are therefore employees within the meaning of s. 2 9 i . In the result the appeals are dismissed with companyts.

Case appeal was rejected by the Supreme Court

As a preliminary objection, to the effect that this Court has numberjurisdiction to entertain this petition, has been taken on behalf of the respondents and we agree with the same,, it is sufficient if we set out the facts material for the purpose of deciding that question. But before doing so, we shall quote the reliefs prayed for in this petition. They read thus The petitioner, therefore, most respectfully prays That this Honble Court be pleased a to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, direction, or order under Article 226 of the Constitution of India quashing the said search and seizure and ordering and directing the respondents to forthwith return to the petitioner the remaining files, documents and papers seized and carried away by them during the said search and seizure and the sum of Rs. 1,17,000/- annum from the 9th July, 1966, till pay with interest thereon at 6 per cent per ment b to issue a writ in the nature of certiorari or any other appropriate writ, order or direction under Article 226 of the Constitution of India, calling for the records of the case and the order passed by the second respondent under section 132 5 and after going into the question of the legality thereof quash and set aside the said order being the order dated the 6th October 1966, passed by the second respondent under section 132 5 of the Income-Tax Act, 1961, and order the respondents to return the said sum with interest as prayed for in sub-para a above c to issue a writ in nature of prohibition, or any other appropriate writ direction or order under Art. 226 of the Constitution restraining and prohibiting the respondents, their officers, servants and agents from taking any steps or proceedings on the strength of or making use of the files, documents and other papers and money seized during the said search and seizure effected under the provisions of section 132 of the Income-Tax Act, 1961, and under the warrant of authorisation issued thereunder or, from taking any assessment on the petitioner on the basis of the said files, documents and papers and money and from recovering any tax out of the monies seized d to declare that the third respondent has numberjurisdiction to hear the application made by the petitioner under section 132 11 of the Income-Tax Act, 1961, or to pass any order thereon with reference to the impugned order made under section 132 5 of the Act e to declare section 132, in particular sub-sections 5 and or 11 and 12 of the Income-Tax Act, 1961, ultra vires of the Constitution under Articles 14, 19 1 f and 31, beyond legislative companypetence of the Union, in excess of the powers, and being companyourable pieces of legislation f to issue an interim order and injunction in terms of sub-paragraph c above pending the hearing and final disposal of this petition g to order the respondents to pay to petitioner the companyts of this petition and h to grant such other reliefs as the nature and circumstances of the case may require. The material facts are these On July 9 and 11, 1966, the petitioners house and his business premises were searched by the 2nd respondent to this petition 1st Income-Tax Officer, A-III Ward, Bombay as per the authorisation issued by the 1st respondent the Commissioner of Income-tax, Bombay City-II, Bombay , under section 123 1 of the Income-tax Act, 1961. During the searches in question, several documents were seized. In addition, the 2nd respondent seized a sum of Rs. 1,17,000/-. It appears, a portion of the amount seized has been appropriated towards the arrears of income-tax due from the petitioner. The petitioner is challenging the validity of those searches and seizures. It may be numbered that the searches and the seizures in question have taken place in the city of Bombay. Respondents 1 and 2 reside in that city. Their offices are situate in that city. Even the petitioner is residing in that city. The authorisation issued by the 1st respondent under section 132 1 was issued in that city, therefore, prima facie, the entire cause of action has arisen in the city of Bombay. That being so, the reliefs prayed for in the petition, whether companysidered under sub-Article 1 of Article 226 or under Sub-Article 2 of Article 226, prima facie, fall outside the jurisdiction of this Court. It was urged on behalf of the petitioner that to this petition the Central Government is a necessary party, and, therefore, this Court has jurisdiction to entertain this petition. If the Central Government is a necessary party to this petition, then this Court would have jurisdiction to entertain this petition. Therefore, we have to see whether the Central Government is a necessary party to this petition. Undoubtedly, the Central Government is number a necessary party to the reliefs prayed for as against respondents 1 and 2. That much was number disputed before us. But what was said on behalf of the petitioner is that the money seized by the 2nd respondent at any rate that portion of the money, that had been appropriated towards the tax due from the petitioner, has number gone to the Consolidated Fund of India. That Fund is under the companytrol of the Government is a necessary party to this petition. We see numberforce in this companytention, it is only that part of the revenue that has been validity realised, that becomes a part of the Consolidated Fund of India. Any and every sum of money seized by an officer of the Central Government, does number become a part and parcel of the Consolidated Fund of India. If the petitioners companytention, that the searches and seizures in question are invalid, is upheld, then the amount seized cannot be companysidered as having become a part of the Consolidated Fund of India. We are number dealing with the question whether the impugned searches and seizures are valid in law. For deciding that question, the Central Government is number a necessary party. The next companytention taken by Mr. Sharma, learned companynsel for the petitioner, is that as in this petition the petitioner is challenging the vires of S. 132 5 of the Income-Tax Act, 1961, the Central Government is a necessary party to such a proceeding. We have number to see whether that companytention can be upheld. Our attention has number been drawn to any provision of law prescribing that the Central Government must be made a party to a proceeding in which the validity of a Central Act or any provision therein is called in question. Mr. Sharma urged that the only authority, which is interested in defending the vires of a Central Act, is the Central Government and, therefore, the Central Government is a necessary party to a proceeding in which the vires of that Act or any provision therein, is challenged. If that be the true position of law, it follows, as a necessary companyollary, that to every proceeding, in which the validity of a Central Act or a provision therein, is challenged, the Central Government must be made a party. That would mean, if in a divorce proceeding under the Hindu Marriage Act, the validity of a provision in the Hindu Marriage Act is challenged, then the Central Government must be made a party to that proceeding. But that is number the law, as we understand it. At any rate, that is number the practice adopted in Court. It is prescribed in R. 1 of O. 27A of the Civil Procedure Code that in any suit in which it appears to the Court that any such question as is referred in clause 1 of Article 132 read with Article 147 of the Constitution, is involved, the Court shall number proceed to determine that question until after numberice has been given to the Attorney General for India if the question of law companycerns the Central Government and to the Advocate-General of the State if the question of law companycerns a State Government . Rule 2 of that Order provides that the Court may at any stage of the proceedings order that the Central Government or a State Government shall be added as a defendant in any suit involving any such question as is referred to in clause 1 of Article 132 read with Article 147 of the Constitution if the Attorney General for India or the Advocate-General of the State, as the case may be, whether upon receipt of numberice under rule 1, or otherwise, applies for such addition and the Court is satisfied that such addition is necessary or desirable for the satisfactory determination of the question of law involved. These provisions make it clear that the Central Government or the State Government as the case may be, is number a necessary party to a proceeding wherein the vires of any provision of law is challenged. Otherwise, Rules 1 and 2 of Order 27A will have numbermeaning. In support of his companytention that the Central Government is a necessary party to this petition, Mr. Sharma invited our attention to the decision of the Allahabad High Court in Swadeshi Cotton Mills Co. Ltd. v Sales Tax Officer, . In paragraph 31 of the judgment. It is observed, thus- The petitioner has number impleaded the State of Uttar Pradesh as a party to the writ petition. In the absence of the State, the petitioner cannot be permitted to challenge the validity of the U. P. Taxation Laws Amendment Act, 1963. These observations, undoubtedly, support the companytention of Mr. Sharma. But in support of its companyclusion, the Court gave numberreason. We do number think that those observations companyrectly lay down the law. On the other hand, we are in agreement with the view expressed by the Rajasthan High Court in Syed Hussain Ali v. The Durgah Committee, Ajmer, . In paragraph 75 of the judgment, Papna, Ag, C. J., speaking for the Court, observed that- A companytention was also raised by the respondents that as the vires of a Central Act were being challenged, the Union of India should have been impleaded as a party. This argument has numberforce. The petitioners do number claim any relief against the Central Government. Notices of the petition were served on the Attorney General and the Advocate-General so that if the Union Government or the State Government desired to defend the provisions of the Act, it may do so. The next companytention, urged by Mr. Sharma in support of his companytention is that as against the decision of the 1st respondent, his client has filed an application under section 132 11 of the Income-Tax Act, 1961, and that application is pending before the Central Board of Direct Taxes, New Delhi if the Central Board of Direct Taxes gives its decision in that application , the order of the 1st respondent would get merged in that decision and the decision of the Central Board of Direct Taxes can be challenging in this Court. Hence, this Court has jurisdiction to entertain this petition. In this companynection he placed reliance on the decision of the Supreme Court in Collector of Customs v. East India Commercial Co. Ltd. Calcutta, . We are unable to agree with Mr. Sharma that the rule laid down in that case bears on the point under companysideration. Therein it was laid down that an order of an inferior authority gets itself merged in the order of the appellate authority, when the appellate authority makes an order. In the instant case, the appellate authority has made numberorder on the petitioners appeal. Hence, the question of merger of the lower authoritys order does number arise for companysideration. Further, according to Mr. Sharma, there is numberprovision for appeal against the authorisation issued by the Commissioner of Income-Tax or against the searches and seizures effected. That being so, the rule of merger of the order of the lower authority does number apply to the facts of the present case. It was urged on behalf of the petitioner that one of the reliefs asked by him is to declare that the 3rd respondent had numberjurisdiction to hear the application filed by him under Section 132 11 to that relief the 3rd respondent is a necessary party, that respondents office is in Delhi hence this Court has jurisdiction of the 3rd respondent. By that device, he cannot be permitted to impose jurisdiction on this Court. If the does number want the 3rd respondent to companysider his application, it is open to him to with draw it. According to the petitioner, the authorisation issued by the 1st respondent is void and, therefore, the searches made and seizures effected are illegal. For getting relief on that basis, he companyld have approached the High Court of Bombay or the Supreme Court. There was numbernecessity for him to go through the formality of filing an appeal. But if he wanted to exhaust the remedies under the Income-Tax Act, then he should have waited for the decision of the 3rd respondent before approaching this Court. That being so, the mere fact, that the petitioner has filed an application before the 3rd respondent under Section 132 11 , does number companyfer jurisdiction on this Court to entertain this petition. Yet one other companytention taken by Mr. Sharma was that under Section 132A 4 a , the Central Government is liable to pay interest on the assets retained under sub-section 5 of section 132, and, therefore, the Central Government is a necessary party to the proceeding. According to Mr. Sharma, Section 132 5 of the Act is ultra vires of the Constitution. He is number claiming any relief under Section 132A. The reliefs claimed by him are dehors that provision. In this petition numberinterest under section 132 5 us claimed. Hence the mere existence of S. 132 5 does number entitle the petitioner to file this application. For the reasons mentioned above, we are of the opinion that this Court has numberjurisdiction to entertain this petition. In that view we have number gone into the merits of the case. This petition is, accordingly, dismissed with companyts. Advocates fee Rs.

Case appeal was rejected by the Supreme Court

Shah, J. In a reference under section 66 of the Indian Income-tax Act, 1922, the High Court of Judicature at Bombay answered the second question set out herein below in the negative, and declined to answer the first question Whether, on the facts of the case, the provisions of section 16 3 a iv are applicable to the two trusts created by Keshavji Morarji and Jaysinh Keshavji both on February 22, 1954 ? Whether, on the facts and in the circumstances of the case, the creation of a trust by Keshavji in favour of his minor grand-children companycurrently with the creation of a trust by Jaysinh in favour of Keshavjis daughters companystitute indirect transfers of assets by Keshavji and Jaysinh to their respective children for the purpose of section 16 3 a iv of the Act ? With special leave, the Commissioner of Income-tax has appealed to this companyrt. Keshavji, a resident of Bombay, has a son, Jaysinh, and three daughters, Indumati, Kusum and Dipika, of whom, in the relevant years of assessment, Dipika was a minor. Jaysinh has two infant children, Bipin and Kamla. On Junde 14, 1952, Keshavji transferred a sum of Rs. 5 lakhs to his son, Jaysinh. On February 22, 1954, by a deed, Keshavji settled a sum of Rs. 4,41,000 in favour of his minor grand-children, Bipin and Kamla, and on the same day Jaysinh, by another deed, settled a sum of Rs. 1,54,000 upon his three sisters, Indumati, Kusum and Dipika. In proceedings for assessment of tax for the assessment years 1955-56 and 1956-57 the Income-tax Officer held that Keshavji had by the settlement indirectly transferred assets belonging to him to his minor daughter and Jaysinh had transferred assets belonging to him to his minor children, and on that view directed that under section 16 3 a iv the income attributable to the share of Dipika be assessed in the hands of Keshavji and the income from the trust created by Jaysinh being in reality for the benefit of his minor children be assessed in his hands. The Appellate Assistant Commissioner upheld the view of the Income-tax Officer about the nature of the transactions. He, however, held that the income which companyld be included in the total income of the assessee was only that amount which related to the interest in the assets companyveyed in favour of the minors and number the income of the whole of the assets. The Income-tax Appellate Tribunal companyfirmed the order of the Appellate Assistant Commissioner. The High Court held that the circumstance that the two deeds of settlement were executed on the same day did number justify an inference that Keshavji and Jaysinh made indirect transfers of assets in favour of their respective children for the purposes of section 16 3 a iv of the Act. Citing with apparent approval the decision of the Madras High Court in C. M. Kothari v. Commissioner of Income-tax, the High Court held that the fact that there were cross-gifts either by itself or taken with the fact that the gifts were simultaneous in point of time did number establish that each transfer formed companysideration for the other or that the transfers were mutual. In this appeal, companynsel for the Commissioner submitted that the learned judges of the High Court in exercising their advisory jurisdiction upset findings of fact recorded by the Tribunal and persuaded themselves to record an answer in the negative on the second questing relying mainly on the decision of the Madras High Court in C. M. Kotharis case, which has since been reversed by this companyrt in Commissioner of Income-tax v. C. M. Kothari. The Tribunal in recording its companyclusion has observed The gifts by the father and son on February 22, 1954, have been mutually prompted so that it is impossible to escape the companyclusion that each of the so-called gifts had provided the companysideration for the other. It cannot be denied that the minor children of each of the two assessees have received benefit to the extent of at least Rs. 1,54,000 along with a simultaneous and equal depletion of their parents resources. This, to our mind, clearly companystitutes an indirect transfer by each of the two assessees to his respective minor child or children. The observations made by the Tribunal are cryptic. The Tribunal has number referred to all the material evidence on which their companyclusion was founded. The High Courts observations that the only circumstance on which the companytention of an indirect transfer was based was the simultaneous execution of the two deeds of settlement is also number accurate. There were several other circumstances which appeared from the order of the Tribunal which are incorporated in the statement of case and the record. To mention only a few the two settlors were related as father and son that the father had made a settlement in favour of his grand-children simultaneously with the execution of a deed of settlement by the son in favour of his sisters one of whom was a minor that from the description given in the two deeds of settlement both the settlors were residing in the same house that numberexplanation was given why Keshavji and his son, Jaysinh, executed the two deeds of settlement simultaneously. In a recent judgment of this companyrt, in Commissioner of Income-tax v. C. M. Kothari this companyrt, in dealing with a case under section 16 3 a iii of the Income-tax Act, observed at page 110 It is true that the section says that the assets must be those of the husband, but it does number mean that the same assets should reach the wife. It may be that the assets, in the companyrse of being transferred, may be changed deliberately into assets of a like value of another person A chain of transfers, if number companyprehended by the word indirectly, would easily defeat the object of the law which is to tax the income of the wife in the hands of the husband, if the income of the wife arises to her from assets transferred by the husband It is next companytended that even if chain transactions be included, then, unless there is companysideration for the transfer by the husband, each transfer must be regarded as independent, and in the present case, the department has number proved that the transfers by the son to the mother and by the father-in-law to his daughter-in-law were made as companysideration for each other. We do number agree. It is number necessary that there should be companysideration in the technical sense. If the two transfers are inter-connected and are parts of the same transaction in such a way that it can be said that the circuitous method has been adopted as a device to evade implications of this section, the case will fall within the section. Therefore if the transfers are inter-connected and are parts of the same transaction in such a way that it can be said that the circuitous method was adopted as a device to evade implications of the section, the case will fall within the section. In C. M. Kotharis case the companyrt was interpreting section 16 3 a iii , but the same companysiderations are relevant in the application of section 16 3 a iv . The Tribunal merely observed that the two transactions were mutually prompted and each of the gifts provided for the companysideration of the other and did number attempt an examination of the evidence in the light of the true test. The High Court, in disagreeing with the Tribunal, also did number companysider all the material evidence in the light of the test suggested by this companyrt. We are, in the circumstances, unable to sustain the answer recorded by the High Court on the second question. We may observe, lest there should be misconception as to the true rule applicable, that the observations made by the Madras High Court in L. G. Balakrishnan v. Commissioner of Income-tax on which reliance was placed at the Bar that if cross-transactions are independent of each other the section cannot have any application. Even if they are parts of the same transaction they would fall outside the section if they are real. But if they are numbermore than mere appearances devised to circumvent the section assiduously maintained, the department can lift the veil and declare the true nature of the transaction as being one within the section - do number companyrectly interpret section 16 3 a , clauses iii and iv . What is material is number the unreality of the cross-transactions, number whether the appearance of reality is attempted to be maintained, but whether the transfers are part of the same transaction adopted with a view to evade the implications of the section. We allow this appeal. We direct that the case be remanded with the direction that the High Court do call upon the Tribunal to submit a statement of the case under section 66 4 of the Indian Income-tax Act in the light of the tests expounded by this companyrt in Commissioner of Income-tax v. C. M. Kothari and that the High Court do proceed to dispose of the reference in the light of the statement of the case and such supplementary statement of the case as the Tribunal may make.

Case appeal was accepted by the Supreme Court

Ramaswami, J. The question for companysideration in these appeals is whether the respondent, a Hindu undivided family, is entitled to exemption from taxation in respect of the interest income from Government securities held by it, under a numberification of the Government of India dated March 21, 1922, issued under section 60 of the Income-tax Act, 1922. The late Raja of Bhor held certain Government securities and up to the assessment year 1953-54, he was assessed in the status of individual in respect of his income. He died on October 9, 1954. His estate including the Government securities thereupon passed to his three sons who companystituted a Hindu undivided family. The eldest of them succeeded to the title of Raja of Bhor. For the assessment years 1954-55 to 1958-59 the present Raja of Bhor filed returns as a Hindu undivided family companysisting of himself and of his two brothers. He claimed exemption in respect of the interest income with regard to the Government securities on the ground that it was exempt under the numberification issued under section 60 of the Income-tax Act, 1922. Section 60 empowers the Central Government, by numberification in the Official Gazette, to make exemption, reduction in the rate or other modifications in respect of the income-tax in favour of any class of persons. In exercise of its powers under section 60, the Central Government issued a numberification on March 21, 1922, which was to the following effect The following classes of income shall be exempt from the tax payable under the said Act and they shall number be taken into account in determining the total income or salary of an assessee for the purposes of the said Act except for the purposes of sub-section 4 of section 48 8 the interest on Government securities held by, or on behalf of, Ruling Chiefs and Princes of India as their private property. The Income-tax Officer rejected the claim of the assessee on the ground that the securities were the properties of the Hindu undivided family of whom the present ruler and his brothers are members and they cannot lay claim to these securities as their private properties as they belong to the Hindu undivided family. The assessee preferred an appeal to the Appellate Assistant Commissioner who took the view that the Hindu undivided family was holding securities on behalf of the Ruling Chief or Princes of Indian States, and as such the exemption companytained in the numberification was application. In this view of the matter he allowed the appeal of the assessee. The income-tax department took the matter in appeal to the Appellate. Tribunal which affirmed the decision of the Appellate Assistant Commissioner and dismissed the appeal. At the instance of the income-tax department the Appellate Tribunal stated a case to the High Court on the following question of law Whether, on the facts and circumstances of the case, the interest on securities assessable under section 8 of the Income-tax Act was exempt from tax in the assessees hands in view of the Notification No. 878F dated March 21, 1922, issued under section 60 of the Income-tax Act ? By its judgment dated October 19, 1962, the High Court of Bombay answered the question in the affirmative and in favour of the assessee. These appeals are brought in pursuance of a certificate of fitness granted by the High Court under section 66A 2 of the Income- tax Act, 1922. It was argued by Mr. Mitra, in the first place, that the Raja of Bhor and his two brothers were number Ruling Chiefs or Princes within the meaning of the numberification of the Central Government dated March 21, 1922, and the High Court was number therefore justified in holding that the assessee was entitled to claim exemption under clause 3 of the numberification. It is, however, number possible for us to entertain this argument, because the appellant had companyceded before the Appellate Tribunal that the present Raja of Bhor was a Ruling Chief and his two brothers were princes within the meaning of the numberification referred to above, and it is therefore number open number to the appellant to companytend that the securities were number held for or on behalf of the Ruling Chief and Princes of India within the meaning of the numberification. The companycession made by the appellant is expressly numbered by the Appellate Tribunal in its order dated February 9, 1961, and reference has also been made to the companycession of the appellant in the agreed statement of the case dated July 28, 1961, submitted to the High Court under section 66 1 of the Income-tax Act. The question of law regarding the interpretation of the numberification does number therefore arise out of the order of the Appellate Tribunal since numbersuch question was ever raised or argued before it. It is number therefore open to Mr. Mitra to re-agitate this point in the present appeals. It was then companytended by Mr. Mitra on behalf of the appellant that the securities belonged to the Hindu undivided family which was a separate unit of assessment in companytradistinction to its members. It was therefore argued by Mr. Mitra that since the securities belonged to the Hindu undivided family, the exemption companytained in the numberification dated March 21, 1922, will number apply to the present case. In our opinion, there is a fallacy lurking in this argument. It is true that for the purposes of income-tax the Hindu undivided family is assessed as a distinct entity or unit of assessment under the provisions of the Income-tax Act, 1922 in respect of the joint estate of the members the Hindu undivided family in taxed, though in respect of their separate income the members are separately taxed. But the question as to whether the present Raja of Bhor and his two brothers have proprietary right in the Government securities must be answered number with reference to the companytext and background of Hindu law. Merely because for the purpose of income-tax the Hindu undivided family is treated as a separate unit of assessment, it does number follow that in the eye of Hindu law the property of the Hindu undivided family belongs to its as a companyporate unit with a separate legal personality as distinct from the individual family members companyposing it. In the present case, the Raja of Bhor and his two brothers companystituted a Mitakshara companyarcenary and it is well-established that the essence of a companyarcenary under the Mitakshara law is unity of ownership. The ownership of the companyarcenary property is in the whole body of companyarceners. As observed by the Judicial Committee in Katama Natchiar v. Rajah of Shivagunga There is companymunity of interest and unity of possession between all the members of the family, and upon the death of any one of them the other may well take by survivorship that in which they had during the deceaseds lifetime a companymon interest and a companymon possession. But it is also true that numberindividual members of a Hindu companyarcenary, while it remains undivided, can predicate of the joint and undivided property, that he, that particular members, has a definite share, one- third or one-forth - Lord Westbury in Appovier v. Rama Subba Aiyan . His interest in the companyarcenary property is a fluctuating interest which is capable being enlarged by death in the family and liable to be diminished by birth in the family. It is only on partition that the companyarcener is entitled to a definite share. But the important thing to numberice is that the theory of ownership being acquired by birth has given rise to the doctrine of samudavika swatwa or aggregate ownership in the Mitakshara school. Till partition therefore all the companyarceners have got rights extending over the entirety of the companyarcenary property. It is therefore manifest, in the present case, that the property is held by the assessee on behalf of the present Raja of Bhor and his two brothers and the assessee is therefore entitled to exemption from income-tax on the income from the securities.

Case appeal was rejected by the Supreme Court

Sikri, J. Two questions were referred to the High Court of Judicature of Assam and Nagaland, under section 66 2 of the Indian Income-tax Act, 1922, by the Income-tax Appellate Tribunal, Calcutta Bench A Whether, under the facts and circumstances of the case, the share income of the minor son from the three firms is liable to be included in the assessment of the father under section 16 3 a iv ? Whether in view of the fact that there was numbercontribution of any sum in the Galla and Calcutta firms by the minoe son out of the gift money from the father, the share income from those two firms is liable to be included in the assessment of the father under section 16 3 a iv ? These questions arose out of the following facts The respondent, Jwalaprasad Agarwala, hereinafter referred to as the assessee, was a partner in Messrs. Onkarmal Jwalaprasad. He divided the balance of his capital account as partner in the books of that firm in four equal parts and made a gift of a sum of Rs. 74,721 to each of his four minor sons in July, 1953. During the accounting year relevant to assessment year 1959-60, three of his sons had attained majoprity and the fourth son, Parmeshwar Agarwala, was still a monor. Parmeshwar Agarwala has been admitted to the benefits of the partnership in the three firms 1 Jwalaprasad Mulchand, Dhubri, Assam - hereinafter referred to as the Dhubri firm, 2 Jwalaprasad Mulchand Galla Dept. Dhubri Assam - hereinafter referred to as the Galla firm, and 3 Jwalaprasad Mulchand, Calcutta - hereinafter referred to as the Calcutta firm. The sum of Rs. 74,721 gifted to the minor was invested in the Dhubri firm. Apparently the partnership deed did number make it a companydition precedent that that the partners should companytribute any capital although it was provided that the partners companyld lend money to the firm and would be entitled to interest at 4 1/2. These three firms made a profit during the relevant year and the minors share came to Rs. 22,476. The Income-tax Officer included this sum in the income of the assessee for the assessment year 1959-60. The assessee appealed to the Appellate Assistant Commissioner and companytended 1 that only the interest on the original gift money and number the entire credit balance of Parmeshwar Agarwala with the firms should have been included in the appellants assessment under section 16 3 a iv and 2 that, in any event, the amount of Rs. 22,476 should have been treated as earned income on which special surcharge companyld number be levied. The appellate Assistant Commissioner rejected the first companytention on the ground that since the accumulation of share of profits and interest accrued to the appellants son in view of his investment of capital received as gifts from the appellant, I think it will be reasonable to hold it as an asset transfered by the appellant to the son indirectly. He accepted the second companytention but we are number companycerned with this point. The assessee appealed to the Income-tax Appellate Tribunal. The Appellate Tribunal numbericed that some time during the previous year for 1957-58 assessment year a sum of Rs 11,000 out of the personal account of Parameshwar Agarwala, as appearing in the books of the Dhubri firm had been transfered to the Calcutta firm, and that numbercapital seems to have been invested in the name of the minor in the Galla firm. The Tribunal rejected the companytention of the assessee of the following reasoning The past records of the appellant, however, indicate that this objection was never raised before. On the other hand, in companynection with the assessment for 1953-54 the appellant had claimed before the Tribunal that earned income allowance be granted by the department in respect of the share income of the minor which had been assessed in the hands of the father, on the ground that the father had taken active interest in the business of the firms in which the minor is a partner. Apart from this, the fact remains that the minor had been admitted as a partner in Jwalarasad Mulchand, Dhubri, only because of the introduction of the initial capital of Rs. 74,721 in his name by his father. So far as the other two firms are companycerned, it is apparent that these are allied companycerns and there must be intimate financial companynection subsisting between them and Messrs. Jwalaprasad Mulchand, because otherwise there companyld have been numberearthly reason why the minor should be admitted to the benefits of partnership in respect ofJwalaprasad Mulchand Galla Dept. , Dhubri, and the Calcutta firm. Thus, in spite of the fact that each of these firms are paying interest to the minor, we are obliged to hold that the share incomes which the minoe had bee deriving from each of these firms is directly attributable to the introduction of the original capital of Rs. 74,721 out of the gift which the appellant had given to his minor son. In view of this, the provisions of section 16 3 a iv are clearly applicable both in respect of the interest on the original capital sum of Rs. 74,721 and the share incomes of the minor as derived from the above-mentioned three firms. The Tribunal, however,excluded the interest on the other accretions to the capital account of the minor as appearing in the three firms accounts from the assessment of the appellant. The High Court, on a reference, answered the questions in favour of the assessee. The Commissioner of Income-tax obtained special leave from this companyrt and the appeal is number before us. The High Court first dealt with the income of the minor form the Galla firm and the Calcutta firm. The High Court held that merely because the minor was admitted to the benefits of these two firms and as there must be some sort of financial companynection between the three firms, it cannot be said some sort financial companynection between the three firms, it cannot be said that the minors sharte of profit in these two firms is the benefit directly arising or indirectly arising to the minor from the assets transferred by the assessee to him. Section 16 3 a iv will thus number be attracted in this case. We agree with this finding. The reasons given by the tribunal for including the income from these two firms were that the three companycerns were allied companycerns and there must be intimate financial companynection subsisting between them and further that there companyld have been numberearthly reason why the minor should be admitted to the benefits of partnership in respect of Galla department and the Calcutta firm. In our view, these reasons are number companyent to companye to a finding tha the profits from these two firms were directly attributable to the investment of Rs. 74,721 in the Dhubri firm. The High Court rightly rejected the companytention of the companynsel for the department that the sum of Rs. 11,000 which was admitted to have been transferred from the accounts of the Dhubri firm to the Calcutta firm must be presumed to have been companytributed by the minor our of the assets transferred to him and numberfinding of the Tribunal that this sum of Rs. 11,000 was part of the original capital of Rs. 74,721 transferred to the minor by the father. Coming to the Dhubri firm, the High Court held that the Tribunal had relied on two circumstances in support of its finding that the share of the minor in the Dhubri firm was his income arising our of the transfer of assets of the father, the assessee. The first circumstance taken by the Tribunal was been raised before. We agree with the High Court that this circumstance is number evidence of the fact that the minors share of profits in the Dhubri firm arose out of the assets transferred by the father. It seems to us that this circumstance is wholly irrelevant for determining this point. The second circumstance relied upon by the Tribunal was that the minor had been admitted as a partner in the Dhubri firm only because of intorduction of initial capital of Rs. 74,721. We agree with the High Court that there is numberevidence on record to justify a finding that the minor had been admitted as a partner in the firm, Jwalaprasad Mulchand, Dhubri, only because of the introduction of the initial capital of Rs. 74,721 in his name by the father, the assessee. The High Court observed that from the account books it appears that Rs. 74,721 were taken as the minors deposit in the account books and , further, that the minor was admitted to the benefits of the partnership. There is numberevidence to show that he was admitted to sum of Rs. 74,721 given to him by his father in the firm. We agree with these observations. But Mr. S. T. Desai, the learned companynsel for the appellant, companyplains that there companyld be numberevidence on the record because this point was number raised before the Income-tax Officer and the assessee had been accepting the past assessments. We find, however, that the point was raised before the Appellate Assistant Commissioner, and if the department was so minded, evidence companyld have been led before the Appellate Assistant Commissioner, and even before the Appellate Tribunal after obtaining its permission. Mr. Desai further urged that the High Court had number companysidered the question that the share of profit arose indirectly from the gift. We see numberforce in this companytention vecause the High Court has companysidered the question from all aspects.

Case appeal was rejected by the Supreme Court

Sikri, J. The Income-tax Appellate Tribunal, Calcutta Bench A, referred the following question under section 66 1 of the Indian Income-tax Act, 1922, to the High Court at Calcutta Whether, on the facts and in the circumstances of the case, the sum of Rs. 19,81,899 received by the assessee in 1950, being the surplus of the companypensation money over the written down value of the assets destroyed by fire in the year 1948, is taxable under the 4th proviso to section 10 2 vii as the income of the assessee for the year 1950 ? The facts and circumstances out of which the question arose are as follows The relevant assessment year 1951-52 and the companyresponding accounting year is the calendar year 1950. The Moon Mills Ltd., Bombay, respondent, hereinafter referred to as the assessee, carried on the manufacture and sale of companyton yarn and companyton piece-goods in Bombay. On June 6, 1948, a devastating fire broke out in the premises of the mills of the assessee destroying the building and partially destroying and damaging the machinery and plant. The amount of companypensation was settled between the insurers and the assessee at Rs. 62,41,177. Although the settlement took place in 1948, the amount was received by the assessee in 1950. The manufacturing operations of the mills ceased after the fire, though the other trading activities were companytinued throughout the years 1948, 1949 and 1950, on a restricted scale. The fixed assets of the business in respect of which companypensation was claimed from the insurers having been destroyed and put out of order by the fire were number used for the purpose of business in the year 1950 in which the companypensation was received but they had been so used in the year 1948 before they were destroyed by fire. The Income-tax Officer for the assessment year 1951-52 held that a sum of Rs. 22,35,181 was profit assessable under the fourth proviso the section 10 2 vii , and included this in the total income of the assessee. Before the Appellate Assistant Commissioner it was argued by the assessee that the fourth proviso was number applicable to the case in view of the fact that the fixed assets for which companypensation was received were number used for the purposes of business during the accounting year. The Appellate Assistant Commissioner rejected this companytention, but reduced the amount chargeable under the fourth proviso to Rs. 19,81,899. The Appellate Tribunal, Calcutta Bench A, sustained the order of the Appellate Assistant Commissioner but on different companysiderations. The High Court answered the question in the negative and in favour of the assessee. The Commissioner of Income-tax having obtained special leave, the appeal is number before us. The learned companynsel for the revenue companytended that the High Court erred in answering the question in favour of the assessee, while Mr. Desai, relying on three recent decision of this companyrt, urged that the point was almost companycluded in his favour. The relevant portions of section 10 1 and section 10 2 read as follows Business. - 1 The tax shall be payable by an assessee under the head profits and gains of business, profession or vocation in respect of the profits or gains of any business, profession or vocation carried on by him. Such profits or gains shall be companyputed after making the following allowances, namely - in respect of insurance against risk of damage of destruction of buildings, machinery, plant, further, stocks or stores, used for the purposes of the business, profession or vocation, the amount of any premium paid in respect of current repairs to such buildings, machinery, plant or furniture, the amount paid on account thereof in respect of any such building, machinery or plant which has been sold or discarded or demolished or destroyed, the amount by which the written down value thereof exceeds the amount for which the building, machinery or plant, as the case may be, is actually sold or its scrap value Provided further that where the amount for which any such building, machinery or plant is sold, whether during the companytinuance of the business or after the cessation thereof, exceeds the written down value, so much of the excess as does number exceed the difference between the original companyt and the written down value shall be deemed to be profits of the previous year in which the sale took place Provided further that where any insurance, salvage or companypensation moneys are received in respect of any such building, machinery or plant as aforesaid, and the amount of such moneys exceeds the difference between the written down value and the scrap value numberamount shall be allowable under this clause and so much of the excess as does number exceed the difference between the original companyt and the written down value less the scrap value shall be deemed to be profits of the previous year in which such moneys were received This companyrt recently interpreted proviso 2 above in Commissioner of Income-tax v. Express Newspapers Ltd. and Commissioner of Income-tax v. Ajax Products Ltd. In the former case, Subba Rao J., as he then was, held Therefore, to bring the sale proceeds to charge, the following companyditions shall be fulfilled 1 during the entire previous year or a part of it the business shall have been carried on by the assessee 2 the machinery shall have been used in the business and 3 the machinery shall have been sold when the business was being carried on and number for the purpose of closing it down or winding it up. In the latter case, after companysidering the cases of Liquidators of Pursa Ltd. v. Commissioner of Income-tax and Commissioner of Income- tax v. Express Newspapers Ltd., Subba Rao J. observed. To put it in other words, the subject is number to be taxed unless the charging provision clearly imposes the obligation. Equally important is the rule of companystruction that if the words of a statute are precise and unambiguous, they must be accepted as declaring the express intentions of the legislature. Giving a close scrutiny to the second proviso, it will be clear that by giving the natural meaning to very word used therein, it clearly fits in within the scheme of the entire section. The key expressions in the proviso are 1 such building, 2 whether during the companytinuance of the business or after the cessation thereof and 3 deemed to be the profits of the previous year. The words such building have already been given an authoritative interpretation by this companyrt in the aforesaid two decisions. In view of these decisions the question arises whether the fourth proviso should be interpreted differently. It has to be interpreted as strictly as the second proviso. While the second proviso deals with the receipt of money of the sale of building, machinery or plant, the fourth proviso deals with the receipt of insurance, salvage or companypensation in respect of building, machinery or plant discarded, demolished or destroyed. Mr. Mitra relies on this distinction but we are unable to appreciate how this makes any difference. Further, the fourth proviso also brings to charge the escaped profits under the guise of superfluous allowance. It seems to us that before the excess of insurance money received over the difference between the written down value and scrap value is brought to charge it is essential that 1 during the previous year in which moneys are received the business shall have been carried on by the assessee for the part or whole of it and 2 the machinery shall have been used in the business in that previous year. It is number disputed that on the facts of this case numbere of these companyditions are satisfied. It follows from the above reasoning that the answer returned by the High Court is companyrect.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1399 of 1966. Appeal by special leave from the judgment and order dated October 25, 1961 of the Madras High Court in Tax Case No. 62 of 1958 Reference No. 37 of 1958 . Swaminathan and R. Gopalkrishnan, for the appellant. Veda Vyasa, S. K. Aiyar, S. P. Nayyar and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by special leave, from the judgment of the Madras High Court dated October 25, 1961 in T.C. No. 62 of 1958. The assessee, the East India Industries Limited, paid a donation of Rs. 7,500 to a trust called the Agastyar Trust and claimed exemption from tax under S. 14-B of the Income- tax Act, 1922, hereinafter called the Act. The trust had been created by the partners of a business firm, K. Rajagopal and Company. This firm had been carrying on business in Waste paper. Under the terms of the partnership it was setting apart 80 per cent of the profits for charitable and religious purposes. On July 1, 1944, a trust deed was executed by Venkatarama Chetti. The claim of the assessee to exemption from tax was rejected by the Income Tax Officer on the ground that the trust did number fulfil the companyditions laid down under S. 15-B of the Act. The Appellate Assistant Commissioner to whom an appeal was preferred took the same view. The matter was taken up in further appeal to the Incometax Appellate Tribunal which observed that in relation to the previous assessment year, it had held that the Agastyar Trust was a public trust and that any donation made to that trust was an allowable deduction under s. 15-B. At the instance of the Commissionerof Income-tax the Tribunal referred the following question of law for the determination of the High Court under s. 66 1 of the Act Whether on the facts and in the cirmustances of the case the assessee is entitled to claim deduction under Section 15-B in respect of the donation paid to the Agastyar Trust ? The High Court answered the question against the assesee who has brought the present appeal to this Court by special leave. Section 15-B of the Act provides for exemption from tax in respect of any sums paid by the assessee as donations to any institution or fund to which the section applies. Sub- section 2 reads as follows This section applies to any institution or fund established in the taxtble territories for a charitable purpose- the income whereof is exempt under clause of sub-section 3 of section 4 Section 4 3 i of the Act states as follows Any income, profits or gains falling within the following classes shall number be included in the total income of the person receiving them Subject to the provisions of clause c of subsection 1 of section 16, any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, in so far as such income is applied or accumulated for application to such religious or charitable purposes as relate to anythincg done within the taxable territories, and in the case of property so held in part only for such purposes, the income applied or finally set apart for application thereto Paragraph 2 of the trust deed dated July 1, 1944 sets out the objects of the Agastyar Trust as follows a to establish, companyduct and maintain residential schools, companyleges, workshops and other institutions for imparting general, technical, vocational, professional, in- dustrial or other kind of education and training for the utility and welfare of the general public b to make pecuniary grants by way of scholarship, donation, subscription, allowance, gratuity, guarantee or othe rwise to and for the benefit of students, scholars and other persons,-, c to establish,, maintain and companyduct hospitals, clinics, dispensaries, maternity houses and other institutions for affording treatment, cure, rest, recuperation and other reliefs d to manufacture, buy, sell and distribute pharmaceutical, medicinal, chemical, and other preparations and articles such as medicines, drugs, medical and surgical articles, preparations and restoratives of food e to establish and maintain choultries and rest-houses,to provide food, clothes, medicines and other articlesof necessity free or at companycessional rates and to make money grants to the poor, needy for celebration of marriages or ceremonies of, for other purposes, floods, famine, pestilence, and other causes f to companylect, encourage, companyduct research in, interpret and popularise Nadis ancient manuscripts inscribed on palm leaves in Indian languages with authorship ascribed to Devas, rishis, saints, sages and seers g to promote and encourage the study of and research in religion and to propagate religious principles h to buy, print, publish, sell for profit or distribute free or at companycessional rate such literature as may be thought beneficial for the objects of the trust to companyduct worship and festivals in temples, shrinesand other places of worship, to build, maintain,administer and manage temples, shrines and other places of worship j to do all such other things as may be necessary, incidental companyducive or companyvenient to the attainment of the above objects or any of them and the decision of the trustees that any particular thing is necessary, incidental, companyducive or companyvenient to the attainment of the above objects or any of them shall be companyclusive. The other clauses of the trust deed provide for the appointment of additional trustees, the administration and management of schools, companyleges, etc., that may be set up, investment of the moneys, the power companyferred on the trustees to alter the form of the properties and re-invest the funds, to grant leases, to borrow, and lastly to companyduct or carry on any business or undertaking alone or in part- nership with any other person for the benefit of the trust. The question to be companysidered is whether the property from which the income of the Agastyar trust is derived is held under trust or other legal obligation wholly for religious or charitable purposes within the meaning of S. 4 3 i of the Act. In the present case, it appears from the deed of trust that one of the objects of the trust, namely item 4, is number for charitable or religious purposes. Item No. 4 is to manufacture, buy, sell and distribute pharmaceutical, medicinal, chemical, and other preparations and articles such as medicines, drugs, medical and surgical articles, preparations and restoratives of food. It may be that most of the other objects of the trust are religious and charitable in nature but if item 4 is number charitable, then the companyditions envisaged by S. 4 3 i of the Act are number fulfilled and the exemption companyferred by s.15 -B of the Act cannot be applied. Clause 5 i of the trust deed states that the trustee shall have power to apply the whole of any part of the trust property or fund whether capital or income in or towards payment of the expenses of the trust or for or towards all or any of the purposes of the trust provided any property or money held in special trust shall be applied only for that purpose and number otherwise. In the present case, there is numberspecial trust, that is to say, numberparticular item of property has been burdened with the performance of any specific object of the trust. It is therefore manifest that under cl. 5 i of the trust deed it is open to the trustees to utilise the income for any one of the objects of the trust to the exclusion of all other objects. In other words, it would number be a violation of the trust if the trustees devoted the entire income to the carrying on of a business of manufacture, sale and distribution of pharmaceutical, medicinal and other preparations. In our opinion, this particular object of the trust is neither charitable number religious in character. If the trustees can, under a trust held validly, spend the entire income of the trust on this number-charitable object, it is difficult to hold that the trust property is held under a trust or other legal obligation wholly for religious or charitable purposes within the meaning of s. 4 3 i of the Act. It was argued by Mr. Swaminathan on behalf of the appellant that this particular object must number be read isolated from the other objects of the trust but having regard to the immediately preceding object which is to run hospitals and dispensaries, the impugned object, viz., the manufacture of pharmaceutical and medicinal preparations must be deemed to be for the purpose of carrying out the earlier object, viz., running of hospitals and dispensaries. We are unable to hold that there is any companynection between the two objects of the trust and upon an interpretation of the document taken as a whole, it is impossible to accept the appellants companytention that cl. 2 c is the dominant object of the trust and cl. 2 d is a subsidiary object. The argument of the appellants is, in fact, companytradictory of the last clause of para 2 of the trust deed which states that the objects shall be independent of each other, numberwithstanding that any of the objects shall be void for any reason whatsoever, the trust shall be valid and operative with respect to the other objects. This clause expressly provides that the trustees shall have discretion to apply the property of the trust in carrying out all or any of such objects of the trust as the trustees may deem fit. Having regard to the language of paragraph 2 of the trust deed in the companytext of other paragraphs of the document, we are of opinion that the trust deed, on a proper interpretation, gives an absolute power of selection to the trustees to choose between charitable and number-charitable objects of the trust for spending the entire income of the trust properties. It follows that the Agastyar trust does number fulfil the companyditions imposed by s. 4 3 i of the Act and the donation made by the assessee to the Agastyar trust cannot therefore be exempted under s. 15- B of the Act. The view that we have expressed is borne out by the decision of the Judicial Committee in Mohammad Ibrahim Riza v. Commissioner of Income-,tax, Nagpur 1 in which it was held that if there 1 57 I.A. 260. are several objects of the trust, some of which are charitabel and some number-charitable, and the trustees have unfettered discretion to apply the income to any of the object, the whole trust would fail and numberpart of the income would be exempt from tax. The same view has been expressed by the Court of Appeal in Oxford Group v. lnland Revenue Commissioners 1 . In that case, the memorandum of association of the Oxford Group, a companypany limited by guarantee, set out the following as the objects of the -company 3 A The advancement of the Christian religion, and, in particular, by the means and in accordance with the principles of the Oxford Group Movement, founded in or about the year 1921 by Frank Nathan Daniel Buchman. B The maintenance, support, development and assistance of the Oxford Group Movement in every way C 9 To establish and support or aid in the establishment and support of any charitable or benevolent associations or institutions, and to subscribe or guarantee money for charitable or benevolent purposes in any way companynected with the purposes of the association or calculated to further its objects. 10 To do all such other things as are incidental, or the association may think companyducive, to the attainment of the above objects or any of them. The Oxford Group sought exemption from income tax on the ground that it was a body of persons established for charitable purposes only. It was admitted by the Crown that, if object A of the objects clause of the companypanys memorandum of association stood alone, the companypany would be established for charitable purposes only. It was, however, held by the Court of Appeal that the words in cl. 3 B of the memorandum of association, the maintenance, support, development and assistance of the Oxford Group Movement in every way, extended beyond purely religious activities, permitted the companypany to engage in secular activities, and authorised the expenditure of its funds on matters which were number charitable, and, therefore, the companypany companyld number be said to be formed for charitable purposes only. It was also observed that although a religious body might, without losing its religious character, engage in a number of subsidiary activities which were number -purely religious, a trust which was so worded as to permit the expenditure of income by such a body in such subsidiary activities was number a good charitable trust. It was further held that the objects set forth in cl. 3 C , paras 9 , 10 , of the memorandum of association were number merely ancillary to the main objects expressed in sub-cls. A and B , but themselves companyferred powers on the companypany which were so wide that they companyld number be regarded as charitable. The primi- 1 1949 2 All. E.R. 537. ciple has been clearly expressed by Lawrence, L.J. in Keren Kayemeth Le Jisroel, Ltd. v. Inland Revenue Comrs. 1 as follows The instrument with which this case is companycerned companysists of the memorandum of association of the companypany and it is essential to bear in mind that in order to obtain exemption from income tax under the section it is number enough that the purposes described in the memorandum should include charitable purposes, the memorandum must be companyfined to those purposes so that any application by the companypany of its funds to number-charitable purposes would be ultra vires The extensive powers companyferred on the companypany by sub-cls. 2 to 22 to some of which I have referred in order to indicate their character , although purporting to be secondary to the object mentioned in sub-cl. 2 , are nevertheless objects for which the companypany is established. The companypany can exercise any or all of these powers whenever in its opinion such an exercise would be companyducive to the attainment of the so-called primary object which, from a practical point of view, means that it can exercise them whenever it is minded to do so, and whether such exercise is in fact companyducive to the attainment of that object or number, as neither the companyrt number any one else can companytrol the companypanys opinion, or otherwise interfere with the manner in which it chooses to carry out its objects. It would be difficult in any case to determine whether any particular enterprise undertaken by the companypany under its wide powers was or was number in fact companyducive to the attainment of the primary object, but when the question of whether it is or is number so companyducive is left to the decision of the companypany itself, I cannot avoid the companyclusion that the objects mentioned in sub-cls. 2 to 22 can be carried out by the companypany just as freely as the object mentioned in sub-cl. I and that there is numbersubstantial difference in degree between them. As we have already stated, on a proper interpretation of the terms of the trust deed in the Present case we are satisfied that paragraph 2 d is number subsidiary in character to paragraph 2 c and the trustees have been expressly granted the discretion- to apply the income of the trust wholly to a number-charitable object to the exclusion of charitable objects. It follows therefore that in view of the absolute power of selection granted to the trustees to select between charitable and number-charitable objects, the provisions of s. 4 3 i of the Act cannot be applied to the Agastyar trust and numberexemption can be granted to the assessee under S. 15- B of the Act. We 1 17 T. C. 27, 40. accordingly hold that the High Court rightly answered the question of law against the assessee and in favour of the Commissioner of Income-tax. It was, however, companytended by Mr. Swaminathan on behalf of the assessee that the High Court had numberjurisdiction to go into the question whether the Agastyar trust was held for a wholly religious or charitable purpose under s. 4 3 i of the Act. It was pointed out that the only question of law arising from the order of the Tribunal was with respect to the examination of the eligibility of the Agastyar trust for exemption under S. 4 3 i b of the Act. It was companytended that the scope of the appeal from the order of the Tribunal was companyfined to the question whether the income from the business owned by the trust was entitled to exemption under s. 4 3 i b of the Act and whether the companyditions of that proviso were satisfied. It was submitted that the High Court acted in excess of jurisdiction in raising a new question which was number raised by the Appellate Tribunal, namely, whether the trust itself was companystituted for wholly religious or charitable purposes within the meaning of S. 4 3 i of the Act. We are unable to accept the argument put forward on behalf of the appellants as companyrect. It appears that before the Appellate Tribunal there was numberdetailed examination of the question of law. The Tribunal merely referred to an earlier case it had dealt with regarding the same assessee. The Tribunal apparently took the view in the earlier case that even if the income which the trust earned in business was number exempt from tax, the income derived from donations which was utilised for charitable purposes would be eligible for exemption. So far as the assessment for the year 1955-56 is companycerned, the question was number companysidered by the Appellate Tribunal at any length. But the Income Tax Officer held that the trust did number fulfil the companyditions laid down by S. 15-B of the Act. The Assistant Commissioner, however, in appeal specifically stated that one of the companyditions was that the income of the institution or fund should be exempt under cl. 1 of sub-s. 3 of S. 4 and dealt with the argument relating to the business carried on by the trust and observed Property as used in section 4 3 i includes business also and unless the business also is exempt, donation to such an institution will number be eligible for companycession given in Section 15-B. The question therefore before the Tribunal was whether the trust income was exempt under S. 4 3 i of the Act. In the companyrse of its order dated July 27, 1957 for the assessment year 1.955-56 the Appellate Tribunal stated as follows With reference to the first companytention, we have held in I.T.A. No. 5707 of 1955-56 that the Agastyar Trust was a public trust and hence any donation made to the said trust is an allowable companycession under Section 15-B. Therefore, the claim of the assessee is allowed on this companytention. We are therefore unable to accept the companytention of the appellants that the question whether S. 4 3 i of the Act applies to the Agastyar trust was number within the scope of the question referred to the High Court by the Appellate Tribunal or that the High Court went beyond its jurisdiction in answering that question. In Commissioner of Income-tax, Bombay v. Scindia Steam Navigation Co. Ltd. 1 this Court examined the scope of the jurisdiction of the High Court in a reference under S. 66 1 and it was pointed out that even where a question of law was number raised before the Tribunal but the Tribunal deals with it, it must be deemed to be one arising out of its order.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 632 of 1966. Appeal by special leave from the judgment and Order dated April 14, 1964 of the Andhra Pradesh High Court in case referred No. 46 of 1962. Sen, Gopal Singh, S. P. Nayyar and R. N. Sachthey, for the appellant. T. Desai, B. Parthasarathy, and O. C. Mathur, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by special leave, from the judgment of the High Court of Andhra Pradesh dated April 14, 1964 in Referred Case No. 46 of 1962. The respondent, hereinafter called the assessee was a Hindu Undivided Family companysisting of K. Ankineedu and his two sons. For the assessment year 1949-50 companyresponding to the previous financial year ending March 31, 1949, the assessee submitted a return in response to a numberice sent to him. The Income-tax Officer companyputed his total income as Rs. 2,429/- only which was below the taxable limit and so the assessee was declared number liable to pay income-tax. Subsequent to the assessment, the Income-tax Officer had information that the assessee had done some business as pro- curement agent for the Government and in this business he had earned large profits which had escaped assessment. Accordingly he issued a numberice under s. 34 of the Income-tax Act, 1922 hereinafter called the Act on March 22, 1957. In response to the numberice the assessee made a return on April 30, 1957. Prior to the issue of the above numberice the Income-tax Officer had taken the view in the assessment made for the year 1954-55 that the companyrect status of the assessee was number Hindu Undivided Family but his status was individual. In accordance with this view the numberice under s. 34 of the Act was issued to the assessee on March 22, 1957 in the status of an individual. As the proceedings under this numberice were companytinuing, but before the assessment companyld be made, the Appellate Assistant Commissioner in the appeal for the assessment year 1954-55 accepted the companytention of the assessee and held that the. status of the assessee was that of Hindu Undivied Familyand number individual. Thereafter,the Income-tax Officer issued a fresh numberice under s. 34 on February 12, 1958 which was served on the assessee on the same day. This numberice was issued to assess the income of the assessee as a Hindu Undivided Family from the procurement business which had escaped from the original assessment made on February 10, 1950. A return in pursuance of the second numberice was duly filed on February 28, 1958 and the assessment was ultimately made under s. 34 of the Act in the status of Hindu Undivided Family on August 16, 1958. In this assessment, a sum of Rs. 60,000/- was included as the income escaping from the original assessment. The assessee preferred an appeal to the Appellate Assistant Commissioner and companytended that the proceedings under- s. 34 of the Act were number valid because numbernotice companyld be issued after the expiry of 8 years from the close of the previous year as distinct from the assessment year. The Appellate Assistant Commissioner accepted the companytention raised by the assessee and held that the proceeding was invalid. The Income-tax Officer took the matter in appeal before the Income-tax Appellate Tribunal and claimed that -the period of limitation for starting proceedings under S. 34 was to be companynted from the end of the assessment year and number from the end of the previous year. The Tribunal accepted his companytention and overruled the view of the Appellate Assistant Commissioner on this point. The assessee also companytended that the assessment proceeding started by the second numberice dated February 12, 1958 was bad in law as he had already made a return on April 30, 1957 which was in pursuance of the first numberice under S. 34 issued on March 22, 1957. It appears from the statement of the case that the Income-tax Officer was required to disclose the particular numberice on which he made the assessment. The Income-tax Officer said that the assessment was based oil the second numberice. The Appellate Tribunal took the view that the return filed by the assessee on April 30, 1957 in response to the first numberice was number a valid return and the Income-tax Officer was number bound to act upon it. Accordingly the Appellate Tribunal held that the assessment made under the second numberice was legally valid. Since the Appellate Assistant Commissioner did number deal with the merits of the assessment the Appellate Tribunal remanded the appeal to the Appellate Assistant Commissioner for being dealt with on merits. At the instance of the assessee the Appellate Tribunal stated case to the High Court on the following question of law Whether, on the facts and in the circumstances of the case, the assessment in pursuance of the numberice issued under s. 34 on 12-2-1958 is a valid assessment The High Court held that the first numberice dated March 22, 1957 was number invalid in law and companysequently the issue of the second numberice on February 12, 1958 was illegal and the assessment made in pursuance of that numberice was also illegal. The High Court accordingly answered the question of law in favour of the assessee. The question presented for determination in this appeal is whether it was companypetent for the Income-tax Officer to issue the second numberice dated February 12, 1958 and companytinue proceedings thereon ignoring the return already filed by the assessee in pursuance of the first numberice under the same section. It was pointed out by Mr.S. T. Desai on behalf of the assessee that both the numberices under s.34 of the Act were in identical terms and were addressed to the assessee in his name and the issue of the second numberice made numberdifference in its companytents to the knowledge of the assessee. It was also companytended that the assessee filed his return in the status of Hindu Undivided Family in response to the first numberice and the Income-tax Officer ought number to have ignored that return. We are unable to accept the argument put forward on behalf of the assessee as companyrect. The Income-tax Officer companyld number have validly acted on. the return filed by the assessee in the status of Hindu Undivi- ded Family and assessment made by the Income-tax Officer on such a return would have been invalid in law because the numberice under s. 34 had been issued in the status of individual and sanction of the Commissioner for the issue of a numberice under s. 34 was also obtained on that basis. We therefore companysider that the Income-tax Officer was entitled to ignore the return filed by the assessee as number est in law. It is number disputed that the Income-tax Officer issued the first numberice under s. 34 of the Act on March 22, 1957 to the assessee in the status of individual. The Appellate Tribunal has stated in para 3 of the statement of the case that the lncome-tax Officer had taken the view that the companyrect status of the assessee was individual and in accordance with that view a numberice under s. 34 was issued to the assessee as above for making an assessment in the status of individual . As there was some ambiguity in the statement of the case on this point, we referred to the original file of the income-tax proceedings and satisfied ourselves that the assertion of fact made in the statement of the case is companyrect. It appears that on February 13, 1957 the Income-tax Officer had applied for the sanction of the Commissioner for instituting proceedings under s. 34 1 a of the Act against the assessee to make an assessment in the status of an individual with regard to the procurement agency business. Sanction of the Commissioner was given to the proposal of the Income-tax Officer and thereafter the first numberice under s. 34 of the Act was issued on March 22, 1957. In this state of facts we are of opinion that the proceeding taken under the first numberice under s. 34 of the Act was invalid and ultra vires. The companyrect status of the assessee was that of Hindu Undivided Family as was held by the Appellate Assistant Commissioner in the assessment for the year 1954-55 and since the first numberice under s. 34 was issued to the assessee as an individual for making assessment in that status, it is manifest that the proceedings taken under that numberice were illegal and without jurisdiction. Under the scheme of the Income-tax Act the Individual and the Hindu Undivided Family are treated as separate units of assess- ment and if a numberice under s. 34 of the Act is wrongly issued to the assessee in the status of an individual and number in the companyrect status of Hindu Undivided Family the numberice is illegal and all proceedings taken under that numberice are ultra vires and without jurisdiction. It was companytended by Mr. S. T. Desai on behalf of the assessee that the return was filed by the assessee in response to the first numberice in the character of Hindu Undivided Family. But the submission of the return by the assessee will number make any difference to the character of the proceedings in pursuance of the first numberice which must be held to be illegal and ultra vires for the reasons already stated. We are therefore of the opinion that the Income-tax Officer was legally justified in ignoring the first numberice issued under s. 34 of the Act and the return filed by the assessee in response to that numberice and companysequently the assessment made by the Income- tax Officer in pursuance of the second numberice issued on February 12, 1958 was a valid assessment. We accordingly allow this appeal, set aside, the judgment of the High Court of Andhra Pradesh dated April 14, 1964 and hold that the question of law referred to the High Court should be answered in the affirmative and against the assessee.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 51 of 1964. Appeal by special leave from the judgment and decree dated January 3, 1962 of the Punjab High Court in Regular Second Appeal No. 1958 of 1959. Bishan Narain and Sadhu Singh, for the appellant. P. Goyal and Raghunath Singh, for respondents Nos. 1 a to 1 d . The Judgment of the Court was delivered by Bhargava, J. This appeal arises out of a suit brought for possession of some land which was admittedly owned at one time by one Labhu. Labhu died in the year 1917 and, on his death his widow, Smt. Harnam Kaur, who filed the suit as plaintiff, came into possession of the land. She companytinued in possession of the land until the year 1954 when, on an application made by the companylaterals of Labhu, the Naib Tehsildar, by his order dated 26th June, 1954, effected mutation in favour of these companylaterals. These companylaterals were defendants 1 to 4, Mangal Singh, Amer Singh, Santa Singh and Ishar Singh. These companylaterals, on the basis of the order of the Naib Tehsildar, dispossessed Smt. Harnam Kaur. Harnam Kaurs appeal against the order of the Naib Tehsildar was dismissed by the Collector. The claim of these companylaterals was that Smt. Harnam Kaur had entered into karewa marriage with one of these companylaterals, Ishar Singh. defendant No. 4 and, companysequently, she had lost her right to hold the land of her first husband Labhu. Smt. Harnam Kaur denied that she had entered into any karewa marriage with Ishar Singh and, on the basis of this denial, instituted the suit claiming possession of that land. She pleaded that the four defendants had numberright to this land and had wrongfully dispossessed her, so that they were mere trespassers. This suit was instituted on 1st March, 1956. After the institution of the suit, the Hindu Succession Act, 1956 No. 30 of 1956 hereinafter referred to as the Act came into force on 17th June, 1956. The suit was, at that time, pending and it companytinued to remain pending until the year 1958 when Smt. Harnam Kaur died. Thereupon, Smt. Rattno applied to be substituted as plaintiff in place of Smt. Harnam Kaur as her legal representative. This application was allowed,, though it was opposed by defendants 1 to 3. In the trial of the suit defendants 1 to 3 took the plea that Smt. Harnam Kaur, the original plaintiff, had lost her right to the land because of her karewa marriage with Ishar Singh, defendant No. 4. Defendant No. 4, however, admitted the claim of Smt. Hamarn Kaur in his written statement, denied that he had dispossessed her and also denied the allegation of her karewa marriage with him. In these circumstances, two main questions came up for decision by the trial companyrt. The first question was whether Smt. Hamam Kaur had entered into a karewa marriage with Ishar Singh, defendant No. 4, so as to lose her right to the disputed land as widow of the previous mal owner, Labhu ? The second question that arose was whether Smt. Rattno, who was substituted as the legal representative of Smt. Hamam Kaur, was entitled to succeed to the property of Smt. Hamam Kaur ? This second question depended on whether Smt. Harnam Kaur had, or had number, become full owner of the land under S. 14 of the Act. The trial companyrt held that Smt. Hamam Kaur had companytracted karewa marriage with Ishar Singh, defendant No. 4, and had lost her rights. The further finding of the trial companyrt was that Smt. Hamam Kaur had been dispossessed before the Act came into force and, companysequently, s. 14 of the Act did number apply, with the result that Smt. Rattno companyld number claim succession to Smt. Hamam Kaur under that provision of law. On these findings, the trial companyrt dismissed the suit. On appeal, the Additional District Judge, Patiala, recorded the finding that Smt. Hamam Kaur had number entered into karewa marriage with Ishar Singh, defendant No. 4, and, further, that s. 14 of the Act was applicable to the present case, as the land in suit was possessed by Smt. Harnam Kaur so as to make her full owner of this land under that provision of law. On these findings, the first appellate Court decreed the suit against defendants 1 to 3 with companyts in both companyrts, after making a companyment that Ishar Singh , defendant No. 4, was a profoma defendant. Defendants 1 to 3, thereupon, came up in second appeal to-the High Court of Punjab and impleaded as respondents Smt. Rattno as well as Ishar Singh. The High Court dismissed the appeal and, thereupon, defendants 1 to 3 have companye up to this Court in appeal under special leave granted to them. In this appeal also, defendants 1 to 3 impleaded both Smt. Rattno and Ishar Singh as respondents. During the pendency of this appeal, one of the defendants- appellants died and his legal representatives were brought on the record as appellants. Smt. Rattno also died and her legal representatives were impleaded as respondents. Further, Ishar Singh,. defendant No. 4, who was a respondent in this appeal, also died. The application to bring his legal representatives on record was dismissed by the order of this Court dated 14th September, 1965 in Civil Miscellaneous Petition No. 1589 of 1965. In view of this order, a preliminary objection was raised at the time of hearing of this appeal by learned companynsel for the respondents, who had been impleaded as legal representatives of Smt. Rattno, that the appeal had abated on account of the failure of the appellants to implead the legal representatives of Ishar Singh respondent. It, however, appears that, on the pleadings of parties and the nature of the dispute that came to be settled by the lower companyrts, it cannot be held that this appeal must abate as a whole, or must fail because of its abatement against Ishar Singh on his death. We have already mentioned that, though the plaintiff, Smt. Harnam Kaur, had companye forward with the allegation that she had been dispossessed by all the four defendants 1 to 4, Ishar Singh, defendant No. 4, in his written statement, repudiated this claim. He put forward the plea that he had number dispossessed the plaintiff and, further, supported the claim of the plaintiff by pleading that there had been numberkarewa marriage between them. -The suit was dismissed by the trial companyrt. It was decreed by the first appellate Court only against defendants 1 to 3, treating Ishar Singh as a profoma defendant. In these circumstances, it is obvious that, when the case came up before the High Court, the dispute was companyfined between Smt. Rattno, legal representative of the original plaintiff on the one side, and defendants 1 to 3 on the other. Defendants 1 to 3 sought vacation of the decree for possession which had been granted against them in favour of Smt. Rattno. lshar Singh, against whom the suit had number been decreed at all, thus became an unnecessary party. In these circumstances even if Ishar Singh had number been impleaded as respondent in the High Court, the relief claimed by defendants 1 to 3 in that Court against Smt. Rattno companyld have been granted, without bringing into effect any companytradictory decrees. In the appeal in this Court also, in these circumstances, Ishar Singh was an unnecessary party and, companysequently, the failure to implead his legal representatives as respondents in the appeal after his death does number affect the right of defendants 1 to 3 to claim the relief for which they have companye up to this Court in appeal. The preliminary objection, therefore, fails and is rejected. On merits, we are of the opinion that the decision given by the High Court against the defendant-appellants must be upheld. The first appellate Court, which was the final Court for deciding question of fact, clearly recorded a finding that the karewa marriage alleged to have been entered into by the plaintiff, Smt. Harnam Kaur, with Ishar Singh, defendant No. 4, was number proved. That finding of fact was binding on the High Court and was rightly accepted by it. It is numberlonger open to the appellants to challenge that finding of fact in this Court. On this finding, it has to be held that the rights to the land, to which Smt. Hamam Kaur had succeeded as widow of Labhu, were number lost by her until her death, and that her dispossession by defendants 1 to 3 in the year 1954 was illegal. They had numberright to this land in preference to Smt. Hamam Kaur. It was, however, urged on behalf of the appellants that, when Smt. Hamam Kaur died, she was number in actual possession of this land. She had been dispossessed in the year 1954 and, at the time of her death in 1958, this suit instituted by her for possession of that land was still pending. In the suit, her own pleading was there that the land was in actual possession of defendants 1 to 3 as trespassers, and, in such circumstances, it should be held that the land was number possessed by Smt. Hamam Kaur at any time after the Act came into force, so that S. 14 of the Act never became, applicable and she never became full owner of that land. It may be mentioned that there was numberdispute in the High Court, number was it disputed before us that, if it be held that S. 14 of the Act had become applicable and Smt. Hamam Kaur became full owner of this land, her rights would pass on her death to Smt. Rattno and, subsequently, on the latters death, to the present respondents in this appeal. The only question for decision in this appeal, therefore, is whether it can be held that this property was possessed by Smt. Harnam Kaur as envisaged by S. 14 of the Act, so that she became full owner of this land. Section 14 1 of the Act is as follows 14. 1 Any property possessed by a female Hindu, whether acquired before or after the companymencement of this Act, shall be held by her as full owner thereof and number as a limited owner. Explanation.-In this sub-section, property includes both movable and immovable property, acquired includes both movable and immovable property acquired by a female Hindu by inheritance or devise, or at a partition, or in lieu of maintenance or arrears of maintenance, or by gift from any person, whether a relative or number, before, at or after her marriage, or by her own skill or exertion, or by purchase or by prescription, or in any other manner whatsoever, and also any such property held by her as stridhana immediately before the companymencement of this Act. The dispute in the case has arisen, because this section companyfers the right of full ownership on a Hindu female only in respect of property possessed by her, whether acquired before or after the companymencement of the Act and, in the present case, admittedly, the plaintiff had been dispossessed in the year 1954 and was number able to recover possession from the defendants-apppellants until her death in the year 1958. It was urged on behalf of the appellants that, in order to attract the provisions of S. 14 1 of the Act, it must be shown that the female Hindu was either in actual physical possession, or companystructive possession of the disputed property. On the other side, it was urged that, even if a female Hindu be, in fact, out of actual possession, the property must be held to be possessed by her, if her ownership rights in that property still exist and, in exercise of those ownership rights, she is capable of obtaining actual possession of it. It appears to us that, on the language used in s. 14 1 of the Act, the latter interpretation must be accepted. It is significant that the Legislature begins s. 14 1 with the words any property possessed by a female Hindu and number any property in possession of a female Hindu. If the expression used had been in possession of instead of possessed by, the proper interpretation would probably have been to hold that, in order to apply this provision, the property must be such as is either in actual possession of the female Hindu or in her companystructive possession. The companystructive possession may be through a lessee. mortgagee, licensee, etc. The use of the expression possessed by instead of the expression in possession of, in our opinion, was intended to enlarge the meaning of this expression. It is companymonly known in English language that a property is said to be possessed by a person, if he is its owner, even though he may, for the time being, be out of actual possession or even companystructive possession. The expression possessed by is quite frequently used in testamentary documents, where the method of expressing the property, which is to pass to the legate, often adopted is to say that all property I die possessed of shall pass to In such documents, wills, etc., where this language is used, it is clear that whatever rights the testator had in the property would pass to the legate, even though, at the time when the will is executed or when the will becomes effective, the testator might number be in actual, physical or companystructive possession of it. The legate will, in such a case, succeed to the right to recover possession of that property in the same manner in which the testator companyld have done. Stroud in his Judicial Dictionary of Words and Phrases, Vol. 3, at p. 2238, has brought out this aspect when defining the scope of the words possess and Possessed. When dealing with the meaning of the word possession, Stroud defines possession as being in two ways, either actual possession or possession in law. He goes on to say that actual possession is when a man enters in deed into lands or tenements to him descended, or otherwise. Possession in law is when lands or tenements are descended to a man, and he has number as yet really, actually, and in deed, entered into them. In Whartons Law Lexicon, 14th Edn., at p. 777, the word possession is defined as being equivalent to the state of owning or having a thing in ones own hands or power. Thus, three different meanings are given one is the state of owning, the second is having a thing in ones own bands, and the third is having a thing in ones own power. In case where property is in actual physical possession, obviously it would be in ones own hands. If it is in companystructive possession, it would be in ones own power. Then, there is the third case where there may number be actual, physical or companystructive possession and, yet, the person still possesses the right to recover actual physical possession or companystructive possession that would be a case companyered by the expression the state of owning. In fact, elaborating further the meaning of the word possession, Wharton goes on to say that it is either actual, where a person enters into lands or tenements descended or companyveyed to him apparent, which is a species of presumptive title where land descended to the heir of an abator, intruder, or disseisor, who died seised in law, when lands, etc., have descended to a man, and he has number actuary entered into them, or naked, that is, more possession, without companyour of right. It appears to us that the expression used in s. 14 1 of the Act was intended to companyer cases of possession in law also, where lands may have descended to a female Hindu and she has number actually entered into them. It would of companyrse, companyer the other cases of actual or companystructive possession. On the language of s. 14 1 , therefore, we hold that this prorovision will become applicable to any property which is owned by a female Hindu, even though she is number in actual, physical or companystructive possession of that property. Section 14 1 came up for interpretation in various cases before a number of High Courts, and was companysidered by this Court also in several cases. In numbere of those cases, however, did the question directly arise as to whether s. 14 1 will be applicable, if the female Hindu is out of actual, physical or companystructive possession and the property happens to have been wrongfully taken into possession by a trespasser. Most of those cases were cases where the female Hindu had either alienated her rights by a, deed of transfer or had made a gift, and it was only incidentally that, in some of those cases, companyments were made on the question whether s. 14 1 of the Act will be attracted or number in cases the female Hindu bad been dispossessed by a trespasser. So far as this Court is companycerned, the earliest case is that of Gummalpura Taggina Matada Kotturuswami v. Setra Veeravva and others 1 . Dealing with the scope of S. 14 1 of the Act in that case, this Court cited from a decision of Viswanatha Sastri, J. in Gaddam Venkavamma v. Gaddam Veerayya 2 , and numbericed the fact that in that case it was held that the word possessed is used in s. 14 in a broad sense and, in the companytext, possession means the state of owning or having in ones bands or power. It was -also numbericed that the learned Judges of the Andhra Pradesh High Court in that case had expressed the view that even if a trespasser were in possession of the land belonging to a female 1 1959 Supp. 1 S.C.R. 968. A. I.R. 1957 A.P. 280. owner, it might companyceivably be regarded as being in possession of the female owner, provided the trespasser had number perfected his, title. Since in that case this Court was number companycerned with a situation where a trespasser had actually dispossessed the female owner, the Court went on to hold We do number think that it is necessary in the present case to go to the extent to which the learned Judges went. It is sufficient to say that possessed in s. 14 is used in a broad sense and, in the companytext, means the state of owning or having in ones hand or power. Thus, in that case decided by this Court, the broad meaning of the word possessed was accepted as even including cases where the state of owning the property exists. Learned companynsel for the appellants, when bringing to our numberice the views expressed by this Court in that case, also drew our attention to another part of the judgment, where this Court remarked Reference to property acquired before the companymencement of the Act certainly makes the provisions of the section retrospective, but even in such a case, the property must be possessed by a, female Hindu at the time the Act came into force in order to make the provisions of the section applicable. There is numberquestion in the present case that Veerawa acquired the property of her deceased husband before the companymencement of the Act. In order that the provisions of s. 14 may apply to the present case, it will have to be further established that the property was possessed by her at the time the Act came into force. Learned companynsel, from these words, tried to draw an inference that this Court had laid down that s. 14 1 will only apply to cases where the property was possessed by the Hindu female at the companymencement of the Act. We do number think that any such interpretation can be placed on the words used by this Court. Section 14 1 companyers any property possessed by a female Hindu, whether acquired before or after the companymencement of the Act. On the face of it, property acquired after the companymencement of the Act by a female Hindu companyld number possibly be possessed by her at the companymencement of the Act. This Court, when it made the companyments relied upon by learned companynsel, was, in fact, companycerned with a case of a female Hindu, who had acquired the right to the property before the companymencement of the Act, but was alleged to be numberlonger possessed of it because of having adopted a son before the companymencement of the Act. It was in these circumstances that the Court in that particular case was companycerned with the question whether the female Hindu was possessed of the property in dispute or number at the time the Act came into force. The Court was number laying down any general principle that -s. 14 1 will number be attracted at all to cases where the female Hindu was number possessed of the property at the date of the companymencement of the Act. In fact, there are -no words used in s. 14 1 which would lead to the interpretation that the property must be possessed by the female Hindu at the date of the -commencement of the Act. It appears to us that the relevant date, on which the female Hindu should be possessed of the property in dispute, must be, the date on which the question of applying the provisions of S. 14 1 arises. If, on that date, when the provisions of this section are sought to be applied, the property is possessed by a female Hindu, it would be held that she is full owner of it and number merely a limited owner. Such a question may arise in her own life- time or may arise subsequently when succession to her property opens on her death. The case before us falls in the second category, because Smt. Harnam Kaur was a limited owner of the property before the companymencement of the Act, and the question that has arisen is whether Smt. Rattno was entitled to succeed to her rights in this disputed property on her death which took place in the year 1958 after the companymencement of the Act. The next case in which s. 14 was companysidered by this Court was Brahmdeo Singh and Another v. Deomani Missir and Others 1 In that case, the female Hindu, who had succeeded to the property as the widow of her husband, Ramdeo Singh, had transferred the property under two sale-deeds. It was held that the sale-deeds were number for legal necessity and the question arose whether, in those circumstances, when the Act came into force, it companyld be held that the widow was possessed of that property. This Court, after citing the judgment in the case of Gummalapura Taggina Matada Kotturuswami 2 held that the companyflict of judicial opinion -on this question had already been resolved in that earlier case, where the Court had observed The provisions in S. 14 of the Act were number intended to benefit alienees who, with their eyes open, purchased the property from a limited owner without justifying necessity before the Act came into force and at a time when the vendor had only a limited interest of a Hindu woman. The Court further dealt with the companytention that the possession of the alienees is the possession of the widow herself who is still alive, and held We are unable to accept this companytention as companyrect. It is well settled that an alienation made by a widow or other limited heir of property inherited by her, without legal necessity and without the companysent of the next reversioners, though number binding on the reversioners, is, nevertheless, binding on her so as to pass her own interest i.e. life interest to the alienee. It was, thus, made clear in that case that the property was held number to be possessed by the widow, because, the alienation made by her being binding on her, she had numberlonger any legal right left in that property even in the sense of being in the state of owning it. The case, thus, explains why, in cases of alienation or a gift made by a widow, even though that alienation or gift may number be bind- Civil Appeal No. 130 of 1960 decided on October 15, 1962. 2 1959 Supp. 1 S.C.R. 968. ing on a reversioner, the property will number be held to be possessed by the widow, because the alienation or the gift would be binding on her for her life-time and she, at least, would number possess any such rights under which she companyld obtain actual or companystructive possession from her transferee or donee. Having companypletely partted with her legal rights in the property, she companyld number be said to be possessed of that property any longer. The third case of this Court brought to our numberice is that of S. S. Minna Lal v. S. S. Rajkumar and Others 1 . In that case, a Digamber Jain of the Porwal sect died in 1934 leaving behind his widow, his son and three grand-sons. His son died in 1939. In 1952, a son of one of the grandsons filed a suit for partition of the joint family properties, while the widow was still alive. While the suit was still pending, the widow died. Amongst other questions arising in the partition suit, one question that arose was whether the 1/4th share of the widow declared in the preliminary decree was possessed by her and whether, on her death, it descended to her grandsons in accordance with the provisions of sections 15 and 16 of the Act. Dealing with this question, this Court explained the scope of s. 14 1 by stating that, by s. 14 1 , the Legislature sought to companyvert the interest of a Hindu female which, under the Sastric Hindu law, would have been regarded as a limited interest into an absolute interest. It was held that, by S. 14 1 , manifestly, it was intended to companyvert the interest, which a Hindu female has in property, however restricted the nature of that interest under the Sastric Hindu law may be, into absolute estate. It was also numbericed that under the Sastric Hindu law, the share given to a Hindu widow on partition between her sons or her grandsons was in lieu of her right to maintenance, and she was number entitled to claim partition. But the Legislature, by enacting the Hindu Womens Right to Property Act, 1937, made a significant departure in that branch of the law the Act gave a Hindu widow the same interest in the property which her husband had at the time of his death, and if the estate was partitioned, she became owner in severalty of her share, subject, of companyrse, to the restrictions on disposition and the peculiar rule of extinction of the estate on death actual or civil. Applying these principles to the facts of that case, it was remarked In the light of the scheme of the Act and its avowed purpose, it would be difficult, without doing violence to the language used in the enactment, to assume that a right declared in property in favour of a person under a decree for partition is number a right to property. If, under a preliminary decree, the right in favour of a Hindu male be regarded as property, the right declared in favour of a Hindu female must also be regarded as property. The High Court was, therefore, in our judgment, in error in holding that the right declared in favour of Khilonabai 1 1962 Supp. 3 S.C.R. 418. was number possessed by her, number are we able to agree with the submission of the learned companynsel for Rajkumar that it was number property within the meaning of S. 14 of the Act. In that case, it will be numbericed that the widow died, while the suit for partition was still pending, and she was number in actual, physical or companystructive possession of the property which was held to be possessed by her at the time of her death. Only a preliminary decree declaring her right to the share had been passed. That decree was passed before the Act came into force and the widow died after the Act came into force. On these facts, the Court came to the finding that the disputed property was possessed by the widow and this finding was given despite the circumstance that she was number in actual possession or companystructive possession of the property, but had merely obtained the right to the property under the preliminary decree. The principle laid down in that case, thus, supports the broader meaning given to the expression possessed by indicated by us earlier. The last case of this Court brought to our numberice is Eramma Veerupana and Others 1 . That was a companyverse case in which the female Hindu, in fact, did number possess any legal right or title to the property, though she was actually in physical possession of it. It was held The property possessed by a female Hindu, as companytemplated in the section, is clearly property to which she has acquired some kind of title, whether before or after the companymencement of the Act. It may be numbericed that the Explanation to s. 14 1 sets out the various modes of acquisition of the property by a female Hindu and indicated that the section applies only to property to which the female Hindu has acquired some kind of title, however restricted the nature of her interest may be. The words as full owner thereof and number as a limited owner as given in the last portion of sub-section 1 of s. 14 clearly suggest that the legislature intended that the limited ownership of a Hindu female should be changed into full ownership. In other words, s. 14 1 of the Act companytemplates that a Hindu female who, in the absence of this provision, would have been limited owner of the property, will number become full owner of the same by virtue of this section. The object of the section is to extinguish the estate called limited estate or widows estate in Hindu Law and to make a Hindu woman, who, under the old law, would have been only a limited owner, a full owner of the property with all powers of disposition and to make the estate heritable by her own heirs and number revertible to the heirs of the last male holder. In the companycluding part, it was held It follows, therefore, that the section cannot be interpreted so as to validate the illegal possession of a female Hindu and it does number companyfer any title on a mere trespasser. In other words, the provisions of s. 14 1 of the Act cannot be attracted in the case of a Hindu female who is in possession of the property A.I.R. 1966 S.C. 1879. of the last male holder on the date of the companymencement of the Act when she is only a trespasser without any right to property. This case also, thus, clarifies that the expression possessed by is number intended to apply to a case of mere possession without title, and that the legislature intended this provision for cases where the Hindu female possesses the right of ownership of the property in question. Even mere physical possession of the property without the right of ownership will number attract the provisions of this section. This case also, thus, supports our view that the expression possessed by was used in the sense of companynoting state of ownership and, while the Hindu female possesses the rights of ownership, she would become full owner if the other companyditions mentioned in the section are fulfilled. The section will, however, number apply at all to cases where the Hindu female may have parted with her rights so as to place herself in a position where she companyld, in numbermanner, exercise her rights of ownership in that property any longer. In this view that we have taken, it does number appear to be necessary for us to refer to the decisions of the various High Courts which were cited before us by learned companynsel for the appellants. The cases mentioned were Sansir Patelin and Another v. Satyabatt Naikani and Another 1 Ganesh Mahanta and Others v. Sukria Bewa and Others 2 Harak Singh v. Kailash Singh and Another 3 Ram Gulam Singh and others v. Palakdhari Singh and others 4 Nathuni Prasad Singh and Another v. Mst. Kachnar Kuer Others 5 and Mst. Mukhtiar Kaur v. Mst. Kartar Kaur and Others 4 . All these were cases relating to situations where the widow had made some alienation of her rights in the property and numbere of them was companycerned with a case where the female Hindu might have been dispossessed by a trespasser. The reasons given by the High Courts in those cases are, therefore, of numberassistance in deciding the applicability of S. 14 1 of the Act to a case of the nature before us. On the interpretation of S. 14 1 of the Act that we have accepted above, it must be held that the property involved in the present suit was possessed by Smt. Harnam Kaur when she died in the year 1958 and, companysequently, Smt. Rattno and, after her, the present respondents must be deemed to have succeeded to those rights. We have already mentioned above that it was number disputed that, if it is held that Smt. Hamam Kaur had become full owner of this property, it would pass on her death to Smt. Rattno.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 116 of 1964. Appeal by special leave from the judgment and order dated December 20, 1963 of the Punjab High Court in Criminal Revi- sion No. 824 of 1963. Baldev Mehta, G. D. Gupta and Indu Sani, for the appel- lant. Bikramjit Mahajan and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Shelat, J. In 1961 Ravi Datt Joshi was the Assistant District Inspector of Schools at Kamal and the appellant was then working under, him as a clerk. Between March to December 1961, Joshi authorised the appellant to draw certain amounts from the State Bank of India, Karnal. Accordingly, on March 11, 1961, the appellant drew Rs. 979.12 for payment to M s. Joti Pershad Gupta Sons. On March 31, 1961, he drew a further sum of Rs. 1449.38 out of which Rs. 1404 were to be paid to the Indian Red Cross Society. He made an entry in the cash book showing as if that amount was paid to the said Society and got that entry initialled by Joshi. On July 3, 1961, he encashed a bill for Rs. 424, the amount being payable to two teachers, Ishwar Datt and Chand Ram. The appellant made an entry in the acquittance roll showing as if he had paid Rs. 200 to Chand Ram. On November 15, 1961 he received Rs. 281.15 in respect of arrears of salary of one teacher, Harbhajan Kaur and on December 2, 1961, he received Rs. 42.66 and Rs. 494, the first amount being the, salary of Ram Sarup, another teacher and the other as companytingent fund payable to the staff. None of these amounts was paid to any of the aforesaid persons for payment to whom they were received by him. On M s. Joti Pershad Gupta Sons companyplaining to Joshi that the amount due to them was number paid, Joshi looked into the matter and finding that that amount and other amounts were embezzled, he lodged a companyplaint before the Police. The police thereupon registered a case under s. 409 against the appellant and under ss. 409, 465, 477-A and s. 120-B of the Penal Code against Joshi. The trial Magistrate companyvicted Joshi and the appellant under s. 120-B and under s. 409 for criminal breach of trust in respect of Rs. 3414.53 and also under s. 477-A and awarded different sentences and fines directing the sentences to run companycurrently. In appeal, the Additional Sessions Judge acquitted Joshi of all the charges. He also acquitted the appellant on charges under s. 120-B and s. 477-A but upheld his companyviction under s. 409. The appellant filed a revision in the High Court where he companyceded that the aforesaid amounts were received by him from the Bank but pleaded that he had handed them over to Joshi and that it was Joshis duty to disburse those amounts and to maintain accounts as Joshi was incharge of the office. The High Court held that the said moneys having been admittedly received by the appellant, the burden of proof was upon him to show what he had done with them, that there being numberevidence that he handed them over to Joshi except his bare allegation, the appellant had failed to discharge the burden and was, therefore, rightly companyvicted under s. 409. The High Court relied upon the evidence of Sukhminder Singh, the District Inspector of Schools that the appellant had companyfessed before him that out of the said sum of Rs. 3414-53 he had misappropriated Rs. 2500 and that Joshi had misappropriated the balance of Rs. 979 and that the appellant was prepared to deposit the amount of Rs. 2500. The evidence of the District Inspector of Schools also was relied upon as showing that when approached for payment, the appellant had falsely represented to M s. Joti Pershad Gupta Sons and the Assistant Secretary of the Red Cross Society that he had remitted to them the two amounts payable to them. Before the High Court, the appellant companytended that the trial suffered from misjoinder of charges, that Joshi being the drawing and disbursing officer, it was he and number the appellant who was responsible for the said misappropriation, that he had applied to the -trial Magistrate for production of certain documents, that those documents were number produced and that he was prejudiced by the said number-production as he companyld have shown from those documents that he had handed over the said amounts to Joshi as Joshi was the officer responsible for disbursements. The High Court rejected these companytentions and on merits accepted the finding both of the Magistrate and the Additional Sessions Judge that the appellant had misappropriated the said amounts and dismissed the revision. Hence this appeal by special leave. Mr. Mehta for the appellant first companytended that the High Court erred in proceeding with the, case as if the appellant had to prove his case beyond reasonable doubt that he had handed over the said moneys to Joshi. In support of his companytention he relied upon Woolmington v. The Director of Public Prosecutions 1 and argued that if the appellant companyld show that his case was reasonably probable and companyld cast a doubt on the prosecution case that would be enough to entitle him to the benefit of reasonable doubt. There was, however, numberquestion of the appellant raising any reasonable doubt in view of a his admission that he had received the said moneys, b the evidence of the District Inspector of Schools that he had companyfessed before him of having misappro- priated Rs. 2500 at least and was prepared to deposit the said amount, and c the evidence as to his false representations to M s. Joti Perhad Gupta Sons and the Assistant Secretary of the Red Cross Society that moneys due to them had already been remitted. But the argument of Mr. Mehta was that he companyld have raised a doubt on the prosecution evidence if the documents called for by the appellant had been produced and his application for their production had number been rejected. In his statement under s. 342 of the Code of Criminal Pro- cedure the appellant admitted that he had drawn the said amounts from the Bank. His case, however, was that he did so on Joshi 1 1935 A 462. authorising him to do so and that he had handed them over to Joshi. He pleaded that he had made entries in the remittance transfer register showing disbursement of these amounts but those entries were made by him at the instance of Joshi and Joshi had initialled those entries. The argument was that in order to prove his case the production of the said documents was necessary. The appellant had called for five documents, viz., 1 A Memo dated June 27, 1960 from the Secretary to the Finance Department to all heads of Departments showing that it was the. head of office, i.e., Joshi, who was responsible for disbursement, 2 Instructions issued in 1962 according to which a clerk companyld make disbursement only if he had furnished security of Rs. 600, 3 the Bill book which witness Des Raj admitted was maintained and which if produced would have shown that the appellant had handed over the said moneys to Joshi, 4 the remittance transfer register admitted by the District Inspector of Schools companyld be found in the office, and 5 the sub-voucher for Rs. 494 which the District Inspector assured the trial Magistrate he would send for but failed to produce. Regarding item No. 1 a companyy of the Memo was in fact filed in the companyrt -and admitted in evidence. For the rest of the items, the trial Magistrate passed an order directing the prosecuting police inspector to make a report. On December 29, 1962, the officer made the report that there was numberbill book, i.e. item No. 3, that item No. 4, the remittance transfer register was part of the record of the Assistant District Inspectors office and that the same companyld be found there and that the sub-voucher item No. 5 was number traceable. No grievance remained in respect of items 1 and 2 as a companyy of the said Memo was admitted in evidence. Therefore, there would be numberdispute that Joshi was the disbursing authority. But in view of the extra judicial companyfession made by the appellant that he had in fact misappropriated Rs. 2500, the fact that Joshi was the disbursing authority would number be of any importance. Items 3 and 5, according to the said report, companyld number be traced. No point, therefore, can be made on the score of their number-production. There remained, therefore, only the remittance transfer register. The order sheet of the Magistrate shows that at the time when the prosecution closed it,, case and the statements of the appellant and Joshi were recorded under s. 342 of the Code, numberobjection was taken by the appellant that the case should number proceed until the said register was produced. The case was adjourned to December 29, 1962 for defence evidence. On that date also numberobjection appears to have been taken and the case was allowed to proceed. Ultimately on January 14, 1963, the Magistrate passed his aforesaid order of companyviction. Apart from that, since the moneys were number remitted to the parties companycerned there can be numberquestion of there being any R.T.R. in respect of them. Evidentially that document was called for by the appellant in order to create companyfusion knowing full well that it was number there. We find, therefore, numbersubstance in the companytention that -if these documents had been produced the appellant companyld have, thrown some doubt on the prosecution evidence and companyld have made out a reasonably probable case that he had handed over the said amounts to Joshi. Mr. Mehta next argued that under S. 409 assuming that the said moneys were entrusted to the appellant, such entrustment must be in his capacity as a public servant. Being a clerk in the office of the Assistant District Inspector of Schools the appellant undoubtedly was a public servant. But the companytention was that it was number his duty as a clerk to receive these moneys and that he had only received them at the instance of Joshi. Not being his duty so to receive the said moneys, it cannot be said that it was in his capacity as a clerk or as part of his duties that the said moneys were entrusted to him. There was, however, evidence that the appellant number only used to receive moneys but also used to disburse them. Whether it was done by him as part of his duties, would clearly be a matter of evidence. This companytention was number raised in the High Court and being dependent on evidence, he is number entitled number to raise it before us. The decision ,of this Court in Budha Lal v. The State of Rajashan 1 rested on different facts as there was clear evidence that entrustment of moneys deposited in the companyplainants savings account in the post ,office was to the accuseds brother who was the post master and number to the accused. In the present case the position is that Joshi authorised the. appellant to draw and receive the moneys in question for the express purpose of payment to different parties. There was, therefore, entrustment to the appellant of the said moneys for an express purpose. The decision in Budha Lals, 1 case cannot apply. The third companytention of Mr. Mehta was that the charge as to ,criminal breach of trust against the appellant and Joshi being one under S. 409 read with s. 120B and there being numbercharge under S. 409 simplicitor a companyviction under s. 409 only is number valid. He argued that as the prosecution failed to establish companyspiracy the -appellant companyld number be companyvicted of the offence under S. 409 simplicitor. In our view, there is numbersubstance in this companytention. If the charge of companyspiracy to companymit criminal breach of trust is followed by a substantive charge of criminal breach of trust in pursuance of such companyspiracy there is numberhing to prevent the companyrt companyvicting an accused under the second charge even if the prosecution fails to establish companyspiracy. In any event, there was numberprejudice caused to him as he was aware that there was a sub- Criminal Appeal 156 of 1962 decided on 27th January, 1965. stantive charge under S. 409 against him. Mr. Mehta, however, relied upon a decision of the Kerala High Court in Kizhakeppallik Moosa v. The State 1 . That decision cannot be of any avail as it is directly companytrary to this companyrts decision in Willie Slaney v. The State of Madhya Pradesh 2 . It was then argued that the trial suffered from misjoinder of charges in that there were six items of moneys in respect of which misappropriation was alleged and three entries in respect of which falsification of accounts was charged against the appellant. There is some companyflict of judicial opinion as to whether a charge of misappropriation where a lump sum companysisting of several items together with a charge of falsification of several entries made with a view to screen the misappropriation is companyrect. We need number in the present case decide which view is companyrect. The appellant did number at any earlier stage take objection to the charges under ss. 409 and 477-A on the ground that he was likely to be embarrassed in his defence. He has also number shown that any prejudice was caused to him and that being so this companytention also must fail. The last companytention was that though he was charged under s. 120-B and s. 477-A numbersanction under s. 196-A 2 of the Criminal Procedure Code was obtained and, therefore, the entire trial was vitiated. We may observe that the Additional Sessions Judge found that sanction was number obtained though the appellant and the said Joshi were charged under the aforesaid two sections along with the charge under s. 409. Reliance in this companynection was placed on a decision of the Patna High Court in Abdul Mian v. The King 3 , where it was held that sanction to prosecute is a companydition precedent to the institution of prosecution and that it is the sanction which companyfers jurisdiction on the companyrt to try the case. The charge-sheet in that case was under s. 295-A of the Penal Code and sanction having number been obtained for prosecution the High Court held that even though the Magistrate trying the accused ultimately companyvicted him under s. 298 which did number require sanction the trial was vitiated as the Magistrate companyld number proceed with the charge-sheet without the requisite sanction. The decision in Govindram Sunder Das v. Emperor 4 was also called in aid as it has been observed there that where the offence of companyspiracy to companymit forgery is charged against a person and the previous companysent of the local Government under s. 196A though required is number obtained, the companyrt cannot take companynizance of the companyplaint. These decisions, however, are in respect of cases where a single charge in respect of an offence requiring sanction was preferred against the accused and previous sanction was number obtained and the companyrt held that in the absence of such sanction the trial companyrt companyld number take companynizance of the companyplaint. I.A.R. 1963 Kerala 68. 2 1955 2 S.C.R. 1140. A.I R 1951 Pat. 513 A.I.R. 1942 Sind 63. Section 196A 2 provides that numbercourt shall take companynizance of the offence of criminal companyspiracy punishable under S. 120-B in a case where the object of the companyspiracy is to companymit any numbercognizable offence or a companynizable offence number punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards, unless the State Government or a Chief Presidency Magistrate or District Magistrate empowered in this behalf by the State Government has, by order in writing, companysented to the initiation of the proceedings. It is clear that the companyrt cannot take companynizance without the necessary companysent in the case of a charge of criminal companyspiracy under S. 120-B of which the object is as stated therein. The companyspiracy to companymit an offence is by itself distinct from the offence to do which the companyspiracy is entered into. Such an offence, if actually companymitted, would be the subject-matter of a separate charge. If that offence does number require sanction though the offence of companyspiracy does and sanction is number obtained it would appear that the companyrt can proceed with the trial as to the substantive offence as if there was numbercharge of companyspiracy. In Sukumar Chatterjee v. Mosizuddin Ahmed 1 where the charge was under S. 404 read with S. 120- B and numbersanction was obtained it was held that the case companyld proceed though only under S. 404. Similarly, in Syed Yawar Bakht v. The Emperor 2 , the accused was charged under s. 120-B read with s. 467 and also under s. 467 read with S. 109 of the Penal Code. No sanction was obtained. It was held that the companysequence of number obtaining the sanction was as if the charge under s. 120B read with S. 467 had never been framed but the accused companyld be companyvicted under the other charge viz., under s. 467 read with S. 109 of the Penal Code. The same view has also been taken by the Punjab High Court in Ram Pat v. State 3 where it was held that where a companyplaint discloses more offences than one, some of which can be inquired into without sanction and others only after sanction has been obtained, there can be numberobjection to the inquiry being carried on in respect of the first category of offences. Reference may be made to the decision in Nibaran Chandra Bhattacharyya v. Emperor 4 . The two petitioners were companyvicted under S. 120B. They were also companyvicted under s. 384 and s. 384 read with s. 114 of the Penal Code respectively. The learned Judge accepted the companytention that the trial was vitiated as numbersanction was obtained in respect of the charge under S. 120-B and set aside the companyviction also under S. 384 and S. 384 read with S. 114 passed against petitioners 1 and 2. But the report of the decision shows that he did so because he felt that by proceeding with the charge under S. 120-B admitting evidence on that charge and that charge resulting in companyviction prejudice was caused to the petitioners in the matter of the other charges and 1 25 C.W.N. 357. 2 44 C.W.N. 474. 3 1962 64 P.L.R. 519. 4 A.I.R. 1929 Cal. 754. that therefore the trial companyld number be said to be severable. No such question of prejudice can be said to arise in the present ease in view of the extra-judicial companyfession of the appellant of having misappropriated Rs. 2,500 out of Rs. 3,414 and odd in question. There was in the instant case number only a charge for companyspiracy under s. 120-B but also two other separate charges for offences under ss. 409 and 477-A alleged to have been companymitted in pursuance ofthe companyspiracy. Though the charge under s. 120B required sanction numbersuch sanction was necessary in respectof the charge under s. 409. At the most, therefore, it can be argued that the Magistrate took illegal companynizance of the charge under s. 120-B as s. 196- A 2 prohibits entertainment of certain kinds of companyplaints for companyspiracy punishable under S. 120-B without the required sanction. The absence of sanction does number prevent the companyrt from proceeding with the trial if the companyplaint also charges a companyconspirator of the principal offence companymitted in pursuance of the companyspiracy or for abetment by him of any such offence companymitted by one of the companyconspira- tors under s. 109 of the Penal Code. See Mohd. Bachal Abdulla v. The Emperor 1 . In our view, the fact that sanction was number obtained in respect of the companyplaint under s. 120-B did number vitiate the trial on the substantive charge under s. 409.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 234 of 1964. Appeal by special leave from the judgment and order dated November 8, 1963 of the Bombay High Court in Criminal Appeal No. 1135 of 1962. R. Prem, S. P. Nayyar for R. N. Sachthey, for the appellant. A. Mehta, V. J. Taraporevala, P. C. Bhartari and 0. C. Mathur, for the respondent. The Judgment of the Court was delivered by Hidayatullah, J. The State of Maharashtra appeals against the judgment and order of the High Court of Bombay dated November 8, 1963 by which the High Court set aside, the companyviction of one Purshottamdas Ranchhoddas since deceased and represented by his widow and the fine imposed on him, under s. 92 of the Factories Act, 1948 read with r. 3-A of the Bombay Factories Rules, 1950. Only one question arises in this appeal and it is the true companystruction of S. 85 of the Factories Act on which different views have been expressed by the High Court and the Court below. Purshottamdas Ranchboddas was a lessee from the Port Trust Bombay of an open plot of land. He established a factory called the Sunderdas Saw Mills. He closed down the factory on April 1, 1957. In July 1957, the ex-workers of the factory companybined to-ether to form five partnerships and by agreements of leave and licence, Purshottamdas Ranchhoddas gave in their use, the premises of the factory and the machinery installed there. He himself did number join any of the five partnerships. The licensees were to pay a fixed sum for the use of the premises and the machines. It appears that some of the workers who were number taken in as partners companyplained that the closure of the factory was a sham. No action was taken on this companyplaint and -there is numberfinding in this case that the closure of the factory was unreal. In the year 1959, a prosecution was started under S. 92 of the Factories Act on the charge that the original licensee of the factory had number given numberice under s. 7 1 of the start of the factory and had number renewed the licence under r. 4 of the Bombay Factories Rules, 1950. This ended in an acquittal since Government had number declared these premises as a factory under s. 85 of the Act, as it companyld, if the workers although number employed by the owner were working with the permission of or under an agreement with the owner. After such numberification the premises are deemed to be a factory and the owner of the premises is deemed to be an occupier. On September 29, 1960, a numberification was issued under s. That numberification specified the places where the five partnerships were working as factory. On November 10, 1959, five separate companyplaints were filed for failure to take out five licences. The charge was that Purshottamdas Ranchhoddas was the owner of the factory and hence an occupier and the workmen were working under an agreement with him. The owner defended himself by stating that he had numbercontrol over the five firms and he companyld number enforce the provisions of the Factories Act. This defence was number accepted. Purshottamdas Ranchhoddas was held to have become an occupier by reason of the numberification and, therefore, to, be companypelled to take out a licence under r. 3-A of the Bombay Factories Rules. He was fined Rs. 201/- for the first offence and Rs. 25/- for the subsequent offences. Purushottamdas Ranchhoddas appealed but died during the pendency of the appeal. As the sentence was one of fine the appeal was companytinued by his legal representative under s. 431 of the Coda of Criminal Procedure. The Bombay High Court set aside the companyviction and fine and number the present appeal has been filed by the State of Maharashtra on special leave granted by this Court. Under r. 3 of the Bombay Factories Rules, 1950 an applica- tion has to be made for the approval of a factory. Under r. 3A numberoccupier of a factory shall use any premises as a factory except under a licence obtained or renewed in accordance with the provisions of the rules. Section 85 grants -power to the State Government to apply the Factories Act to certain premises which would otherwise number companye within its purview. The section reads S. 85 Power to apply the Act to certain premises - 1 The State Government may, by numberification in the Official Gazette, declare that all or any of the provisions of this Act shall apply to any place wherein a manufacturing process is carried on with or without the aid of power or is so ordinarily carried on numberwithstanding that- the number of persons employed therein is less than ten, if working with the aid of power and less than twenty if working without the aid of power, or the persons working therein are number employed by the owner thereof but are working with the permission of, or under agreement with, such owner Provided that the manufacturing process is number being carried on by the owner only with the aid of his family. After a place is so declared, it shall be deemed to be a factory for the, purposes of this Act, and the owner shall be deemed to be the occupier, and any person working therein, a worker. Explanation.-For the purposes of this section, owner shalt include a lessee or mortgagee with possession of the premises. The present matter is said to be governed by s. 8 5 1 ii . It s companytended that in as much as a numberification had issued, the owner of the pemises the present lessee of the premises namely Purshottamdas Ranchhoddas became an occupier and thus liable for breach of the Factories Act and the Bombay Factories Rules since the premises were number licensed. The High Court, differing from the. Presidency Magistrate, Mazgaon, held that s. 8 5 i ii did number companyer the present case. We think the High Court was right. Under s. 2 n of the Act an occupier of a factory means the person who has the ultimate companytrol over the affairs of the factory. If one goes by this definition, Purshottamdas Ranchhoddas was number an occupier if he had number the ultimate companytrol over the affairs of the five partnership firms running the factory. But here the Factories Act gives special powers to the State Government under s. 85 quoted above. The numberification of Government makes applicable all or any of the provisions of the Act to a place of manufacture numberwithstanding that the persons working therein are number employed by the owner of the place wherein the manu- facture is carried on provided the workers work with the permission of or under agreement with the owner. The companydition precedent for the numberification is that the persons working therein a work with permission of or b under agreement with the owner. The section does number companytemplate a case where the owner hands over the factory on rent and the workers work without his permission and number under agreement with him. In other words, if there is numberconnection between the owner and the workmen in the sense that they work without his permission and without an agreement with him, there would be numberquestion of the liability of the owner as an occupier. In the, present case the agreements show that the, premises were given over to partnership firms in return for a periodic payment. The agreements show that the licensees of the premises bound themselves to carry on the manufacturing process on their own and Purshottamdas Ranchhoddas had numbercontrol over them. The High Court has companysidered the clauses and companye to the companyclusion that the partnerships were independent of the companytrol of the owner and the workers cannot be said to be working with his permission or under agreement with him. They had formed themselves into partnerships, taken on leave and licence the factory premises and started their own business. In these circumstances, the companyditions for the numberification hardly existed. An attempt was made to prove from S. 93 that the definition of an occupier cannot apply to circumstances arising under S. 85 because S. 93 makes special provision for the responsibility of the owner. A glance at the provisions of S. 93 however discloses the opposite. It is number necessary to companysider all the clauses, some of which may bind the owner but a clause like 93 3 ii clearly shows that the owner is liable only when he has companytrol. The clause reads Where in any premises, independent or selfcontained, floors or flats are leased to different occupiers for use as separate factories, the owner of the premises shall be liable as if he were the occupier or manager of a factory, of any companytravention of the provisions of this Act in respect of- i fencing of machinery and plant belonging to the owner and number specifically entrusted to the custody or use of an occupier The difference between the owner of the premises and the occupier is at once visible. The liability of the occupier is patent but the liability of owner arises only when the machinery and plant is number specifically entrusted to the custody or use of an occupier. In the present case, for example, the machinery and plant has been so specifically entrusted to the custody or use of the various partnerships and the owner of the premises cannot be made liable. As we said above the finding is number that the owner had indulged in a sham transaction. If the transactions are genuine and the five partnerships have -taken over the factory to work independently, numberquestion of the liability of the owner under s. 85 1 ii arises. It is possible that some obligations are still on the owner under S. 93 but that is another matter. Purshottamdas Ranchhoddas companyld number be made liable for number taking out the licence. The matter has been companyrectly approached by the High Court and we see numberreason to interfere. The appeal fails and will be dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 215 of 1961. Appeal by special leave from the judgment and decree dated January 22, 1958 of the Bombay High Court at Rajkot in Civil First Appeal No. 93 of 1956. H. Dhebar, for the appellant. K. Puri and Bishamber Lal, for the respondents Nos. 4- 7. The Judgment of the Court was delivered by Shelat, J. In 1947 and prior thereto the respondent carried on business as an exporter of fish in the State of Junagadh in the name and style of Ayub lqbal and Company. In 1947 the Customs authorities of the, State of Junagadh seized two motor trucks, a station wagon and other goods belonging to the respondent on the grounds, a that the respondent had number paid import duties on the said trucks, b that they were used for smuggling goods in the State and c that some of the goods were smuggled goods. The action was taken under the Junagadh State Sea Customs Act, II of S.Y. 1998 then in vogue in the State. The respondent filed an appeal against tbis order to the Home Member of the State as provided in the said Act. Pending the appeal, the State of Junagadh merged in the United States of Saurashtra which ultimately was companyverted into the State of Saurashtra. The State of Saurashtra thereafter merged with the former State of Bombay and on bifurcation of the Bombay State became part of the State of Gujarat. In the meantime the appeal was transferred to the Revenue Tribunal which was companystituted by the State of Saurashtra and which was the companypetent forum to hear such appeals. On February 6, 1952, the Revenue Tribunal set aside the said order of companyfiscation of the Customs authority and directed the return of the said vehicles to the respondent. On March I , 1952, the respondent applied for the return of the said vehicles but was informed that they had been disposed of under an order of a Magistrate passed under S. 523 of the Code of Criminal Procedure and that the sale proceeds viz., Rs. 2213/8/- were handed over to a creditor of the respondent under an attachment order passed in his favour. On February 5, 1954, the respondent filed the present suit for the return of the said vehicles or in the alternative for their value viz., Rs. 31786/8/- on the ground that pursuant to the said order of the Tribunal, which in the absence of any proceedings against it had become final, the State Government was bound to hand over the said vehicles. In its written statement the State Government denied the respondents claim Lind took up diverse pleas. It is number necessary to go into the details of these pleas except to say that the State Government did number raise any companytention therein that it was number liable for any tortious act companymitted in respect of the said goods and vehicle s by any one of its servants. On these pleadings the trial companyrt raised various issues. No issue with regard to the absence of liability for the tortious act of any servant of the Government was or companyld be raised in the aforesaid state of pleadings. The evidence led by the State and in particular of the police officer Trambaklal Naranji showed a that the said vehicles were seized in 1947 by the Customs Officer of the State of Junagadli, b that somehow they were kept in an open space opposite to the police station at Veraval, c that they remained -totally uncared for from 1947 to October, 1951 with the result that the greater part of the machinery of the vehicles, tyres and even some wheels were pilfered away leaving only the skeletons of the vehicles, d that numberentries were made in any of the registers maintained at the police station to show as to how these vehicles came to be kept in the said open space or whether the customs authority had handed over the said vehicles to the police for safe custody, e that in October, 1951, witness Trambaklal who was then incharge of the police station reported to his superior officers the fact of these vehicles lying in the said open space as uncared and unclaimed vehicles, f that on October 3, 1951, directions were given to him to apply to the Magistrate for disposal of the said Vehicles as unclaimed property under S. 523, g that on October 21, 1951, the police recorded a Panchanama as regards the companydition of the said vehicles, and h that on October 29. 1951 pursuant to the said directions, the police officer made an application which mentioned the fact that these vehicles were seized by the Port Commissioner in 1947 from Memon Mahomed Haji Hasam of Veraval, the respondent. It is clear that in spite of the police authorities being aware that the said vehicles were seized from the respondent, his name having been mentioned in the said application, numbernotice was served upon him of the said application which, as aforesaid, was made on the footing that the said vehicles were unclaimed property. The only numberice which was issued by the Magistrate was a public numberice which was ordered to be pasted at a public place. Clearly, the respondent was right when he said that he was number aware of the said proceedings or the order passed by the Magistrate therein. It appears from the Rojkam of the Magistrates companyrt that on February 9 41 5, 1952, the said vehicles were auctioned in the companydition in which they were and only Rs. 2,000 and odd were realised from that auction. The trial companyrt found that the customs officer was companypetent to seize the said vehicles on a suspicion that a custom offence tinder the said Act had been companymitted. It held, however, that after the Tribunal had set aside his order and directed the return of the said property to the respondent it was the duty of the State Government to return the said property and on failure to do so the respondent had a cause of action and the suit was maintainable. On these findings, the trial companyrt passed a decree against the State Government for Rs. 26797/8/-. The State Government thereupon filed an appeal in the High Court of Bombay at Rajkot taking a number of grounds in its memorandum of appeal. In the memorandum of appeal the State Government inter alia raised the following grounds The learned Civil Judge ought to have decided that the State is number liable for any acts tortious or otherwise of its servants and of the customs or the police authorities. The High Court held that numbersuch plea having been taken in its written statement number any issue having been raised in the trial companyrt, the State Government was number entitled to raise the companytention for the first time in the appeal. The High Court companyfirmed the said decree except for a slight reduction in the decretal amount from Rs. 26797/8/- to Rs. 25532/10/-. The High Court found 1 that the said vehicles were sold on February 5, 1952 while the appeal before the Revenue Tribunal was still pending, 2 that the said vehicles were sold at the instance of the police officer under s. 523 on the footing that they were unclaimed property, 3 that such an assumption was wrong as the vehicles were lying with the authorities while the appeal was still pending and when the issue, whether the said vehicles were liable to companyfiscation, was number finally decided, 4 that the said vehicles companyld number be sold by auction because they were liable to be returned in the event of the Tribunal holding that the said seizure and companyfiscation were illegal and directing the vehicles to be returned to the owner. The High Court hold a that the Junagadh Customs Act which applied to the instant case provided an appeal against an order of seizure and companyfiscation, b that there being a provision for appeal in the said Act there was a statutory duty on the State to see that the property which was seized was kept intact till the appeal was disposed of, c that there was an implied obligation to see that the said property was number tampered with during the pendency of the appeal in which the order of companyfiscation was under scrutiny, d that the breach of the said obligation gave a cause of action to the respondent, and e that the cause of action on which the said suit was grounded was the respondents right to the return of the said property and that the relief claimed on that cause of action was the return of the said property or in the alternative the value thereof and number damages for any negligence either of the State Government or of any of its servants. It is against this judgment and decree of the High Court that this appeal by special leave is directed. It is clear that both the trial companyrt and the High Court companycurrently found that the said vehicles were-seized by the customs -authority, that between 1947 and October, 1951 when they were disposed off they were lying uncared for in an open space, that they were disposed of at the instance of the Police as unclaimed property, that when they were sold most of the valuable parts were missing and lastly that they were sold while the appeal against the order of seizure and companyfiscation was still pending. Mr. Dhebars companytention was that since they were seized by a ,competent officer the seizure was lawful and that the utmost that ,could be alleged in the circumstances was that one or the other servants of the State Government was guilty of negligence. Fe ,contended that the State Government was number liable for any tor-tious act of any of its servants. Before we proceed to companysider this companytention it is necessary to examine some of the provisions of the said Act which both the parties companyceded was the relevant law applicable to the present ,case. Section 150 lays down various offences under the Act and the respective penalties therefor. Clause 8 of s. 150 provides that- if any goods, the importation or exportation of which is for the time being prohibited or restricted by or under Chapter IV of this Act, be imported into or exported from the Junagadli State companytrary to such prohibition or restriction, or if any attempt is made so to import or export any such goods, or if any such goods are found in any package produced to any officer of Customs as companytaining numbersuch goods etc., such goods shall be liable to companyfiscation and any person companycerned in any such offence shall be liable to a penalty as set out therein. Section 160 provides that a thing liable to companyfiscation under this Act may be seized in any place by an officer of Customs or other person duly employed for the prevention of smuggling. Section 163 provides that when a thing is seized the officer making such seizure shall on demand of the person in charge of the goods so seized give him a statement in writing of the reasons for such seizure. Section 166 provides for adjudication of companyfiscation and penalties. Section 172 providas for an appeal from a subordinate Customs officer to the -Chief Customs authority and S. 175 provides a revision by the Ruler of the Junagadh State. The power of revision under S. 175 includes the power to reverse or modify the decision or, order in the exercise of His Highnesss extraordinary revisional jurisdiction. It would appear from these provisions that the seizure of the said vehicles was carried out with jurisdiction and -the order of companyfiscation was also made, apart from the question as to its merits, by a companypetent officer with jurisdiction. It is also possible to companytend that as the said vehicles were sold pursuant to a judicial order numberliability can be attached on the State Government for their disposal by public auction. But between their seizure and the auction there was a duty implicit from the provisions of the Act to take reasonable care of the property seized. This is so because .the order of companyfiscation was number final and was subject to an appeal and a revision before the Home Member and later on before the Revenue Tribunal after Junagadh merged in the State of Saurashtra in 1948-49. The appellant-State was aware that the order of seizure and companyfiscation was number final being subject to an appeal and was liable to be set aside either in appeal or in revision. It was also aware that if the said order was set aside, the property would have to be returned to the owner thereof in the same state in which it was seized except as to numbermal depreciation. In spite of this clear position, while the appeal was still pending before the Revenue Tribunal and without waiting for its disposal, it allowed its police authorities to have it disposed of as unclaimed property. The State Government was fully aware, firstly, by reason of the pendency of the appeal and secondly because the application under s. 523 expressly mentioned -the person from whom the said vehicles were seized, that the vehicles were and companyld number be said to be unclaimed property. In the circumstances, the State Government was during the pendency of the appeal under a statutory duty to take reasonable care of the said vehicles which on the said appeal being decided against it were liable to be returned to their owner. The companytention that the order of disposal was a judicial order or that the respondent companyld have filed a revision application against that order and have it set aside would be beside the point. There being a statutory obligation under the Act to return the property once the order of seizure and companyfiscation was held to be wrong, the respondent companyld rely on that obligation and claim the return of the said vehicles. On behalf of the respondent, the companytention urged was that though the seizure might be lawful and under the authority of the Statute, the State Government was from the time that the said goods were seized until the decision of the appeal, in a position of a bailee and was, therefore, bound to take reasonable care of the said vehicles. That numbersuch reasonable care was taken and the vehicles remained totally uncared for is number in dispute. Mr. Dhebars reply was that there was numberbailment number can such bailment be inferred as s. 148 of the Contract Act requires that a bailment can arise only under a companytract between the parties. That companytention is number sustainable. Bailment is dealt with by the Contract Act only in cases where it arises from a companytract but it is number companyrect to say that there cannot be a bailment without an enforceable companytract. As stated in Possession in the Common Law by Pollock and Wright, p. 163, Upon the whole, it is companyceived that in general any person is to be companysidered as a bailee who otherwise than as a servant either receives possession of a thing from another or companysents to receive or hold possession of a thing for another upon an understanding with the other person either to keep and return or deliver to him the specific thing or to companyvey and apply the specific thing according to the directions antecedent or future of the other person. Bailment is a relationship sui generis and unless it is sought to increase or diminish the burdens imposed upon the bailee by the very fact of the bailment, it is number necessary to incorporate it into the law of companytract and to prove a companysideration 1 . There can, therefore, be bailment and the relationship of a bailee in respect of specific property without there being an enforceable companytract. Nor is companysent indispensable for such a relationship to arise. A finder of goods of another has been held to be a bailee in certain circumstances. On the facts of the present case, the State Government numberdoubt seized the said vehicles pursuant to the power under the Customs Act. But the power to seize and companyfiscate was dependent upon a customs offence having been companymitted or a suspicion that such offence had been companymitted. The order of the Customs Officer was number final as it was subject to an appeal and if the appellate authority found that there was numbergood ground for the exercise of that power, the property companyld numberlonger be retained and had under the Act to be returned to the owner. That being the position and the property being liable to be returned there was number only a statutory obligation to return but until the order of companyfiscation became final an implied obligation to preserve the property intact and for that purpose to take such care of it as a reasonable person in like circumstances is expected to take. Just as a finder of property has to return it when its owner is found and demands it, so the State Government was bound to return the said vehicles once it was found that the seizure and companyfiscation were number sustainable. There being thus a legal obligation to preserve the property intact and also the obligation to take reasonable care of it so as to enable the Government to return it in the same companydition in which it was seized, the position of the State Government until the order became final would be that of a bailee. If that is the companyrect position once the Revenue Tribunal set aside the order of the Customs Officer and the Government became liable to return the goods the owner Law of companystract by Chesire and Fi foot,pp./73,74. 94 5 had the right either to demand the property seized or its value, if, in the meantime the State Government had precluded itself from returning the property either by its own act or that of its agents or servants. This was precisely the cause of action on which the respondents suit was grounded. The fact that an order for its disposal was passed by a Magistrate would number in an-,, way interfere with or wipe away the right of the owner to demand the return of the property or the obligation of the Government to return it. The order of disposal in any event was obtained on a false representation that the property was an unclaimed pro- perty. Even if the Government cannot be said to be in the position of a bailee, it was in any case bound to return the said property by reason of its statutory obligation or to pay its value if it had disabled itself from returning it either by its own act or by any act of its agents and servants.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1668 of 1966. Appeal by special leave from the judgment and order dated November 2, 1965 of the Allahabad High Court in Civil Revision No. 1095 of 1965. N. Dixit, for the appellant. Bishan Narain and 0. P. Rana, for the respondent. The Judgment of the Court was delivered by Shelat, J. The appellant-company filed suit No. 16 of 1963 against the State of Uttar Pradesh and the Union of India, inter alia, praying for a permanent injunction regaining the State of Uttar Pradesh, its servants and agents from realising or from proceeding to realise sugarcane cess and purchase tax amounting to Rs. 33 lakhs and odd charged under the U.P. Sugar Cane Regulation of Supply and Purchase Act, 1953, the Sugar Cane Cess Act, 1956 read with the U.P. Sugar Cane Cess Validation Act, 1961 and the U.P. Sugar Cane Purchase Tax Act, IX of 1961. In the said suit, the appellant-company, inter-alia, alleged that the Acts for the diverse reasons set out therein were invalid and void and therefore the State was number entitled to levy, companylect or recover the said cess or the purchase tax and prayed, as aforesaid. that the State should be restrained from proceeding to realise the said cess or tax. The appellant- companypany paid companyrt-fees on its said plaint under sub-s. iv- B b of S. 7 on the footing that the relief sought in the suit was an injunction. The Chief Inspector of Stamps objected to the companyrt-fees being paid under cl. b of sub- s. iv-B of S. 7 companytending that the companyrt-fees payable were as provided under sub-s. iv a of s. 7 or under sub- s. iv-A of S. 7, that is to say, on the footing that the suit was for a declaratory decree where companysequential relief prayed for was an injunction or on the footing that the suit involved cancellation of or of adjudging void an instrument securing money or other property having such value. The trial Judge rejected the objections and held that the companyrt- fees payable were adequate as cl. b of sub-s. iv-B of S. 7 applied. The Chief Inspector of Stamps thereupon filed a revision application before the High Court reiterating the said objections. The High Court rejected the companytention that s. 7 iv a applied but held that sub-s. iv-A of S. 7 applied as the said Acts were instruments securing money within the meaning of that subsection and that though the relief claimed in the suit was injunction, in substance and effect the suit involved adjudgment of the said Acts as void. Hence this appeal by special leave. Sub-s. iv-A of S. 7 reads as follows- For cancellation or ad judging void instruments and decree-In suits for or involving cancellation of or adjudging void or voidable an instrument securing money or other property having such value. The question which falls for determination is whether an Act passed by the Central or the State Legislature can be said to be an instrument and, if so, an instrument securing money or other property having such value. The Court-fees Act does number define the word instrument. That being so we have to turn for the companynotation of the word instrument to its ordinary dictionary meaning. According to Strouds Judicial Dictionary, 3rd Ed. Vol. 11, p. 1472, instrument means a writing, and generally imports a document of a formal legal kind. Semble, the word may include an Act of Parliament see Deed of Settlement so in the Trustee Act, 1925 15 Geo. 5, c. 18 , S. 68 11 Conveyancing Act, 1881 44 45 Viet. c. 41 S. 2 xiii , instrument includes deed, will, inclosure, award, and Act of Parliament. Thus, an instrument may include a statute enacted by Parliament if the particular statute in its companytext includes it as an instrument. According to Jowitts Dictionary of English Law,, p. 984 Instrument means a formal legal writing, e.g., a record charter, deed of transfer or agreement. It is, however, observed that under the Law of Property Act, 1925, S. 205 1 van , instrument for the purposes of this Act does number include a tatute unless the statute creates a settlement. An instrument is a writing and generally means a writing of a formal nature. But where there is a power to appoint by any deed or instrument o by will, any writing, such as a letter, which refers to the power, or which can have effect only by operating on the fund such as a cheque or other order for payment , is an instrument. A telegram is an instrument within the meaning of the Forgery Act, 1912, s. 7, and so is an envelope with a postmark falsified for the purposes of a betting fraud. According to the same dictionary, the word enact means to act, perform or effect to establish by law to decree and an enactment means an Act of Parliament or statute or any part thereof. A statute, according to Maxwell on Interpretation of Statutes, 11th Ed. p. I is -the will of the legislature, i.e. an edict of the legislature. A statute is, however, different from a statutory instrument as defined by -the Statutory Instruments Act 9 10 Geo. 6, c. 36 1946 where power to make, companyfirm, or approve orders, rules, regulations or other subordinate legislation is companyferred on His Majesty in Council or on any Minister of the Crown., a document by which that power is exercised is a statutory instrument. Similarly, where by an Act passed before the enactment of the Statutory Instrument Act, 1946, power to make statutory rules is companyferred on any rule- making authority, any document by which that power is exercised is a statutory instrument. Thus, whereas a statute is an edict of the legislature, a statutory instrument as distinguished from such an edict is a document whereby the rule making power is expressed. In Mohan Chowdhary v. The Chief Commissioner Tripura 1 the question arose whether the order dated November 3, 1962, passed by the President under Art. 359 1 of the Constitution suspending the right of any person to move any companyrt for the enforcement of rights companyferred by Arts. 21 and 22 during the Proclamation of Emergency was an instrument withinthe meaning of s. 8 1 of the General Clauses Act, 1897. Inconsidering that question this Court approved the meaning of the word instrument given by Stroud and observed- The expression is also used to signify a deed inter- parties or a charter or a record or other writing of a formal nature. But in the companytext of the General Clauses Act, it has to be understood as including reference to a formal legal writing like an Order made under a statute or subordinate legislation or any document of a formal character made under companystitutional or statutory authority. We have numberdoubt in our mind for the expression instrument in S. 8 was meant to include reference to the Order made by the President in exercise of his companystitutional powers. The Presidents Order having been made under power companyferred upon him by Art. 359 that Order would have the same companynota- tion as the Statutory instrument defined by the statutory Instruments Act 1946 and therefore was an instrument within the meaning of s. 8 1 of the General Clauses Act. That does number mean that a statute like the U.P. Court-fees Act which is an edict of the legislature is an instrument. In Emperor v. Rayangouda Lingangouda Patil 1 the High Court of Bombay companysidered whether an order of the Government delegating its power to District Magistrates under the Defence of India Rules was an instrument within the meaning of s. 8 1 of the General Clauses Act. The High Court held that an instrument, generally speaking, means a writing usually importing a document of a formal legal kind. in but it does number include Acts of Parliament unless there is a statutory definition to that effect in any Act. There is thus ample authority to hold that ordinarily a statute is number an instrument unless as in the case of Conveyancing Act of 1881, the definition includes it or as in the case of s. 205 I viii of the Law of Property Act, 1925, the statute creates a settlement and such statute is for that reason treated as an instrument. It would number therefore be companyrect to say that the Acts alleged in the plaint to be void are instruments within the meaning of sub-s. iv-A of s. 7. In this view, it does number become necessary to decide whether the Acts are instruments securing money or other property having such value. Sub-s. iv-A of s. 7 would number, therefore, apply and the High Court was number right in calling upon the 1 1964 3 S C.R. 442. A.I.R. 1944 Bom, 259. appellant-company to pay additional companyrt-fees under that subsection. Mr. Bishan Narain, however, argued that even if these Acts are number instruments, the plaint if read in substance rather than in form is for a declaratory decree with injunction as the companysequential relief and therefore sub- s. iv a of s. 7 would apply and the companyrt-fees paid merely on the footing of the suit being for an injunction would number be adequate. As stated earlier, the High Court rejected this companytention as untenable. Mr. Bishan Narain, companytended that he was numberetheless entitled to argue that the High Court was in error and that sub-s. iv a would apply and number cl. b of sub-s. iv-B . For this purpose he relied on some observations in Ramanbhai Ashabhai Patel v. Dabhi Ajitkumar Fulsinji l , where it has been held that as soon as special leave is granted this Court has the power to decide all the points arising from the judgment appealed against and even in the absence of an express provision like XLI, r. 22 of the Code of Civil Procedure it can devise appropriate procedure to be adopted at the hearing. Assuming that Mr. Bishan Narain can urge the companytention that S. 7 iv a applies in the present case the companytention still fails. It is true that for purposes of the Court fees Act, it is the substance and number the form which has to be companysidered while deciding which particular provision of the Act applies. It cannot, however, be gainsaid that the actual relief prayed for in the plaint was an injunction restraining the State and its authorities to realise from the appellant-company the aforesaid cess and the purchase tax. It is clear from the plaint when read as a whole that though the appellant-company alleged that the Acts were void and therefore number-est for the reasons set out therein, it did number seek any declaration that they were void. The plaint procedure on the footing that the said Acts were void and that therefore this State of U.P. or its authorities had numberpower to realise the tax and the said cess. It may be that while deciding whether to grant the injunction or number, the companyrt might have to companysider the question as to the validity or otherwise of the said Acts. But that must happen in almost every case where an injunction is prayed for. If for the mere reason that the companyrt might have to go into such a question, a prayer for injunction were to be treated as one for a declaratory decree of which the companysequential relief is injunction all suits where injunction is prayed for would have to be treated as falling under cl. a of sub-s. iv of S. 7 and in that view cl. b of sub-s. iv-B of s. 7 would be superfluous. The companytention urged by Mr. Bishan Narain, therefore, cannot be accepted. For the reasons aforesaid, we are of the view that neither cl. a of sub-s. iv-A of s. 7 number sub-s. iv-A of s. 7 would 1 19651 1 S.C.R 712. apply and the companyrt-fees payable on the plaint were under cl. b of sub-s. iv-B of S. 7. The appeal, therefore, has to be allowed. The order of the High Court is set aside and the order of the trial companyrt is restored.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 557 and 558 of 1966. Appeals by special leave from the judgment and order dated April 29, 1964 of the Rajasthan High Court in Income-tax Reference No. 2 of 1963. D. Karkhanis, Ganpat Rai, E. C. Agarwala for P. C. Agarwala, for the appellant in both the appeals . T. Desai, S. K. Aiyar and R. N. Sachthey, for the respondent - in both the appeals . The Judgment of the Court was delivered by Ramaswami, J. These appeals are brought, by special leave,. from the judgment of the Rajasthan High Court dated April 29, 1964 in Income-tax Reference No. 2 of 1963. The appellant is a private limited companypany having its mines, factory and Head Office at Bhilwara in Rajasthan which was at the relevant periods in a Part B State. The appellant carried on mining business at Bhilwara and was engaged in the cutting, processing, sorting and packing of mica which was exported by it to Kodama and Giridih which were situated in Part A and Part C States and sold there to purchasers. The mica was sent almost entirely by railway from Bhilwara to Kodarma and Giridih. The appellant followed the mercantile method of accounting and the assessment years in question are 1950-51 and 1951-52, the companyresponding previous years being the years from November 2, 1948 to October 21, 1949, and October 22, 1949 to November9 5 1950 respectively. The total sale proceeds of the appellant during the two assessment years amounted to Rs. 19,77,544/-. The appellant tendered bills to the local branch of the Bank of Rajasthan to the extent of Rs. 15,64,475/- and received payment of that amount at Bhilwara. The appellant claimed that it was entitled to the benefit of rebate in regard to profits from these, sales under the Part B States Taxation Concessions Order, 1950 and that s. 4 1 a of the Income-tax Act 1922. hereinafter, called the Act was number applicable to its transactions By his orders dated March 24, 1955 and May 31, 1954 the Incometax Officer held that the sales took place in Part A and Part C States and the entire profits from those sales accrued and were received by the appellant in Part A and Part C States and therefore numberrebate was admissible under the Part B States Taxation Concessions Order, 1950. The Income-tax Officer also, rejected the claim of the appellant that in regard to some of the sales bills were discounted by the Rajashan Bank and payment to that extent should be treated as having been received at Bhilwara in the Part B State. It was held by the Income-tax Officer 1 that the letter for discounting was forged, 2 that even assuming that the appellant tendered some of its bills for discounting, the responsibility of the appellant under the companyditions, stipulated by the Bank in its form did number cease till the Bank realised payment from the purchaser and hence there was numberdiscounting of the bills which were merely handed to the Bank for companylection. On appeal, the Appellate Assistant Commissioner by his order dated September 20, 1957 held that the lncome-tax Officer was justified in holding that the appellant was number entitled to any rebate under the Part B States Taxation Concessions Order, 1950. On further appeal, the Appellate Tribunal held by its order dated August 18, 1958 that the appellant received the sale proceeds in regard to the goods companysigned to the purchasers in Part A and Part C States and number in Part B State and therefore the appellant was number entitled to the rebate claimed by it. The Appellate Tribunal thereafter stated a case under s. 66 1 of the Act and referred the following question of law for the opinion of the High Court Whether on the facts and in the circumstances of the case, the assessee was entitled to any rebate under the Part B States Taxation Concessions Order.in respect of income from the mining business for the assessment years 1950-51 and 1951-52 ? By its judgment dated April 29, 1964, the High Court answered the question in the negative and against the appellant. The method of the appellant in making sales was as follows The representatives of the buyers from Kodanna and Giridih used to visit Bhilwara, inspect the various qualities of mica which the appellant had for sale and entered into written companytracts for purchase. The aforesaid companytracts are marked as Annexure A to the statement of the case and it is admitted by the parties that -they represent all the companytracts with which we are companycerned in these appeals. These companytracts plainly show that the buyers purchased specified qualities of mica, Bhilwara go down delivery on the companydition that the companysignments would be sent to Kodarma or Giridih as the case may be and the railway receipts would be sent through bank. There is the further stipulation that 25 per cent of the price would be sent by way of an advance, within -a weeks time, that the packing expenses would be payable by the buyers and that after the companysignments left the godown at Bhilwara, they would be entirely at the buyers risk. Apart from these written terms and companyditions of the companytract,the Income-Lax Appellate Tribunal has recorded the further finding of fact that the appellant companysigned the goods to self and that the railway receipts alongwith the bills of exchange were presented by the appellant to the Rajasthan Bank, Bhilwara for companylection after ,endorsing the railway receipts in, favour of the Bank. It has also been found that the Rajasthan Bank in its turn endorsed the railway receipts in favour of its branches in Part A and Part C States and that the goods were delivered to the buyers only when they paid the price to the Bank and obtained the railway receipt. Paragraph 4 I iii of the Part B States Taxation Conccssions Order, 1950 is to the following effect Scope of the main companycessions- 1 The provisions of paragraphs 5, 6, sub-paragraph 1 of paragraphs 11, 12 and 13 of this Order shall apply- 9 6 5 in the case of any other assessee who is number resident in the previous year in the taxable territories or in the taxable territories other than Part B States, to so much of the income, profits and gains included in his total income as accrue or arise in any Part B State and are number deemed to accrue or arise, or are number received or deemed to be received within the meaning of clause a of sub-section 1 of section 4 of the Act, in the taxable territories other than the Part B States. Section 4 I a of the Act reads Application of Act.- 1 Subject to the provisions of this Act, the total income of any previous year of any person includes all income, profit and gains from whatever source derived which- a are received or are deemed to be received in the taxable territories in such year by or on behalf of such person, or .LM0 The question to be companysidered in this case is -Where did the income or the right to receive the payment under the companytracts of sale accrue or arise ? According to the Oxford English Dictionary the meaning of the word accrue is to fall as a natural growth or increment to companye as an accession or advantage. The word arise is defined as to spring up, to companye into existence. The word receive is number used in the same sense as accrue and arise in para 4 I iii of Part B States Taxation Concession Order. The words accrue and arise do number mean actual receipt of the profits or gains. Both these words are used in companytra-distinction to the word receive and indicate a right to receive. In Colquhoun Brooks 1 Lord Justice Fry had to companystrue the expression profits or rains, arising or accruing in 16 and 17 Victoria Chapter 34, Section 2, Schedule D and observed in that companynection as follows In the first place, I would observe that the tax is in respect of profits or gains arising or accruing. I cannot read those words as meaning received by. If the enactment were limited to profits and gains received by the person to be charged, that limitation would apply as much to all Her Majestys subjects as to foreigners residing in this companyntry. The result would be that numberincome-tax would be payable upon profits which accrued but which were number actually received, although profits might have been earned in the kingdom and might have accrued in the kingdom. I think, 1 1888 21 Q.B.D. 52 at 59. therefore, that the words arising or accruing are general words descriptive of a right to receive profits. It is clear, therefore, that the income may accrue to an assessee without actual receipt of the same. If the assessee acquires a right to receive the income, the income can be said to accrue to him though it may be received later on its being ascertained. The basic companyception is that he must have acquired a right to receive the income.- See E. D. Sassoon Company Ltd. v. C.1.T. Bombay City 1 . As pointed out by the Judicial Committee in C.I.T. Bombay Presidency Aden v. Chunilal B. Mehta 2 , it is impossible to lay down any general test to determine the place where the profits of the business accrue. In some cases it may be the place of the formation of the companytract, but other matters-for instance the place where the companytract is carried out or acts are done under the companytract-may be decisive in certain circumstances. When the business companysists of buying and selling goods, profits accrue as a general rule at the place where the companytract of sale is made or where sales are effected. But the question depends very much upon the facts and circumstances of each particular case. At page 533 of the Report the Judicial Committee observed as follows Their Lordships are number laying down any rule of general application to all classes of foreign transactions, or even with respect to the sale of goods. To do so would be nearly impossible and wholly unwise-to use the language of Lord Esher in Erichsen v. Last 3 . They are number saying that the place of formation of the companytract prevails against everything else. In some circumstances it may be so, but other matters-acts done under the companytract, for example-cannot be ruled out a priori. In the case before the Board the companytracts were neither framed number carried out in British India the High Courts companyclusion that the profits accrued or arose outside British India is well-founded. In the companytext of the facts found in this case we are of the opinion that profits accrued to the appellant at the place where the sales were effected in other words, where the property in the goods passed to the purchasers. The problem in the present case therefore is to determine whether the property in the goods passed to the purchasers at Bhilwara, as claimed by the appellant, or at Kodarma or Giridih, as claimed by the respondent. In the case of a companytract for sale of unascertained goods the property does number pass to the purchaser unless there is unconditional appropriation, of the goods in a deliverable state to the companytract. 1 26. T.R. 27, 5 1. 3 1881 8 Q.B.D. 414. 2 6 I.T.R. 521 9 6 7 tion 23 of the Indian Sale of Goods Act Act 3 of 1930 es Where there is a companytract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the companytract, either by the seller with the assent of the. buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be express, or implied and may, be given either before or after the appropriation is made. Where, in pursuance of the companytract, the seller delivers the goods to the buyer or to a carrier or other bailee whether named by -the buyer or number for the purpose of transmission to the buyer, and does number reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the companytract. Section 25 provides as follows Where there is a companytract for the sale of specific goods or where goods are subsequently appropriated to the companytract, the seller may, by the terms of the companytract or appropriation, reserve the right of disposal of the goods until certain companyditions are fulfilled. In such case, numberwithstanding the delivery of the goods to a buyer, or to a carrier or other bailee for the purpose of Transmission to the buyer, the property in the goods does number pass to the buyer until the companyditions imposed by the seller are fulfilled. Where goods ire shipped and by the bill of lading the goods are deliverable to the order of the seller or his agent, the seller is prima face deemed to reserve the right of disposal. In the present case, the appellant has reserved the right of disposal over the goods at the time of despatch. The companysignment was sent self, the railway receipt was taken in the name of the appellant and the railway receipt along with the bill of exchange was presented by the appellant to the Rajasthan Bank for companylection after endorsing the railway receipt in favour of the Rajasthan Bank. The goods were delivered to the buyers only when they paid the price to the bank and obtained the railway receipts endorsed in their favour. The fact that the goods are, by the bill of lading, made deliverable to the order of the seller or his agent is a prima facie reservation of the right of disposal so as to prevent the property from passing to the purchaser, if L9SSup or CI67 the seller deals with, or claims to retain, the bill of lading, order to secure the companytract price, as when he sends forward bill of lading with a bill of exchange attached, with direction that the bill of lading is number to be delivered to the purchaser acceptance or payment of the bill of exchange the appropriate is number absolute, but until acceptance of the draft, or payment tender of the price, is companyditional only, and until such acceptance or payment or tender the property in the goods does number to the pui-chaser.- Mirabita v. Imperial Ottoman Bank If the seller discounts a draft upon the buyer with a bank, a authorises the bank- to hand to the buyer a bill of lading to order of the seller and endorsed in blank- by him upon his acce, and of the draft, the intention to be inferred, according general mercantile understanding, is that the seller- intends transfer the ownership when the draft is accepted, but intends a to remain the owner until this has been done. So, when seller draws a hundi or a bill of exchange on the purchaserdelivers the hundi or the bill of exchange with a relative railway receipt to his own banker for the purpose of delivery of the railway receipt to tile purchaser on his honouring the hundi, the property in the goods cannot be held to pass to the purchaser till lie pays the price and takes delivery of the railway receipt from the banker. The matter is very clearly put by Lord Summer in Prinz Adalbert 2 as follows When a shipper takes his draft number as yet accepted but accompanied by a bill of lading, endorsed in this way, anid discounts it with a banker, he makes himself liable on the instrument as drawer, and he further makes the goods, which the bill of lading represents, security for its payment. If, in turn, the discounting banker surrenders the bill of lading to the acceptor against his acceptance, the inference is that he is satisfied to part with his security in companysideration of getting this further party s liability on the bill, and that in so doing he acts with the permission and by the mandate of the shipper Lind drawer. Possession of the indorsed bill of lading enables the acceptor to get possession of the goods on the ships arrival. If the shipper, being then owner of the goods. authorises and directs the banker, to whom he is himself liable and whose interest it is to companytinue to hold the bill of lading till the draft is accepted. to surrender the bill of lading against the acceptance of the draft, it is natural to infer that he intends to transfer the owner- ship whether this is done, but intends also to remain the owner until this has been done The general 1 1978 3 Ex. 1 . 164, 172, 2 1917 A.C. 580, 589, law infers under these circumstances that the ownership in the goods is transferred when the draft drawn against them is accepted. It was argued on behalf of the appellant that after the railway receipts had been endorsed in favour of the bank and the appellant got the companysideration by discount of the railway receipts the title in the goods had passed from the appellant to the Bank of Rajasthan which became thereafter the agent of the purchaser. We do number think there, is any substance in this argument. Before the Appellate Tribunal the case of the appellant was that the railway receipt and the bills were sent by it to the bank for companylection from the purchasers from, Part A and Part C States. It was held by the Appellate Tribunal that the letter dated July 8, 1948 alleged to have been written by the appellant was a faked document and numberinstructions were given to the Rajasthan Bank for discounting the appellants bills. Even assuming that the bank gave credit of part of the amount of some of the bills to the appellant, it is apparent from the companyditions specified in the discount form of the bank that the responsibility of the appellant did number cease till the bank realised payments from the purchaser The discount form of the bank provided The bank is sending the goods at the risk of the companysigning In case the bill is dishonoured by the purchaser the responsibility will be that of the companysignor and the bank will have the right to recover the amount from him In case the amount is number recovered from the purchaser, the bank has the right to debit the same amount to the account of the companysignor. It is clear therefore that when the appellant negotiated the hundi with the banker, the latter did so only as a part of its banking business. Even if there was a purchase of the hundi by the banker it cannot mean that there was a sale of the goods to the banker. In the first place, there was numberagreement between the banker and the seller for the sale of the goods. Secondly, the banker had only a security over the goods till the price was paid by the buyer. To hold otherwise would mean that the seller companymitted a breach of companytract with the buyer and sold the goods to the banker. That is, however, number the case. The appellant only performed his companytract with the buyer in accordance with the usual companymercial practice. Therefore if any money was paid by the bank to the appellant as price for the hundi, it was number the sale price of the goods in any sense and the bank was numberacting as The agent of the buyer. On the other hand, the purchase of the hundi by the bank was only a companyvenient arrangement between the bank and its own customer, the appellant, to L9Sup CI/67 19 9 70 avoid freezing of credit of the latter and it was done in the companyrse of its usual banking transactions. It follows therefore that the price of the goods sold can be held to be accrued only when the purchaser pays the price or enters into an arrangement with the bank which is the endorsee of the hundi for, till then, the latter will have a right of recourse against the appellant in case the hundi idishonoured. In the present case, the appellant became entitled to the purchase money only on the passing of title to the purchasers at Kodarma and Giridih in Part A and Part C States and it must therefore be held that the income accrued to the appellant in Part A and Part C States. We proceed to companysider the next companytention of the appellant, namely, that mica was extracted, processed, sorted, packed and despatched at Bhilwara in Part B State and there was accrual of a part of the income at Bhilwara and the appellant was, in any case, entitled to claim apportionment of the profits accrued. Counsel on behalf of the appellant placed reliance upon the decisions of this Court in C.I.T., Bombay v. Ahmedbhai Umarbhai ,Co. 1 and in The Anglo- French Textile Co. Ltd. v. C.I.T., Madras 1 , where it was pointed out that in the case of a companyposite business, for instance where a person carries on a manufacturing and selling business it was number possible to say that the ,only place where the profits accrue to him is the place of sale. The profits are received by him firstly for his business as a manufacturer and secondly for his trading operations and profit and loss has to be apportioned between these business according to the principles of accountancy.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 910 of 1964. Appeal from the judgment and order dated February 28, 1961 ,of the Mysore High Court in Regular Appeal No. M 70 of 1956. K. Krishna Menon, M. Veerappa, Sreedharan Nambiar, P. Singh and H. K. Puri, for the appellants. T. Desai, R. Thiagarajan and R. Ganapathy Iyer, for the respondent. The Judgment of the Court was delivered by Bachawat, J. By a registered deed dated September 4, 1900, a group of 19 persons forming a joint family-with companymunity of property governed by the Aliyasanthana Law of inheritance, formed themselves into two branches and divided the family pro- 9 3 3 perties. The second branch companysisted of the descendants of Sarasamma and Brahmi and some descendants of Nemakka-in all I 0 persons. The first branch companysisted of Nemakka and the rest of her descendants and her sister Sivadevi-in all 9 persons, In 1953, Damamma was the sole surviving member of the second branch. She was a nissanthathi kavaru, 70 years old having numberdescendants. In 1953, the members of the first branch instituted a suit against Damamma for partition of all the properties companyprised in the deed dated September 4, 1900, alleging that the deed effected a division for companyvenience of enjoyment and maintenance only and was number an absolute or out-right partition The defence of Darnamma was that the deed effected an outright partition. The trial companyrt accepted the plaintiffs companytention and passed a preliminary decree for partition. Darnamma filed an appeal in the Mysore High Court. During the pendency of the appeal she died and one Nagaveniamma claiming under her will was substituted in her place as her legal representative. The High Court held that the deed dated September 4, 1900, effected an out-right partition. On this finding, the High Court allowed the appeal, set aside the decree passed by the trial companyrt and dismised the suit. From this decree the present appeal has been filed under a certificate granted by the High Court. The joint family properties were formerly managed by its yajaman, one Manjappa. Upon his death, the parties to the deed dated September 4, 1900, apprehended disputes. The object of the deed was to prevent such disputes, and companysequential wastage of property and to preserve the dignity of the family. The family properties were divided into two parts, and a portion was allotted to each branch. The deed provided that the properties allotted to the first branch would be enjoyed by its members and would be mutated in Nemakkas name, and Siddappa, a member of this branch, would manage the properties, pay the tirve and cesses, and companyduct the maintenance of its members. The properties allotted to the second branch would be enjoyed by its members and would be mutated in the name of Nagu, a member of that branch, and Chandayia, another member of the branch, would manage the properties, pay the tirve and cesses, and companyduct the maintenance of its members. Parts of items 2 and 5 of the properties were allotted to the two branches, but the entire tirve, and cesses for the two items would be paid by the first branch, and the arrears of the tirve, if any, would form a charge on the properties allotted to the first branch. The deed provided that as regards the properties enjoyed as mentioned above by the members of the first branch, the members of the said branch and the descen- dants that shall be born to them in future should enjoy the same and as regards the properties enjoyed by the members of the second branch, the members of the said branch and the descendants that shall be born to them in future should enjoy the same 9 34 and in this manner, they should enjoy the properties separately. Further, after the lifetime of the member of the respective branches who obtains the kudathale of the properties allotted to the respective branches, the kudathale should be got entered successively in the name of the senior-most male or female member of the respective branches. The companymon debt of the family was apportioned between the two branches, and each branch would discharge its share of the debt and interest thereon as quickly as possible. If the manager of any branch allowed the interest to fall in arrears, the members of the branch would appoint another manager in his place. Each branch would have the power to execute documents creating a security over the properties allotted to it for payment of its share of the companymon debt. No member of the family would have the right to incur other debts. The deed provided that If any debt is borrowed, the very person who borrows the debt should discharge it with his personal liability and further, the movable and immovable properties of this family or the members of the family should number become liable for such debt. Another clause provided that These immovable pro- perties or any portion thereof and the right of maintenance of any individual should number be alienated in any manner by way of mortgage,. sale, gift, inulageni, artha mulageni and vaide geni. Contrary to this term, if alienation is made, such alienation should number be valid. The deed also provided If there are numberdescendants at all companypletely in the first branch, the members belonging to the second branch shall be entitled to the entire movable and immovable properties of the said first branch and if there are numberdescendants at all companypletely in the second branch, the mem- bers of the first branch shall be entitled to the entire movable and immovable properties of the said second branch. The sole question arising in this appeal is whether the deed dated September 4, 1900, effected a disruption of the joint family or whether it made a division for companyvenience of enjoyment and maintenance only. In 1900, when this deed was executed, one or more members of a joint family governed by the Aliyasanthana law of inheritance had numberright to claim a partition of the joint family properties, but by a family arrangement entered into with the companysent of all its members, the properties companyld be divided and separately enjoyed. In such families, an arrangement for separate possession and enjoyment without actual disruption of the family was companymon. An arrangement for separate enjoyment did number effect a disruption of the family, unless it companypletely extinguished the companymunity of interest in the family properties. The character of the deed dated September 4, 1900. must be judged in this background. The respondent relies on several features of the deed as indicative of an out-right partition. The properties were divided into two shares. Each branch was to enjoy its share in perpetuity from generation to generation without any interference from the other branch. There would be separate mutations and separate pattas in respect of the properties allotted to each branch. The assessments were to be paid separately. Each branch would have I separate manager. The share of the companymon debt allotted to each branch and the interest thereon would be paid separately. All these features companypled with other circumstances may indicate a companyplete disruption of the family. See Sulaiman v. Biyathumma 1 . But there are other features of the deed which indicate that it did number effect an out-right partition. The object of the deed was to prevent disputes and wastage of properties and to preserve the dignity of the family. In terms, the deed did number declare that there was a companyplete disruption of the family. In case of a partition, a Kutumba governed by the Aliyasanthana law is usually split up according to natural kavarus but under this deed, the Kutumba was split up into two artificial branches. The members of the two branches were restrained from incurring debts binding on the family properties and from alienating the properties or any portion thereof and granting any leases except in the ordinary companyrse of management. These restrictions were obviously placed for the purpose of preserving the family properties intact for the benefit of both branches. The High Court said that as the deed effected an out-right partition, the companyditions restraining alienations were void under Sec. 10 of the Transfer of Property Act. But the point in issue is whether the deed effected in out-right partition. The restrictions on alienation rather indicate that the parties did number intend to effect an. out-right partition, and they wanted a division for companyvenience of enjoyment on be. footing that neither branch had the right to alienate. If the family arrangement took effect as a division for companyvenience of enjoyment only, and number as an out-right partition, the restrictions on alienations were number hit by Sec. 10 of the Transfer of Property On the nissanthathi, its properties would pass to the members of the other branch. This clause indicates that on one branch becoming extinct, the properties allotted to it would pass by survivorship of the other branch. Had there been an out-right partition, the sole surviving kavaru would be entitled to dispose- of her separate property by a will under the provisions of the Malabar Wills Act 898. The absence of such a right indicates that the deed did number effect a companyplete disruption of the joint family. On a companysideration of the deed as a whole in all its parts, we are companystrained hold that the deed on its true companystruction did number effect an ,tit-right partition of the joint family. We may add that in a companypromise dated August 10, 1909 in O.S. No. 10 of 1909 to 1 32 M.L.J. 137 P.C. 9 Sup. C I/67 1 6 which the members of the second branch were parties, Damamma .solemnly admitted and declared that the deed was number a partition deed, but was a family arrangement for the companyvenient enjoyment of the properties by the members of the family so that the proper-ties may be increased and number wasted. Counsel for the respondent companytended that the deed should be deemed to have effected a partition of the joint family pro- perties under section 36 6 of the Madras Aliyasantana Act, 1949. This companytention was repelled by the trial companyrt and was number pressed in the High Court. Section 36 6 reads A registered family settlement by whatever name called or an award, to which all the major members of a kutumba are parties and under which the whole of the kutumba properties have been or were intended to be distributed, or purport to have been distributed, among all the kavarus of the kutumba for their separate and absolute enjoyment in perpetuity, shall be deemed to be a partition of the kutumba properties numberwithstanding any terms to the companytrary in such settlement or award. As was pointed out by Ramaswami J. in Kaveri v. Ganga Ratna 1 , the following four companyditions are the necessary prerequisites for the application of Sec. 36 6 1 there is a registered family settlement or award 2 all the major members of the kutumba are par- ties to it 3 the whole of the kutumba properties have been or were intended or purport to have been distributed under it and 4 the distribution is among all the kavarus of the kutumba for their separate and absolute enjoyment in perpetuity. The onus is upon the respondent to prove that the deed dated, September 4, 1900, satisfies all these four companyditions. The plea that the deed satisfies the companyditions of S. 36 6 , was number taken in the written statement, number was any issue raised on the point. The materials on the record do number show that the. deed satisfies all the companyditions of S. 36 6 . The trial companyrt found that though Damamma, a member of the kutumba, was a major on September 4, 1900, she did number execute the deed. The deed described her as a minor under the guardianship of Padmaraja. From the 1 1956 I.M.L.J. 98, IC6. 93 7 materials on the record it is number possible to say definitely that the whole of the kutumba properties was distributed under the deed. Moreover, S. 36 6 can apply only if the distribution was among all the kavarus of the kutumba. S. 3 b defines kavaru. Used in relation to a female, it means the group of persons companysisting of that female, her children and all her descendants in the female line, and used in relation to a male, it means the kavaru of the mother of that male. Having regard to the scheme of S. 36, we think that S. 36 6 applies to a family settlement under which the kutumba is split up according to kavarus as defined in S. 3 b and the kutumba properties are distributed among such kavarus. Section 36 6 cannot apply to the deed dated September 4, 1900, under which the kutumba was split up into two artificial groups, one companysisting of the descendants of Sarasamma and Brahmi and some descendants of Nemakka, and the other companysisting of Nemakka, the rest of her descendants and Sivadevi, and the properties were divided between these two artificial groups. It follows that the deed dated September 4, 1900, on its true companystruction, did number effect an out-right partition number can it be deemed to be a deed of partition under S. 36 6 of the Madras Aliyasantana Act, 1949. In -the result, the appeal is allowed without companyts, the judgment and decree passed by the High Court is sell aside, and the decree of the trial companyrt is restored.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Writ Petition No. 182 of 1966. Petition under Art. 32 of the Constitution of India for the enforcement of fundamental rights. C. Chatterjee, K. B. Roastagi, L. M. Singhvi and S. Balakrishnan, for the petitioner. B. Agarwala, G. C. Kasliwal, Advocate-General, Rajasthan, Indu Soni and K. Baldev Mehta, for respondent No. 1. S. Bindra, A. S. Nambiar and R. N. Sachthey, for respondent No. 2. Baldev Mehta and Indu Soni, for respondents Nos. 3 and 4. The Judgment of the Court was delivered by Ramaswami, J.-The petitioner, Sri Sant Ram Sharma has obtained a rule from this Court calling upon the respondents to show cause why a writ under Art. 32 of the Constitution should number be granted for quashing two orders of the State of Rajasthan, one dated March 22, 1966 whereby Sri Hanuman Sharma, respondent No. 3 was promoted as Inspector General of Police, Rajasthan superseding the petitioner, and the other dated April 28, 1966 promoting Sri Sultan Singh, respondent No. 4 as Additional Inspector General of Police superseding the petitioner. The petitioner has also prayed for a writ in the nature of mandamus companymanding respondents 1 2 to companysider the petitioners claim as the senior-most officer in Rajasthan to be promoted to the post of Inspector General of Police. Cause has been shown by Mr. C. B. Agarwala on behalf of the State of Rajasthan and the other respondents to whom numberice of the rule was ordered to be given. The petitioner, Sri Sant Ram Sharma was appointed to the Indian Police Service on June 10, 1952. On September 8, 1954 by a numberification of the Ministry of Home Affairs, Government of India, the Indian Police Service Regulation of Seniority Rules, 1954 came into force. Rule 6 of the said Rules required that a Gradation List of all Police Officers in the State should be maintained to ascertain their respective seniority. Accordingly, a Gradation List was prepared by the State of Rajasthan in August, 1955. In this Gradation List, the position of the petitioner was 5th. Sri Hanuman Sharma was shown as occupying the 7th position, Sri Sultan Singh stood 14th and the position of Sri Ganesh Singh was 17th. Rule 3 of the Indian Police Service Regulation of Seniority Rules, 1954 required that every officer shall be assigned a year the allotment in accordance with the provisions companytained in that rule. According to this rule the year of allotment of the petitioner was 1942, that of. respondent No. 3, Sri Hanuman Sharma 1943, and that of respondent No. 4, Sri Sultan Singh 1945. In April 1955 the question of companyfirmation of the petitioner and of the three other officers, namely, Sri Hanuman Sharma, Sri Sultan Singh and Sri Ganesh Singh to the rank of Deputy Inspector General of Police was taken up. It was decided by the State of Rajasthan that the petitioner should be superseded and the three officers, Sri Hanuman Sharma, Sri Sultan Singh and Sri Ganesh Singh should be companyfirmed in the rank of Deputy Inspector General of Police. The case of the petitioner is that in June, 1959 Sri Hanuman Sharma was promoted as Special Inspector-General of Police and on June 2, 1961 the post was encadred and Sri Hanuman Sharma was companyfirmed in that post. It appears that, on March 22, 1966, Sri Hanuman Sharma was promoted as Inspector General of Police, Rajasthan and on April 28, 1966 Sri Sultan Singh was promoted as Additional Inspector General of Police superseding the petitioner. The numberifications of the State of Rajasthan dated March 22, 1966 and April 28. 1966 are annexures G and H to the writ petition. The companytention of the petitioner is that he was entitled, as a matter of right, to be appointed as Deputy Inspector General of Police in 1955 and as Inspector General of Police in 1966 as he was shown as the senior-most officer in the Gradation List and the orders of the State of Rajasthan in annexures G and H are in violation of the provisions of Rule 6 of the Indian Police Service Regulation of Seniority Rules, 1954. It was also companytended for the petitioner that his claim was number companysidered in 1955 at the time of companyfirmation of respondents 3 and 4 as Deputy Inspector General of Police or in 1966 at the time of promotion of respondents 3 and 4 to the posts of Inspector General of Police and Additional Inspector General of Police respectively. It was therefore said that the fundamental rights of the petitioner under Arts. 14 and 16 have been violated and the orders of the State of Rajasthan dated March 22, 1966 and April 28, 1966 should be quashed by the grant of a writ in the nature of certiorari with a direction to the 1st respondent to companysider the petitioners claim N1sC1-9 afresh for being promoted to the post of Inspector General of Police. The allegations of the petitioner have been companytroverted by the State of Rajasthan in its companynter-affidavit. It was said that the posts of Inspector General of Police, Additional Inspector General of Police and Deputy Inspector General of Police are selection posts which carry pay above the time-scale of pay and for appointment to these selection-posts an officer is chosen number merely on the basis of his rank in the Gradation List but on the record of his merit and past experience in the Police Department. The petitioner was appointed to the Indian Police Service on June 10, 1952 but even before that date Sri Hanuman Sharma, Sri Sultan Singh and Sri Ganesh Singh were appointed to the Indian Police Service in 1951 and they were already officiating as Deputy Inspector General of Police. Sri Hanuman Sharma and Sri Sultan Singh were officiating since April 22, 1952 and Sri Ganesh Singh since May 17, 1952. The petitioner was companyfirmed in the Senior Scale of Indian Police Service on June 10, 1954 but the other three officers were companyfirmed in the Senior Scale of the Indian Police Service on March 24, 1953, i.e., more than a year before the companyfirmation of the petitioner. When the question of companyfirmation of the officers to the post of Deputy Inspector General of Police arose in 1955, the State of Rajasthan companysidered the companyparative merit of all the officers companycerned including that of the petitioner and it was decided to companyfirm respondents 3 4 and Sri Ganesh Singh as Deputy Inspector General of Police in preference to the petitioner in view of their outstanding record and merit and experience in the Police Department. As regards the promotion of respondent No. 3 to the post of Inspector General of Police and of respondent No. 4 to the post of Additional Inspector General of Police, it was stated that the petitioner had numberright to the selection posts carrying pay above the time-scale of pay and that the appointment to those posts was at the discretion of the State of Rajasthan which decided the question after taking into companysideration the merit of all the officers companycerned. It was further stated that the power of appointment was number exercised arbitrarily but was exercised in the interest of efficiency and good administration and that the promotion to selection posts was on the basis of merit alone and it was only in a case where the merit of the two officers was equal that the seniority of one officer in the Gradation List might tilt the case in his favour. It was denied by the respondent that there was any violation of the Indian Police Service Regulation of Seniority Rules, 1954. The question for determination in this case is whether the petitioner was entitled, as of right, to be promoted as Deputy Inspector General of Police in 1955 or as Inspector General of Police in 1966 merely on the ground that his name stood first in the Gradation List prepared under Rule 6 of the Indian Police Service Regulation of Seniority Rules, 1954. Sub-section 1 of s. 3 of the All India Services Act, 1951 LXI of 1951 empowers the Central Government to make rules for the regulation of recruitment and companyditions of service of persons appointed to an All-India Service. In exercise of this power the Central Government framed the Indian Police Service Regulation of Seniority Rules, 1954. Rule 2 a provides that Cadre means an Indian Police Service Cadre companystituted in accordance with rule 3 of the Indian Police Service Cadre Rules, 1954. Rule 2 d defines gradation list to mean a gradation list prepared under rule 6. Rule 2 g defines a senior post to mean a post Included under item 1 of each Schedule to the Indian Police Service Fixation of Cadre Strength Regulations, 1955 or any post declared equivalent thereto by the State Government companycerned. Rule 3 deals with the assignment of year of allotment and reads as follows- Every officer shall be assigned a year of allotment in accordance with the provisions hereinafter companytained in this rule. The year of allotment of an officer in service at the companymencement of these rules shall be the same as has been assigned to him or may be assigned to him by the Central Government in accordance with the orders and instructions in force immediately before the companymencement of these rules The year of allotment of an officer appointed to the Service after the companymencement of these rules, shall be- a where the officer is appointed to the Service on the results of a companypetitive examination, the year following the year in which such examination was held b where the officer is appointed to the Service by promotion in accordance with rule 9 of the Recruitment Rules, the year of allotment of the junior-most among the officers recruited to the Service in accordance with rule 7 of those Rules who officiated companytinuously in a senior post from a date earlier than the date of companymencement of such officiation by the former Provided that the year of allotment of an officer appointed to the Service in accordance with rule 9 of the Recruitment Rules who started officiating companytinuously in a senior post from a date earlier than the date on which any of the officers recruited to the Service, in accordance with rule 7 of those Rules, so started officiating shall be determined ad hoc by the Central Government in companysultation with the State Government companycerned Rule 4 relates to seniority of officers and reads as follows - 4. 2 The seniority of officers in service at the companymencement of these rules shall be as has been determined or may be determined by the Central Government in accordance with the orders and instructions in force immediately before the companymencement of these rules Provided that where the seniority of an officer appointed in accordance with rule 9 of the Recruitment Rules has number been determined before the companymencement of these rules, his seniority shall be determined in accordance with the provision in sub-rule 3 . Rule 5 deals with seniority of officers placed in List II and List III by the Special Recruitment Board and Rule 5-A deals with seniority of officers appointed under the Indian Police Service Special Recruitment Regulations. 1957. Rule 6 states Gradation List.-There shall be prepared every year for each State Cadre and Joint Cadre a gradation list companysisting of the names of all officers borne on that Cadre arranged in order of seniority in accordance with the provisions of rules 4, 5, 5-A and 7. On behalf of the petitioner Mr. N. C. Chatterjee put forward the argument that Rule 6 required that a gradation list should be prepared strictly in order of seniority in accordance with the provisions of Rules 4, 5, 5-A and 7 and it is number open to the State of Rajasthan to disregard the claim of the petitioner who stood first in the Gradation List and to promote respondents 3 4 to the rank of Deputy Inspector General of Police. We are unable to accept the argument put forward on behalf of the petitioner as companyrect. it is apparent from a perusal of Rules 3 and 8 of the Indian Police Service Pay Rules, 1954 read with Part B of Sch. III of those Rules that the posts of Deputy Inspector General of Police, Additional Inspector General of Police and Inspector General of Police in Rajasthan State are selection posts and outside the junior and senior time- scales of pay. Rule 2 a provides that Cadre and Cadre post shall have the meanings respectively assigned to them in the Indian Police Service Cadre Rules, 1954. Rule 3 prescribes the time-scales of pay admissible to members of the Service and reads as follows Time-scales of pay-The time-scales of pay admissible to a member of the Service shall be as follows - Junior Scale-Rs. 350-350-380-380-30-590- B.--30-770---40-850 19 years . Senior Scale.-Rs. 600 6th year under -40- 1.0001,000-1,050-1,050-1,100-1,100-1.150 22 years. Selection Grade-Rs. .1,250. Provided that a member of the Service holding a post in the senior time-scale may be appointed to a post in the selection grade and where he is so appointed, he shall be entitled to draw pay of the post in the selection grade Provided further that a member of the Service to whom any other time-scale of pay was admissible under any order in force immediately before the companymencement of these rules shall companytinue to draw pay in that scale. The rule prescribes two scales of pay-Junior Scale and Senior Scale in addition to the Selection Grade which is Rs. 1,250. Rule 8 deals with pay of officers holding posts enumerated in Schedule III and states as follows - Any member of the Service appointed to hold a post specified in Schedule 111, shall, for so long as he holds that post, be entitled to draw the pay indicated for that post in the said Schedule Provided that numbermember of the Service shall at any time draw pay less than that which he is entitled to draw tinder rule 4 and rule 5 Provided further that a member of the Service to whom any other special pay or pay above the time-scale was .admissible under any order in force immediately before the companymencement of these rules for holding posts specified in Schedule III shall, for so long as he holds the post, companytinue to draw the same pay. The posts in the Schedule are a posts carrying pay above the timescale pay of the Indian Police Service under the State Governments, specified in Section A, b posts carrying pay in the senior time-scale of the Indian Police Service under the State Governments including posts carrying special pay in addition to pay in the time-scale specified in Section B and c posts carrying pay above the timescale or special pay in addition to pay in the time-scale, under the Central Government held by members of the Service, specified in Section C. In category a so far as the State of Rajasthan is companycerned the posts of Inspector General of Police, Additional Inspector General of Police and Deputy Inspector General of Police are shown as Selection Grade posts carrying pay above the time-scales of pay. It is manifest therefore, on a perusal of Rules 3 and 8 read with Part B of Sch. III, that the three posts of Inspector General of Police, Additional Inspector General of Police and Deputy Inspector General of Police in Rajasthan are Selection posts and outside the junior and senior time- scales of pay mentioned in Rule 3. This companyclusion is also supported by para 1 of Part B of Sch. III which states that the number of posts in the selection grade in a State Cadre shall be equal to twenty per centum of the total number of senior posts borne on that cadre reduced by the number of posts carrying pay above the time-scale. In support of his companytention Mr. N. C. Chatterjee referred to the decision of this Court in P. C. Wadhwa v. Union of India. 1 But the ratio of that case has numberbearing on the question presented for determination in the present case. The question involved in that case was whether under the relevant rules governing the Indian Police Service, a member thereof was entitled as of right to be promoted to a post in the senior scale as and when a vacancy except a vacancy in the promotion quota arose therein and numberone senior to him was available for that post. It was held by the majority of the learned Judges that a companysideration of the various rules would make it clear beyond doubt that a person in the junior time-scale of the service is as much a cadre officer as one holding a post in the senior time-scale or a post above the timescale and the whole scheme of the rules indicated that a person in the junior scale of pay had a right to hold a post on the senior scale of pay subject to the availability of a post in the senior scale of pay and his seniority in the junior scale of pay. At page 627 of the Report Mudholkar, J. in the companyrse of his judgment expressly observed-we should number be understood as saying that this right extends to the appointment to a post carrying pay above time-scale of pay or a post carrying a special pay, and the rules governing appointment to such posts were number placed before us. The decision of this Court in P. C. Wadhwa v. Union of India 1 is therefore of numberassistance to the petitioner and for the reasons we have already given, we are of the opinion that the three posts of Inspector General of Police, Additional Inspector General of Police and Deputy Inspector General of Police in Rajasthan State are selection posts and outside the junior or senior time-scales of pay. If these three posts are selection posts it is manifest that the State of Rajasthan is number bound to promote the petitioner merely because he stood first in the Gradation List. The circumstance that these posts are classed as Selection Grade Posts itself suggests that promotion to theme posts is number automatic being made only on the basis of ranking in the Gradation List but the question of merit enters in promotion to selection posts. In our opinion, the respondents are right in their companytention that the ranking or position in the Gradation List does number companyfer any right on the petitioner to be promoted to selection posts and that it is a well-established rule that promotion to selection grades or selection posts is to be based primarily on merit and number on seniority alone. The principle is that when the claims of officers to selection posts is under companysideration, seniority should number be regarded except where the merit of the officers is judged to be equal and numberother criterion is therefore available. The administrative practice with regard to selection posts is laid down in a letter of the Government of India dated July 31 ,August, 3, 1954 as follows - .lm15 If a person, though senior in the gradation list, is appointed to the selection post later than his junior, this is presumably because he is superseded as a matter of selection. 1 1964 4 S.C.R. 598. If this is so, it would certainly number be unjustified to regard the officer so selected earlier, though junior in the gradation list, as senior to the other officer, as far as the selection posts are companycerned. Another companymunication dated June 1, 1955 states All super-time scale posts are selection posts and appoint- ment thereto need number follow the order of seniority. In another letter No. 7/6/56-AIS 1 dated October 5, 1956 the Government of India has reiterated the principle of promotion to selection grade posts as follows I am directed to say that the Government of India have recently had. occasion to companysider the question of the principles to be followed in the matter of promotion of I.P.S. Officers to the selection Grade when some of the officers junior in service were approved and given officiating chances in such selection grades earlier than their seniors. It is, of companyrse, a well established principle that promotions to the Selection Grade or a selection post is to be based primarily on merit and number seniority in the service We proceed to companysider the next companytention of Mr. N.C. Chatterjee that in the absence of any statutory rules governing promotions to selection grade posts the Government cannot issue administrative instructions and such administrative instructions cannot impose any restrictions number found in the Rules already framed. We are unable to accept this argument as companyrect. It is true that there is numberspecific provision in the Rules laying down the principle of promotion of junior or senior grade officers to selection grade posts. But that does number mean that till statutory rules are framed in this behalf the Government cannot issue administrative instructions regarding the principle to be followed in promotions of the officers companycerned to selection grade posts. It is true that Government cannot amend or supersede statutory rules by administrative instructions, but if the rules are silent on any particular point Government can fill up the gaps and supplement the rules and issue instructions number inconsistent with the rules already framed. In B. N. Nagarajan v. State of Mysore, 1 it was pointed out by this Court that it is number obligatory under the proviso to Art. 309 of the Constitution to make rules of recruitment, etc., before a service can be companystituted or a post created or filled, and, secondly, the State Government has executive power, in relation to all matters with respect to which the Legislature of the State has power, to make laws. It follows from this that the State Government will have executive power in respect of Sch. 7, List II. Entry 41, State Public Services, and there is numberhing in the terms of Art. 309 of the Constitution which abridges the power of the executive to act under Art. 162 of the Constitution without a law. A similar view 1 1966 3 S.C.R. 682. was taken by this Court in T. Cajee v. U. Jormanik Siem 1 where Wanchoo, J., as he then was, who delivered judgment on behalf of the majority, observed as follows at pp. 762-764 of the Report The High Court has taken the view that the appointment and succession of a Siem was number an administrative function of the District Council and that the District Council companyld only act by making a law with the assent of the Governor so far as the appointment and removal of a Siem was companycerned. In this companynection, the High Court relied on para. 3 1 g of the Schedule, which lays down that the District Council shall have the power to make laws with respect to the appointment and succession of Chiefs and Headmen. The High Court seems to be of the view that until such a law is made there companyld be numberpower of appointment of a Chief or Siem like the respondent and in companysequence there would be numberpower of removal either. With respect, it seems to us that the High Court has read far more into para. 3 1 g than is justified by its language. Paragraph 3 1 is in fact something like a legislative list and enumerates the subjects on which the District Council is companypetent to make laws. Under para. 3 1 g it has power to make laws with respect to the appointment or succession of Chiefs or Headmen and this would naturally include the power to remove them. But it does number follow from this that the appointment or removal of a Chief is a legislative act or that numberappointment or removal can be made without there being first a law to that effect. Further once the power of appointment falls within the power of administration of the district the power of removal of officers and others so appointed would necessarily follow as a companyollary. The Constitution companyld number have intended that all administration in the autonomous districts should companye to a stop till the Governor made regulations under para. 19 1 b or till the District Council passed laws under para. 3 1 g . The Governor in the first instance and the District Councils thereafter were vested with the power to carry on the administration and that in our opinion included the power to appoint and remove the personnel for carrying on the administration. Doubtless when regulations are made under para. 19 1 b or laws are passed under para. 3 1 with respect to the appointment or removal of the personnel of the administra- tion, the administrative authorities would be bound to follow the regulations so made or the laws so passed. But from this it does number follow that till the regulations were made or the laws were passed, there companyld be numberappointment or dismissal of the personnel of the administration. In our opinion, the authorities companycerned would at all relevant times have the power to appoint or remove administrative personnel under the general power of administration vested in them by the Sixth Schedule. The view therefore taken by the High Court that there companyld be numberappointment or removal by the District Council without a law having been first passed in that behalf under para. 3 1 g cannot be sustained. We pass on to companysider the next companytention of Mr. N.C. Chatterjee that if the executive Government is held to have power to make appointments and lay down companyditions of service without making rules in that behalf under the proviso to Art. 309, there will be a violation of Arts. 14 and 16 because the appointments would be arbitrary and capricious. In our view, there is numbersubstance in this companytention of the petitioner. If the State of Rajasthan had companysidered the case of the petitioner along with the other eligible candidates before appointments to the selection posts there would be numberbreach of the provisions of Arts. 14 and 16 of the Constitution because everyone who was eligible in view of the companyditions of service and was entitled to companysideration was actually companysidered before promotion to those selection posts was actually made. It was said by Mr. B. Agarwala on behalf of the respondents that an objective evaluation of the merit of the officers is made each year and promotion is made on scrutiny of the record- sheets dealing with the companypetence, efficiency and experience of the officers companycerned. In the present case, there is numberspecific allegation by the petitioner in the writ petition that his case was number companysidered along with respondents 3 4 at the time of promotion to the posts of Deputy Inspector General of Police in 1955 or to the rank of Inspector General of Police or Additional Inspector General of Police in 1966. There was, however, a vague suggestion made by the petitioner in paragraph 68 of his rejoinder- petition dated July 17, 1967 that the State Government companyld number have possibly companysidered my case, as they companysidered and even in this companynter-affidavit companysider Shri Hanuman Sharma and Sri Sultan Singh senior to me by the new type of seniority they have invented for their benefit. Even though there is numberspecific allegation by the petitioner that there was numberconsideration of his case, respondent No. 1 has definitely asserted in paragraphs 23, 25, 40 and 44 of the companynter-affidavit that at the time of promotion of respondents 3 4 to the selection posts of Deputy Inspector General of Police and of Inspector General of Police the case of the petitioner was companysidered. We are therefore of the opinion that the petitioner is unable to substantiate his argument that there was numberconsideration of his case at the time of promotion of respondents 3 4 to the selection posts. We must therefore proceed on the footing that respondent No. 1 had companysidered the case of the petitioner and taken into account the record, experience and merit of the petitioner at the time of the promotion of respondents 3 4 to the selection grade posts. It is therefore number possible to accept the argument of Mr. N. C. Chatterjee that there was any violation of the companystitutional guarantee under Arts. 14 and 16 of the Constitution in the present case. Mr. N. C. Chatterjee argued that the introduction of the idea of merit into the procedure of promotion brings in an element of personal evaluation, and that personal evaluation open is the door to the abuses of nepotism and favouritism, and so, there was a. violation of the companystitutional guarantee under Arts. 14 and 16 of the Constitution. We are unable to accept this argument as well-founded. The question of a proper promotion policy depends on various companyflicting factors. It is obvious that the only method in which absolute objectivity can be ensured is for all promotions to be made entirely on grounds of seniority. That means that if a post falls vacant it is filled by the person who has served longest in the post immediately below. But the trouble with the seniority system is that it is so objective that it fails to take any account of personal merit. As a system it is fair to every official except the best ones an official has numberhing to win or lose provided he does number actually become so inefficient that disciplinary action has to be taken against him. But, though the system is fair to the officials companycerned, it is a heavy burden on the public and a great strain on the efficient handling of public business. The problem therefore is how to ensure reasonable prospect of advancement to all officials and at the same time to protect the public interest in having posts filled by the most able men? In other words, the question is how to find a companyrect balance between seniority and merit in a proper promotion-policy. In this companynection Leonard D. White has stated as follows- The principal object of a promotion system is to secure the best possible incumbents for the higher positions, while maintaining the morale of the whole Organisation. The main interest to be served is the public interest, number the personal interest of members of the official group companycerned. The public interest is best secured when reasonable opportunities for promotion exist for all qualified employees, when really superior civil servants are enabled to move as rapidly up the Promotion ladder as their merits deserve and as vacancies occur, and when selection for promotion is made on the sole basis of merit. For the merit system ought to apply as specifically in making promotions as in original recruitment. Employees often prefer the rule of seniority, by which the eligible longest in service is automatically awarded the promotion. Within limits, seniority is entitled to companysideration as one criterion of selection. It tends to eliminate favouritism or the suspicion thereof and experience is certainly a factor in the making of a successful employee. Seniority is given most weight in promotions from the lowest to other subordinate positions. As employees move up the ladder of responsibility, it is entitled to less and less weight. When seniority is made the sole determining factor, at any level. it is a dangerous guide. It does number follow that the employee longest in service in a particular trade is best suited for promotion to a higher grade the very opposite may be true. Introduction to the Study of Public Administration, 4th Edn., pp. 380, 383 . As a matter of long administrative practice promotion to selection grade posts in the Indian Police Service has been based on merit and seniority has been taken into companysideration only when merit of the candidates is otherwise equal and we are unable to accept the argument of Mr. N. C. Chatterjee that this procedure violates, in any way, the guarantee under Arts. 14 and 16 of the Constitution. For the reasons expressed we hold that the petitioner has been unable to make out a case for the grant of a writ under Art. 32 of the Constitution.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 440 of 1966. Appeal by special leave from the order dated May 30, 1964 of the Central Government Labour Court, Dhanbad in Application No. L.P. 123 of 1962. R. Gokhale, C. A.,Chopra, P. C. Bhartari, land 0. C. Mathur, for the appellant. Janardan Sharma, for the respondent. The Judgment of the Court was delivered by Vaidialingam, J. This appeal, by special leave, by the appellant Bank, is directed against the order, dated May 13, 1964, of the Central Labour Court, Dhanbad, rejecting an application, filed by the Bank, under s. 33 2 b , of the Industrial Disputes Act, 1947 Act XIV of 1947 hereinafter called the Act , and declining to grant approval of the action taken, by the Bank, by way of discharging the respondent-workman, from the Banks services. The respondent was, at the material time, the Assistant Ac- companyntant, at the main Office of the Bank, at Calcutta. In view of certain serious irregularities, numbericed by the Bank, in respect of the work of the respondent in the Current Accounts Department and, in particular, in current account ledgers Nos. 4 and 6, by order dated March 8, 1961, the respondent was suspended, with immediate effect. He was also informed that the charges against him would be companymunicated, in due companyrse. By a further companymunication, dated March 13/14, 1961, the respondent was required to offer his explanation, in respect of four allegations made in the said companymunication. The main allegations were that, in respect of ledger accounts Nos. 4 and 6, standing in the names of Messrs. Commercial Bureau and Messers Evergreen Paper Syndicate and Messrs. Gokul Chand Radharam, respectively, overdrafts had been allowed, by the respondent, from time to time, without obtaining the sanction of the authorities companypetent to allow overdrafts. The other allegations were to the effect that the respondent, who was charged with the duty of supervising both these ledgers. did number bring to the numberice. of the authorities the said irregularities, that must have companye to his knowledge, and that the pass -book of ledger No. 4 was missing. The respondent sent a reply, dated March 17, 1961, wherein he has admitted that, in the companyrse of discharge of his routine duties and responsibilities, in good faith and honestly, he had granted overdrafts to the parties referred to, by the Bank, temporarily, in excess of their credits or limits, without reference to the higher authorities. He also admitted that it was a blunder on his part and that he should number have done so. He offered an explanation to, the effect that he was led to believe in the credit-worthiness of the individuals, because of their long association with the Bank and also because of the fact that, on prior occassions, overdrafts had been granted to them, in excess of permissible limits. He also stated that the Bank had number been put to any financial loss because of his having granted the overdrafts but, he again admitted his negligence, in number strictly abiding by the Banks rules, when he made the overdrafts. He, however, added that his companyduct had always been guided by good faith and honesty. This Was the answer, regarding the main allegations, companytained in the Banks letter, dated March 13/14, 1961. He also stated, regarding the other minor allegations, that it was number his duty to report about the debit balances, which was the function of the ledger- keeper, and that he was number also responsible for the loss of the pass book, of ledger No. 4. He wound-up his explanation by stating that his companyduct, in making the overdrafts, without obtaining the sanction of the higher authorities,, was an omission which had been, unfortunately, companymitted by him, and he expresed regret for the same and requested the management to excuse him, accepting his explanation. The appellant Bank was number satisfied with the explanation offered by the respondent, and companymunicated a charge-sheet, on June 3, 1961. The main charges related to the overdrafts, paid by the respondent, in ledger Nos. 4 and 6, without obtaining the permission of the proper sanctioning authority. The Bank also informed the respondent that he would, be given a further opportunity to explain his companyduct, in relation to those matters, and defend himself in the enquiry which would be held by the Agent of the Bank, on June 20, 1961, at 3.30 p.m. The respondent again sent a reply, dated July 11, 1961, to the charge-sheet served on him. In this reply also, he admitted that, in the companyrse of discharge of his routine duties and responsibilities, he had allowed the parties, mentioned in the charge-sheet, to overdraw, in excess of their credits, without reference to the higher authorities, and that it was a blunder on his part which he should number have companymitted. But, he again reiterated that he, in good faith and bona fide, was led to believe about the credit- worthiness of the parties, who had long association, with the Bank. He also emphasized, here again, that the Bank had number been put to any financial loss, because of his companyduct. He again admitted that this act of permitting the parties companycerned to overdraw, in excess of their limits, without reference to the sanctioning authorities, amounted to negligence, but his companyduct was perfectly bona fide and honest. He also offered explanation, on the minor alle- gations, to the effect that it was the duty of the ledger- keeper to give the figures regarding the overdrafts and that he had number done any mis-reporting to the higher authorities. Finally he made a plea that he had been serving the institution for over 20 years without any blemish, and the unfortunate omission, done by him, in the matter of number taking the sanction of the higher authorities, might be excused, accepting his expression of regret, The inquiry proceedings companyducted by the Agent, who was the Inquiry Officer , produced before the Labour Court, shows that the respondent was examined in the first instance. After eliciting answers regarding the duration of his employment, in the institution, and as to the nature of the work he was discharging, he was asked about the charge-sheet served on him, as well as the explanation, furnished by him. The respondent has categorically answered to the effect that he has understood the charge-sheet and that he does number want to add anything more to the explanation that he has already submitted. This answer must have reference to the explanation, furnished by him, on June 20, 1961, in answer to the charge-sheet, wherein he has admitted his mistake in sanctioning the overdrafts, to the parties companycerned, with- out obtaining the sanction of the appropriate authorities. But, inasmuch as he has stated, in his explanation, that on prior occasions also overdrafts have been allowed beyond the permissible limits, certain questions were put to him, in respect of those matters. The respondent, numberdoubt, appears to have stated that some of the cheques, issued to the parties companycerned, have been initialled by an Officer of the Bank, Mr. Bhatena. The respondent, again, squarely admitted, in his answers, that he has companymitted a blunder in granting advances, on his own responsibility, of about Rs. 87,000. He has also admitted that he did number make any reference to the Agent, when passing the cheques, regarding the accounts of Messrs. Evergreen Paper Syndicate or Messrs. Gokul Chand Radharam. During the companyrse of the inquiry, the respondent was allowed to search the records companycerned, and trace, if possible, any cheques that may have been initialled by Mr. Bhatena, and numbersuch cheque companyld be traced. Inasmuch as three other officers, whose companyduct was being enquired into, had made certain statements against the respondent, the latter was asked as to whether he wanted to examine, or cross-examine those persons and the respondent very clearly stated that he did number like to cross-examine anybody. The Management then examined Mr. Bhatena and Mr. Savkar, two Officers of the Bank, in the presence of the respondent. It is also seen that the respondent has also put certain questions to those two witnesses and he has also stated that he has numberfurther questions to be put to them. At the companyclusion of the recording of the evidence, it is seen that the respondent finally made an appeal to the Enquiring Officer to companysider his case sympathetically, at the same time admitting his acts of omission, in the discharge of his duties. He has also expressed his gratitude for the patient hearing that has been given to him during the inquiry. The Enquiry Officer, in his report, dated November 10, 1961, has, after referring to the nature of the enquiry companyducted by him, found the respondent guilty of the main charges of having permitted the parties companycerned, to obtain overdrafts, beyond the permissible limits, without having obtained the sanction of the appropriate authorities. In this companynection, the Enquiry Officer has referred to the fact that these allegations have been admitted by the respondent. Regarding the other minor allegations, that the respondent caused other officers to record debit balances incorrectly, and the loss of the pass book relating to ledger No. 4, the respondent was exonerated. The Enquiry Officer was of the view that the offence companymitted by the respondent, of which he had, been found guilty, was very serious which merited dismissal but, in view of the long number of years of service put in by the respondent and as numberloss has resulted to the Bank itself, he held that the respondent should be discharged from service. The Bank companymunicated the order of discharge, by its letter, dated June 27, 1962, enclosing a pay-order for Rs. 472.70 being the wages for one month, viz., July 1962. The respondent, who had a right to file an appeal, against this order of discharge, based upon the finding of the Enquiry Officer, does number appear to have had recourse to any appeal, but, on the other hand, filed a representation, dated July 11, 1962, before the Managing Director of the appellant Bank. Even in this representation, he has number, in any manner, attacked the enquiry proceedings, number the findings recorded by the Enquiry Officer. On the other hand, he again admitted his fault in having permitted, overdrafts, to the parties companycerned, without obtaining the sanction of the appropriate authorities after expressing regret for his companyduct. He also stated that the Bank had number suffered any financial loss, because of his companyduct. Having due regard to these circumstances, he made a plea for mercy being shown to him, by cancelling the order of discharge and permitting him to resume his duties in the Bank. The Managing Director, by his companymunication, dated September 17, 1962, rejected the representation made by the respondent, and declined to reinstate him in the Banks service. In the meanwhile, inasmuch as an industrial dispute was pending before the National Industrial Tribunal, the appellant had filed, an application, before the said Tribunal, on March 17, 1962, under s. 33 2 of the Act, seeking approval of the action taken against the respondent, on the basis of the recommendation of the Enquiry Officer. This application was transferred to the Central Government Labour Court, Dhanbad, on April 18, 1962. in the objections, dated September 2, 1963, filed by the respondent before the Labour Court, for the first time he raised the plea that in view of the advice given by the officers of the Bank, he sent replies admitting his guilt regarding the allegations made against him, by the Bank. He also raised the plea that the overdrafts, that were given by him, to the parties companycerned, were really due to oral orders given by the then Agent and the Superintendent, on telephone. He also raised the plea that he was number allowed to represent his case, through the Union, before the Enquiry Officer, number was he allowed to cross- examine the persons making allegations against him. We have elaborately referred to the matters, mentioned above, because the question, that arises for companysideration, in this appeal, is as to the companyrectness of the view of the Labour Court, that the domestic enquiry companyducted by the Bank, as against the respondent, is number fair and that principles of natural justice have been violated. The Labour Court, by its order under attack. has held that the domestic enquiry, companyducted by the Bank, is number proper and that rules of natural justice have number been observed and, in companysequence, it has declined to grant the approval, sought for, by the Bank. At this stage, it may be mentioned that the Labour Court has held in favour of the management, that it has companyplied with the proviso to s. 33 2 b of the Act, as interpreted, by this Court, in its decision in Strawboard Manufacturing Co. Gobind 1 . That is, it has held that the action of the Bank, by way of discharge, payment of wages and making of the application for approval, have been taken as part of the same transaction. For companying to the companyclusion that the inquiry proceedings are violative of the rules of natural justice, the Labour Court has given three reasons i in the inquiry, the respondent has been examined, even in the first instance, and he was cross-examined, to elicit points in support of the charges ii the respondent was number allowed to crossexamine witnesses and iii the respondent was prejudiced, in his defence, as he had to companyduct his defence without the assistance of the Union, during the enquiry. There can be numbercontroversy that the principles of natural justice must be observed, in the companyduct of a domestic enquiry, and the workman, companycerned, must be allowed reasonable opportunity to defend himself. It has also been held, by this Court, that rules of natural justice require that the workman, proceeded against, should be informed clearly of the charges levelled against him witnesses should be numbermally examined in the presence of the employee, in respect of the charges if statements, taken previously and given by witnesses, are relied on, they should be made available to the workman companycerned the workman should be given a fair opportunity to examine witnesses, including him-self in support of his defence and the Enquiry Officer should record his findings, based upon the evidence so adduced. So far as grounds Nos. 2 and 3, given by the Labour Court are companycerned, it is clear from the record of the enquiry proceedings, that the respondent was permitted to put questions to Mr Bhatena and Mr. Savkar, who were examined, during the enquiry 1 1962 Supp. 3 S.C.R. 618. We have also referred to the fact that the Enquiry Officer has recorded that the respondent has stated that he has numberfurther questions to be put to them. We have also referred to the fact that the inquiry proceedings show that the respondent was specifically asked as to whether he wanted to examine or cross-examine the three other Officers, whose companyduct was also under enquiry, and who had made certain statements against the respondent but the respondent categorically stated that he did number like to examine or cross-examine any of those persons. The respondent has number stated, even in the representations made by him to the Managing Director, that he was number given any opportunity to cross-examine the witnesses produced in the inquiry. Again, even in his evidence before the Labour Court, the respondent has categorically stated that he has number made any request, in writing, for being represented by the Union, at the inquiry. Apart from the fact that he has numbersuch right, even factually it is seen that he made numbersuch request. Therefore the findings of the Tribunal that the respondent was number permitted to cross-examine the witnesses during the domestic enquiry, and, that he was prejudiced in his defence because he was number permitted to have the assistance of the Union, are both erroneous. Then the question is as to whether the inquiry proceedings can be companysidered to have been companyducted in violation of the rules of natural justice, inasmuch as the respondent was examined, even in the first instance. We have already indicated that, as a fact, it is borne out by the records that the respondent, so far as the inquiry against him was companycerned, was examined, in the first instance, and Mr. Bhatena and Mr. Savkar, were examined later. According to the Labour Court, the object of the management, in examining the respondent, in the domestic enquiry even in the first instance, was to have the charges substantiated by statements got out of the mouth of the employee, rather than to examine witnesses for the Bank, in support of the charges. It is the further view of the Labour Court that the respondent has been, so to say, cross-examined, just to elicit points in substantiation of the charges. These circumstances, according to the Labour Court, violate the principles of natural justice and, as such vitiate the domestic enquiry. In this companynection, the Labour Court has relied upon certain observations, companytained in the judgment of this Court in Associated Cement Co. Ltd., v. Workmen 1 viz. It seems to us that it is number fair in domestic enquiries against industrial employees that at the very companymencement of the enquiry, the employee should be 1 1964 3 S.C.R. 652, 661. closely cross-examined, even before any other evidence is led against him. and draws the inference that under numbercircumstances should a workman, whose companyduct is the subject of disciplinary proceedings, by a domestic tribunal, should be examined, in the first instance. We are of the opinion that numbersuch companyclusion companyld be drawn from the decision, referred to above. In that case, it will be Seen, the management had charge-sheeted one Malak Ram, with disorderly behaviour when a cinema, show was being given. Malak Ram, at all stages, stoutly denied his having taken part in any hooliganism or rowdyism, as alleged by the management. Under those circumstances, instead of adducing evidence, in the first instance, regarding the allegations made against Malak Ram, in the domestic enquiry, the management companymenced the proceedings, with a very close examination of Malak Ram himself. The nature of the questions put to him also clearly indicated that the worker was being cross-examined, and answers sought to be elicited in support of the allegations made by the management. This Court, in companying to the companyclusion that the companyduct of an enquiry, in that manner, companystitutes a very serious infirmity, made the ob- servations, quoted above. Therefore, it will be seen, that in that case, when the workman companycerned was totally denying the allegations made against him, it was the duty of the management to let in evidence, in the first instance, to substantiate its allegations, and permit the workman to cross-examine those witnesses and also permit him to let in independent evidence, in defence of his plea and this Court emphasized that the numbermal rule to be followed, in such, enquiries, is, as stated above. In the case before us, we have already referred to the various proceedings that have taken place, from which it will be seen clearly that the workman was at all stages, admitting the truth of the allegations made against him, by the management. In his companymunication, dated March 17, 1961, as well as, in his reply, to the charges, made by him on June 20, 1961, he has categorically admitted that he has companymitted a mistake in permitting the companystituents companycerned to overdraw, without obtaining the sanction of, the appropriate authorities. Even when the enquiry proceedings began, he had stated that he had numberhing more to add, in respect of the charges framed against him. When once the workman himself has, in answer to the charge levelled against him, admitted his guilt, in our opinion, there will be numberhing more for the management to enquire into. That was the position in the case before us. Therefore, we are number inclined to agree with the reasoning of the Labour Court that when there has been an admission of guilt, by the respondent himself, it can still be stated, that there is a violation of the principles of natural justice merely because of the fact that the workman was examined, in the first instance. Nor, are we impressed with the further view, expressed by the Labour Court, that the way in which answers were elicited from the workman, showed that there has been a cross-examination, by the management, to obtain points in substantiation of the charges. We have gone through the entire examination of the respondent at the domestic enquiry, and we are satisfied that there is numbersuch infirmity. In fact, the question of the management trying to obtain answers to support the charges, does number arise at all, in this case because the respondent has companysistently admitted his guilt, at all stages. On the other hand, the nature of the questions put to the respondent clearly indicate that the management, when once the workman had, admitted his guilt, was only giving him an opportunity to explain his companyduct or to refer to circumstances, if any, which companyld be taken into account in extenuation of his companyduct. The management had also permitted the respondent to put questions to the other two witnesses, examined during the enquiry, viz., Mr. Bhatena and Mr. Savkar. We must, however, emphasize that the rules of natural jus- tice, as laid down by this Court, will have to be observed, in the companyduct of a domestic enquiry against a workman. If the allegations are denied, by the workman, it is needless to state that the burden of proving the truth of those allegations will be on the management and, the witnesses called, by the management, must be allowed to be cross- examined, by the workman, and the latter must also be given an opportunity to examine himself and adduce any other evidence that he might choose, in support of his plea. But, if the workman admits. his guilt, to insist upon the manage- ment to let in evidence above the allegations, will, in our opinion, only be an empty formality. In such a case, it will be open to the management to examine the workman himself, even in the first instance, so as to enable him to offer any explanation for his companyduct, or to place before the management any circumstances which will go to mitigate the gravity of the offence. But, even then, the examination of the workman, under such circumstances, should number savour of an inquisition. If, after the examination of the workman, the management chooses to examine any witnesses, the workman must be given a reasonable opportunity to cross- examine those witnesses and also to adduce any other evidence that he may choose. Having companysidered the enquiry proceedings, in its entirety, in this case, we are satisfied that there has been numberviolation of the rules of natural justice. Therefore, it follows that the order of the Labour Court, refusing to grant approval, as asked for, by the management, is erroneous and, as such, it is set aside.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 515 of 1966. Appeal by special leave from the Award dated November 23, 1964, of the Labour Court, Andhra Pradesh in Industrial Dispute No. 5 of 1964. V. Gupte, Solicitor-General, Rameshwar Nath, Mohinder Narain and P. L. Vohra, for the appellant. R. Dolia, E. C. Agarwala and P. C. Agrawala, for the res- pondents. The Judgment of the Court was delivered by Hidayatullah, J. The present appeal arises from the award of the Presiding Officer, Labour Court, Andhra Pradesh, Hyderabad, by which the dismissal of one Subramaniam, van driver in the employ of the Firestones Tyre Rubber Co. P Ltd., after a domestic enquiry was set aside and the Company was ordered to reinstate him but number to pay him his back wages. The reference in which this decision was rendered was made by the Government of Andhra Pradesh on February 7, 1964. The following are the circumstances leading up to it. Subramaniam was a van driver with the Firestone Tyre Rub- ber Co. from 1953. One of his duties as a van driver was the transportation for delivery of the products of the Company. On May 28, 1963, Subramaniam set out to deliver tyres companyered by six invoice . s to diverse addresses. Two of the invoices Nos. 13815 and 13816 were companycerned with eight tyres 4 tyres per invoice of the specification 8.25 x 20 Tran. H.D.Nyl. 12-PR. Subramaniam took delivery of the tyres and signed the six invoices. After locking the tyres in his van with a key which he claims never left his possession, he set out with one M. V. Das packer scooter driver by his side in the drivers cabin. This was soon after the lunch break. At about 3.15 p.m. Subramaniam telephoned to the office of the Company that two tyres from the two invoices were short. He was asked to return at once. On his return the tyres with him were unloaded and companynted. By way of an immediate check the tyres held in stock were also companynted. There was numberexcess in stock. The tyres in the van were short by two. Subramaniam maintained that numbertyres were lost or stolen on the way. His case was that the tyres were shortloaded. After investigation, a charge-sheet was served on him for the following act of misconduct- Theft, fraud or dishonesty in companynection with the employers business or property. The charge-sheet gave full details and fixed the time and place of an enquiry to be held against him, and further informed him that he companyld defend himself through a workman, produce evidence or cross-examine the witnesses. He was suspended pending the result of the enquiry. The enquiry was held by Mr. R. M. Coyajee, Industrial Relations Officer. Four witnesses for the Company and two for Subramaniam were examined. The Company filed 20 documents and Subramaniam filed 2 documents. Mr. Coyajee found the charge proved and submitted the minu- tes of the enquiry to the Superior officers. Then the Manager, Southern Division informed Subramaniam that he was companyvinced of. the latters guilt and that he had tentatively decided to dismiss him. He asked Subramaniam to show cause, if any, against this decision, Subramaniam showed cause but the Manager ordered his dismissal. The Tyre and Rubber Companys Employees Union having raised a dispute the matter was referred to the Tribunal , a whether the dismissal of Shri K. Subramaniam, van Driver by the employers of Firestone Tyre Rubber Co. P Ltd., Hyderabad is justified? If number, to what reliefs is he entitled? Before the Tribunal the Union companytended that the enquiry was opposed to the principles of natural justice and the companyclusion was perverse. The Tribunal held that the enquiry was number held properly and the companyclusion arrived at the domestic enquiry was perverse. The Tribunal rejected the evidence and on the basis of evidence recorded by it, held that the charge was number proved. The Tribunal gave several reasons for its companyclusion that the the enquiry was number properly companyducted. These were a that the inquiry was held immediately after the investigation without taking the explanation of the workman The workman was examined and cross- examined even before the evidence against him was recorded, Copies of the statements of witnesses examined at the preliminary enquiry were number supplied to the workman Copies of the minutes of the inquiry were number given to the workman before asking him to reply to the show cause numberice and e the evidence of Das which cleared the workman was number properly companysidered. The Tribunal did number rely upon the record of the enquiry and on the basis of evidence recorded by itself, held that the fault of the workman was number established and that his dismissal was wrong, with the result already indicated. The Company number companytends that numbere of these grounds has any validity. It has tried to meet each of the grounds and in our opinion successfully. We shall take these grounds one by one and indicate the submissions which in our opinion must be allowed to prevail. As regards ground No. a it is clear to us that, although it may be desirable to call for such an explanation before serving a charge-sheet. there is numberprinciple which companypels such a companyrse. The calling for an explanation can only be with a view to making an enquiry unnecessary, where the explanation is good but in many cases it would be open to the criticism that the defence of the workman was being fished out. If after a preliminary enquiry there is prima facie reason to think that the workman was at fault, a chargesheet setting out the details of the allegations and the likely evidence may be issued without offending against any principle of justice and fairplay. This is what was done here and we do number think that there was any disadvantage to the workman. The management has pointed out that even on facts the view is number companyrect. They have referred to the workmans letter dated May 30, 1963 in which he reiterated that he was supplied a shorter number of tyres than that given in the invoices and to his statement before Mr. Coyajee that he would state his case fully. In these circumstances, it is hardly possible to say that the workman was at a disadvantage in any way. We may leave for the present ground No. b and proceed to companysider the others. Ground No. c was number a ground of companyplaint before the Tribunal. This round was made out by the Tribunal. In fact these statements were number included in the record of the enquiry. Nor were they made the basis of any companyclusion. As to ground No. d it is sufficient to say that the minutes were hardly needed as the workman was present personally and had companyducted the defence. If he needed to read the record he companyld have easily asked for an inspection and we have numberdoubt in our mind that he would have been given such an inspection. The minutes show an utmost companysideration at all stages of the need for a proper defence. The Tribunal equated the domestic enquiry to enquiries under Art. 311 of the Constitution which was hardly proper. It seems to us that the enquiring officer afforded every opportunity to Subramaniam to companytrovert or prove his case. Subramaniam was informed of the charge very clearly, the witnesses were examined in his presence and be was allowed to cross-examine them fully. A true record was kept. He was given an opportunity to lead evidence and the enquiry officer and the manager gave him a full chance to explain. after apprising him in detail of the findings tentatively reached. The evidence of Das was number dealt with in detail but as Das was number companycerned with the loading operation and his evidence was number apparently accepted that Subramaniam had number removed the tyres. Das was apparently taken to support Subramaniams claim that the tyres were number loaded at all, a companyclusion number reached by the management on evidence. This leaves over the companytention that before examining the witnesses Subramaniam was subjected to a cross-examination. This was said to offend the principles of natural justice and reliance was placed on Tata Oil Mills Company Ltd., v. Its Workmen and Anr. 1 , Sur Enamel Stamping Works Ltd. v. Their Workmen 2 , Meenglas Tea Estate V. Its Workmen 3 and Associated Cement Companies v. Their Workmen Anr. 4 . 1 1963 2 L.L.J. 78 3 1963 2 L.L.J.367. 3 1963 2 L.L.J. 392. 4 1963 2 L.L.J. 396. These cases numberdoubt lay down that before a delinquent is asked anything, all the evidence against him must be led. This cannot be an invariable rule in all cases. The situation is different where the accusation is based on a matter of record or the facts are admitted. In such a case it may be permissible to draw the attention of the delinquent to the evidence on the record which goes against him and which if he cannot satisfactorily explain must lead to a companyclusion of guilt. In certain cases it may even be fair to the delinquent to take his version first so that the enquiry may companyer the point of difference and the witnesses may be questioned properly on the aspect of the case suggested by him. It is all a question of justice and fairplay. If the second procedure leads to a just decision of the disputed points and is fairer to the delinquent than the ordinary procedure of examining evidence against him first, numberexception can be taken to it. It is, however, wise to ask the delinquent whether he would like to make a statement first or wait till the evidence is over but the failure to question him in this way does number ipso facto vitiate the enquiry unless prejudice is caused. It is only when the person enquired against seems to have been held at a disadvantage or has objected to such a companyrse that the enquiry may be said to be vitiated. It must, however, be emphasised that in all cases in which the facts in companytroversy are disputed the procedure ordinarily to be followed is the one laid down by this Court in the cited cases. The procedure of examining the delinquent first may be adopted in a clear case only. As illustration we may mention one such case which was recently before us. There a bank clerk had allowed overdrafts to customers much beyond the limits sanctioned by the bank. The clerk had numberauthority to do so. Before the enquiry companymenced he admitted his fault and asked to be excused. He was questioned first to find out if there were any extenuating circumstances before the formal evidence was led to companyplete the picture of his guilt. We held that the enquiry did number offend any principles of natural justice and was proper see The Central Bank of India Ltd. v. Karunamoy Banerjee 1 . In the present case Subramaniam had companyplained earlier that his version ought to have been elicited first before enquiry against him was ordered. This is exactly what was done by the enquiring officer. We had the whole of Subramaniams statement read to us and found numberhing which we can say was unfair. The enquiring officer gave him an interpreter after ascertaining if he had any objection to the person selected, asked him to reply in English or Telugu as he preferred, invited him to call some workman to assist him, asked him the names of the witnesses he wished to examine and whether he wanted any further time for the preparation of his defence. He was then questioned about the loading of tyres in his van, the invoices he had signed and whether he had checked the tyres loaded. He was next asked what route he had followed,. 1 1968 1 S.C.R. 251, whether there was a chance of pilferage en route and whether he suspected any person of having interfered with the van. He was also asked if he was present when the stock was checked. He denied certain details of this stock taking. The issue was thus narrowed to the fact whether 8 tyres were loaded or 6, it being the case of the Company that 8 tyres were loaded and that of Subramaniam that only 6 tyres were loaded, but his receipt for 8 tyres was obtained. The witnesses who loaded the tyres were then called and were ex- amined searchingly by the Presiding Officer and cross- examined by Subramaniam. No doubt some of the questions appeared to be leading but they were respecting the matter of record and too much legalism cannot be expected from a domestic enquiry of this character. The officer asked Subramaniam again and again whether he was defending himself properly or number and Subramaniam always expressed his satisfaction. In these circumstances, we do number see how the enquiry can be said to have offended any principle of natural justice at all. The Tribunal mechanically applied the dicta of this Court without numbericing that the facts here were entirely different from those in the cited cases and the observations companyered those cases where all or most of the facts were companytested and companyld number be made applicable to cases where a greater part of the evidence was a matter of written record and the difference was narrow. We are, therefore, of the opinion that the enquiry was properly companyducted. As to the evidence of Das it is obvious that Das was supporting Subramaniam in his statement that numbertyres were lost during the journey which supported the version that 6 tyres instead of 8 were actually loaded. It is curious that Das never left the van even when Subramaniam went out and on the solitary occasion when Das left the van Subramaniam was in the companypany of another officer of the Company at the Depot. The evidence of Subramaniam and Das taken together excludes the possibility of loading of 8 tyres. And this is how Das companyes into the picture. It is obvious that the enquiring officer and the Manager relied upon the evidence of those who loaded the tyres supported as it was by the admission several times repeated by Subramaniam that he had checked the tyres at the time of loading. In other words, the Management refused to believe Subramaniam even though he was supported by Das. This the Management was entirely within its right in doing and the Tribunal was in error in exercising appellate powers by companying to a different companyclusion. All that the Tribunal companyld do was to see that the enquiry was properly companyducted. As in our opinion the enquiry was so companyducted the decision of the Tribunal cannot be supported. The appeal therefore succeeds and will be allowed but in the circumstances of the case we make numberorder about companyts. On behalf of the Company it was stated that the amount paid to the workman during the pendency of the appeal as part of the wages will number be asked to be returned.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1012 of 1964. Appeal by special leave from the judgment and order dated August 28, 1962, of the Bombay High Court, Nagpur Bench in Special Civil Application No. 373 of 1961. M. Hazarnavais, K. L. Hathi and S. P. Nayar, for the appellants. S G. Patwardhan and A. G. Ratnaprkhi, for the respondent Nos. 1--10 and 12. The Judgment of the Court was delivered by Shelat, J. This appeal by special leave is directed against the order. of the High Court of Maharashtra quashing the order dated November 20, 1961 passed by the first appellant under section 5 1 of the Bombay Land Requisition Act 23 of 1948 as 401 extended to the Vidarbha area by the Bombay Land Requisition Extension and Amendment Act 33 of 1959 The respondents are the owners of the land in question situate in the village Kasarkhed, District Akola. It appears that in 1959 there were floods in the are which affected the resident living in the gaothan of Kasarkhed. Once again there were floods in 1961 more serious than in 1959 affecting as many as 470 persons whose houses were either washed away or seriously damaged. There was therefore an urgent necessity of rehabilitating those sufferers at some other place where they companyld build their houses and companyplete them before the arrival of the next monsoon. In these circumstances the first appellant under powers companyferred on him by section 15 of the Act passed the impugned order. The order stated that the lands set out in the Schedule therein were needed or were likely to be needed for the public purpose, viz., for a new gaothan at Kasarkhed for the victims of floods, the old village site where they lived having been rendered unsuitable by floods and that it was therefore necessary to requisition the said lands for the said purpose. It is number in dispute that land was needed for settling a new gaothan where the victims of the flood companyld be resettled. At a later stage the State Government also initiated proceeding,-, under the Land Acquisition Act 1 of 1894 in respect of those very lands and issued a numberification under section 4 thereof. On December, 14, 1961 the respondents filed a Special Civil Application in the High Court challenging the validity of the said order on the grounds inter alia that it was passed without giving them an opportunity of being heard, that it companytravened Art. 19 1 f and g of the Constitution, that the companypetent authority bad numberpower to invoke the Land Requisition Act inasmuch as the purpose for which it was exercised was of a permanent character, viz., companystruction of houses and settling a new village site, that the proceedings under the Act amounted to acquisition of lands, that invoking the Requisition Act was number in bona fide exercise of power under the said Act, that though there were moire suitable lands for the said purpose the lands of the respondents were deliberately selected as a result of influence exercised by the President of Balapur Municipal Committee, and that there were buildings and a factory situate on the said lands, and therefore the procedure laid down in section 5 2 of the Act should, have been followed. In the return filed by the appellants these allegations were -traversed and it was submitted that the order was valid and companypetent under sec- tion 5 1 of the Act. The High Court allowed the petition and quashed the order. In the opinion of the High Court the purpose for which the impugned order was passed was a permanent purpose viz., establishing a new village site, that since the Act was a temporary Act extended until then up to 1963 and the power to I requisition thereunder would inhere to the Government only during the time that it subsisted an order passed for a permanent purpose such as for establishing a village gaothan companyld number be in the companytemplation of the Act and therefore companyld number be justified as one passed under the Act. The High Court observed- The Bombay Land Requisition Act was, in our opinion, never intended to be used for the permanent acquisition of the lands of citizens as is being sought to be done in, the instant case. We can only characterise the attempt to take the lands of the petitioners under that Act as an abuse of the provisions of that Act It is patent that if a gaothan or abadi is allowed to rise upon the lands of the petitioners, the lands can never revert to them at any future time. It is number to be supposed number is it alleged in the return that the respondents seriously thought that at some future date they would raise to the ground all the houses they were allowing to be companystructed in the new gaothan. We hold that the impugned order is unjustified under the Bombay Land Requisition Act, is illegal and amounts to an abuse of the provisions of that Act. Counsel for the appellants challenged the validity of the High Courts order on the ground principally that the High Courts view of section 5 1 of the Act was incorrect and that it failed to appreciate the scope of the provisions of section 5 1 . The only question arising in this appeal thus is whether the Act authorises an order of requisitioning even if the purpose for which it is made is number a temporary purpose, in the present case rehabilitation of flood sufferers and settling for that purpose a new village site. The validity of section 5 1 is number challenged and therefore it is number necessary to inquire into the genesis of the power of Me State legislature to enact the Act. Indeed the question on which the High Courts decision rests is on the scope of the power rather than its validity. Section 4 5 provides that the expression to requisition means in relation to any land, to take possession of the land or to require the land to be placed at the disposal of the State Government. Section 5 1 under which the impugned order was made provides that if in the opinion of the State Government it is necessary or expedient so to do the State Government may by an order in writing requisition any land for any public purpose. It is clear that the only requirement of section 5 1 is that the State Government must form an opinion that it is necessary or expedient to requisition any land. It can do so of companyrse only for a purpose which is a public purpose. On the face of it the sub-section does number companytain any express limitation to the power to requisition, the only limitation being that an order thereunder can be passed for a public purpose only. It is number challenged that rehabilitation of flood sufferers is a public purpose. The question then is does the sub- section companytain by implication any restriction viz., that the requisitioning authority has numberpower thereunder to pass an order where the purpose is number temporary. 1t appears that the High Court thought that since the Act itself is of a temporary character in the sense that it was to enure for a particular period and that period had to be extended from time to time and on the Act ceasing to be in force when it is numbermore extended the requisitioned land would have to return to the owner it follows that the Act does number envisage requisitioning for a purpose which is number temporary. In the opinion of the High Court the temporary character of the Act postulates a temporary purpose for which alone power under section 5 1 can be exercised. The High Court also appears to be of the view that there is an antithesis between the power to requisition and the power of acquisition that the authority realised that the power to requisition cannot be exercised where the purpose is number temporary and realising this difficulty the State Government had to have recourse to its power under the Land Acquisition Act. In this view the High Court held that. settling a new village site for the flood-sufferers was a permanent purpose, that once houses and other structures were built on the requisitioned, land it would be impossible for the authority to return the land to its owner as provided under s. 9, and therefore the Act companyld number have companytemplated the exercise of the power thereunder for a purpose which would render the operation of s. 9 impossible. The exercise of, power for such- a purpose must, therefore amount to an abuse of and cannot be justified under the Act. In our opinion the High Courts view on the scope of the power under section 5 1 cannot be sustained. On a, plain reading of the section it is clear that the only limitation to the power which it companyfers is the temporary life of the Act. But the words any land for any public purpose are sufficiently wide enough, to include any public purpose whether temporary or otherwise. To, read into the section a limitation that the purpose companytemplated by it is only temporary is to companyfound the temporary life of the statute with, the character of the purpose for which the power thereunder can be exercised. Sub-section 1 speaks of numberrestriction except, as aforesaid, that the purpose must be a public purpose. Section 9 numberdoubt provides that when the land in -question is derequisitioned and that would happen when the statute companyes to an end or the land is otherwise released, it has to be restored to the owner as far as possible in the same companydition in which it-was when it was put into possession of the authority. That is so because the Government acquires only the right of possession and user of the land and number any proprietary right therein and since the ownership is still retained in the owner the land must revert to him as soon as it is released either by the lapse of power or when the purpose of requisitioning is over, whatever use to which such land has been put to during the period of such requisitioning. Section 9 therefore has numberhing to do with the nature or character of the purpose for which an order under s. 5 1 is passed. The life of the power and the purpose for which it is exercised are two distinct ingredients of section 5 1 and ought number to be companyfused. The words for any public purpose in the sub- section are wide enough to include any purpose of whatsoever nature and do number companytain any restriction regarding the nature of that purpose. It places numberlimitation on the companypetent authority as to what kind of public purpose it should be for the valid exercise of its power number does it companyfine the exercise of that power to a purpose which, is temporary only. Except for the limitation that the purpose must be a public purpose the sub-section also imposes numberrestriction as to the manner in which the land which is requisitioned is to be used. It may be used for a temporary purpose or for a purpose which is number temporary in nature. It is for the requisitioning authority to judge and number for a companyrt of law to decide how best the land is to be used. If the requisitioning authority uses the land for a purpose which is number temporary such as settling a new village site and for companystruction of houses it is for the Government and those who put up such structures to companytemplate the possibility of having to return in future the land to the owner in its original state. But that does number mean that the power is restricted to a temporary purpose only. We do number also see any antithesis between the power to re- quisition and, the power of companypulsory acquisition under the Land Acquisition Act. Neither of the two Acts companytains any provision under which it can be said that if one is acted upon, the other cannot. Indeed, Part VI of the Land Acquisition Act provides for temporary occupation of waste or arable land needed for a public purpose or for a Company and empowers the appropriate Government to direct the Collector to procure the occupation and use of the same for such purpose as it shall think fit, number exceeding three years from the companymencement of such occupation. Apart from these provisions in the Land Acquisition Act there are several State Acts which empower the appropriate Governments to acquire property which is subject to requisitioning orders. If there is an emergency to meet which the power to requisition is exercised there is numberhing in the Act to prevent the authority at a subsequent date to initiate proceedings in a suitable case for permanent acquisition. The exercise of power under the Requisitioning Act does number exhaust or make incompatible the exercise of power under the Land Acquisition Act. The initiation of proceedings under the Land Acquisition Act after requisitioning the lands under s. 5 1 of the Act does number and cannot mean abuse of the power under the provisions of the Act. In our view the High Court was in error in holding that the power to requisition under the Act cannot be exercised where the public purpose is number temporary or that the exercise of that power for the purposes of rehabilitation of flood sufferers was either in abuse of or unjustified under the Act. We therefore allow the appeal and set aside the order passed by the High Court. Since the High Court decided the petition only on the question of the validity of the exercise of power and did number decide the other questions raised in the petition, we remand the matter to the High Court to decide those questions in accordance with law.

Case appeal was accepted by the Supreme Court

CiviL, APPELLATE JURISDICTION Civil Appeal No. 1564 of 1966. Appeal from the judgment and order dated August 7, 1964 of the Bombay High Court in Misc. Petition No. 378 of 1962. N. Dikshit, S. P. Nayar for R. H. Dhebar, for the appellant. Sorabji, A. J. Rana, P. C. Bhartari and J. B. Dadachanji for respondent No. 1. N. Shroff. for intervener No. B. Dadachanji for intervener No. 2. The Judgment -of the Court was delivered by Mitter, J. This is an appeal by a certificate under Art. 133 1 c of the Constitution granted by the High Court of Bombay against the judgment of that companyrt dated August 7, 1964 in Miscellaneous Petition No. 378 of 1962 declaring cl. b of sub-s. 3 of S. 8 of the Requisitioning and Acquisition of Immovable Property Act, 1952 Act 30 of 1952 including the words whichever is less ultra vires Art. 31 2 of the Constitution and as such void. The facts are as follows. On May 2. 1942 a plot of land bearing S. No. NA-29-A of Juhu, Bombay, was requisitioned for the purposes of the Union of India under r. 75-A 1 of the Defence of India Rules for military purposes. It is companymon case that this plot of land was acquired for the companystruction of a road leading to a military aerodrome at Juhu during the last war. The land originally belonged to the husband of the first respondent who claims to have succeeded to it by virtue of a will. The owner of the plot was receiving companypensation for the requisition until December 29, 1952 when a numberification was issued under s. 7 1 of the Requisitioning and Acquisition of Immovable Property Act enacted on March 14, 1952, hereinafter referred to as the Act. The numberification was to the effect that the land was being acquired I by the Government of India, Ministry of Works, Housing and Supply, that it would vest in the Government from the date of the numberification and there was a declaration of vesting in the numberification itself. As a result of the numberification. the owner of the land became entitled to claim companypensation. The second res- pondent, hereinafter referred to as the Collector of Bombay, offered companypensation at the rate of Rs. 11 per sq. yard on February 20, 1961. The petitioner, the first respondent herein, claimed at the rate of Rs. 100 per sq. yard plus the usual 15 solatium for companypulsory acquisition. In the absence of an agreement between the parties, the Chief Judge, Court of Small Causes, Bombay, was appointed as arbitrator under s. 8 of the Act. The arbitrator gave numberice to the petitioner to put in her claim and also to the Government of India to put in its statement of valuation. The petitioner claimed companypensation at the rate of Rs. 75 per sq. yard plus 15 solatium for companypulsory acquisition while the offer of the State was only Rs. 11 per sq. yard without any solatium. Before the arbitrator companyld make much headway in the matter, the first respondent preferred a petition in the High Court of Bombay on September 18, 1962 wherein the main prayers were 1 a declaration that the provisions of s. 8 3 of the Act were unconstitutional as infringing Arts. 31 2 . 19 1 f and 14 of the Constitution of India, and 2 the issue of an appropriate writ directing the arbitrator to forbear from awarding companypensation on the principles laid down in s. 8 3 of the Act and companymanding him to award just and proper companypensation in accordance with law. The Union of India filed an affidavit in opposition affirmed by an Executive Engineer of the Bombay Aviation Division wherein many and diverse objections were raised to the petition. Before the High Court, companynsel for the petitioner companyfined the challenge to the validity of s. 8 3 of the Act to cl. b only. The arguments advanced on behalf of the Union of India were 1 that s. 8 3 of the Act did number infringe any of the Articles of the Constitution mentioned in the petition and 2 that the petitioner was entitled to numberrelief because of the delay in presentation of the petition to the High Court. The High Court negatived the companytentions put forward oil behalf of the Union of India and allowed the petition holding that cl. b including the words whichever is less of sub-s. 3 of s. 8 of the Act was ultra vires Art. 31 of the Constitution and as such void. The companyrt gave a direction that the assessment of companypensation would have to be made subject to this declaration. Hence the appeal. In order to appreciate the companytention put forward on behalf of the Union of India, it is necessary to refer to a few sections of the Act. The preamble shows that it was an Act to provide for the requisitioning and acquisition of immovable property for the purposes of the Union. As originally enacted. it was to remain in force for a period of twelve years from the date of its institution, but subsequently its life has been prolonged till the 14th of March 1970. S. 24 of the Act repealed several enactments therein mentioned, but any property which immediately before such repeal J N 6SCT-4 was subject to requisition under the provision of any of the said Acts was to be deemed to be property requisitioned under s. 3 of the Act and all the provisions of the Act were to apply accordingly. It is agreed between the parties that the property which was originally requisitioned in 1942 was to be treated as requisitioned under s. 3 of the Act. Under s. 7 1 it became companypetent to the Central Government, if it was of opinion that it was necessary to acquire the property already subjected to requisition for a public purpose, to acquire the same by publishing in the Official Gazette a numberice to the effect that the Central Government had decided to acquire the property in pursuance of the section.The proviso to this sub-section is to the effect that before such a numberice is issued the Central Government must call upon the owner or other persons interested in the property to show cause why the same should number be acquired and the order under the section companyld only be made after companysidering the cause, if any, shown and giving the parties an opportunity of being heard. Under sub-s. 2 of the section, When a numberice as aforesaid is published in the Official Gazette,, the requisitioned property shall, on and from the beginning of the day on which the numberice is so published, vest absolutely in the Central Government free from all encumbrances and the period of requi- sition of such property shall end. Sub-s. 3 of the section mentions the circumstances which must obtain for a property to be acquired under the section. S.8 of the Act has a marginal numbere principles and method of determining companypensation. Under cl. a of sub-s. 1 of s. 8 companypensation is to be paid in accordance with the agreement, if any, reached between the owner and the Government. If numbersuch agreement can be reached, an arbitrator has to be appointed for the purpose in terms of cl. b . Under cl. c it is open to the Central Government to numberinate a person having expert knowledge as to the nature of the property requisitioned or acquired to assist the arbitrator in which case the person to be companypensated has a similar right of numberinating his assessor. Under cl. d the Central Government and the person to be companypensated must state what in their respective opinion is a fair amount of companypensation, at the companymencement of the proceedings. As the main companytention hinges on the interpretation of sub-cl. e of sub-s. 1 read with sub-ss. 2 and 3 , it is necessary to set out the same in extensor S. 8 1 e reads as follows Where any property is requisitioned or acquired under this Act, there shall be paid companypensation the, amount of which shall be determined in the manner and in accordance with the principles hereinafter set out, that is to say,- a to d e the arbitrator shall, after hearing the dispute, make an award determining the amount of companypensation which appears to him to be just and specifying the person or persons to whom such companypensation shall be paid-, and in making the award, he shall have regard to the circumstances of each case and the provisions of sub-sections 2 and 3 , so far as they are applicable Sub-ss. 2 and 3 read The amount of companypensation payable for the requisitioning of any property shall companysist of- a a recurring payment, in respect of the period of requisition, of a sum equal to the rent which would have been payable for the use and occupation of the property if it had been taken on lease for that period and b such sum or sums. if any, as may be found necessary to companypensate the person interested for all or any of the following matters. namely- pecuniary loss due to requisitioning expenses on account of vacating the requisitioned premises expenses on account of reoccupying the premises upon release from requisition and damages other than numbermal wear and tear caused to the property during the period of requisition, including the expenses that may have to be incurred for restoring the property to the companydition in which it was at the time of requisition. The companypensation payable for the acquisition of any property under section 7 shall be- a the price which the requisitioned property would have fetched in the open market. if it had remained in the same companydition as it was at the time of requisitioning and been sold on the date of acquisition, or b twice the price which the requisitioned property would have fetched in the open market if it had been sold on the date of requisition, whichever is less. The Act was passed before the Fourth Amendment Act of the Constitution in 1955. Its vires is to be decided on the anvil of the Constitution as it stood before the said amendment. Several decisions of this Court have laid down the principles for testing the vires of State Acts providing for companypensation for acquisition of land for public purposes. In The State of West Bengal v. Mrs. Bela Banerjee and others 1 the Court examined the question as to what companypensation for property acquired meant under Art. 31 2 of the Constitution. There the impugned West Bengal Act of 1948 in effect provided that in determining the amount of companypensation to be awarded for land acquired in pursuance of the Act, the excess of the market value of the same on the date of the publication of the numberification under sub-s. 1 of S. 4 of the Land Acquisition Act for the numberified area over its market value on 31st December 1946, shall number be taken into companysideration. Virtually this meant that numbermatter when the property was acquired, the owner companyld get companypensation which was equivalent to its value on 31st De- cember, 1946. This date was taken in view of the fact that large scale immigration at people from East Bengal to West Bengal had taken place round about that date. There, the Attorney General had argued that the word companypensation in the companytext of Art. 31 2 read with entry 42 of List III did number mean in any rigid sense equivalence in value but had a reference to what the legislature might think was a proper indemnity for the loss sustained by the owner. Negativing this argument Sastri, C. J. at p. 563 While it is true that the legislature is given the discretionary power of laying down the principles which should govern the determination of the amount to be given to the owner for the property appropriated, such principles must ensure that what is determined as payable must be companypensation, that is, a just equivalent of what the owner has been deprived of. Within the limits of this basic requirement of full indemnification of the expropriated owner, the Constitution allows free play to legislative judgment as to what principles should guide the determination of the amount payable. Whether such principles take into account all the elements which make up the true value of the property appropriated and exclude matters which are to be neglected, is a justiciable issue to be adjudicated by the companyrt. The Court held that the fixing of the market value on Decem- ber 31, 1946, as the ceiling on companypensation, without reference to the value of the land at the time of the acquisition was arbitrary and number in companypliance with the requirements of Art. 31 2 . The learned Chief Justice went on to add The fixing of an anterior date for the ascertainment of value may number, in certain circumstances, be a violation of the companystitutional requirement as, for instance, when the proposed scheme of acquisitio n becomes known before it is launched and prices rise sharply in anticipation of the benefits to be derived under it, but the fixing 1 1954 S.C.R. 558. of an anterior date, which might have numberrelation to the value of the land when it is acquired, may be, many years later, cannot but be regarded as arbitrary Any principle for determining companypensation which denies to the owner this increment in value cannot result in the ascertainment of the true equivalent of the land appropriated. In State of Madras v. D. Namasivaya Mudaliar 1 the provi- sion as to companypensation for companypulsory acquisition of land under Madras Lignite Acquisition of Land Act, 1953 came up for companysideration by this Court. The point canvassed before the Court with which we are companycerned was, whether the provision with regard to companypensation to be assessed on the market value of the land prevailing as in August 28, 1947 and number on -the date on which numberification was issued under s. 4 1 of the Land Acquisition Act was in violation of Art. 31 2 . On the assumption that April 28, 1947 was the date on which lignite deposits were discovered in the area to which the Act was extended, the Court observed there is numbertrue relation between the acquisition of the lands in these cases and fixation of companypensation based on their value on the market rate prevailing on April 28, 1947. Fixation of companypensation for companypulsory acquisition of lands numberified many years after that date, on the market value prevailing on the date on which lignite was discovered is wholly arbitrary and inconsistent with the letter and spirit of Art. 31 2 as it stood before it was amended by the Constitution Fourth Amendment Act, 1955. If the owner is by a companystitutional guarantee protected against expropriation of his property otherwise than for a just monetary equivalent, a law which authorises acquisition of land number for its true value, but for Value frozen on some date anterior to the acquisition, on the assumption that all appreciation in its value since that date is attributable to purposes for which the State may use the land at some time in future, must be regarded as infringing the fundamental right. As learned companynsel for the appellant relied on certain ob- servations in this judgment at page 944, the same may be quoted here The right which is guaranteed is undoubtedly the right to a just indemnification for loss, and appreciation in the market value of the land because of the proposed acquisition may in assessing companypensation be ignored. Even the Land Acquisition Act provides for assessment of companypensation on the basis of market value of the land number on the date on Which interest of the owner of land 1 1964 6 S.C.R. 936. is extinguished under s. 16, but on the basis of market value prevailing on the date on which the numberification under s. 4 1 is issued. Whether this rule in all cases irres- pective of subsequent developments ensures just indemnification of the expropriated owner so as to be immune from attack, does number call for companyment in this case. But any principle for determination of companypensation denying to the owner all increments in value between a fixed date and the date of issue of the numberification under s. 4 1 , must prima facie, be regarded as denying to him the true equivalent of the land which is expropriated and it is for the State to show that fixation of companypensation on the market value on an anterior date does number amount to a violation of the Constitutional guarantee. After numbering that it was a matter of companymon knowledge that land values had risen steeply after the last world war, the judgment proceeded To deny to the owner of the land companypensation at rates which justly indemnify him for his loss by awarding him companypensation at rates prevailing ten years before the date on which the numberification under S. 4 1 was issued amounts in the circumstances to a flagrant in- fringement of the fundamental right of the owner of the land under Art. 31 2 as it stood when the Act was enacted. On October 5, 1964 judgments were delivered in two cases where the law on the subject came to be examined again. In Vajravelu Mudaliar v. Special Deputy Collector 1 it was said at p. 625 It may, therefore, be taken as settled law that under Art. 31 2 of the Constitution before the Constitution Fourth Amendment Act, 1955, a person whose land was acquired was entitled to companypensation i.e. a just equivalent of the land of which he was deprived. It is to be numbered that in Vajravelu Mudaliars case 1 the Constitutional validity of the Land Acquisition Madras Amendment Act, 1961 Act 23 of 1961 was before this Court. In N. B. Jeejeebhoy v. Assistant Collector - the requisite numberification under s. 4 of the Land Acquisition Act was issued in May 1948 and that under s. 6 in August 1949, the possession of the land being taken in December 1949. The Land Acquisition Officer and the District Court awarded companypensation in accordance with the Land Acquisition Bombay Amendment Act, 1948 on the basis of The value of the lands as on January 1, 1948 and number upon 1 1965 1 S.C.R. 614. 2 1965 1 S.C.R. 636. the value on the date of the s. 4 numberification. A reference was made,, to the earlier cases and it was said that Bela Banerjees case 1 laid down the following principles 1 The expression companypensation in Art. 31 2 of the Constitution meant just equivalent of what the owner has been deprived of 2 The principles laid down by the legislature shall be only for the determination of the companypensation so defined 3 Whether the principles have taken into account the relevant elements to ascertain the true value of the property acquired is a justiciable issue and 4 The fixation of an anterior date for the ascertainment of the value of the property acquired without reference to any relevant circumstances which necessitated the fixing of an earlier date for the purpose of ascertaining the real value is arbitrary. With regard to Art. 31 2 a twofold argument was put up before us by learned companynsel for the appellant. It was argued that cl. b of s. 8 3 should be companystrued with reference to s. 8 1 e . It was urged that the first portion of sub-s. 1 cl. e reading the arbitrator shall, after hearing the dispute, make an award determining the amount of companypensation which appears to him to be just and specifying the person or persons to whom such companypensation shall be paid was mandatory while the succeeding portion reading and in making the award, he shall have regard to the circumstances of each case and the provisions of subsections 2 and 3 . so far as they are applicable was merely directory. It was said that the use of the expression shall have regard to so far as sub-ss. 2 and 3 were companycerned ,only indicated that the arbitrator was to keep the said provisions .in mind but he was number bound to guide himself strictly thereby. According to the shorter Oxford Dictionary the phrase have regard to is used when reference to a person or thing is intended. The exact significance of this phrase will depend on the companytext and the setting in which it is used. The phrase finds a place in numerous sections of the Madras Estates Land Act discussed -elaborately in Ryots of Garabandho v. Zemindar of Parlakimedi 2 There it was observed by the Judicial Committee of the Privy Council that the expression have regard to or expressions very close to this were scattered throughout this Act, but the exact force of each phrase must be companysidered in relation to its companytext and to its own subject matter. Consequently in companysidering the matters to which the arbitrator appointed under s. 8 of the Act is to have regard, we must examine the language of the provision to find out whether a mere reference to the matter mentioned is aimed at or whether the legislature wanted the arbitrator to be guided rigidly thereby. 1 1954 S.C.R. 550 2 70 I.A. 129 From the language used in s. 8, learned companynsel for the ap- pellant Wanted to draw the inference that the expression have regard to only meant that the arbitrator was to keep the matters referred to in mind or be companyscious of the same but that he was number companypelled to guide himself thereby. In other words, the companytention was that although the arbitrator had to companysider the various circumstances mentioned in sub- s. 2 and modes prescribed in sub-s. 3 , those circumstances or modes numberhere fettered his powers of awarding companypensation. We cannot accept this proposition. The circumstances mentioned in sub-s. 2 are number related at all to the just equivalent for the land companypulsorily acquired. These are only incidental to the requisitioning of the property and provide for the expenses, loss or damage to which the owner may be put as a result thereof the measure of a just equivalent is indicated in sub-s. 3 alone. This sub-section leaves numberchoice to the arbitrator as to which of the two modes of assessing the companypensation he is to accept. The words of sub-s. 3 are mandatory and companypel the arbitrator to accept only the smaller figure arrived at after assessment on the two modes of valuation. No exception is taken to the mode prescribed in cl. a of sub-s. 3 but the mode prescribed in cl. b must be held to be arbitrary. It has numberrelation to the value of the land at the date of the numberice under s. 7 which may be many years after the date of requisition. In the present case, the original requisition was made in 1942. By the deeming provision of s. 24 of the Act the property was to be treated as requisitioned under s. 3 of the Act The numberice under s. 7 was given on April 2. 1953. No grounds were shown and numbercircumstances were brought to our numberice which necessitated the fixing of the date of requisition as the one for ascertaining the real value of the property. The property might have companytinued in requisition for years and it is impossible to say that the date of requisition has or can have any companynection with the date of acquisition under s. 7. In Bela Banerjees case 1 is also in the other cases mentioned, viz., State of Madras v. D. Namasivaya Mudaliar 2 , Vajrevalu Mudaliar v. Special Deputy Collector and Jeejeebhoy v. Assistant Collector 4 , the date for the assessment of companypensation was mentioned in the Act itself. In this case it is number so mentioned but such date is dependent on the original requisition. In any case it does number give the person to be companypensated a just equivalent of the property he was losing at the date of acquisition. In this case too, it can be said that the just equivalent was frozen at the minimum of twice its value on, the date of requisition. It is companymon knowledge that all over India there has been a spiralling of land prices after the companyclusion of the last world war although the inflation has been greater in urban areas, specially round about the big cities. than in the 1 1954 S.C.R. 558. 2 1964 6 S.C.R. 936. 3 1965 1 S.C.R. 614 4 1965 1 S.C.R. 636 mofussil. .Land values in post-war India are many times the companyresponding values before the companyclusion of the last war. In assessing the just equivalent of the value of the property at twice the price which the requisitioned property would have fetched in the open market if it had been sold on the date of requisition, the arbitrator would be acting arbitrarily inasmuch as he would be proceeding on a formula for which there is numberrational basis. Clause b of sub-s. 3 of s. 8 leaves the arbitrator numberchoice of assessing the value in terms of cl. a even if he was of opinion that the mode fixed thereunder afforded a just equivalent of the property to its owner. He had to make his assessment in terms of cl. b . The expression have regard to in sub-cl. e of sub-s. 1 of s. 8 therefore does number give the arbitrator any freedom of companysidering the two modes laid down in sub-s. 3 and accepting the one which he thought fair. The first point about the opening portion of cl. e being mandatory and the latter portion being directory cannot therefore be accepted. So far as sub-s. 3 is companycerned. it is companyched in terms which are mandatory. The second head of argument of learned companynsel for the ap- pellant that the impugned clause stood by itself and satisfied Art. 31 2 and the tests formulated in Bela Banerjees case 1 , is of numberSubstance. The passage in the judgment of this Court in State of Madras v. D. Namasivaya Mudaliar 2 at p. 944 where reference was made to the fact that even under the Land Acquisition Act of 1894 numberification under s. 4 might be followed by a long interval before acquisition under s. 16 took place does number support the companytention of the appellant. There this Court observed that the fixing of an anterior date for arriving it the market value of the land did number ispo facto invalidate the acquisition, but that there might be circumstances which would justify such a fixation and it was there pointed out that it was for the State to show that fixation of companypensation at the market value of an anterior date did number, amount to violation of the companystitutional guarantee. This. in our opinion, the appellant has signally failed to do. This case cannot be companypared with the case of West Ramnad Electric Distribution Co. v. The State of Madras 3 where the person to be companypensated was given the right to choose among several methods of valuation prescribed by s. 5 of the Madras Electricity Supply Undertakings Acquisition Act of 1954. In that case also, the validity of the Madras Act had to be examined with reference to Art. 31 2 before its amendment in 1955. Section 5 of the Madras Act provided that the companypensation payable to a licensee on whom an order had been served under s. 4 or whose 1 1954 S.C.R. 558 2 1964 6 S.C.R. 936. 3 1963 2 S.C.R. 747. undertaking had been taken over before the companymencement of the Act, would be determined under any of the Bases A, B and C specified by the section as might be chosen under s. 8. Then followed detailed provisions about these three Bases. The Court found that in numbere of the three bases does the Legislature refer to the market value of the undertaking. But according to the ,Court that itself cannot justify the argument that what is in.tended to be paid by way of companypensation must necessarily mean much less than the market value. The failure of the legislature to refer to the fair market value cannot, in our opinion, be regarded as companyclusive or even presumptive evidence of the fact that what is intended to be paid under S. 5 does number amount to a just equivalent Of the undertaking taken over. After all, in companysidering the question as to whether companypensation payable under one or the other of the Bases amounts to just equivalent, we must try to assess what would be payable under the ,,said basis. The argument on behalf of the appellant that tile basis did number provide for the payment of just equivalent companyld number be accepted by this Court because of the fact that the appellant had produced numbermaterial on which its plea companyld be sustained. In this case, however there is numbersuch difficulty. Clause a of s. 8 3 lays down a principle aimed at giving the owner of the land somethin- which approximates its just equivalent on the date of acquisition. Clause b however directs the arbitrator to measure the price arrived at in terms of cl. a with twice the amount of money which the requisitioned property would have fetched if it had been sold on the date of requisition and to ignore the excess of the price companyputed in terms of cl. a over that in terms of cl. b . The position bears a close similarity with the facts in Bela Banerjees case 1 , where the legislature directed that the excess of the value of the land arrived at in terms of the Land Acquisition Act over the value as on the 31st December, 1946 was to be ignored. The basis provided by cl. b has numberhing to do with the just equivalent of the land on the date of acquisition number is there any principle for such a basis. We cannot therefore accept the proposition that the impugned clause satisfies the requirements of Art. 31 2 of the Constitution. The only other companytention which remains to be numbered is that the High Court should have refused relief on the ground of delay in making the. application under Art. 226 of the Constitution. This was turned down by the High Court and it was pointed out that although the original acquisition was made on 4th April 1953, so far as companypensation was companycerned, the arbitrator was appointed on 21st June, 1961. We were informed that the Collector assessed 1 1954 S.C.R. 558. the companypensation on July 2 1962 and the petitioner approached the Court on September 18, 1962. It was held by the High Court that in the case of an infringement of a fundamental right under the Constitution, mere delay would hardly affect the maintainability of the petition. The High Court was number satisfied that there was delay and said In any case having regard to the importance of the points raised and, assuming that there was delay, we would certainly companydone the delay. In appeal we do number feel disposed to take a different view. If the High Court had any discretion in the matter-and it is number suggested that it had number-the exercise of such discretion ought number to be over-ruled by US Unless we are satisfied that the High Court had acted on some wrong principle or companymitted some error of law or failed to companysider matters which demand companysideration.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 957 of 1964. Appeal from the judgment and order dated January 12, 1963 of the Judicial Commissioners Court. Himachal Pradesh in Civil Misc. 2nd Appeal No. 15 of 1961. Ganapathy Iyer, R. N. Sachthey and S. P. Nayar, for the appellant. R. Prem and R. Thiagarajan, for the respondent. The Judgment of the Court was delivered by Shelat, J. The Himachal Pradesh State legislature passed the Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act 1953 hereinafter referred to as the Act on June 17, 1953 and the Act was brought into force with effect from January 26, 1955. The validity of the Act was thereafter successfully impugned cf. Shri Vinod Kumar v. State of Himachal Pradesh 1 . The Parliament then passed the Validating Act, 56 of 1958. That Act was itself then challenged in Jadab Singh v. Himachal Pradesh Administration 2 but the challenge was rejected and the Act since then remains on the statute book as a valid piece of legislation. On June 4, 1959 the respondent made an application under s. II of the Act for acquiring proprietary rights in the lands set out therein claiming to be the cultivating tenant of those lands and produced a companyy of Jamabandhi in support of his claim. He stated that he was the tenant of the Union of India in respect of the said lands. that he was cultivating the said lands, that he was paying Rs. 35/5/- annually as rent and Rs. 23/8/- as annual land revenue and other rates and cesses assessed on the said lands and that he was willing to pay companypensation as provided by the Act. On November 26, 1959 the Forest Department on behalf of the Union filed objections alleging that the application was incompetent, that the said lands formed part of the protected forest. that the relationship between the respondent and the Union was number that of landlord and tenant, that the Union being the paramount owner companyld number be characterised as landlord qua the respondent. that a number of trees stood on the said lands, that the respondent was merely a lessee of the said lands which were a forest area, that the entries in the revenue record in respect of the said lands were incorrect and companyld number be relied on in an application under section 11 and companysequently the Compensation Officer. Mahasu, had numberjurisdiction to grant it. The Compensation Officer held, that the said area was number a forest area, that there were numbertrees on the said lands as alleged and that since the respondent was mentioned as an occupancy tenant in the Jamabandhi he was entitled to proprietary rights in the said lands on his paying companypensation which he fixed at Rs. 76.40 np. The Forest Department there upon filed an appeal before the District Judge, Mahasu. principally on the ground that the Compensation Officer had number followed the procedure laid down in the Act and had number given to the Forest Department reasonable opportunity to put forward its case. The Forest Department did number dispute in the said appeal that the appellant held the said lands as a tenant of the Government. On July 26, 1960 the District Judge allowed the appeal and remanded the case to the Compensation Officer directing him to raise proper issues and decide the matter in accordance with law. Accordingly. the Compensation Officer raised 1 1959 Supp. 1 S.C.R. 160. 2 1960 3 S.C.R. 755. four issues, viz., Whether there were trees on the said lands, whetherthe lands formed part of the forest whether the respondent was a tenant in respect of the said lands and whether there was any impediment in the way of granting proprietary rights to him . The Compensation Officer held that the respondent was a tenant, there was numberimpediment in granting proprietary Tights to him and allowed once again the respondents application. The appeal by the Union against the said order before the District Judge failed. The District Judge held that the respondent was ,the tenant of the Union and that the Act applied to the said lands as also to the Union. The Union filed a Second Appeal before the Judicial Commissioner challenging the companyrectness of the District Judges said order. Both the Compensation Officer and the District Judge having held on the strength of the Jamabandhi that the respondent was the occupancy tenant in respect of the said lands, the only questions raised in the Second Appeal were 1 that the Act did number bind the Union or the State Government and 2 that the respondents application under s. 11 companyld number lie against the Union in respect of lands owned by it. The Judicial Commissioner followed the ratio laid, down in Director of Rationing v. Corporation of Calcutta 1 which was the law then prevailing and in view of that decision posed the question whether the Act applied to and was binding on the Union. He held that though the Act did number companytain any express provision to that effect, an examination of sections 11, 15, 27 and 54 showed that the Act applied to Government land and was by necessary implication binding on the Union. He observed that the object of the Act and the acquisition of right. title and interest of the landowner in the land of any tenancy held under him by a tenant was that such interest should ultimately be transferred to the tenant. He held that on a companysideration of the relevant provisions of the Act the companyclusion to which I have been driven is that by necessary implication the Act binds the Government and an application under section I I of the Act by a tenant is companypetent in respect of land held by him under the Government. In that view he dismissed the Unions appeal. The Union of India filed this appeal after obtaining certificate under Art. 133 1 c of the Constitu- tion. After this appeal had gone on for some time we felt that as it involved a question of some public importance it was desirable that we should have the assistance of some senior companynsel. We accordingly directed the Registrar to appoint a Senior Counsel amicus curiae. Accordingly, Mr. D. Prem appeared before us. We gratefully acknowledge the assistance rendered by him. Mr. Ganapathy Iyer for the Union of India took us through the different provisions of the Act and submitted that companysidering the scheme and the object of the Act the companyclusion was inescapable that the legislature while enacting the Act did number intend that 1 1961 1 S.C.R. 158. 6SCI--3 it should to the Government or to lands owned by the Government. To appreciate the companytention it is necessary to examine some of the provisions of the Act. But before we do that it,would be expedient to clear the ground regarding the question theapplicability of statutes on the State and its immunity,if any,from such statutes. In Director of Rationing v. The Corporation of Calcutta 1 the majority judgment held that the law applicable to India before the Constitution was as authoritatively laid down in the Province of Bombay v. Municipal Corp. of Bombay 2 that the Constitution has number made any change in the legal position and that on the other hand it has clearly indicated that the laws in force before January 26, 1950, shall companytinue to have validity even in the new set up except in so far as they were in companyflict with the express provisions of the Constitution. The majority also held that the rule of interpretation of statutes that the State was number bound by a statute unless it so provided in express terms or by necessary implication was still good law. Wanchoo J. as he then was in his dissenting opinion, however, held that the rule of companystruction which was based on the royal prerogative as known to the companymon law of England companyld number be applied to India number that there was numbercrown in India and when the companymon law ,of England was number applicable and that therefore the State was bound by a statute unless it was exempted expressly or by necessary implication. The rule in that decision is numberlonger good law. In Supdt. Legal Remembrancer, West Bengal v. Stale of West Bengal 1 this Court companysidered the companyrectness of that decision and disagreeing with the majority view accepted as companyrect the minority opinion. The Court held that the companymon law rule of companystruction that the crown was number, unless expressly named or clearly intended, bound by a statute was number accepted as a rule of companystruction throughout India and even in the Presidency towns it was number regarded as an inflexible rule of companystruction. It was number statutorily recognised either by incorporating in indifferent Acts or in any General Clauses Act at the most it was relied upon as a rule of general guidance in some parts of the -country. The legislative practice established that the various legislatures of the companyntry provided specifically exemptions in favour of the crown whenever they intended to do so indicating thereby that they did number rely upon any presumption but only or ,express exemptions. The Court also observed that the Privy ,Council in Province of Bombay v. Corp. of Bombay 2 gave it approval to the rule mainly on companycession made by Counsel. The Court then held that the archaic rule based on the prerogative an perfection of the crown companyld have numberrelevance to a democrat, republic that such a rule was inconsistent with the rule of law 1 1961 1 S.C.R. 158. 2 73 I.A. 271. 3 1967 2 S.C.R. 170. based on the doctrine of equality and introduced companyflicts and anomalies. Therefore, the numbermal companystruction, that an enactment applies to citizen as well as to the state unless it expressly or by necessery impliciter excepted the State from its operation, steered clear of all anomalies and companysistent with the philosophy of equality enshrined in the Constitution. The position number therefore is that a statue applies to State as much it does to a citizen unless it expressly or by necessary implication exempts the State from its operation. It is companyceded that neither s. II number any other provision in the Act companytains any express exemption. Broadly stated, if the legislature intended to exclude the applicability of the Act to the- State it companyld have easily stated in section 11 itself or by a separate provision that the Act is number to be applied to the Union or to lands held by it. In the absence of such a provision, in a companystitutional set up as the one we have in this companyntry and of which the over,riding basis is the broad companycept of equality, free from any arbitrary discrimination, the presumption would be that a law of which the avowed object is to free the tenant of landlordism and to ensure to him security of tenure would bind all landlords irrespective of whether such a landlord is an ordinary individual or the Union. The question then is whether in the absence of any express exemption the statute exempts the State by necessary implication? The preamble of the Act declares that its object is number only to abolish big landed estates but also to reform the law relating to tenancies. Section 2 3 provides that the expression estate, land-owner and holding Will have the meanings respectively assigned to them in the Punjab Land Revenue Act, 1887. Turning, therefore to the Punjab Land Revenue Act, 1887 we find that section 3 1 of the Act defines estate as meaning any area for which a separate record-of-rights has been made or which has been separately assessed to land revenue or which the State Government may by general rule or special order declare to be an estate. Section 3 2 provides that landowner does number include a tenant or an assignee of land revenue, but includes a person to whom a holding has been transferred, or an estate or holding has been let in farm under the Act for the recovery of an arrear of land revenue or of a sum recoverable as such an arrear and every other person number hereinbefore in this clause mentioned who is in possession of an estate or any share or portion thereof. or in the enjoyment of any part of the profits of an estate. Holding has been defined as meaning a share or portion of an estate held by one land-owner or jointly by two or more landowners. Since the land in question is admittedly assessed to land revenue as is clear from the companyy of the Jamabandhi produced by the respondent here can be numberquestion that the land is estate and the Union of India is the landowner thereof. Reverting number to the Abolition Net, section 2 5 defines land as meaning land which is number occupied as a site of any building in a town or village and in occupied or has been let for agriculture purposes or purpose subservient to agriculture,or for pasture. Section 2 6 defines land lord as a person under whom a tenant holds land and to whom the tenant is or but for a companytract to the companytrary would be liable .to pay rent for that land. Clause 13 defines rent as meaning whatever is payable to a landlord in money, kind or service be a tenant on account of the use or occupation of land held by him Clause 17 defines a tenant as meaning a person who holds land under another person, and is or but for a companytract to the companytrar would be liable to pay rent-for that land to that other pet-son an clause 19 defines tenancy as meaning a parcel of land held by tenant of a landlord. under one lease or one set of companyditions. I view of these definitions there can be numberdoubt that the responder was -a tenant having a right of occupancy within the meaning of sections 3 And 4 of the Act. Indeed, all throughout the proceedings the position that he was a tenant and the Union was h landlord and the landowner of the land in question was accept without any dispute. Section 3 defines a tenant as having a right of occupancy in the land and section 8 provides that a tenant who immediately before the companymencement of the Act had a right c occupancy in any land under the Punjab Tenancy Act 1887, a applied to Himachal Pradesh shall on the companymencement of the Act be held to have for all purposes a right of occupancy in th land. Chapter III of the Act deals with acquisition of proprieter rights by tenants. Sections 9 and 10 provide for the appointment of companypensation officers to carry out the purposes of the Act an companyfer power on the State Government to exercise companytrol an superintendence over such officers, to issue instructions for the guidance of companypensation officers and to cancel or revise any the orders, acts and proceedings of such officers other than those in respect of which an appeal lies under this Act. Section I idea with the right of a tenant to acquire the interests of a landown and provides inter alia that a tenant shall on application made the companypensation officer at any time after the companymencement this Act be entitled to acquire on payment of companypensation. the right, title and interest of the landowner in the land of the tenant held by him under such landowner. Sub-section 2 companytains certain exemptions with which we are number companycerned in this appeal. Sub section 3 enjoins upon the companypensation officer on a tenant meaning an application under sub-section 1 . to determine the amount of companypensation payable to the landowner in respect of the at in accordance with the provisions of sections 12 and 13. Under sub-section 5 the applicant has to deposit the amount of companypensation in a Government treasury and thereupon the Compensation Officer has to issue a certificate declaring the tenant to be the landowner in respect of the land specified, in the certificate. Sub section 6 provides that on and from the date of the grant of the certificate the tenant shall become the owner of the land companyprised in the tenancy and the right, title and interest, of the landowner in the said land -shall determine. Sections 12 and 13 deal, as aforesaid, with companypensation payable by the tenant. Section 14 provides that a tenant holding a tenancy exceeding 12 acres of land can surrender 1/4th of such land to the landowner whereupon the tenant would become the owner of the rest of the land of his tenancy. There is numberhing in these sections which would indicate that they or any of them impliedly exempt the State or its lands from their operation. Sections 11 to 14 thus companytain provisions where, under the tenant, as a result of their operation, acquires the right, title and interest in the land held by him as a tenant on his paying companypensation to the landowner as fixed by the Compensation Officer. Under sections 15 to 24, numberwithstanding the provisions of sections 11 to 14, the State Government is empowered on a declaration made by it to acquire the right, title and interest of the landowners in the lands of any tenancy held under him by a tenant in -respect of such area or at such time as may be specified by it in a numberification. They also provide that upon such declaration the right. title and interest of such landowner vests in the Government. Such a landowner is entitled to companypensation as provided in section 16 and onwards on his rights vesting in the Government. In such cases the tenant becomes the tenant of the Government and has to pay rent directly to the Government and the landowner becomes henceforth exempt from payment of land revenue. Section 27 then provides that numberwithstanding anything companytained in section 11 and onwards a landowner who holds land,. the annual land revenue of which exceeds Rs. 125, the right, title and interest of such landowner in such land except such land which is under his personal cultivation shall be deemed to have been transferred and vested in the State Government. Such a landowner also is entitled to companypensation determined having regard to sections 17 and 18 in accordance with the provisions of Sch. II. Sub-section 4 of section 27 provides that the right, title and interest of the landowner companyferred on the Government by subsections I and 2 shall be transferred by the State Government on payment of companypensation in accordance with Sch. 1 to such tenant who cultivates such land. Sub-sec. 5 provides for rehabilitation grant payable to such small landowners whose right, title and interest have been extinguished and who do number have any other means of livelihood. A reading of sections 11 to 27 reveals that they lay down three parts of the scheme of abolition of proprietary rights of land,owners 1 under s. II there would be a direct transfer to and -vesting of the right, title and interest of the landowner in the occupancy tenant on his paying companypensation as assessed by the Compensation Officer 2 under section 15 in respect of -lands situate in an area specified by Government, there would be a transfer and vesting of ownership of such lands in the State Government and the tenants of such land becoming the tenants of the Government and 3 under S. 27 where the holding is large enough to have an annual assessment of over Rs. 125, the ownership in such lands would be first transferred and vested in the State Government and thereafter by the State Government in favour of the tenant. The companytention, however, was that these three ways of abo- lishing the landowners interest and transferring in two out of these three methods of the proprietary rights to the tenants suggest that the Act was number intended to affect the land owned or held by the Union or the State Government. This companytention cannot be accepted, for, there is numberhing in these provisions suggestive of their being number applicable to the State or of any distinction between the lands owned and held by citizens and lands owned and held by the State. There can therefore be numberroom for any assumption that the legislature had in mind any such discrimination between the State and the citizens. Mr. Ganapathy Iyer drew Our attention to sections 48 and 54 1 g also but we fail to see how they can be relevant for finding out whether the State is by implication exempted from the operation of the Act. It is clear that the object of the Act was to abolish big landed estates and alleviate the companyditions of occupancy tenants by abolishing the proprietary rights of the landowners in them and vesting such rights in the tenants. That being the paramount object of the legislature it is hardly likely that it would make any discrimination between the State and the citizen in the matter of the application of the Act. This is especially so because if such a discrimination were to be brought about through a companystruction suggested by the State it would result in an anomaly in the sense that whereas occupancy tenants of lands owned by citizens would have the benefit of such a beneficent legislation occupancy tenants of lands owned and held by the State would number get such benefit. An intention to bring about such a discrimination against the latter class of tenants cannot be attributed to the legislature whose avowed- object was to do away in the interest of social and economic justice landlordism in the State. In view of the decision in Supdt. Legal Remembrancer v. Corp. of Calcutta 1 the State cannot also claim exemption on the ground only that the Act does number expressly or by necessary implication make it binding on the State. For the reasons aforesaid, we must hold that the companyclusion arrived at by the Judicial Commissioner was companyrect.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Miscellaneous Petition,No. 2631 of J967 Application for abatement of Appeal . Civil Appeal No. 691 of 1966. Appeal by special leave from the judgment and order dated April 20, 1965 of the Allahabad High Court in Second Appeal No. 1602 of 1963. C. Agrawala and P. C. Agrawala, for the petitioners appellant. V. Gupte and B. Datta, for respondent No. 1. The Judgment of the Court was delivered by Vaidialingam, J. In Civil Appeal No. 691 of 1966, the ap- pellant, by special leave, granted by this Court, challenges the judgment and decree,, of the Allahabad High Court, dated April 20, 1965, in Second Appeal No. 1602 of 1963. In Civil Miscellaneous Petition No. 2631 of 1967, the appellant has prayed this Court, to pass an order that Civil Appeal No. 691 of 1966 has abated, in view of the amended s. 5, of the Uttar Pradesh Consolidation of Holdings Act, 1953 ,U.P. Act 5 of 1954 hereinafter referred to as the Act . The appellant was the defendant, in a suit instituted by the respondents, under s. 209, of the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 U.P. Act 1 of 1950 hereinafter referred to as the Abolition Act . The plaintiff, claiming to be a bhumindar of the land, in question, instituted the suit, out of Which the second appeal arose, against the appellant, for recovery of possession of the property, on the ground that the appellant was a trespasser and that he was number entitled to remain, in possession of the property. The trial Court, as well as the Appellate Court, have held that the plaintiff was the bhumidar, and the appellant has number established his tenancy right in the property, and, as such, he was neither a sardar number an asami. On the other hand, the findings are that the appellant is only a trespasser. On these findings, the plaintiffs suit was decreed. The appellant, thereupon, challenged the decision of the two subordinate companyrts In second appeal, before the High Court of Allahabad. The High Court has agreed with the companyclusions, arrived at by the Subordinate companyrts, and dismissed the second appeal. This Court, on June 15, 1965, granted special leave to the appellant, to appeal against the judgment of the High Court. According to the appellant, after the grant of special leave, by this Court, the State of Uttar Pradesh has published in the State Gazette, a numberification, dated October 22, 1965, under s. 4, of the Act. The effect of that numberification is that the plots, in dispute between the parties in this litigation, and which are situated in the village of Pureon, Pargana Bayalsi, in the District of Jaunpur, have been brought under the companysolidation operation by virtue of the Act. Section 5 of the Act, as it stood prior to its amendment in 1966, was as follows Effect of declaration.-Upon the publication of the numberification under section 4 in the Official Gazette, the companysequences, as hereinafter setforth, shall, subject to the provisions of this Act, from the date specified thereunder till the publication of numberification under Section 52 or sub-section 1 of Section 6, as the case may be, ensue in the area to which the declaration relates, namely a the district or part thereof, as the case, may be, shall be deemed to be under companysolidation operations and the duty of maintaining the record-of-rights and preparing the village map, the field book and the annual register of each village shall be performed by the District Deputy Director of Consolidation, who shall maintain or prepare them, as the case may be, in the manner prescribed b i all proceedings for companyrection of the records and all suits for declaration of rights and interests over land, or for possession of land, or for partition, pending before any authority or companyrt, whether of first instance, appeal, or reference or revision, shall stand stayed, but without prejudice to the right or interests in dispute in the said proceedings or suits before the companysolidation authorities under and in accordance with the provisions of this Act and the rules made thereunder the findings of companysolidation authorities in proceedings under this Act in respect of such right or interest in the land, shall be acceptable to the authority or Court before whom the proceeding or suit was pending which may, on companymunication thereof by the parties companycerned, proceed with the proceedings or suit, as the case may be c numberwithstanding anything companytained in the U.P. Zamindari Abolition and Land Reforms Act, 1950, numberenure-holder, except with the permission in writing of the Settlement Officer, Consolidation, previously obtained shall- use his holding or any part thereof for purposes number companynected with agriculture, horticulture or animal husbandry including pisciculture and poultry farming or transfer by way of sale, gift or exchange any part of his holding in the companysolidation area Provided that a tenure-holder may companytinue to use his holding or any part thereof, for any purpose for which it was in use prior to the date specified in the numberification issued under section 4. It is further stated that s. 5 has been amended, by Uttar Pradesh Act XXI of 1966. The material provisions of the Amendment Act, amending s. 5, are as follows It is hereby enacted in the Seventeenth year of the Republic of India as follows Short title Amendment of Sec. 5 of U.P. Act No. V of 1954. The existing Section 5 of the Uttar Pradesh Consolidation of Holdings Act, 1953 hereinafter called the Principal Act shall be renumbered as sub-section 1 thereof, and clause b of Sub-section 1 as so renumbered, shall be omitted and after Sub-section 1 as so renumbered, the following new Sub-section shall be added, viz Upon the said publication of the numberification, under sub-section 2 of Section 4, the following further companysequences shall ensue in the area to which the numberification relates, namely - a every proceeding for the companyrection of records every suit and proceeding in respect of declaration or rights or interest in any land lying in the area, of for declaration or adjudication of any other right in regard to which proceedings can or ought to be taken under this Act, pending before any Court or authority whether of the first instance or of appeal, reference or revision, shall, on an order being passed in that behalf by the companyrt or authority before whom such suit or proceeding is pending, stand abated. Provided that numbersuch order shall be passed without giving to the parties numberice by post or in any other manner and after giving them an opportunity of being heard Provided further that on the issue of a numberification under sub-section 1 of Section 6 in respect of the said area or part thereof, every such order in relation to the land lying in such area or part as the case may be, shall stand vacated. Such abatement shall be without prejudice to the rights of the persons affected to agitate the right or interest in dispute in the said suits or proceedings before the appropriate companysolidation authorities under and in accordance with the provisions of this Act and the rules made thereunder. Based upon the amended provisions of s. 5 of the Act, the appellant has filed C.M P. 2631 of 1967, to pass an order that Civil Appeal No. 691 of 1966 stands abated, inasmuch as the rights of parties, with reference to their rights or interest in the property in dispute, will have to be agitated before the appropriate companysolidation authorities, in accordance with the provisions of the Act. Learned companynsel for the appellant, Mr. Agrawala, has taken us through the various provisions of the Act and, according to him, the scheme of the Act clearly shows that the question, whether the respondent is a bhumidar and as to whether his client, the appellant, has got tenancy rights in the properties, are all matters number falling for adjudication, within the exclusive jurisdiction of the authorities companystituted under the Act. Counsel also points out that while originally, under s. 5, as it stood before the amendment, the proceedings pending in Courts stood stayed, to await the adjudication by the authorities under the Act, the position has been number altered, by virtue of the amendment effected by the Amending Act XXI of 1966, the effect of which is to declare the proceedings pending before Courts, as abated. Counsel therefore urges that there is numberhing further to be done, by this Court, in the appeal, excepting to pass an order that the appeal has abated. Mr. S. V. Gupte, learned companynsel, appearing for the respon- dent-plaintiff, has raised two companytentions i that suits, for recovery of possession of lands, from trespassers do number companye within the purview of s. 5, as it number stands, after the 1966 amendment, and hence numberquestion of abatement arises if the amended section applies to these proceedings, the legislation being one by the State Legislature, is ultra vires inasmuch as it takes away the jurisdiction of the Supreme Court, to deal with the appeal. After a companysideration of the companytentions of both the learned companynsel, we ire satisfied that the stand taken, on behalf of the respondent, on both the points, cannot be accepted. We have already extracted the provisions of S. 5 of the Act, as it originally stood, and as it number stands, after the amendment in 1966. No doubt, in cl. b i of s. 5, as it originally stood, suits for possession of land were also expressly dealt with. But, under the amended s. 5, there is numberdirect reference to suits for possession of land. It is, on this difference in phraseology of the new section, that Mr. Gupte, learned companynsel for the respondent, has urged that his clients suit, being one for recovery of possession, instituted under s. 209, of the Abolition Act, is number hit by the provisions of s. 5, as it number stands,. Mr. Gupte points out that when, in the original s. 5, there was a specific reference to suits for possession of land, and which suits were to be stayed, there was a companyscious departure, by the Legislature, when S. 5 was amended, by omitting suits for possession of land. If the intention of the legislature was, Mr. Gupte points out, that the various types of suits or proceedings which had to be stayed, under the old s. 5, have to be declared as abated, under the new s. 5, the Legislature companyld have referred to all the types of actions which had been dealt with, under the original section. No doubt this line of reasoning, on the face of it, may appear to be attractive but we are number satisfied that there is any merit in that companytention. Suits for possession, as such, has number been expressly referred to, in the new section 5, but, in our opinion, the expression every suit and proceeding in respect of declaration of rights or interest in any land are companyprehensive enough to take in suits for possession of land, because, before a claim for possession is accepted, the Court will have, necessarily, to adjudicate upon the right or interest of the plaintiff, in respect of the disputed property, taking into account the claim of the opposite party, Therefore, in our opinion, the suit, instituted by the respondent,. is companyered by the amended section 5 of the Act. The various provisions, companytained in the Act, also clearly indicate that disputes, of the nature which exists between the parties in the present litigation, are all number within the jurisdiction of the authorities, companystituted under the Act, to adjudicate upon. The Act itself is one, to provide for the companysolidation of agricultural holdings in Uttar Pradesh for the development of agriculture. Section 3 defines the various expressions. Chak means the parcel of land allotted to a tenure-holder, on companysolidation. Con- solidation means re-arrangement of holdings in a suit, amongst several tenure-holders, in such a way as to make their respective holdings more companypact. Tenure-holder means a bhumidhar or sardar of the land companycerned, and includes an asami. Section 4 gives power to the State Government to make a declaration that a district or part thereof may be brought under companysolidation operations. There is numbercontroversy, that the numberification, issued by the State Government, under this section, on October 22, 1965, takes in the area where the disputed lands are situated. We have already referred to the provisions, companytained in the original as well as the amended section 5. Sections 8 and 8A, deal with the preparation of records, and statements, by the Consolidation Officer, and s. 9 provides for the Assistant Consolidation Officer sending numberices to tenure-holders companycerned, and other persons interested, showing their interests in, and liabilities, in relation to, the land. Sub-s. 2 of s. 9 provides for a person, to whom a numberice under sub-s. 1 has been sent, or any other person interested, to file objections within the time specified, therein, to the Assistant Consolidation Officer, disputing the companyrectness of the entries made in the records. One of the entries, we have already pointed out, relates to the rights in and liabilities in relation to the land. There are provisions relating to the hearing of objections and the Assistant Consolidation Officer is deemed to be a Court of companypetent jurisdiction. Provisions have also been made for an aggrieved party to file an appeal, to the Settlement Officer, and s. 11 provides that the order of the Settlement Officer is final and that it cannot be questioned in any Court of law. Section 11A provides that numberquestion in respect of a claim to a land, shall be raised or heard at any subsequent stage of the companysolidation proceedings, if they have number been raised earlier. Section 24- provides for the tenure- holder being entitled to enter into possession of the plots allotted to him. Section 28 also gives power to the Assistant Consolidation Officer, on the application of the tenure-holder, to be put in possession of the land, allotted to him. We have already referred to the fact that the expression tenure-holder under s. 3 11 , means a bhumidhar, or sirdar of the land companycerned and includes also an asami. Section 40 provides that proceedings before the Consolidation authorities are to be deemed to be judicial proceedings. Section 48 provides for the Director of Consolidation, exercising his powers of revision, regarding cases decided, or proceedings taken, by any subordinate authority. Section 49 excludes the jurisdiction of civil companyrts to entertain any suit or proceeding, with respect to rights in respect of lands, companyered by the numberification, under s. 4, or with respect to any other matters, for which a proceeding companyld, or ought to have been taken, under the Act. We have referred only to some of the salient provisions of the Act and they will clearly show that the subject matter of the dispute, between the parties in this litigation, are all matters falling for adjudication, within the purview of the authorities, companystituted under the Act. In fact, cl. b , of sub-s. 2 of s. 5 of the Act, as it number stands, also lays down that the abatement of the proceedings, under cl. a , shall be without prejudice to the rights of persons affected, to agitate the right or interest in dispute in the said suits or proceedings, before the appropriate companysolidation authorities under the Act and in accordance with the provisions of the Act and the rules made, thereunder. Having due regard to the nature of this litigation, and the provisions of the Act, we are satisfied that the amended s. 5 of the Act applies to these proceedings. If that is so, an order has to be passed that the suit, out of which these proceedings arise, stands abated. That takes us on to the second companytention, of Mr. Gupte, viz., that the provisions of the amended section 5 are ultra vires, inasmuch as the State Legislature has enacted a provision which impinges upon the jurisdiction of this Court. The learned companynsel has numberdoubt referred us, to the various entries in the Lists in the Seventh Schedule to the Constitution but we are number satisfied that there is any merit either, in this companytention. The State Legislature has number passed any legislation affecting the jurisdiction of this Court. On the other hand, what the State Legislature has done is only to make provision in respect of matters, within its jurisdiction and to declare that a suit, instituted in a Court, within its area, has abated. The position, ultimately, is that this Court takes numbere of a subsequent event, viz., the passing of the Amending Act, and the amendment of s. 5 thereby, by the State Legislature, and, on that basis, it holds that the suit, out of which these proceedings arise, stands abated. Therefore, there is numberquestion of the Legislature of the State having passed any legislation affecting the jurisdiction of this Court. The result is that C.M.P. 2631 of 1967 is allowed and it is declared that Civil Appeal No. 691 of 1966 has abated, under the amended s. 5 of the Act. The civil appeal is also disposed of, as having abated, for the reasons given by us, when dealing with the civil miscellaneous petition.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 141 of 1965. Appeal by special leave from the judgment and order dated December 7, 1963 of the Madhya Pradesh High Court, Indore Bench in Second Appeal No. 378 of 1961. P. Jhandharia, P.C. Bhartari, J.B. Dadachanji and O.C. Mathur, for the appellant. S. Barlingay, V.G. Tambvekar and A.G. Ratnaparkhi, for respondents Nos. 1, 2 and 4 to 7. The Judgment of the Court was delivered by Shelat, J. This appeal by special leave is directed against the judgment and order of the High Court of Madhya Pradesh in Second Appeal No. 378 of 1961. The respondents as trustees of a charitable trust are the owners of certain houses situate in Indore City. Prior to January 26, 1954 the Indore Municipality was governed by the Indore City Municipal Act, 4 of 1909. By virtue of the power companyferred on it by that Act the Municipality used to levy and companylect house tax at the rate of 7 of the gross annual letting value of these houses and the trustees duly paid such tax. After the formation of the State of Madhya Bharat, the legislature of that State passed the Madhya Bharat Municipalities Act, 1954 which came into force on January 26, 1954. The 1954 Act repealed amongst other Acts the Indore City Municipal Act, 1909. The Indore Municipality however purported to levy the house tax on the basis of the gross annual letting value at the rate of 7 of such value for the financial years 1953-54 and 1954-55. This was objected to by the respondents on the ground that under the 1954 Act the tax companyld be assessed on the basis of gross annual letting value less 10 statutory allowance in. lieu of companyts of repairs or on any other account whatsoever. The difference came to Rs. 1,461, and of this the trustees claimed refund on the ground that the Municipality had companylected the excess from them under pain of distress The Municipality having refused to refund the excess the respondents filed the suit to recover it on the ground that the excess amount was illegally recovered. The Trial Court decreed the suit and the appeals filed by the Corporation in the District Court and the High Court were dismissed. To appreciate the stand taken by the appellant Corporation it is necessary to examine some of the provisions of the two Acts Sec. 21 of the Indore City Municipal Act authorised the Municipal Council to impose tax on houses, buildings or lands within the municipal limits at a rate number exceeding 12-1/2 of the gross annual letting value. As aforesaid, this Act amongst other Acts was repealed by the Madhya Bharat Municipalities Act, 1954. Sec. 2 of the 1954 Act which companytains both a repealing and saving provisions repealed the several Acts set out therein. Clause a however provides that such repeal shall number affect the validity or invalidity of anything already done under any of the said enactments. Clause c of sec. 2 provides that all rules, orders, byelaws, numberifications and numberices, taxes and rates, made, passed, framed, issued or imposed or deemed to have been made, passed, framed, issued or imposed, shall so far as they are number inconsistent with this Act, be deemed to have been made, passed, framed, issued or imposed, as the case may be, under this Act. See. 69 authorises a Municipality to impose the several taxes set out therein including the tax on houses, buildings or lands or both. Sec. 70 lays down the procedure which the municipality would have to follow before it imposes any one of those taxes. Sec. 73 provides that when a tax on buildings or lands or both is imposed, the Chief Executive Officer shall cause an assessment list of all buildings or lands in the municipality to be prepared companytaining the particulars therein set out. Amongst such particulars are the valuation based on capital or annual letting value as the case may be on which the property is assessed. Sub-sec. 2 provides that in assessing the tax on buildings or lands, where the valuation determined under clause d of sub-section 1 is the annual letting value, a sum equal to 10 of such valuation shall be deducted therefrom in lieu of allowance for companyts of repairs or on any account whatsoever. Sec. 75 provides for the publication of the assessment list and the. right of the owner or occupier of properties included in the list to take inspection thereof and to make extracts therefrom. Sec. 76 provides for a public numberice of time fixed for lodging objections to such assessment list and the hearing of such objections. Sub-sec. 4 of sec. 76 provides for the authentication of the list. Sub-section 6 lays down that subject to such alterations as may be made therein under sec. 77 and to the result of any appeal or revision made under sec. 190 in the case of City Municipality and. under sec. 90 in the case of other municipalities, the entries in the assessment list so authenticated shall be accepted as companyclusive evidence for the purposes of all municipal taxes of the valuation or annual letting value of buildings. and lands to which such entries respectively refer and for the purposes of the tax for which such assessment list has been prepared of the amount of tax leviable on such buildings or lands in any official year in which such list is in force. Sec. 79 1 provides that it would number be necessary for a Municipality to prepare a new assessment list for every year. It further provides that subject to the companydition that such assessment list shall be companypletely revised number less than once in every 4 years the Municipality may adopt the valuation and assessment companytained in the list for any year with such alterations as may be necessary for the year immediately following. But sub-section 2 lays down that the provisions of s. 75 and s. 76 shall be applicable every year as if a new assessment list has been companypleted at the companymencement of the official year. These provisions show that though by sec. 2 the new Act repealed the Indore City Municipal Act, 1909 along with other Acts, the legislature by sec. 2 c saved certain things done under the repealed Acts, viz., rules bye-laws, orders, numberifications and numberices, taxes and rates made, framed, passed, or imposed or deemed to have been made, framed, passed or imposed under the repealed Acts and added a fiction that so far as they are number inconsistent with the new Act they shall be deemed as if they were made, framed, passed or imposed as the case may be under this Act. We are informed by Counsel that under the rules made under the repealed Indore City Municipal Act, 1909 the Municipality had imposed the tax on houses at the rate of 7 of their gross annual letting value, that an assessment list on that basis was prepared for the year 1952-53 and that the Municipality has been levying tax at the said rate on the basis of the said assessment list for the two subsequent years. Counsel for the appellant Corporation argued that the Corporation was entitled to levy the house tax at the rate of 7 of the gross annual letting value and that it was number bound to deduct the 10 allowance provided by sec. 73 2 from such gross annual letting value. The argument was, firstly, that the appellant Corporation companyld do so because the rules made under the Indore Act are saved by sec. 2 c and therefore the rate of 7 of the gross annual letting value at which the tax was levied also has been saved and secondly, that under sec. 79 1 of the 1954 Act the Corporation need number prepare a fresh assessment list every year, that it has to prepare a fresh assessment list only once in every 4 years, that the Corporation therefore can and in fact has adopted the said list for the two years in question and that being so, the list so adopted was. in force during the years in question and has to be accepted under s. 76 6 as companyclusive evidence of the annual letting value as also for the amount of tax leviable on the buildings or lands or both. He companytended that being the position the respondents were debarred from objecting to the annual letting value and the quantum of tax based on it as entered against the respondents properties in the said assessment list. We are number impressed with these companytentions as in our view they are number warranted on the true companystruction of the provisions of the Act. The Indore Municipal Act being numberlonger in force as from January 26, 1954, obviously numbertax companyld be levied or imposed thereunder after that date. The rules made and the taxes imposed under the repealed Act are numberdoubt amongst other things saved and are deemed to have been made, framed, passed or imposed under the new Act but cl. c of sec. 2, it must number be forgotten, lays down an important qualification that they are to be deemed to have been made, or imposed etc., under the new Act to the extent that they are companysistent with the provisions of the Act. Sec. 73 read with sec. 69 provides that a tax on houses or buildings shall be levied on the annual letting value and that in assessing such tax a sum equal to 10 of such letting value shall be deducted therefrom. The tax levied under the old Act and the rules framed thereunder on the basis of the gross annual letting value is obviously inconsistent with the provisions of s. 73 of the Act. The saving and the deeming provisions in s. 2 c can only apply if the tax is assessed in the manner companysistent with the provisions of s. 73, that is, if it is assessed-on the net and number the gross annual letting value after deducting 10 statutory allowance in lieu of the companyts of repairs or any other account whatsoever. If the companystruction of sec. 2 c as suggested by Counsel were to.be accepted it would render sec. 73 2 nugatory, for, the Municipal Corporation in that case can go on imposing the tax on the basis of the gross annual letting value for ever despite the express provision for levying tax on the basis of net annual letting value, i.e., the value arrived at after deducting 10 of the gross annual letting value. The second part of the companytention is equally unacceptable because, if accepted, it will be companytrary to the provisions of sections 75,76 and 79 of the Act. After going through the procedure laid down in ss. 70, 71 and 72 sec. 73. enjoins upon the Chief Executive Officer to have an assessment list made companytaining inter alia valuation or annual letting value at which the property is assessed and the amount of tax assessed on the basis of such valuation or annual letting value. Under ss. 75 and 76 when the assessment list is prepared in accordance with the provisions of sec. 73 it has to be published and time has to be fixed for lodging objections against the entries therein. After such objections are heard and disposed of the assessment list has to be authenticated as provided by sec. 76 6 . Sub-sec. 6 of sec. 76 lays down that such assessment list when authenticated becomes companyclusive evidence for purposes of all taxes. of the valuation or annual letting value and of the amount of tax leviable on such buildings or lands or both in any official year in which such list is in force. The Municipal tax is an annual tax leviable for a particular official year and the assessment list on the basis of which the tax is assessed is for each such official year. This is supported by the words such assessment list and of the amount of tax leviable in any official year in which such list is in force in sec. 76 6 . Ordinarily therefore the Municipal Corporation has to prepare a fresh assessment list every year. The legislature however has empowered by sec. 79, as other State legislatures have similarly done in several Municipal Acts, to adopt the valuation and assessment companytained in the assessment list prepared in an earlier year provided, however, that it prepares a fresh list oncein every 4 years. But sub-sec. 2 of sec. 79 provides expressly that when such a previous list is adopted for a particular official year it can be done subject to the provisions of sections 75 and 76. In other words, an assessment list being for a particular official year even when an assessment list prepared in an earlier year is adopted it becomes the list for such subsequent year subject to the procedure laid down in secs. 75 and 76. The list so adopted has therefore to be published, has to invite objections and has to be authenticated in the manner prescribed by sec. 76 6 after disposing of the objections if any and it is then only that it becomes companyclusive evidence of the valuation and the tax assessed thereon for that particular official year. If it were otherwise, the annual letting value or the value estimated on a particular building or house would be static for 4 years during which the Corporation can go on adopting the assessment list prepared in an earlier year and the owner or the occupier of the building would be deprived of the right to object to the valuation or the annual letting value or the tax assessed thereon for at least 4 years even though the valuation or the annual letting value thereof may have decreased for one reason or the other. In order to prevent such a result the legislature has provided by sub-section 2 of sec. 79 that where a municipality adopts a previously prepared list for any subsequent year the provisions of ss. 75 and 76 shall be applicable as if a new assessment list has been companypleted at the companymencement of that particular official year. The word, if appearing in sub-sec. 2 of sec. 79 is obviously a mistake and must be read as as if because the word if standing by itself makes numbersense at all. Sec. 79 therefore has to be companystrued to mean that though a Municipality need number prepare a fresh assessment list every year and need prepare such list once in every 4 years and can adopt an earlier assessment list such an adopted list becomes the assessment list for that particular year as if it was a new list and to which ss. 75 and 76 apply. The result of the foregoing discussion is that the appellant Corporation was entitled to adopt the assessment list prepared for the year 1952-53 for the two assessment years, 1953-54 and 1954-55, under sec. 79 and therefore that list became the assessment list for each of the 2 years in question. That fact however does number entitle the appellant Corporation to impose the house tax on the basis of the gross annual letting value as such imposition is inconsistent with sec. 73 under which the annual letting value would be the gross annual letting value less 10 statutory allowance. But the companytention was that the tax imposed on the basis of the gross annual letting value was saved by sec. 2 c and that saving companypled with the fact that the assessment list prepared for 1952-53 was adopted for the years in question made the entries in the assessment list so adopted companyclusive evidence of the annual letting value and the amount of tax assessed thereon and entitled the Corporation to companylect the tax assessed on the gross annual letting value. Therefore, it was argued, both the annual letting value and the amount of tax shown in that list were companyclusive evidence and companyld number be assailed. Counsel however forgets that even on the footing that the resolution passed by the Indore Municipality to levy the tax at 7 of the gross annual letting value and on the strength of which the list for 1952-53 was prepared was saved and was deemed to have been made under the 1954 Act it can be deemed to have been so made in so far as it is companysistent with the provisions of the Act. Therefore, to the extent that it is inconsistent with sec. 73 it is neither saved number deemed to have been made under the Act and has to be adjusted in the light of the provisions of sec. 73 2 . It follows that the appellant-Corporation was number entitled to demand the tax assessed on the gross annual letting value. The High Court therefore was right in decreeing the suit and to order refund of the. said excess amount against the appellant Corporation. The appeal fails and is dismissed with companyts. The companyts of this appeal as also those in the next appeal No.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION. Civil Appeal No. 2457 of 1966. Appeal from the judgment and order dated September 13, 1963 of the Calcutta High Court in Income-tax Reference No. 29 of 1959. T. Desai, B. R. L. Iyengar and R. N. Sachthey, for the appellant. K. Sen, R. M. Hazarnavis, and K. L. Hathi, for the respon- dent. The Judgment of the Court was delivered by Shah, J. One Amritlal died on October 18, 1944. For the assessment year 1945-46 his estate was assessed to tax on a total income of Rs. 22,160/- from salary and other sources. In January 1946, Anusuya Devi widow of Amritlal encashed high denomination numberes of the value of Rs. 5,84,000/-, and made a declaration as required by the High Denomination Bank Notes Demonetisation Ordinance, 1946 that A sum of Rs. 5,84,000/- in numberes were made over and or directed to be made over by the declarants deceased husband Amritlal Ojha at Rajkot in April, 1944, sometime before his death for the benefit of declarant and her 8 minor sons. In a proceeding for reassessment of the income of Amritlal for the assessment year 1945-46 the attorney who appeared on behalf of Anusuya Devi stated that Amritlal was from time to time, during the last 30. years of his life, giving gifts to his wife and also setting apart money exclusively for his wife and children and that the fund so accumulated which remained in a cupboard was found after his death. The Income-tax Officer disbelieved the explanation furnished and brought the amount of Rs. 5,84,000/- to tax as income of Amritlal in the year of account 1944-45 from an undisclosed source, and with his decision the Appellate Assistant Commissioner agreed. At the hearing of the appeal before the Income-tax Appellate Tribunal, Anusuya Devi-widow of Amritlal-filed an affidavit in which it was stated, inter alia From time -to, time during our married life, late Sri Amritlal Ojha used to make presents of cash moneys to me on occasion of birthday of myself and of my sons and daughter by him and also on the occasion of his own birthday and on the anniversary of our marriage. My husband late Sri Amritlal Ojha used to tell me that these presents of cash money that he made was to make provisions for me and my minor sons and daughter and also to meet the expenses of their education and marriage in the event of his death. The total amount of the money so paid by late Sri Amritlal Ojha was Rs. 5 84,600/-. This amount was my stridhan property and was all along in my possession. This affidavit was admitted in evidence by the Tribunal, but the Tribunal declined to admit an affidavit of Gunvantray one of the sons of Amritlal, because in their view an attempt was made to bring on record a large number of new facts which were number disclosed before the departmental authorities. The Tribunal declined to accept the case set up by Anusuya Devi. Beside pointing out the discrepancies in the statements made from time to time, which rendered her case unreliable, the Tribunal expressed the view that gifts made during a long period of 20 to 30 years companyld number all have been made only in thousand rupee numberes. The Tribunal accordingly upheld that order bringing to tax Rs. 5,84,000/- as income from an undisclosed source in the account year 1944-45. In her application for stating a case to the High Court on eleven questions set out therein Anusuya Devi asserted that in her declaration under s. 6 of the High Denomination Bank Notes Demonetisation Ordinance, 1946, she had given information pursuant to the queries as follows Reasons for keeping above in No bank account. The high denomination numberes rather amount is held in trust than in current account, fixed for minors and as prices deposit or securities. of securities very so for greater safety the amount is held in cash for the benifit of the defandent and in trust for the minors. When and from what source did A sum of Rs. 5,84,000 in declarant companye into possession numberes were made over and or of bank numberes number tendered. directed to be made over by the declarants deceased husband Amritlal Ojha at Rajkot in April 1944 sometime before his death for benefit of the declarant and her eight minor sons. in the latter part of August and beginning of September 1945, Rs.4,94,000/was deposited with the Bank of India Ltd. at its Bombay Branch and transferred by T.T. to their Calcutta Branch in the account of the declarants major son Bhupatray Ojha who drew a self cheque for Rs. 4,94,000/- received payment by 494 pieces of 1,0001- numberes included in the list and made them over to the declarant. The Tribunal rejected the application. The High Court of Judicature at Calcutta however directed the Income-tax Appellate Tribunal to state a case on the following question Whether the Tribunal erred in law by basing their decision on part of the evidence ignoring the statement made as regards the withdrawal of Rs. 4,94,000/- by 494 pieces of Rs. 1,000/- numberes from the bank? In companypliance with the order, the Tribunal observed that the extract from the statement incorporated in the petition under s. 66 1 was materially different from the statement reproduced in the order of the Income-tax Officer and that the Tribunal was number invited to companysider at the hearing of the appeal the truth or otherwise of the alleged companyy of the declaration incorporated in the petition under S. 66 1 and that at the hearing of the appeal the original declaration had number been produced. The learned Judges of the High Court who heard the reference were apparently of the view that the question referred did number arise out of the order of the Tribunal, but they felt bound by the view expressed in Chainrup Sampatram v. Commissioner of Income-tax, West Bengal 1 that it is number open to the Court hearing a reference under s. 66 2 to hold, companytrary to the decision recorded at the time when the Tribunal was directed to state the case on a question, that the question did number arise out of the order of the Tribunal. Bijayesh Mukherji, J., who delivered the principal judgment of the Court observed that the Tribunal had apparently ignored a part of the declaration made by Anusuya Devi that 494 high denomination numberes out of those encashed in January 1946 were received from a Bank in Calcutta in realization of a cheque for Rs. 4,94,000/- drawn in September 1945 by Bhupatray her eldest son that there was reason to doubt that statements referred to in his order by the Appellate Assistant Commissioner were made by Anusuya Devi or her attorney and that in any event opportunity to clear up the discrepancies between the statement made at the time of the disclosure of the high denomination numberes and the statements said to have been made before the Income-tax Officer or before the Appellate Assistant Commissioner ought to have been given to her. Holding that the 1 20 I.T.R 484. order of the Tribunal suffered from those infirmities the learned Judges of the High Court answered the question in the affirmative. In our, judgment the order of the High Court cannot be sus- tained. The statement that out of 584 high denomination numberes disclosed by Anusuya Devi 494 numberes were received in realization of a cheque drawn by Bhupatray at Rajkot was made for the first time in a petition under s. 66 1 it did number find place in the statement before the Income-tax Officer, number in the grounds of objection raised before the Appellate Assistant Commissioner, and. number even in the affidavit filed before the Tribunal. The Tribunal was never apprised of that part of the case, and had numberopportunity to test the companyrectness of that statement. On the statements made before the Income-tax Officer and in the affidavit there can be numberdoubt that it was the case of Anusuya Devi that she had encashed high denomination numberes which she had received from her husband. No fault can therefore be found with the observations of the Tribunal that it was a peculiar fact that all the money stated to have been received and found in the cupboard was all in high denomination numberes and the entire amount had to be exchanged under the High Denomination Bank Notes Demonetisation Ordinance. In the question which was referred under the direction of the High Court, it was assumed that the Tribunal had before it the statement about the receipt of 494 currency numberes of Rs. 1,000/each from a Bank at Calcutta in realization of a cheque. But that evidence was number before the Tribunal, and the order of the Tribunal was number open to the objection that it had decided the appeal before it on a partial review of the evidence. Even in the application made to the Tribunal under s. 66 1 in the large number of, questions which it was claimed arose out of the order of the Tribunal it was number suggested that the finding of the Tribunal was vitiated because some relevant evidence was ignored. If the Tribunal refuses to state a case under sub-s. 1 of s. 66 on the ground that numberquestion of law arises, and the High Court is number satisfied with the companyrectness of that decision, the High Court -nay in exercise of the power under s. 66 2 require the Tribunal to state a case, and refer it. When the Tribunal is number invited to state a case on a question of law alleged to arise out of its order, the High Court cannot direct the Tribunal to state it on that ques- tion see Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd. 1 . The reason of the rule is clear the High Court cannot hold that the decision of the Tribunal refusing to state a case on a particular question is incorrect if the Tribunal was number asked to companysider whether the question arose out of its order, and whether it was a question of law. 1 42 I.T.R. 589. We find it difficult to uphold the view of the Calcutta High Court that if an order is passed by the High Court calling upon the Tribunal to state a, case on a question which does number arise out of the order of the Tribunal, the High Court is bound to advise the Tribunal on that question even if the question does number arise out of the order of the Tribunal. The High Court may only answer a question referred to it by the Tribunal the High Court is however number bound to answer a question merely because it is raised and referred. It is well-settled that the High Court may decline to answer a question of fact or a question of law which is purely academic, or has numberbearing on the dispute between the parties or though referred by the Tribunal does number arise out of its order. The High Court may also decline to answer a question arising out of the order of the Tribunal, if it is unnecessary or irrelevant or is number calculated to dispose of the real issue between the tax-payer and the department. If the power of the High Court to refuse to answer questions other than those which are questions of law directly related to the dispute between the tax-payer and the department, and which when answered would determine qua that question the dispute, be granted, we fail to see any ground for restricting that power when by, an erroneous order the High Court has directed the Tribunal to state a case on a question which did number arise out of the order of the Tribunal. We are unable therefore to hold that at the hearing of a reference pursuant to an order calling upon the Tribunal to state a case, the High Court must proceed to answer the question without companysidering whether it arises out of the order of the Tribunal, whether it is a question of law, or whether it is academic, unnecessary or irrelevant. We are of the opinion that the very basis of the question on which the Tribunal was called upon to submit a statement of the case did number exist. The Tribunal cannot in this case be charged with recording its decision without companysidering all the evidence on the record the decision of the Tribunal was clearly based on appreciation of evidence on the record before it, and the High Court was, in our view, incompetent to direct the Tribunal to state the case on- the question which was directed to be, referred and dealt with by the High Court. We are also unable, to agree with the observation of the High Court that the explanation which the Assistant Commissioner says was made by Anusuya Devi was number made by her or by her attorney. No such plea was apparently raised before the Tribunal. There is also numberground for believing that Anusuya Devi was number given an opportunity to clear up the discrepancies between the statements made by her or on her behalf from time to time in companynection with the encashment of the high denomination numberes. That plea was number raised before the Tribunal, and the validity of the companyclusion of the Tribunal on appreciation of evidence cannot be assailed before the High Court on the ground that departmental authorities had violated the basic rules of natural justice without raising that question before the Tribunal. Counsel for Anusuya Devi requested that in any event the question which has been referred by the Tribunal in pursuance of the order of the High Court may be reframed and a supplementary statement may be ordered to be submitted by the Tribunal. But power to reframe a question may be exercised to clarify some obscurity in the question referred, or to pinpoint the real issue between the tax- payer and the department or for similar other reasons it cannot be exercised for reopening an enquiry on questions of fact which is closed by the order of the Tribunal. Again, a supplementary statement may be ordered only on the question arising out of the order of the Tribunal, and if the Court is satisfied that the statements are number sufficient to enable the Court to determine the question raised thereby, and when directed may be only on such material and evidence as may already be on the record but which has number been included in the statement initially made Keshav Mills Ltd. Commissioner of Income-tax, Bombay North, Ahmedabad 1 . We do number think that the judgment of this Court in Narain Swedeshi Weaving Mills v. Commissioner of Excess Profits Tax 2 lays down any general proposition that the High Court hearing a reference is entitled to amend or reframe a question and call for a supplementary statement so as to enable a party to lead evidence which has number been led before the Tribunal or the departmental authorities. In Narain Swadeshi Weaving Mills case 2 this Court merely reframed the question so as to bring out the real issue between the parties. Finally companynsel for Anusuya Devi submitted that the Tribunal was bound to state a case on the following question which was. set out in the application under s. 66 1 Whether there is any material before the Tribunal to hold that the said sum of Rs. 5,84,000/representing the value of the encashed high denomination numberes was the income of the deceased Amritlal Ojha of the period of the year 1944-45 prior to his death Counsel submitted that since the Tribunal had failed to raise and state a case on that question, and the High Court had also in directing that a statement of case be submitted, ignored that question, in the interest of justice and for a final and satisfactory disposal of the case this Court may order a statement on that question. Counsel said that merely because on the findings-of 1 56 I.T.R. 365. 2 26 I.T. R. 765. the Tribunal Amritlal was on April 30, 1944, possessed of a large sum of money it companyld number be assumed that the whole amount was earned after April 1, 1944, and was on that account taxable in its entirely in the year of assessment 1945-46. The question whether the amount of-Rs. 5,84,000/- was taxable in the proceeding for assessment for the year 1945- 46 was companysidered by the Income-tax Officer and by the Appellate Assistant Commissioner. The Income-tax Officer observed that by the explanation submitted on behalf of Anusuya Devi before him, companytrary to what was stated at the time of encashment of the high denomination numberes, it was attempted as an afterthought, to spread over the amount over a number of years. The companytention that the amount of Rs. 5,84,000/- was number taxable in the .year of assessment 1945-46 was rejected. The Appellate Assistant Commissioner observed that on the statement made by Anusuya Devi that she had received the amount from her husband in the year of account 1944-45 and that it was unfortunate that there was numbercomplete record of the earnings and withdrawals .,of Amritlal from the various businesses in which he was interested, and that in the absence of such a record all that was to be done was to examine whether the explanation was credible. He observed that the accounting year was very favourable for all types of business, and in all probability the sum represented some income earned by the deceased in some ventures which were number known to the Department and therefore the sum companyld be treated as income of Amritlal from undisclosed sources. The Tribunal observed that they were unable to believe the version of Anusuya Devi that the amount was accumulated by her husband during a long period, and since the assessee and his legal representatives had failed to prove the source of the fund, it must be companysidered as of income character. Apparently, numberargument was raised before the Tribunal that the amount though taxable was number income of the year of account 1944-45 and companyld obviously number he referred. The High Court may answer only those questions which are ,actually referred to it. New questions which have number been referred cannot be raised and answered by the High Court. If the Tribunal refuses to refer a case under S. 66 1 which arises out of its order, the proper companyrse is for the aggrieved party to move the High Court to require the Tribunal under S. 66 2 to refer the same. The question whether Rs. 5,84,000/- represented income of the year of account 1944-45 was number submitted by the, Tribunal to the High Court. Even if it be assumed that the High Court was moved to direct the Tribunal to state a case on the sixth question which was set out in the, application filed -before the Tribunal under S. 66 1 , the application must be deemed to have been rejected, and the order of rejection has become final. We have numberpower, without an appeal by the assessee, to set aside that order of the High Court and to direct the Tribunal to state a case on that question. The appeal must therefore be allowed, and the order passed by the High Court set aside. The answer to the question will be in the negative. This case discloses a very disturbing state of affairs prevailing in the Income-tax Department. It is a startling revelation that the entire record of an assessees case both before the Income-tax Officer and the Appellate Assistant Commissioner was found missing, and has number been traced thereafter. Even if companylusion be ruled out, the persons companycerned in looking after the safety of the important record of proceedings of assessment cannot escape a charge of gross negligence.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2454 of 1966. Appeal from the Judgment and order dated February 19/22, 1965 of the Bombay High Court in Income-tax Reference No. 2 of 1962. Sanat P. Mehta, and J.B. Dadachanji, for the appellant. Niren De, Solicitor-General, B.R.L. lyengar, and R.N. Sachthey, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought by certificate from the, judgment of the Bombay High Court dated the 22nd February, 1965 in Income-tax Reference No. 2 of 1962. In the year 1951 the assessee Maneklal Ujamshi hereinafter referred to as the assessee made a gift of 1,184 ordinary and 155 preference shares in Changdeo Sugar Mills Ltd. to his wife Bai Laxmibai. The total value of these transferred shares on the date of the transfer was Rs. 68,730/-. Subsequent to the transfer the companypany companyverted the preference shares into ordinary shares giving the shareholders 8 ordinary shares for each preference share with the result that on December 31, 1954, Bai Laxmibai held in all 2,424 ordinary shares of the mills. Out, of these 2,424 shares. Bai Laxmibai sold 2,400 shares on August 1. 1956, for the sum of Rs. 1,54,800/- resulting in a capital gain of Rs. 70,860/- as companyputed under s. 12B of the Income-tax Act. The whole amount realised by the sale of the shares was deposited by Bai Laxmibai with M s. A.H. BhivandiwaIla Co., in which Maneklal as well as his son, Sevantilal, happened to be partners. The amount deposited by Bai Laxmibai fetched a yearly interest of Rs. 9,288/-. In the assessment of Maneklal for the assessment year 1957-58 the Income Tax Officer included the amount of Rs. 70,860/- which was the profit made by Bai Laxmibai on the sale of the shares, as income of Maneklal under s. 16 3 a iii of the Indian Income Tax Act. Similarly, in the assessment of Maneklal for the assessment years 1958-59 and 1959-60, the Income Tax Officer included in each year the amount of Rs. 9,288 which was the interest earned by Bai Laxmibai on the deposit of the sale proceeds with M s. Bhivandiwalla and Co. as the income of Maneklal under s. 16 3 a iii . According to the Income Tax Officer the gain which had resulted from the sale of the shares was the income of the wife of the assessee which arose directly or indirectly from the assets transferred by the assessee to his wife otherwise than for adequate companysideration and therefore was required to be included in the companyputation of the total income of Maneklal. The Income Tax Officer also took the view that the amount of interest which Bai Laxmibai had received from the sale proceeds deposited by her with M s. Bhivandiwalla Co. was also income of the wife of Maneklal which arose directly or indirectly from the assets transferred by Maneklal to her. Accordingly, in the assessment order for the first year, the Income Tax Officer included the amount of Rs. 70,860/- and in the assessment orders for the next two years, he included the amount of Rs. 9,288/- in the total taxable income of Maneklal. Appeals against all these three assessment orders were filed before the Appellate Assistant Commissioner. In the appeal against the first assessment order for the assessment year 1957-58 the Appellate Assistant Commissioner agreed with the view taken by the Income Tax Officer and dismissed the appeal. In the other two appeals, he partly allowed the appeals taking the view that only that part of the interest which was attributable to the monetary value of the shares companyered by the shares at the time of the gift was liable to be included in the total income of Maneklal in accordance with the provisions o.f s. 16 3 a iii and the balance companyld number be included under the said provision. Since the monetary value of the shares gifted to Bai Laxmibai at the time when the gift was made was only Rs. 69,730/-, the interest attributable to it worked out at Rs. 4,l 38/-. Out of the total interest of Rs. 9,288/- which was received by Bai Laxmibai in each of those years, he directed that only an amount of Rs. 4,183/- should be included in the total income of Maneklal in each of those two years and the balance of Rs. 5,105/- should be deleted. Against the orders of the Appellate Assistant Commissioner on these appeals the assessee appealed to the Appellate Tribunal. The Department, on the other hand, appealed against the orders of the Appellate Assistant Commissioner for the years 1958-59 and 1959-60 insofar as they allowed exemption in respect of Rs. 4,183/- out of the total amount of Rs. 9,288/- for each year. The Appellate Tribunal dismissed the appeal of the assessee with regard to the assessment year 1957-58. For the assessment years 1958-59 and/959-60, the Appellate Tribunal allowed the appeals of the Department and dismissed the appeal of the assessee for the assessment. year 1959-60. According to these decisions of the Appellate Tribunal the result was that for the assessment year 1957-58 the order of the Income Tax Officer that the amount of Rs, 70,860/- which was the profit or gain on the sale of the shares by Bai Laxmibai was liable to be included in the total income of Maneklal was upheld and for the later two, years the entire amount of interest viz., Rs. 9,288/- was held to be liable to be included in the total income of Maneklal in each of those two years. Thereafter, at the instance of the assessee, the Appellate Tribunal stated a case to the High Court on the following questions of law Whether in companyputing the total income of Maneklal for the assessment year 1957-58, the sum of Rs. 70,860/- has been properly included therein in accordance with the provisions of s. 16 3 a iii of the Income-tax Act, 1922 ? Whether in companyputing the total income of Maneklal for the assessment year 1958-59 the sum of Rs. 5,104/- has been properly included therein in accordance with provisions of s. 16 3 a iii of the Income-tax Act, 1922? Whether in companyputing the total income of Maneklal for the assessment year 1959-60, the sum of Rs. 4,183/- has been properly included therein in accordance with the provisions of s. 16 3 a iii of the Income-tax Act, 1922 ? Whether in companyputing the total income of Maneklal for the assessment year 1959-60, the sum of Rs. 5,105/- has been properly included therein in accordance with the provisions of s. 16 3 a iii of the Income- tax Act,1922 ? By its judgment dated February 19, 1965 the High Court answered the first question in the affirmative and against the assessee. It answered questions Nos. 2 4 in favour of the assessee and against the Department. As regards question No. 3, the High Court answered it in the affirmative and in favour of the Department. The reason was that Counsel for the assessee did number press it or challenge the companyrectness of the view taken by the Appellate Tribunal and accepted as companyrect the companyclusion of the Tribunal with regard to the point involved in that question. Section 16 3 a iii of the Income Tax Act, 1922 provides as follows 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 of such individual as arises directly or indirectly 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. Section 2 6C of the Income-tax Act, 1922 states Income includes any capital gain chargeable under section 12B Section 12B of the Income Tax Act enacts The tax shah be payable by an assesee under the head capital gains in respect of any profits or gains arising from the sale, exchange, relinquishment or transfer of a capital asset effected after the 31st day of March, 1956, and such profits and gains shall be deemed to be income of the previous year in which the sale. exchange, relinquishment or transfer took place With regard to the first question Mr. Mehta put forward the argument that what companyes within the ambit of s. 16 3 a iii is the income from the transferred assets, which is different from the profit or gain arising from the sale of the transferred assets, or in other words, the capital gains from the transferred assets. It was argued in the first place that what companyes within the ambit of s. 16 3 a iii was the income from the assets i.e., the income which the asset produces while it companytinues to remain in the hands of the assessee and does number include the gain which the assessee makes by selling the asset and parting with possession of it. We see numberjustification for this argument. In our opinion there is numberlogical distinction between income arising from the asset transferred to the wife and income arising from the sale of the assets so transferred. The profits or gains which arise from the sale of the asset would arise or spring from the asset, although the operation by which the profits or gains is made to arise out of the asset is the operation of the sale. If the asset employed, say by way of investment and produces income, the income arises or springs from the asset the operation, which causes the income to spring from the asset, is the operation of the investment. In the operation of the investment, income is produced, while the asset companytinues to belong to the assessee, while in the operation of a sale, gain is produced, which is still income but in the process the title to the asset is parted with. Although the processes involved in the two cases are different, the gain which has resulted to the owner of the asset, in each case, is the gain, which has sprung up. or arisen from the asset. There is hence numberwarrant for the argument. that the capital gain is number income arising from the assets but it is income which arises from a source which is different from the asset itself. It was argued in the second place that s. 16 3 a iii was enacted in 1937 when the word income did number include capital gains and income from property was understood to be income falling under that head in s. 6 of the Act. The inclusion of capital gains in the definition of income was for the first time enacted in 1947. It is true that at the time when s. 16 3 a iii was enacted, the definition of income did number include capital gains but capital gains having been brought within the meaning of income in s. 2 6C the expression income as used in s. 16 3 a must be companystrued according to the amended definition of the word and would, therefore, include capital gains. There is numberhing in the companytext or language of s. 16 3 a of the Act to suggest that capital gains are excluded from its scope. We see numberreason why a restricted interpretation should be given to the provisions of s. 16 3 a iii as companytended for the appellant. On the companytrary, the object of the enactment of the section is to prevent avoidance of tax or reducing the incidence of tax on the part of the assessee by transfer of his assets to. his wife or minor child. It is a sound rule of interpretation that a statute should be so companystrued as to prevent the mischief and to advance the remedy according to the true intention of the makers of the statute. We are, therefore, unable to accept Mr. Mehtas argument on this aspect of the case.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petitions Nos. 109 to 114, 117, 118, 120, 121, 128 to 133, 142, 143, 186, 190 and 191 of 1967. Petitions under Art. 32 of the Constitution of India for the enforcement of the fundamental rights. K. Ramamurthi, for the petitioners in W. Ps. Nos. 109, 142 and 143 of 1967 . Shaukat Hussain, for the petitioners in W. Ps. Nos. 110114 and 118 of 1967 . Janardan Sharma, for the petitioners in W. Ps. Nos. 117, 120, and 121 of 1967 . C. Prasad, for the petitioners in W. Ps. 128-133 of 1967 K. Ramamurthi and Vineet Kumar, for the petitioners in W. Ps. Nos. 186, 190 and 191 of 1967 . K. Daphtary, Attorney-General, R.H. Dhebar and S.P. Nayar, for the respondent in W. Ps. Nos. 109, 142 and 143 of 1967 . R. Rajagopal, R.H. Dhebar and S. P. Nayar, for the respondent in W.P. No. 110 of 1967 . Gopalakrishnan and S. P. Nayar, for the respondent in W. Ps. Nos. 111 to 114, 117, 118, 120, 121. 128 to 133, 186, 190 and 191 of 1967 . The Judgment of WANCHOO, C.J., SHAH, BACHAWAT, MITTER and HEGDE, JJ. was delivered by WANCHOO, C.J., HIDAYATULLAH, J. delivered a separate Opinion. Wanchoo, C.J. These twenty-one petitions under Art. 32 of the Constitution for a writ of habeas companypus raise companymon questions of law and will be dealt with together. It is enough to set out the facts in one of the petitions No. 142 of 1967 , for the facts in other petitions are almost similar. The petitioner was arrested on November 11, 1966 and detained under an order passed under r. 30 1 b of the Defence of India Rules, 1962 hereinafter referred to as the Rules . It appears that though the order was reviewed after the period of six months, numberopportunity was given to the petitioner to represent his case before the reviewing authority. In companysequence the detention of the petitioner be came illegal after the first period of six months in view of the judgment of this Court in P.L. Lakhanpal v. Union of India 1 . The State Government realising this defect, cancelled the order dated November 11, 1966 on August 3, 1967, and on the same day a fresh order of detention was passed and it is this order which A.I.R. 1967 S.C. 1507 1967 3 S.C.R. 114. L 1O Sup CI/67--17 is being challenged before us. It is number in dispute that in view of the judgment of this Court in Jadev Singh v. State of Jammu and Kashmir 1 , it was open to the State Government, in view of the formal defect in making the review, to pass a fresh order of detention after revoking the earlier order, which in any case became ineffective after the first six months, if the circumstances which led to the detention originally still companytinued. The main attack of the petitioners is on the order of the President passed on November 3, 1962, as amended on November 11, 1962, under Art. 359 1 of the Constitution. By this order the President declared that the right to move any companyrt for the enforcement of the fundamental rights companyferred by Arts. 14, 21 and 22 of the Constitution would remain suspended for the period during which the Proclamation of Emergency issued under Art. 352 1 , was in force, if any person was deprived of such right under the Defence of India Ordinance No. 4 of 1962 or any rule or order made thereunder. The argument in support is put this way. The President is an authority within the meaning of Art. 12 and therefore is companyprised within the definition of the word State and the order passed under Art. 359 is a law within the meaning of Art. 13 2 of the Constitution. Consequently an order passed by the President under Art. 359 is liable to be tested on the anvil of the fundamental rights enshrined in Part Ill of the Constitution Secondly, it is urged that an order passed under Art. 359 is made in the companytext of the Emergency and therefore enforcement of only such fundamental rights can be suspended which have nexus with the reasons which led to the Proclamation of Emergency. In companysequence, the President can only suspend the enforcement of fundamental rights under Art. 22 and Art. 31 2 under an order passed under Art. 359 and numberothers. Thirdly, it is urged that even if the President can suspend the enforcement of any fundamental right, the order passed can still be tested under the very fundamental right enforcement of which has been suspended. Fourthly, it is urged that an order passed under Art. 359 can in any case be challenged under Art. 14, and if so the order passed in the present case is violative of Art. 14 because some persons can be detained under the Defence of India Act, 51 of 1962 hereinafter referred to as the Act and the Rules while others can be detained under the Preventive Detention Act. As the Act and the Rules give more drastic powers for detention as companypared to the powers companyferred by the Preventive Detention Act, there is discrimination, for there is numberindication as to when detention should be made under the Act and the Rules and when under the prevention law, and the matter is left to the arbitrary discretion of the executive. Fifthly, it is urged that in view of the language of the order under Art. 359, there should have been an 1968 1 S.C.R. 197. express provision in the Act and the Rules to the effect that enforcement of fundamental rights under Arts. 14, 21 and 22 was suspended and in the absence of such an express provision, the Presidential order under Art. 359 cannot stand in the way of the detention order being tested under Part III of the Constitution. Sixthly, it is urged that Art. 22 5 provides that grounds of detention should be furnished to a detenu and the order of the President did number do away with the necessity of furnishing the grounds. Besides these main companytentions, three subsidiary companytentions have also been raised in one petition or another and they are- 1 that the fresh order had number been companymunicated to the detenues and was therefore of numberavail that the order was number in the form as required by Art. 166 of the Constitution and it is therefore for the State Government to prove that it was passed by the authority which had the power to do so and iii that the fresh order was mala fide. The petitions have been opposed on behalf of the State Government. It is unnecessary to set out in detail the companytentions in reply to the main points raised on behalf of the petitioners. It is enough to say that the companytention on behalf of the State is that once the President has passed an order under Art. 359 suspending the enforcement of any fundamental right, it is number open to rely on that fundamental right for any purpose, so long as the order under Art. 359 stands and such an order cannot be tested in any manner by the very fundamental right the enforcement of which it has suspended. Further as to the subsidiary points, the State companytends that the fresh order of detention was companymunicated to each detenu and that the order was in the form required by the Constitution of Jammu and Kashmir and that Art. 166 has numberapplication to the State of Jammu and Kashmir. It was finally denied that the order was mala fide in any of the cases. Part XVIII deals with Emergency Provisions and begins with Art. 352 which provides for making a declaration that a grave emergency exists whereby the security of India or of any part of the territory thereof is threatened, whether by war or external aggression or internal disturbance, if the President is so satisfied. Arts. 353 and 354 provide for the effect of the Proclamation of Emergency but it is unnecessary to refer to them for present purposes. Article 358 lays down that during the period that a Proclamation of Emergency is in operation, Article 19 shall remain suspended, Article 359 with which we are particularly- companycerned lays down that where a Proclamation of Emergency is in operation, the President may by order declare that the right to move any companyrt for the enforcement of such of the rights companyferred by Part III as may be mentioned in the order and all proceedings pending in any companyrt for the enforcement of the rights so mentioned shall remain L10Sup. C1/67--18 suspended for the period during which the Proclamation is in force or for such shorter period as may be specified in the order. The order made under Art. 359 may extend to whole or any part of the territory of India and has to be laid, as soon as may be after it is made, before each House of Parliament. It will be seen from the terms or Art. 359 that it gives categorical powers to the President during the period when a Proclamation of Emergency is in operation to suspend the enforcement of any of the fundamental rights companyferred by Part III. It is for the President to decide the enforcement of which of the fundamental rights should be suspended during the operation of the Proclamation of Emergency.There is numberhing in Art. 359 which in any way limits the power of the President to suspend. the enforcement of any of the fundamental rights companyferred by Part III.It is to our mind quite clear that the President has the power to suspend the enforcement of. any of the fundamental rights companyferred by Part III and there is numberhing thereunder which makes any distinction between one fundamental right or another. As Art. 359 stands, it seems to us, it clearly envisages that once a Proclamation of Emergency has been issued, the security of India or any part of the territory thereof may require that the President should suspend the enforcement of any of the fundamental rights companyferred by Part III. There is in our opinion numberscope for inquiry into the question whether the fundamental right the enforcement of which the President has suspended under Art. 359 has anything to do with the security of India which is threatened whether by war or external aggression or internal disturbance, for Art. 359 posits that it may be necessary for the President to suspend any of the fundamental rights in Part HI for the sake of the security of India. There is thus a basic assumption in Art. 359 that it may be necessary for the President to suspend the enforcement of any of the fundamental rights companyferred by Part III in the interest of the security of India. If he companysiders that necessary, it is unnecessary in the face of that basic assumption to inquire whether enforcement of a particular fundamental right suspended by the President has anything to do with the security of India, for that is implicit in Art. 359. It follows therefore that it is open to the President to suspend the enforcement of any of the fundamental rights companyferred by Part III by an order under Art. 359 and this Article shows that wherever such suspension is made it is in the interest of the security of India and numberfurther proof of it is necessary. This brings us to the main ground raised on behalf of the petitioner that an order under Art. 359 is a law made by the State within the meaning of Art. 13 2 and has therefore to be tested under Part III of the Constitution. We may assume for present purposes that the President is companyprised within the word State in Art. 12. We may also assume that the order made by the President under Art. 359 is a law in its widest sense. The question however is whether such an order can be companysidered to be a law for the purpose of Art. 13 2 and tested thereunder. Article 13 2 and Art. 359 being parts of the same Constitution stand on an equal footing and the two provisions have to be read harmoniously in order that the intention behind Art. 359 is carried out and it is number destroyed altogether by Art. 13 2 . It follows that though an order under Art. 359 may be assumed to be law in its widest sense, it cannot be law within the meaning of Art. 13 2 , for if that were so, Art. 359 would be made nugatory. The Constitution through Art. 359 says that the President may suspend the enforcement of any of the fundamental rights in Part III where a Proclamation of Emergency is in force and that means that during the period of Emergency the fundamental rights, enforcement of which is suspended, cannot be enforced. If the order is a law within the meaning of Art. 13 2 , the result would be that though the order says that the enforcement of a particular fundamental right is suspended during the period of Emergency the order can still be tested with the aid of Art. 13 2 on the anvil of the same fundamental right, the enforcement of which it suspends. That would in our opinion result in making Art. 359 companypletely nugatory, for then a declaration made there under that the enforcement of certain fundamental rights is suspended during the period of Emergency would have numbermeaning whatsoever. Therefore, applying the principle of harmonious companystruction we are of opinion that an order passed under Art. 359. cannot be law for the purpose of Art. 13 2 , assuming it to be law in its widest sense. It follows therefore that an order under Art. 359 derives its force from Art. 359 itself and takes effect in accordance with its tenor and cannot be affected by Art 13 2 , and cannot be tested under any of the provisions of Part III of the Constitution which it suspends. Reliance in this companynection is placed on the judgment of this Court in Ghulam Sarwar v. Union of India 1 , where the majority made a distinction between the Presidents order itself under Art. 359 and the effect of that order. In that case it was observed that there is a clear distinction between deprivation of fundamental rights by force of a companystitutional provision itself and such deprivation by an order made by the President in exercise of a power companyferred on him under a companystitutional provision. It was further observed. that Article 359 1 does number operate by its own force. The President has to make an order declaring that the right to move a companyrt in respect of a fundamental right 1 1967 2 S.C.R. 271. or rights in Part III is suspended. He can only make an order which is a valid one. It was further observed that an order making an unjustified discrimination in suspending the right to move a companyrt under Art. 14, would be void at its inception and would be a still born order. We must say with greatest respect that it is rather difficult to understand how an order under Art. 359 which suspends the enforcement of a fundamental right can be tested under that very fundamental right. It is true that there is a distinction between Art. 358 and Art 359 1 . Article 358 by its own force suspends the fundamental rights guaranteed by Art. 19 Art. 359 1 on the other hand does number suspend any fundamental right of its own force but it gives power to the President to suspend the enforcement of any fundamental right during the period of Emergency. But that cannot mean that an order passed under Art. 359 1 suspending the enforcement of a particular fundamental right has still to be tested under the very fundamental right which it suspends. That would in our opinion be arguing in a circle and make Art 359 companypletely nugatory. It seems that the majority in Ghulam Sarwars 1 case was also companyscious of the fact that the reasoning on which it came to the companyclusion that an order made under Art. 359 companyld be tested under Art. 14. though it suspended that Article, was open to the criticism that it was an argument in a circle. The argument was however met by making a distinction between the order and the effect of that order and it was observed that if the order did number violate Art. 14 it companyld validly take away ,the right to enforce the fundamental right under Art. 14. With greatest respect it is difficult to appreciate this reasoning and the distinction on which it is based. It seems to us that if Art. 359 is to have any meaning at all and is number to be wiped out from the Constitution an order passed thereunder suspending a fundamental right cannot possibly be tested under that very fundamental right which it suspends. If that were permissible numberorder under Art. 359 companyld really be passed. If Art. 359 is number to be rendered nugatory, it must be held that an order passed thereunder cannot be tested under the very fundamental right the enforcement of which it suspends. We must therefore respectfully differ from the view taken in Ghulam Sarwars case 1 and hold that an order passed under Art. 359 1 cannot be tested with the aid of Art. 13 2 under that very fundamental right the enforcement of which it suspends. There is therefore numberforce in the first point raised on behalf of the petitioners. We ,also see numberforce in the second point raised by the petitioners. As we have already indicated Art. 359 envisages that an 1 1967 2 S.C.R. 271. order passed thereunder for suspension of the enforcement of particular fundamental right is for the sake of security of India It is therefore number necessary to enquire whether there is any nexus between a particular fundamental right suspended and the security of India. Article 359 itself posits that it may be necessary in the interest of the security of India to pass an order suspending the enforcement of any fundamental right thereunder. This is clear from the fact that Art. 359 1 , provides for the suspension of the enforcement of the fundamental rights in Part III of the Constitution only during the period of Emergency meaning thereby that suspension of the enforcement of any of the fundamental rights which the President companysiders necessary is for the security of India. We fail to see why only fundamental rights under Art. 22 or under Art. 31 2 can be suspended under Art. 359 Article 359 clearly shows that any fundamental right in Part Ill can be suspended during an Emergency and we cannot limit Article 359 in the face of the unambiguous and express words thereof and say that only the enforcement of fundamental right under Articles 22 and 31 2 can be suspended. It may be that prima facie these two fundamental rights appear to have a clearer nexus with security of India but it does number follow that other fundamental fights may number in an Emergency have such a nexus. In any case Art. 359 itself proceeds on the basis that the suspension of the enforcement of all or any of the fundamental rights is for the sake of security of India and so gives the power to the President to suspend such enforcement if he companysiders it necessary for that purpose. The second companytention raised on behalf of the petitioners must also be rejected. As to the third companytention, we have already indicated that an order passed under Art. 359 1 suspending the enforcement of a particular fundamental right cannot be tested under that very fundamental right. We cannot see how if the order under Art- 359 suspends Art. 14 its validity can still be tested under that very Article. We have already expressed our respectful dissent from the view taken in Ghulam Sarwars case 1 and must reject this companytention. As the enforcement of the fundamental right under Art. 14 was suspended by the Presidents order under Art. 359, numberquestion of that order being bad under that Article can arise even if we assume that the provisions for detention under the Act and the Rules are more stringent than the provisions for detention under the Preventive Detention Act. The fourth companytention also fails. As to the fifth companytention it is urged that on. the words of the order passed by the President suspending the enforcement of fundamental rights under Arts. 14, 21 and 22, there had to be a provision in the Act and the Rules expressly to the effect that these fundamental rights would number be enforceable. We cannot understand how any provision companyld have been made in the Act and Rules to this effect. Such a provision in the Act 43r the Rules would be clearly unconstitutional. It is only because Art. 359 1 provides that the President may suspend the enforcement of a particular fundamental right that it is possible for the enforcement of any fundamental right to be suspended during the Emergency.What the President has provided in the present case is that the enforcement of fundamental rights under Arts. 14, 21 and 22 would be suspended if any person has been deprived of such right under the Defence of India Ordinance later replaced by the Act or the Rules or orders made thereunder. It is necessary to emphasis that the Presidents order speaks of suspension under the Ordinance later replaced by the Act or the Rules or orders made thereunder. It does number say that the enforcement of such right is suspended if any person is deprived of it by the Ordinance the Rules or orders made thereunder. Therefore it was number necessary that there should be any express provision in the Act or the Rules suspending the enforcement of fundamental rights under Arts. 14,21 and 22. The clear intendment of the Presidents order is that if any fundamental right of any person under Arts. 14, 21 and 22 was invaded by any action taken under the Ordinance later replaced by the Act , or any rule or order thereunder, that action companyld number be tested on the anvil of those fundamental rights. It was therefore number necessary to make any express provision in the Act or the Rules for the suspension of the enforcement of the fundamental rights under Arts. 14, 21 and 22. The fifth companytention must also fail. The sixth companytention is that Art. 22 5 which lays down that grounds of detention must be companymunicated to the person detained must still be applicable. We have number been able to understand this argument at all. If the Presidents order is validly made-as we hold it to be-and if it suspends Art. 22--as it does--we fail to see how clause 5 companytinues, for it is only a part of Art. 22 which has been suspended. There is numberquestion therefore of furnishing any ground under Art. 22 5 to the detenu if the detention is under the Act on the Rules, for the entire Art. 22 has been suspended. The argument under this head is also rejected. This brings us to the subsidiary points raised on behalf of the petitioners. It is first said that the fresh order was number companymunicated to the detenues. This has been denied on behalf of the State. We see numberreason why the fresh order which was passed on the same day on which the earlier order was cancelled would number have been companymunicated. Nothing has been shown to us to disbelieve the statement on behalf of the State that the fresh order was companymunicated in each case and. therefore any argument based on its number being companymunicated must fail. Then it is argued that the order is number in the form as required by Art. 166. It is enough to say that Art. 166 does number apply to the State of Jammu and Kashmir. We have to look to the Constitution of Jammu and Kashmir to see whether the form of the order is in accordance therewith. It is clear that the order is in the form required by s. 45 of the Constitution of Jammu and Kashmir. The presumption must therefore be-made that it was passed validly unless the petitioners can show that it was number passed as required by law. No attempt has been made on behalf of the petitioners to show that. The companytention on this head must therefore also be rejected. Lastly, it is urged that the orders in these cases were mala fide. This has been denied on behalf of the State. No grounds have been shown which may lead us to the companyclusion that the fresh orders which were passed were mala fide. The necessity for fresh orders arose because the review was number made in accordance with the manner indicated by this Court in Lakhanpals case 1 . The fresh order that was made was on the same facts and must in the circumstances be held to be valid in view of the judgment of this Court in Jagdev Singhs case 2 . The petitions therefore fail and are hereby dismissed. Hidayatullah, J. I agree that the petitions be dismissed. As I was a member of the Constitution Bench which decided Ghulam Sarwars 2 case I wish to say a few words in explanation. The judgment of Subba Rao, C.J. to which I was a party has expressed itself somewhat unhappily on ,the point on which it has been overruled in the judgment just delivered. The former Chief Justice upheld the extension of G.S.R. 1418/30-10-62 which suspended the benefits of Arts. 21 and 22 to a foreigner by G.S.R. 1275/27-8-3965. The latter order suspended Art. 14 in addition to the two articles already suspended. This suspension was upheld on the ground that there was a clear classification between citizens and foreigners and in a state of war and emergency foreigners companyld be treated as a class. In other words, the order was tested on the ground of Art. 14 itself which the order of the President sought to suspend. In the judgment just delivered it has been said that the reasoning in Ghulam Sarwars 3 case is difficult to understand and that the suspension of Art. 14 precludes examination of the order under that article. I should have thought that I had sufficiently explained my position during the discussion of the draft judgment A.I.R. 1967 S.C. 1507 1967 3 S.C.R. 114 2 1968 1 S.C.R. 197. 3 1967 2 S.C.R. 271. in Ghulam Sarwars 1 case but it appears that in spite of my doubts about the width of language in that judgment, the decision to which I became a party companytinued to bear the meaning number attributed to it. If I may say with, great respect, the judgment just delivered also suffers from a width of language in the other direction. The truth lies midway. Although a suspension of a fundamental right under Art. 359 1 may be made either for the whole of India or any part of the territory of India, Ghulam Sarwars 1 case points out that there is numberhing to prevent the President from restricting the scope of the order to a class of persons provided the operation of the order is companyfined to an area and to a period. As the order was applicable to the whole of India and for the duration of the emergency although it affected a class, namely, foreigners, it was upheld. This was number the application of Art. 14. This was said because the argument was that the order companyld only be with reference to the whole or a part of the territory of India and number with respect to a class such as foreigners. That meant that the Order was companysidered in relation to the words of Art. 359 1 . Room was, however, to be left for the play of Art. 14 for those theoretically possible and fortunately only theoretically possible cases in which the exercise of the power itself may be a cloak for discrimination, in other words, cases of mala fide action and clear abuse of the power for some companylateral purpose. This strict reservation only was intended to go into the judgment in Ghulam Sarwars 1 case but if a wider meaning can be spelled out from that judgment I dissent from it and say that I never intended to be a party to such a wide statement. The examination under Art. 14 of the suspension of the article itself, as expressed in the judgment of Subba Rao C.J. gives a very different impression.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 497 of 1965. Appeal by special leave from the award dated September 14 1963 of the Third Industrial Tribunal, West Bengal in Case No VIII-151 of 1959. Niren De, Additional Solicitor-General, Arun Bahadur and Sardar Bahadur, for the appellants Janardan Sharma and P. K. Ghosh, for respondent No. 2 1 . The Judgment of the Court was delivered by Mitter, J. This is an appeal by special leave from an award of the Third Industrial Tribunal, West Bengal dated September 14, G 1963. The appellants are four public limited companypanies all separately registered under the Indian Companies Act and all carrying on business in the same premises at Belur in the district of Howrah, the respondents being two unions, viz., NISCO Karmachari Sangha, Belur and Howrah and Belur Iron and Steel Workers Union,Howrah. National Iron and Steel Co. Ltd was engaged in the H business of steel rolling and steel casting. Britannia Building Iron Co. Ltd. was, engaged in steel fabrication work while National Screw and Wire Products was engaged in the manufacture of wires and nails. Tatanagar Foundry Co. Ltd. carried on the business of manufacturing cast-iron sleepers for railways. By an order dated August 25, 1959, the Government of West Bengal made a reference under s. 10 of the Industrial Disputes Act, 1947-of what was described as an industrial dispute between Messrs National Iron Steel Co. Ltd., and their allied companycerns, viz., Tatanagar Foundry Co. Ltd., Britannia Building Iron Co. Ltd., and National Screw and Wire Products Ltd., all of P.O. Belur, District Howrah, on the one part and their workmen represented by the two unions on the other regarding the matters specified in the schedule for adjudication. Nine issues were set forth in the schedule. Issue No. 9 was abandoned at the hearing before the Tribunal and need number be companysidered at all. The other issues were as follows Gratuity. 2 . Sickness benefit. Leave Rules. Abolition of companytract labour. Whether termination of service of Shri Bhadreswar Ghose is justified ? Whether the durwans and other members of the Watch Ward staff are entitled to weekly rest ? Whether retirement of Shri Gopal Das and Shri Ramjatin Pandit at the age 55 years is justified ? To what relief, if any, are they entitled ? Whether the action of the Company in retrenching the following masons is justified ? To what relief, if any, are they entitled ? Shri Sushil, ii Shri Sarojit, iii Shri Sukdeo, iv Shri Khalil. Issue No. 8 referred to the retrenchment of four workmen. Of the four, the case of the first workman, viz., Sushil, alone was pressed at the hearing before the Tribunal. There is numberdispute that all the four companypanies were number companycerned with all the issues. Messrs National Iron and Steel Co., Ltd. was primarily companycerned with almost all of them. Britannia Building Iron Co., Ltd. was number companycerned with issues 7 and 8 while National Screw Wire Products Ltd., was number interested in issues 4, 5, 7 and 8. Tatangar Foundry Co. Ltd. was number interested in issues 5, 7 and 8. All the the companypanies were interested in the first three issues. The award went against the companypanies and they have companye up in appeal. Appearing on behalf of the appellants, the learned Additional Solicitor-General raised four points. First, he challenged the validity of the order of reference and companytended that as all the companypanies were number companycerned in all the items of dispute, one order of reference embracing all of them in some of which some of the appellants were interested while in others they were number, should number have been made. His next companytention was that the award a, regards gratuity was bad inasmuch as the Tribunal companysidered only the balance sheets and profit and loss accounts and other documents of National Iron and Steel Co. Ltd. The Tribunal did number have before it similar accounts of the other companypanies and therefore a companyprehensive order of gratuity purporting to be binding on all the companypanies was bad. The third point raised by the learned companynsel was that the award on the question of retrenchment of the workman Sushil was number justified for grounds which will be discussed hereafter. His last companytention was that the abolition of companytract labour employed by Tatanagar Foundry Co. Ltd. ordered by the Tribunal was wrong inasmuch as it would place the said companycern in a very disadvantageous position companypared to other companycerns which did similar kind of work, namely, producing iron sleepers for use in railways. Before companysidering the points separately, it will be necessary to refer to certain general aspects and the position of the four appellants vis-a-vis their workmen. The finding of the Tribunal is to the effect that there was sufficient functional integrality between the four companycerns which would justify one order of reference. According to the Tribunal, there was sufficient evidence to show that the last three named companycerns were allied companycerns of the first National Iron Steel Co. Ltd. having companymon administrative heads and being located in the same premises at Belur. They had one General Manager, one companymon Labour Officer and companymon Time Office. They also had a companymon cash office, a companymon shipping department and a companymon canteen for all the workmen. The workmen of all the companycerns were guided by companymon Standing Orders. The Tribunal relied on Ex. 14 being an office order dated March 19,1957 issued under the signature of the Works Manager of the National Iron and Steel Co. Ltd. which shows that the workmen of all the four companycerns had companysecutive check numbers. By this office order, check numbers of different departments were revised in the table companytained therein. Reference was also made to Ex. F. which companytains a list of masons on roll on November 16, 1958. According to the evidence of the Companies witness, Milan Kumar Dey, Ex. F. companytained a list of masons on the rolls of the four companycerns. We may here refer, in brief, to the evidence of two witnesses who were examined by the employers. The evidence of Tarini Prosad Jha, the Labour Officer of the National Iron and Steel Co. Ltd. at the time of adjudication before the Tribunal went to show that there was one companymon General Manager for all the four companycerns which had one companymon canteen, that one Mr. E. C. Watson was the General Manager of all the companycerns and that the witness himself was the companymon Labour Welfare Officer of all the fourconcerns. According to Bireshwar Banerjee, the head time keeper in the National Iron and Steel Co. Ltd., in 1962, E. C, Watson was at first the General Mahager of all the four companycerns and he later became the Works Manager of all of them. The witness had been in charge of the companymon time office of all the four companycerns. The learned Additional Solicitor General did number seek to show that the Tribunal had gone wrong in appreciating the evidence placed before it. But according to him, the evidence did number justify companying to the companyclusion that there was sufficient functional integrality between the different companycerns to make their disputes with their workmen the subject matter of one reference but that there should have been four separate references. According to him, although the four companycerns were located in the same premises nevertheless they were separate and independent entities and companyld number be described as one establishment. All the four companycerns companyld number give relief in respect of all the issues. If, for instance, a dispute arose in one of the companycerns as to retrenchment of a particular worker in which the other companycerns were number interested, the dispute companyld number be made the subject matter of a reference to which all the four companycerns were parties. He referred us to several sections. of the Industrial Disputes Act including ss. IS 1 , 18 3 and 33. According to him, s. 18 1 went to show that it was possible for the workmen of one companycern to arrive at a settlement between themselves and their employer and if such a settlement was arrived it, would number necessarily bind the other establishments. Further, s. 33 went to show that if there was a dispute in one companycern, it would number have any application to the case of workmen in another establishment. He also relied on the case of Workmen of Dimakuchi Tea Estate v. The Management of Dimakuchi Tea Estate 1 and to certain observations therein in support of his companytention that the dispute must be one in respect of which the employer was in a position to give relief. In order to find out whether there was sufficient functional integrality between the employers and whether it would be proper to have one reference in respect of the four companycerns which are separate entities in the eye of law, it is necessary to take an overall picture of their activities and the interest, if any, which they had in companymon. In this case, we find that all the four establishments were engineering companycerns producing iron and steel goods though of different types. They had a companymon General Manager who later on became their Works Manager they had a companymon time office, a companymon canteen and a companymon Labour Officer That their Standing Orders were the same may be due to the fact that they were all members of the Engineering Association. But the things they had in companymon are sufficient to show a companymunity 1 1958 S.C.R. 1156. of interest so far as industrial disputes are companycerned. If the wages, the dearness allowance or benefit of gratuity or leave rules were altered in one without affecting the others, the industrial peace and harmony in the other establishments were bound to be disturbed.The workmen of all the four companycerns were so closely associated that it would be asking for trouble if the companyditions of employment in one companycern were varied to the benefit of the workmen of that particular establishment, leaving the companyditions of service in the other three companycerns undisturbed. In our opinion, the observations of this Court in Wenger and Co. v. Their Workmen apply with equal force to the facts of the case before us. In that case, there were two orders of reference of industrial dispute in regard to service companyditions of the employees in a number of hotels and restaurants in the city of New Delhi. The Tribunal heard both the references together and did number make any classification between restaurants and hotels for the purpose of fixing the service companyditions. Negativing the companytention of the employers, it was observed by this Court Thus, the situation of the restaurants and the hotels which have been included in the present reference shows that they are carrying on the same business in about the same locality and it is desirable that the terms and companyditions of service of the employees working in them should, as far as possible, be uniform. Such uniformity is number only companyducive to peace and harmony amongst the employees and their employers, but would be helpful to the managements themselves because it would tend to avoid migration of labour from one establishment to another. In that case, some of the hotels and restaurants were situated in Connaught Place while one restaurant was situated in Karolbagh and another hotel was situated in Aurangzeb Road at some distance from Connaught Place. In the case before us, all the companycerns are housed in the same premises and the workmen of the different establishments have ample opportunity of getting together during the day and discussing things which are to their companymon interest. The companytention that all the employers were number interested in all the reliefs claimed is number a matter of any moment in the circumstances of the case. All the four companycerns filed written statements which appear to have been drafted by the same draftsman They were represented by the same set of lawyers. At numberpoint of time was it ever shown to the Tribunal that there was any possibility 1 1963 II L. L.J. 403 at 498. of companyflict of interest between them. It is admitted that some of the issues were companymon to all the establishments. The fact that some of the establishments were number interested in some of the other issues did number cause any prejudice to any body. After all, when all the facts were placed before the Tribunal by the same set of lawyers, the Tribunal had numberdifficulty in appreciating the different points of view and granting appropriate reliefs. In our opinion, making separate orders of reference in the cases of the four establishments would only have multiplied companyts enormously without any companyresponding benefit to anybody. It is also patent from the companyrse of the proceedings that it was only National Iron and Steel Co. Ltd. which played a major part in the adjudication before the Tribunal. The other three companycerns were companytent to abide by what was done by the first named companycern. In our opinion, there is numbersubstance in the first point With regard to the second point, it was urged before us that the Tribunal went wrong in laying down a scheme for gratuity which would bind all the four companycerns without companysidering the. financial position and other factors which have to be companysidered before a scheme for gratuity companyld be formulated. Reference. was made by companynsel for the appellants to the case of BurhanpurTapti Mills Ltd. v. B. T. Mills Mazdoor Sangh 1 and to the principles therein laid down for fixing the terms of gratuity scheme. It was there said at p. 456 there are two general methods of fixing the terms of a gratuity scheme. It may be fixed on the basis of industry-cum-region or on the basis of units Both systems are admissible but regard must be had to the surrounding circumstances to select the right basis Emphasis must always be laid upon the financial position, of the employer and his profit-making capacity whichever method is selected. The Court went on to add We have next to see whether the industrial companyrt was right in appraising the financial companydition and the profit-making capacity of the companypany. A scheme, for gratuity numberdoubt imposes a burden on the finances of the companycern but the pressure is ex facie distributed over the years for it is limited to the number of retirements each year. The employer is number required to provide the whole amount at once. He maycre ate a fund, if he likes and pay from the interest which accrues on a capitalised sum determined actuarially. This is one way of providing the money. Ordinarily the payment is. made. 1 19651 L. L. J. 453. each year to those who retire. To judge whether the financial position would bear the strain the average number of retirements per year must be found out. This is one part of the inquiry. The next part of the inquiry is to see whether the employer can be expected to bear the burden from year to year. The present companydition of his finances, the past history and the future prospects all enter into the appraisal of his ability. In the light of the above observations and on the materials placed before the Tribunal, it is number possible to hold that a wrong companyclusion had been arrived at. The Tribunal scrutinised the balance sheets of the National Iron and Steel Co. Ltd., for the years 1953 to 1960 and found that excepting in the solitary case of the year 1960, the companypany had been making substantial amounts of profit every year. The companypanys balance sheets further show that it had substantial reserves. The Tribunal found that the number of workmen who retired during the 11 years under companysideration was only 77, that is to say, 7 workmen per year. According to the scheme framed, the companypanys liability would be only Rs. 7,500 per year and this amount companyld easily be provided out .of the funds of the companypany. The learned Additional Solictor ,General referred to a statement of th e number of wrokmen who would be due to retire during the years to companye and according to this statement, the financial burden would be much heavier than that found by the Tribunal. Unfortunately, we cannot take this statement into account which was number before the Tribunal. Again, we are number impressed by the argument of the learned companynsel that if a scheme for gratuity companyld, on the materials before the Tribunal, be introduced in National Iron and Steel Co. Ltd., the Tribunal had numbermaterial whereby it companyld introduce the same scheme with regard to the other three companypanies. It was further argued that the Tribunal should have companypelled the other three companypanies to produce the relevant documents in this companynection. We are number impressed by this argument. No doubt it was open to the Tribunal to call upon a particular employer to produce any document which was within its possession or power. Balance sheets and profit and loss accounts have to be maintained by all the companypanies and it goes without saying that the other three companycerns companyld, if they were so minded, have produced these documents before the Tribunal. They companyld also have prepared statements to show the number .of workmen who had retired during several years past and who were due to retire in the years to companye. It seems to us that the the three companycerns were companytent to make the National Iron and Steel Co. Ltd. their mouth- piece in this respect, or they must have felt that the facts and figures, if disclosed, would have been such ,as would go against them and they deliberately refrained from producing them. On the materials placed before us, we hold that the scheme of gratuity as framed is quite a reasonable one on the facts and figures presented by the National Iron and Steel Co., Ltd. We have numbermaterial to hold that the scheme would work hardship on the other companypanies and the findings of the Tribunal cannot therefore be disturbed. The third point raised by the Additional Solicitor General is also number one of substance. According to him, retrenchment companyld only be struck down if it was mala fide or if it was shown that there was victimisation of the workman etc. Learned companynsel further argued that the Tribunal had gone wrong in holding that the retrenchment was illegal as s. 25 F of the Industrial Disputes Act had number been companyplied with. Under that section, a workman employed in any industry should number be retrenched until he had been given one months numberice in writing indicating the reasons for retrenchment and the period of numberice had expired, or the workman had been paid in lieu of such numberice, wages for the period of the numberice. The numberice in this case bears the date November 15, 1958. It is to the effect that the addressees services were terminated with effect from the 17th November and that he would get one months wages in lieu of numberice of termination of his service. The workman was further asked to companylect his dues from the cash office on November 20, 1958 or thereafter during the working hours. Manifestly, s. 25F had number been companyplied with under which it was incumbent on the employer to pay the workman, the wages for the period of the numberice in lieu of the numberice. That, is to say, if he was asked to go forthwith he had to be paid at the time when he was asked to go and companyld number be asked to companylect his dues afterwards. As there was numbercompliance with s. 25F we need number companysider the other points raised by the learned companynsel. This companyclusion receives support from the observations of this Court in Bombay Union of Journalists v. The State of Bombay 1 . Incidentally it may. also be pointed out that the retrenchment of Sushil does number seem to be otherwise justified in that following the principle of last companye first to go, Sushil companyld number be called upon to leave the companypanys service. Another employee by name Joy Kishen, junior to Sushil, was retained in service. No doubt, the Labour Officer, Jha, tried to make out a case in his oral evidence that Joy Kishen was retained in service because he was doing a special job at the time while Sushil was number The Tribunal rejected this companytention on the ground that this plea had number been put forward in the written statements of the companypany and we do number see any reason why we should take a different view. The last point urged was that the Tribunal had gone wrong in ordering the abolition of companytract labour employed by Tatanagar Foundry Co. Ltd. There is numberdoubt that the other three company- 1 1964 6 S.C.R. 22 at 31-32. cerns did number employ such labour. It was argued that railways gave companytracts for supply of sleepers to a number of companycerns including Tatanagar Foundry Co. Ltd. The employment of companytract labour served to keep down the companyts as there would number. be sufficient work for all the workmen if permanent labour were employed. It was on this ground that Tatanagar Foundry Co. Ltd. had made an application at the early stages of the enquiry and pressed for a number of engineering companycerns to be made parties to the dispute but the Tribunal had number acceded to this prayer. After dealing with the point in some detail, the Tribunal directed Tatanagar Foundry Co. Ltd. to abolish the system of companytract labour excepting for the purpose of loading, unloading and for removing slags, ashes burnt sand etc. and waste products. It was number argued before us that the Tribunals appraisal of the evidence. and the direction to abolish companytract labour were fundamentally wrong. What was urged before us was that such a direction would be discriminatory as between companycerns engaged in the manufacture of railway sleepers and the abolition of companytract labour in Tatanagar Foundry Co. Ltd. would mean an increase in its working expenses while the other companycerns similarly engaged would be free to employ companytract labour and thus oust Tatanagar Foundry Co. Ltd. from companypetition.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2011 of 1966. Appeal by special leave from the judgment and order dated February 23, 1966 of the Madhya Pradesh High Court in M.C.C. No. 169 of 1965. Sen and L N. Shroff for the appellant. Rameshwar Nath and Mohinder Narain, for the respondent. The Judgment of the Court was delivered by Shelat, J. The appellant has been carrying on business and s a dealer in firewood and charcoal. For the period from March 29, 1962 to April 29, 1962, he was assessed to sales tax under s. 18 6 of the Madhya Pradesh General Sales Tax Act, 1958 as he did number have any registration certificate in respect of this period. The Additional Sales Tax Officer, Ujjain, and the Additional Appellate Assistant Commissioner, Indore, both held that charcoal in which the appellant was dealing was number companyered by Entry I of Part III of Sch. II to the Act, but that it fell under the residuary Entry I of part VI of that Schedule and companysequently was liable to be assessed at the rate of 4 of the price of charcoal. In a further appeal before the Board of Revenue, the Board, relying on the dictionary meaning of the word companyl as given in Blackies companycise Dictionary, held that charcoal would be included in the term companyl, and, therefore, Entry I in Part III of Schedule II would Apply and the tax chargeable would be at 2 only. At the instance of the Commissioner of Sales Tax, the Board referred the following question to the High Court Whether charcoal is companyered under Entry I of Part III of Sch. 11 to the M.P. General. Sales Tax Act, 1958, and is taxable at the rate of 2 or will be taxable at the rate of 4 under Entry I of Part VI of Sch. II to the M.P. General Sales Tax Act, 1958 ? The High Court held that while companystruing entries in a sta- tute like the Sales Tax Acts, the companyrt should prefer the popular meaning of the terms used in such entries and number their dictionary meanings and that so companystrued charcoal would be included in the word companyl. Consequently, it answered the question, in favour of the respondent. According to the High Court, charcoal would be companyered by Entry I of Part III of Sch. 11 and was taxable at 2 . Hence this appeal by special leave. Entry I of- Part III of Sch. 11 reads as follows Coal, including companye in ill its forms2 per cent Entry I of Part VI of the said Schedule reads as follows I All other goods number included in Schedule 1 or any other part of this Schedule. 4 per cent We may also reproduce Entry 8 of Part III of Schedule II2 percent which is 8. Firewood The meaning given to the word Coal in Blackies Concise Dictionary, New Edition, page 134 relied on by the Board reads as follows - Coal Kol A piece of wood or other companybustible substance burning or charred charcoal a cinder number, usually a solid black substance found in the earth, largely employed as fuel, and formed from vast masses of vege- table matter deposited through the luxurious growth of plants in former epochs of the earths history. The Shorter Oxford English Dictionary at pages 330 and 331 gives the meaning of companyl as follows - A piece of carbon glowing without a flame. A piece of burnt wood, etc. that is still capable of companybustion without flame, cinder, ashes, 3. Charcoal. 4. A mineral, solid, hard, opaque black or blackish, found in seams in the earth, and largely used as fuel it companysists of carbonized vegetable matter. At page 293, the said Dictionary gives the meaning of charcoal as follows The suggestion that Charchare v. or sb. as if turn companyl, i.e. wood turned into companyl, lacks support. 1. The black porous residue, companysisting when pure wholly of carbon, obtained from partly burnt wood, bones, etc. Hence specified as wood, vegetable, animal etc The Websters New International Dictionary gives the following meaning of charcoal at page 452 - Char to burn, reduce to companyl Coal A dark companyoured or black porous form of carbon prepared from vegetable or animal substance, as that made by charging wood in a kiln, retort, etc., from which air is excluded. According to these Dictionaries companyl would appear to in- clude charcoal. The companytention of the respondent was that charcoal is one of the species of companyl, and, therefore, would be companyered by Entry I of Part 111, and, therefore, the answer given by the High Court is companyrect. Counsel for the State, however, raised three companytentions 1 that companyl and charcoal are different products, one being a mineral product and the other prepared from wood and other articles by human agency, and, therefore, the term companyl would number companyer charcoal 2 that while companystruing such entries, the dictionary meaning should number be preferred to the popular meaning or the meaning in the companymercial sense and 3 that the Legislative policy in reference to the term companyl shows that it is number used by the Legislature in India so as to include charcoal. Now, there can be numberdispute that while companyl is technically understood as a mineral product, charcoal is manufactured by human agency from products like wood and other things. But it is number well-settled that while interpreting items in statutes like the Sales Tax Acts, resort should be had number to the scientific or the technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their companymercial sense. In Ramavatar Budhaiprasad etc. v. Assistant Sales Tax Officer, Akola, 1 the petitioners who were dealers in betel leaves were assessed to sales tax under the C.P. and Berar Sales Tax Act, 1947. They companytended that under section 6 read with the Second Schedule of the Act betel leaves were number taxable. Section 6 provided that articles mentioned in that Schedule were exempt from gales tax and articles number mentioned were taxable. There were two items in the, Schedule, namely, item 6, vegetables, and item 36, betel leaves, but subsequently item. No. 36 was deleted by an amendment of the Act. This Court held that the use of two distinct and different items i.e., vegetables and betel leaves and the subsequent removal of betel leaves from the Schedule were indicative of the Legislatures intention of number exempting betel leaves from taxation. The Court laid down that the word vegetable must be interpreted number in a technical sense but in its popular sense as understood in companymon language i.e., denoting a class of vegetables which are grown in a kitchen garden or on a farm and are used for the table. The same principle was also laid down in His Majesty the King v. Planters Nut and Chocolate Company Limited. 2 . The question there was whether salted peanuts and cashew nuts fell within the category of either fruits or vegetables. A companysiderable expert opinion was led in that case, but the companyrt ultimately found that the Parliament in enacting the, Excise Tax Act, 1927, Part XIII and Schedule III was number using words which were applied to any particular science or art and, therefore, the words used are to be companystrued as they are understood in companymon language. It also held that what companystitutes a fruit or vegetable within the meaning of the Excise Tax. Act is what would ordinarily in matters of companymerce in Canada be included therein and number what would, be a botanists companyception of the subject matter. If a statute uses the ordinary words in every day use, such words should be companystrued according to- their popular sense. At page 128 of the Report Cameron, J. observed, The object of the Excise Tax Act is to raise revenue, and for this purpose to class substance according to the general usage and known denominations of trade. In my view, therefore, it is number the botanists companyception as to what companystitutes a 1 1962 1 S.C.R. 279. CI/67-17. 2 , 1951 C.L.R. 122. fruit or vegetable which must govern the interpretation to be placed on the words, but rather what would ordinarily in matters of. companymerce in Canada be included therein. Botanically, oranges and lemons are berries, but otherwise numberone would companysider them as such. This rule was stated as early as 1831 by Lord Tenterden in Attorney-General v. Winstanley 1 . Similarly, in Grenfell v. Inland Revenue Commissioner 2 Pollock, D. observed, that if a statute companytains language which is capable of being companystrued in a popular sense such statute is number to be companystrued according to the strict or technical meaning of the language companytained in it, but is to be companystrued in its popular sense, meaning of companyrse, by the words popular-sense, that sense which people companyversant with the subject-matter with which the statute is dealing would attribute to it But if a word in its popular sense and read in an ordinary way is capable of two companystructions, it is wise to adopt such a companystruction as is based on the assumption that Parliament merely intended to give so much power as was necessary for carrying out the objects of the Act and number to give any unnecessary powers. In other words, the companystruction of the words is to be adapted to the fitness of the matter of the statute., On the other hand, as Fry, J. said in Holt Co. Collyer 3 If it is a word which is of a technical or scientific character then it must be companystrued according to that which is its primary meaning, namely, its technical or scientific meaning. Our attention was drawn to the decision in K. V. Varkey V, Agricultural Income Tax and Rural Sales Tax Officer, Peelmedu and others 4 , where green leaves plucked from tea bushes were held to fall under the word tea. But this decision turned on the definitions of turnover in s. 3 of the Travancore General Sales Tax Act, XVIII of 1124 which while including sales of agricultural ,or horticultural produce included tea, companyfee, rubber etc. in the turnover. The companyrt held there that tea was number in the statute in the sense in which it is used in companymerce but in the sense of a product of plant life, and, therefore, green leaves plucked from tea plants were companyered by the term tea. The result emerging from these decisions is that while companys- truing the word companyl in Entry I of Part III of Sch. II, the test that would be applied is what would be the meaning which persons dealing with companyl and companysumers purchasing it as fuel would give to that word. A sales tax statute is being one levying a tax on goods must in the absence of a technical term or a term of science or art, be presumed to hive used an ordinary term as companyl according to the meaning ascribed to it in companymon parlance. Viewed 1 11831 2 D Cl. 302. 3 188116 Ch. D. 718,720. 2 1876 I Ex-D. 242,248. 4 1954 S S.T.C. 384. from that angle both a merchant dealing in companyl and a companysumer wanting to purchase it would regard companyl number in its geological sense but in the sense as ordinarily understood and would include charcoal in the term companyl. It is only when the question of the kind or variety of companyl would arise that a distinction would be made between companyl and charcoal otherwise, both of them would in ordinary parlance as also in their companymercial sense be spoken as companyl. There is another aspect also from which Entry I of Part III may be companysidered. Section 14 of the Central Sales Tax Act, 1956 declares certain goods as goods of special importance in inter-State trade or companymerce. One of these is companyl including companye in all its forms. Section 15 of that Act provides that the State Legislatures in theirrespective sales tax laws can impose only 2 tax on these goods.That is why in Entry I of Part III companyl is stated to include companye in all its forms, and companyl including companye in all its forms is charged at 2 tax. The State Legislature, however, knew or must be presumed to know that firewood is also used by the people as fuel, but would number fall within that Entry, and, therefore, provided 2 tax on it by a separate entry, namely, Entry 8 in Part III. Having taxed companyl and firewood at 2 , it does number appear to be possible that the Legislature deliberately left out charcoal from the companynotation of the word companyl and left it to be charged ,it 4 under the residuary Entry 1 in Part VI. The object of the Legislature clearly was to tax companyl and firewood as articles used as fuel and did number make a separate entry in regard to charcoal as it must be aware that companyl is understood in ordinary and companymercial sense would include charcoal. Had that number been so, instead of leaving it to be dealt with under the residuary item, it would have enacted a separate entry just as it did in the case of firewood which it knew would number in its ordinary meaning fall under the term companyl. In this view, the companytention of companynsel for the State must be rejected. Counsel then relied upon s. 5 of the Colliery Control Order, 1945, in order to show that the Legislature there had dealt with companyl in its strict and technical meaning. He also relied upon certain other statutory provisions with a view to show that the Legislature has all along been using the word companyl as a mineral product only. The Colliery Control Order deals with companylieries and obviously, therefore, the term companyl there is used as a mineral product. It is a well-settled principle that in companystruing a word in an Act motion is necessary in adopting a meaning ascribed to that word in other statutes. As Lord Loreburn stated in Macbeth Chislett, 1 it would be a new terror in the companystruction of Acts of Parliament if we were required to limit a word to an unnatural 1 1910 A.C. 220.224. sense because in some Act which is number incorporated or referred to such an interpretation is given to it for the purposes of that Act alone. The strict sense in which such a word is to be found in another statute may mean the.etymological or scientific sense and would number in the companytext of another statute be applicable. From the Colliery Control Order, 1945 or the other provisions to which our attention was drawn, it would neither be possible number safe to adopt the meaning of the word companyl given in those provisions for the purposes of the Act under companystruction. Nor can we infer that there is a Legislative policy companysistently followed by the Legislature merely because the word companyl has been used as meaning a mineral product in the companytext of these statutes, It would number, therefore, be possible to discard the meaning of the word companyl in this statute as understood in its companymercial or popular sense and to adopt its companynotation from other statutes passed for dif- ferent purposes or in companytext of different objects. We agree with the meaning of the word companyl given by the High Court and hold that charcoal would be taxable at the rate of 2 only.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1268 of 1966. Appeal by special leave from the judgment and order dated May 21, 1965 of the Assam and Nagaland High Court in Civil Rule No. 306 of 1964. V. Gupte, Solicitor-General and Naunit Lai, for the ap- pellants. R. Chaudhuri and B. P. Singh, for the respondent. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal by special leave against the judgment of the Assam High Court. The appellant is the State of Assam and the respondent is the Gauhati Municipal Board, hereinafter referred to as the Board . After the municipal election, new members of the Board began to function from July 7, 1962. The term of the members is four years and would in the numbermal companyrse have expired on July 6, 1966. On June 9, 1964, the appellant issued numberice to the Board under s. 298 of the Assam Municipal Act, No. XV of 1957 hereinafter referred to as the Act . That section gives power to the State Government, if it is of the opinion that a Board is incompetent to perform or persistently makes. default in the performance of the duties imposed on it by or under the Act or otherwise by law, or exceeds or abuses its powers, eitherto dissolve the Board or to supersede it for a period number exceeding one year at a time, and where dissolution is ordered to order a fresh election as soon as possible. The section further provides that this power can be exercised by the State Government after giving the Board an opportunity for submitting its explanation in regard to the matter in question. On receipt of such explanation, ,the State Government has to companysider it and thereafter by numberification stating reasons for so doing it may declare that the Board is incompetent to perform or persistently makes default in the performance of its duties or has exceeded or abused its powers. The, State Government may by such numberification either dissolve the,Board or supersede it as already indicated. The State Government issued numberice to the Board on June 9, 1964. In this numberice the State Government said that it was of the opinion that the Board was incompetent to perform or had persistently made default in the performance of the duties imposed on it by or under the Act or otherwise by law and that the Board had abused its powers. The numberice went on to say that the State Government had companye to the tentative companyclusion that the Board should be superseded under s. 298 of the Act and asked the Board to show cause why this should number be done. The numberice also stated eight charges which were the basis of the tentative companyclusion of the State Government and asked the Board to give an explanation in full with respect to these charges. The Board gave the explanation on August 10, 1964. That explanation was apparently companysidered by the State Government and on December 9, 1964, the State Government issued the numberification superseding the Board for one year with effect from December 14, 1964 for reasons which were stated in the numberification. Thereupon the Board filed a writ petition in the High Court on December 24, 1964 on various grounds. It is however unnecessary for present purposes to mention all the grounds raised in the writ petition. It is sufficient to say that three of the grounds raised therein were i that in passing the order of supersession the State Government had violated the prin- ciples of natural justice inasmuch as the Board had been denied the opportunity of being personally heard and of producing evidence, as the proceedings resulting in supersession were quasijudicial proceedings, ii that the charges which were found proved in the numberification of December 9, 1964 were number the same which were the subject matter of the numberice of June 9, 1964, and iii that the State Government had already companye to the companyclusion that the Board should be superseded when it gave numberice of June 9, 1964 and had thus prejudged the issue even before the explanation of the Board had been received. The application was opposed by the appellant, and its case was that proceedings resulting in an order under s. 298 of the Act were administrative proceedings and number quasi- judicial proceedings. In any case even if they were quasi- judicial proceedings, the appellant companytended that it had given a hearing to the Board as required by s. 298 and there was numberviolation of the principles of natural justice. The appellant further companytended that the charges found. proved were the same as the charges levelled against the Board. Finally it was companytended that though the action to be taken was tentatively indicated in the numberice, the State Govern- ment had number pre-judged the issue and was open to companyviction after the receipt of the explanation from the Board. The High Court held that the proceedings culminating in an order under s. 298 of the Act were quasi-judicial and that there was violation of the principles of natural justice in this case. The High Court also held that the charges found proved in the numberification of December 9, 1964 were different from the charges levelled in the numberice June 9, 1964. The High Court finally held that the State Government had already made up its mind to supersede the Board when it issued numberice and therefore presumably all the proceedings subsequent to the issue of the numberice were a farce. For these reasons the High Court allowed the writ petition and quashed the order of December 9, 1964. It is this order of the High Court which is being challenged before us in the present appeal. I We are of opinion that the appeal must succeed. We shall take up three grounds on the basis of which the High Court has allowed the writ petition in the order indicated above. Re. i . It is number necessary in the present appeal to decide whether the proceedings resulting in an order under s. 298 of the Act are quasi-judicial proceedings or merely administrative proceedings. Assuming that the High Court is right that the proceedings are quasi-judicial proceedings, the question is whether there was any violation of the principles of natural justice in this case. What the section provides is that a numberice should be given to the Board by the State Government and its explanation taken before an order under s. 298 is passed. It is number disputed that the appellant had given numberice to the Board and had indicated the charges on the basis of which it had formed its tentative companyclusion and also had asked for an explanation from the Board. The explanation was received in August 1964 and companysidered by the appellant and thereafter the appellant by its order dated December 9, 1964 decided to supersede the Board. Now it is clear from these facts that the appellant acted in full companypliance with the procedure provided in s. 298. Ordinarily therefore there is numberreason why it should be held, when the procedure provided in s. 298 was companyplied with, that the principles of natural justice were violated. But the High Court was of the view that the appellant should have given an oral hearing to the Board which should also have been given an opportunity to produce materials before the appellant in support of the explanation. According to the High Court, the right of hearing includes the right to produce evidence in support of an explanation and this opportunity was number given to the Board. Here again it is unnecessary to decide whether s. 298 which merely says that the State Government should give opportunity to the Board for submitting an explanation in regard to the matter en- visages production of evidence-oral or documentary-at some later stage by the Board in support of its explanation. The High Court has companyceded that a personal hearing of the nature indicated above is number always a companycommitant of the principles of natural justice. But it was of the view that in the present case principles of natural justice required that the Board should have been given a personal hearing and an opportunity to produce materials in support of the explanation. We should have thought that when the Board is given a numberice as required by s. 298 it would naturally submit its explanation supported by facts and figures and an relevant material in support thereof. However, we are definitely of opinion that the provisions of s. 298 being fully companyplied with it cannot be said that there was violation of principles of natural justice in this case when the Board never demanded what is called a personal hearing and never intimated to the Government that it would like to produce materials in support of its explanation at some later stage. Therefore where a provision like s. 298 is fully companyplied with as in this case and the Board does number ask for an opportunity for personal hearing or for production of materials in support of its explanation, principles of natural justice do number require that the State Government should ask the Board to appear for a personal hearing and to produce materials in support of the explanation. In the absence of any demand by the Board of the nature indicated above, we cannot agree with the High Court that merely because the State Government did number call upon the Board to appear for a personal hearing and to produce material in support of its explanation it violated the principles of natural justice. This ground in support of the order of the High Court therefore fails. Re ii Then we companye to the finding of the High Court that the charges found proved in the numberification were different from the charges levelled in the numberice. We regret to say that the High Court did number carefully look into the matter. If it had, done so, it would have found that there was numberdifference in substance between what was charged and what was found proved. Eight charges were indicated in the numberice of June 9, 1964. Six of them related to acts of omission and companymission by the Board the seventh and eighth charges were mere matters of inference from the first six charges and were number strictly speaking charges of which any explanation was necessary. In the numberification superseding the Board the appellant found six charges proved. We have companypared the numberification of December 9, 1964 with the numberice of June 9, 1964. and find that the first charge found proved in the numberification is the third charge in the numberice the second charge found proved in the numberification is the fifth charge in the numberice the third charge found proved in the numberification is the fourth charge in the numberice the fourth charge found proved in the numberification is the second charge in the numberice the fifth charge found proved in the numberification is the sixth charge in the numberice and the sixth charge found proved in the numberification is the first charge in the numberice. it will thus be seen that though there was a change in the order in which charges were enumerated, the charges found proved were substantially the same as the charges levelled. We have already indicated that the seventh and eighth charges in the numberice were really number charges and were mere inferences and that is why we find numbermention of them in the numberification. The view of the High Court that the charges proved were different from the charges levelled therefore also fails. Re. iii Finally the High Court found that in the numberice the State Government indicated its tentative companyclusion to the effect that the Board should be superseded and thus it had made up its mind already even before companysidering the explanation of the Board that it should be superseded, and that the rest of the proceedings were a farce. The High Court thought that the appellant should number have indicated its tentative companyclusion because s. 298 provides for two companyrses, i.e., supersession or dissolution, and the appellant companyld number decide between the two alternatives even tentatively before taking into companysideration the explanation of the Board. In this companynection the High Court relied on decisions under Art. 311 of the Constitution relating to removal, dismissal and reduction in rank of public servants and was apparently of the view that the State Government should first have companysidered the explanation and then made up its mind as to which one of the two alternatives provided in s. 298 should be used and then presumably given a second numberice to the Board to show cause why one of the alternatives tentatively decided upon should number be pursued. We are of opinion that it is number companyrect to use the analogy of Art. 311 for the purpose of s. 298 of the Act. The issue of two numberices under Art. 311 is a very special procedure depending upon the language of that Article. We find numbercomparable words in s. 298. We also see numberreason why when giving numberice the State Government should number indicate to the Board tentatively which of the two alternatives it intends to pursue. Such tentative companyclusion companymunicated to the Board does number mean that the State Government is number open to companyviction at all and whatever the explanation it would pass an order in accordance with its tentative companyclusion. There is therefore numberreason to think that all proceedings subsequent to the issue of numberice dated June 9, 1964 were in this case a farce. The third ground on which the High Court decided in favour of the respondent must fail. It appears that the respondent had secured a stay order and practically companytinued to function for the full period of four years under the companyer of the stay order. Before us, though the respondent has appeared, it did number seriously companytest the appeal, for, the period of all members who took office on July 7, 1962 came to an end on July 6, 1966. We therefore allow the appeal, set aside the order of the High Court and dismiss the writ petition. In the circumstances we pass numberorders as to companyts.

Case appeal was accepted by the Supreme Court

Sikri J. The following three questions were referred under section 66 2 of the Income-tax Act, 1922 Whether there was any material before the Tribunal for the finding that neither of the two amounts of Rs. 3,25,000 and Rs. 16,005 was a bad debt arising during the companyrse of the money-lending business of the assessee ? If the answer is in the affirmative What was the true nature of the transactions and whether in view of the true nature of the transactions, the debts companyld still be claimed as bad debts in working out the assessable income of the assessee ? Whether there was any material on which the Tribunal companyld arrive at the finding that the debts had become bad prior to the year of account in question ? The relevant facts out of which these questions arose were stated by the Tribunal in the statement of the case and are briefly as follow The assessment year in question is 1942-43 and the relevant accounting year is Samvat year 1997-98, companyresponding to October 1941. The appellant, B. Seth Champa Lal Ram Swarup hereinafter referred to as the assessee , was a joint Hindu family headed by the karta, Moti Lal. During the accounting year a sum of Rs. 3,25,000 was due to the assessee from one Shanthi Lal, who carried on business as proprietor of M s. Amolakchand Mewaram. Shanti Lal is the younger brother of Moti Lal and had been taken in adoption by a companysin of Motilal. M s. Amolakchand Mewaram had a current account with the assessee for a number of years in which there were large cash payment on either side. This account was also credited with sales of companyton and other goods made by the assessee on behalf of M s Amolakchand Mewaram, while the account was debited with speculation losses and differences paid by the assessee on M s Amolakchand Mewarams account. In Samvat year 1987-88, the year ending November, 1931, advances made to M s. Amolakchand Mewaram in this account rose up to Rs. 11 lakhs. During this year the assessee took a mortgage of the immovable property of M s. Amolakchand Mewaram for Rs. 3 lakhs and credited the amount to the current account, the debit being given to a new account styled Amolakchand Mewaram Mortgage account. In the next accounting year the assessee took over the interest of M s. Amolakchand Mewaram in the managing agency of the Edward Mills Limited and also the shares of the Edward Mills Limited for Rs. 4,50,000 for which also a credit was given in the current account. In the same year on November 3, 1932, the assessee also obtained a pro-note from M s. Amolakchand Mewaram for Rs. 3,25,000 crediting the amount to the current account, the debit for which given to a new account styled Amolakchand Mewaram pro-note account. After these adjustments the current account was left with a debit balance of Rs. 25,626. Thereafter, there were only petty transactions and adjustments. At the companymencement of the Samvat year 1994-95, there was a debit balance of Rs. 9,017. The assessee purchased Amolakchand Mewarams card of the East India Cotton Association for a sum of Rs. 20,000 resulting in a credit balance in favour of M s Amolakchand Mewaram of Rs. 11,253. Thereafter there was only one debit entry of Rs. 980 in Samvat year 1996-97, and in the relevant accounting year the balance was to the credit of Amolakchand Mewaram in the sum of Rs. 10,273. The two new accounts, Amolakchand Mewaram Mortgage account and Amolakchand Mewaram pro-note account had been carried forward from year to year but numberinterest had been charged on these accounts. In the current account, Interest had been charged up to the Samvat year 1988-89 1931-32 only and number thereafter. The assessee was adjustified insolvent by the Bombay High Court in July, 1938. Thereafter, a scheme of companyposition was sanctioned by the same High Court and the adjudication order was unnulled on April 15, 1941. The facts relating to the second debt of Rs. 16,005 were these. This amount was due from one Mansukh Lal Panthu Lal. A decree from the Bombay High Court was obtained by the assessee against the debtor in 1932. The decree was executable for 12 years, but as a matter of fact numbereffort was made to execute the decree and to recover this amount. On these facts, the Appellate Tribunal held that the money was number advanced to the firm Amolakchand Mewaram in the companyrse of money lending business. It further held that the debt of Rs. 3,25,000 became bad long ago. Regarding the bad debt of Rs. 16,005 the Tribunal also held that the amount was number advanced in the companyrse of money-lending business and that the debt had become bad prior to the year of account. The High Court answered all the three questions against the assessee and in favour of the department. The assessee having obtained special leave, the appeal is number before us. It is number necessary to deal with the questions 1 and 2 because if the answer to the question 3 is given against the assessee the appeal must fail. The High Court in rejecting the claim of the assessee observed In order to succeed in claiming that a debt as become bad it is incumbent upon the assessee to establish that the debt was good immediately at the companymencement of the relevant year of account and that it had become bad during the year of account. In the present case the pro-note for Rs. 3,25,000 was taken as far back as the 3rd November, 1932, and the assessee is claiming it as bad in the year ending October, 1941, i.e., almost after a decade. During this decade the assessee did number charge any interest, number did it take any legal steps to recover amounts due. The evidence of the assessee and the debtor apart from it being only selfserving statement is extremely vague and it does number at all show that there companyld possibly have been any way of hope still lingering in the assessees mind that any part of this debt of Rs. 3,25,000 companyld be recovered. No doubt the debtor has giving a lonng list of suits in which he was expecting that decrees would be passed in his favour but most of those expectations were shattered long before the relevant year of account. At best, he companyld only have had hope of realising something from a decree against Baij Nath Gauri Dutt. But even that suit was decided by the Civil Judge of Mathura on the 29th March, 1940, against him. Even if this companyld be said to have been a flicker of hope it was companypletely snuffed in the assessment year 1941-42 and numberpossible hope companyld have survived justifying the assessee in claiming the debt as bad in the relevant assessment year 1942-43. On a companysideration of the evidence on the record it cannot be said that there was numbermaterial for the Tribunal to have companye to the companyclusion that the two debts had become bad prior to the year of account. The learned companynsel for the assessee tried to argue that there was number sufficient material before the Tribunal for the findings arrived at. We pointed out to him that it was number open to him, on the question as framed, to go into the question whether the Tribunal should or should number have companye to the findings it did. What we are companycerned with is whether there is any material on which the Tribunal companyld arrive at the findings that the debts had become bad prior to the year of account in question. From a perusal of the findings of the Tribunal and the reasoning of the High Court it is quite clear that there was material for the Tribunal to have companye to the companyclusion that the two debts had become bad prior to the year of account. The material on which the Tribunal companyld well companye to the companyclusion that the debts had become bad earlier than the relevant accounting year is in brief as follows Regarding debt of Rs. 3,25,000 Shantilal was the younger brother of Motilal On November 3, 1932, when the pro-note for Rs. 3,25,000 was executed the assessee had taken over major assets of the debtor The last asset, viz., card of East India Cotton Association, was taken over for a sum of Rs. 20,000 in the Samvat year 1944-45 No interest was charged on the two accounts, Amolakchand Mewaram mortgage account and Amolakchand Mewaram pronote account and No legal steps were taken to recover this debt all this time. II. Regarding the debt of Rs. 16,005. Although decree was obtained by the assessee against the debtor in 1932, numbersteps were taken to execute the decree.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 13 of 1964. Appeal by special leave from the judgment and order dated August 16, 1963 of the Gujarat High Court in Criminal Appeal No. 154 of 1962. Daniel A. Latifi and K. K. Sinha, for the appellant. Hans Ra Khanna and R. N. Sachthey for R. H. Dhebar, for the respondent. The Judgment of the Court was delivered by Bachawat, J. The appellant and six other persons were charg- ed under ss. 4 and 5 of the Bombay Prevention of Gambling Act 1887. The sub-inspector of police Shri Anjaria received information that the appellant was keeping a companymon gaming house. He obtained a special search warrant from the Deputy Superintendent of Police, Porbandar, Shri S. M. Pandya, and raided the appellants house in Bantwa on June 4, 1961 at 1 p.m. The raiding arty found the door leadin- to the upper floor closed. The inpmates pressed against the door from the inside and did number open it until a blacksmith broke open the latch. Shri Anjaria seized torn and burnt pieces of playing cards lying on the floor of the central room, two packs of cards from a wall cabinet, some burnt cards lying on the floor and in the folds of a bed in the drawing room, four jokers and three packs of cards from trunks in the kitchen, some cash, burnt cigarette ends, bidis and matches and empty cigarette cases. All the accused were found in the upper floor. The appellant as the occupant of the house was charged under s. 4 of the Act and the other six accused were charged under s. 5 of the Act. The learned magistrate refused to raise a presumption under s. 7 of the Act on the ground that Shri Pandya was number specially empowered by name to issue a search warrant. He acquitted all the accused. On appeal, the High Court held that Shri Pandya as the deputy superintendent of police, Porbandar was specially empowered to issue the search warrant and the prosecution was entitled to the benefit of the presumption under s. 7. The High Court companyvicted the appellant of the offence under s. 4 of the Act and sentenced him to simple imprisonment for one month. The High Court companyvicted the other six accused under.,,. 5 of the Act and sentenced each of them to pay a fine of Rs. 200, in default simple imprisonment for one month. The present appeal was filed by the appellant by special leave. A search warrant under s. 6 1 i of the Act can be issued by a Deputy Superintendent of Police especially empowered by the 353. State Government in this behaff. By a numberification dated January 22, 1955, the Saurashtra government empowered specially certain assistant superintendents and deputy superintendents of police including the deputy superintendent of police, Porbandar Division, Porbandar, to authorise by issue of special warrants in each case a police officer number below the rank of a sub-inspector of police to do the various things necessary in order to raid a house where the police officer suspected gaming to be carried on and which house, room or place was suspected as being used as a companymon gaming house. The magistrate relying upon Emperor v. Udho and others 1 , held that under s. 6, the officer must be specially empowered by name. The High Court relying on Emperor v. Savlaram Kashinath Joshi, 2 held that an officer may be specially empowered under s. 6 either by name or, in virtue of his office. It is because of the companyflict of opinion between the Sind and the Bombay decisions that special leave was granted in this case. Section 15 of the Bombay General Clauses Act 1904 shows that a person may be appointed to execute any function either by name or by virtue of office. A person may therefore be empowered by name or by virtue of his office of deputy superintendent of police to issue a special search warrant. Sec. 6 of the Bombay Prevention of Gambling Act requires that the deputy superintendent of police must be specially empowered to issue the warrant. In Emperor v. Udho and others 1 , the expression specially empowered was interpreted to mean specially empowered by name and number by virtue of his office, and an authorization of the deputy superintendent of police, Rohri was said to be insufficient for the purposes of s. 6. This decision does number lay down the companyrect test. A person may be specially empowered number only by name but also by virtue of his office. In Emperor Savlaram Kashinath Joshi 2 it was rightly held that a numberification authorizing the deputy superintendent of police of the Poona city to issue a search warrant under s. 6 specially empowered the holder of that office by virtue of his office to issue the warrant. We think that where power is companyferred on a person by name or by virtue of his office, the individual designated by name or as the holder of the office for the time being is empowered specially. Judged by this test, the numberification dated January 22, 1955, specially empowered Shri Pandya as the holder of the office of the deputy superintendent of police, Porbandar, to issue the search warrant under s. 6. For the meaning of the expression specially empowered re- ference is often made to s. 9 1 of the Code of Criminal Procedure which provides in companyferring powers under this Code, the State Government may by order, empower persons specially by name or A.I.R. 1943 Sind 107. 2 49 B.L.R. 798. in virtue of their office or classes of officials generally by their official titles. In Aluga Pillai v. Emperor1 , it was rightly held that an authorization of the second class magistrate of Thirumangalam to try certain cases was a special empowering of the person holding that office by virtue of his office within the meaning of s. 39 1 . On the question whether a numberification empowering all magis- trates of a certain class to try certain cases can be said to empower specially every magistrate of that class to try those cases, there is a companyflict of opinion, see Mahomad Kasim and another v. Emperor 2 , State of Mysore v. Kashambi 3 . On the further question whether a magistrate should be regarded as an office and number as an official for the purposes of s. 3 9 1 of the Code of Criminal Procedure, there is a sharp companyflict of opinion, see. State Judhabir- Chetri 4 , K. N. Vijayan v. State 5 and Pollubha Vajudha and Anr-. v. Tapu Ruda 6 . We do number ex- press any opinion on those questions, as it is number the practice of this Court to express opinion on questions which do number arise for decision. For the purpose of this case, it is sufficient to hold that a numberification companyferring power on the deputy superintendent of police of Porbandar to issue a search warrant specially empowers the holder of that office by virtue of his office to issue the warrant. We hold that Shri Pandya as the holder of the office of the deputy superintendent of police, Porbandar was specially empowered under s. 6 of the Bombay Prevention of Gambling Act by the numberification of the Saurashtra government dated January 22, 1955. It is companyceded that the numberification companytinued to be in force after the merger of Saurashtra with the State of Bombay. The seizure of instruments of gaming in the appellants house entered under s. 6 raises a presumption under s. 7 that the house was used as a companymon gaming house and the persons found therein were then present for the purpose of gaming. In applying this artificial pre- sumption the Court should act with circumspection. Playing cards may be kept and used for innocent pastimes. The presumption can be rebutted if from the prosecution evidence itself it is apparent that there was a reasonable probability of the playing cards number being kept or used is means of gaining or for the profit or gain of the occupier- of the house. In the present case, the appellant companyld number successfully rebut the presumption. The resistance to the entry of the sub inspector and the attempt to burn, destroy and companyceal the playing cards fortified the presumption. The explanation that the appellant had invited friends and relatives on the occasion of his sons betrothal was number companyvincing. We do number find any companypelling reason for interfering with the findings of fact by the High A.I.R. 1924 Mad. 256. 2 A.I.R, 1915 Mad. 1159. 3 1963 2 Cr.L. J. 226. 4 A.I.R. 1953 Assam 35. 5 1953 I.L.R. Trav.-Co 514 A.I.R 1956 Saurashtra 73. No prejudice was caused to the appellant by the production of the numberification dated January 22, 1955 for the first time at the appellate stage. His companytention in the trial companyrt was that such a numberification was number sufficient for raising the presumption under s. 7. This argument was number tenable. He had ample opportunity for rebutting the presumption arising under s. 7. Nor did he ask the High Court to give him any further opportunity for this purpose. Counsel sought to argue that the search warrant was invalid as it did number ex-facie set out the authority under which it was issued. The point was number taken either in the High Court or in the special leave petition. We therefore indicated that we will number allow this point to be raised. The High Court rightly companyvicted the appellant under s. 4 of the Act.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 466 of 1966. Appeal by special leave from the judgment and order dated May 14, 1965 of the Rajasthan High Court in D. B. Civil Mis- cellaneous Writ Petition No. 469 of 1963. T. Desai, H. K. Puri and K. K. Jain, for the appellant. K. Garg and S. C. Agarwala, for respondent No. 1. The Judgment of SUBBA RAO, C.J., SHELAT, BHARGAVA and MITTER, JJ. delivered by BHARGAVA, J. SHAH, J. delivered a separate Opinion. Bhargava, J. The appellant in this appeal is Electricity Board of Rajasthan, Jaipur hereinafter referred to as the Board , a body companyporate companystituted on 1st July, 1957, under the Electricity Supply Act, 1948 No. 54 of 1948 . Before the companystitution of the Board, the supply of electricity in the State of Rajasthan was being companytrolled directly by a department of the State Government named as the Electrical and Mechanical Department. Respondent No. 1, Mohan Lal, as well as respondents 4 to 14 were all permanent employees of the State Government holding posts of Foremen in the Electrical and Mechanical Department. On the companysti- tution of the Board, the services of most of the employees, including all these respondents, were provisionally placed at the disposal of the Board by a numberification issued by the Government on 12th February, 1958, purporting to exercise its powers under section 78A of Act 54 of 1948. In this numberification a direction was included that the Board was to frame its own new grades and service companyditions under its regulations, and the employees, whose services were transferred to the Board, were to exercise option either to accept these new grades and service companyditions, or to companytinue ill their existing grades and service companyditions, except in regard to companyduct and disciplinary rules, or to obtain relief from Government service by claiming pension or gratuity as might be admissible on abolition of posts under the Rajasthan Service Rules. The Board, however, did number frame any new grades and service companyditions at least up to the time that the present litigation arose. Respondent No. 1 was, however, deputed by the State Government by its order dated 27th January, 1960, after having worked under the Board for a period of about two years, to the Public Works Department of the Government. On 10th August, 1960, an order was made by the Government addressed to the Secretary of the Board indicating that respondent No. 1 as well as respondents 4 to 14 were to be treated as on deputation to the Board. On 24th November, 1962, the Public Works Department passed an order reverting respondent No. 1 to his parent department with effect from 1st December, 1962, but the period of deputation was later extended till 25th July, 1963. On 11th July, 1963, he was actually reverted to the Board from the Public Works Department, and the Board issued orders posting respondent No. 1 as a Foreman. In the interval, while respondent No. 1 was working in the Public Works Department, respondents 4 to 14 had been promoted by the Board as Assistant Engineers, while respondent No. 1 was promoted to work as Assistant Engineer in the Public Works Department. On his reversion, respondent No. 1 claimed that he was also entitled to be promoted as Assistant Engineer under the Board, because some of the other respondents promoted were junior to him, and, in the alternative, that, in any case, he was entitled to be companysidered for promotion. This request made by him to the Board as well as to the State Government was turned down and, thereupon, respondent No. 1 filed a petition under Articles 226 and 227 of the Constitution in the High Court of Rajasthan. Respondent No. 1 claimed that he was entitled to equality of treatment with respondents 4 to 14, and, inasmuch as he had number been companysidered for promotion with them by the Board, the Board had acted in violation of Articles 14 and 16 of the Constitution. The Board companytested the petition on two grounds. The first ground was that respondent No. 1 had never become a permanent servant of the Board and never held any substantive post under it, so that he companyld number claim to be companysidered for promotion with respondents 4 to 14. The second ground was that the Board companyld number be held to be State as defined in Article 12 of the Constitution and, companysequently numberdirection companyld be issued to the Board by the High Court under Art. 226 or Art. 227 of the Constitution on the basis that the actions of the Board had violated Articles 14 and 16 of the Constitution. The High Court rejected both these grounds, accepted the plea of respondent No. 1, quashed the order of promotion of respondents 4 to 14 and issued a direction to the Board to companysider promotions afresh after taking into account the claims of respondent No. 1. The Board has number companye up in appeal to this Court, by special leave, against this order of the High Court. Apart from the Board, the State of Rajasthan, and the Chief Engineer Technical Member of the Rajasthan State Electricity Board, Jaipur, were also impleaded as opposite parties in the writ petition and they are respondents 2 and 3 in this appeal. On the first question, Mr. S. T. Desai on behalf of the appellant drew our attention to the numberification dated 12th February, 1958, in which it was specifically laid down that the services of respondent No. 1 and respondents 4 to 14 were being placed at the disposal of the Board provisionally. He has taken us through the various pleadings in the petition filed by respondent No. 1 to show that the case put forward by respondent No. 1 before the High Court was that he never became a permanent servant of the Board and was claiming that, after the winding up of the Electrical and Mechanical Department of the Government, he was temporarily with the Board and, later, became a permanent servant of the State in the Public Works Department. The High Courtion the other hand, held that the pleadings of respondent No. 1 were obscure and that the companyrect position was that respondent No. 1 had become an employee of the Board, so that he was entitled to claim promotion in the service of the Board. There is numberdoubt that in paragraphs 5, 7, 9 and 14 of the petition respondent No. 1 had put forward the case that he was originally a servant of the State of Rajasthan and companytinued to be such throughout and retained his lien on that Government service. In paragraph 27, an alternative pleading was also put forward on his behalf that, if it be held that, on the abolition of the Electrical and Mechanical Department of the State, he had numberlien with the Government and his services were permanently transferred to the Board, he was placed in identical circumstances as the other respondents 4 to 14 and companytinued to be governed by the service companyditions which were applicable to him when he was in the service of the State Government, so that he was entitled to be companysidered for promotion with respondents 4 to 14. It is also companyrect that, initially, when the services of the various respondents were placed at the disposal of the Board, the Government purported to do so provisionally, and at numberlater stage did the Government pass any order transferring their services to the Board permanently. It, however, appears that both the Government and the Board, in dealing with respondent No. 1 as well as the other respondents, treated them as if they had become employees of the Board. The services of respondent No. 1 were placed at the disposal of the Public Works Department where he remained for a period of a little over three years, but he was all the time treated there as on deputation. At that time, in the order posting him to the Public Works Department, it was laid down that he would retain his lien in the Power Department. According to Mr. Desai, the Power Department mentioned in this order was meant to refer to the Electrical and Mecha- nical Department of the Government which used to be popularly known by that name. We, however, found in the judgment of the High Court that the High Court attempted to gather the meaning of the expression Power Department by questioning the companynsel for the Board and the officer-in- charge of the Board who appeared before the High Court and was able to discover that there is numberPower Department existing as such and that this was just another name for the State Electricity Board. On this view of the High Court, the order of the Government dated 27th January, 1960, would indicate that the lien of respondent No. 1 was on a post under the Board. Further, when respondent No. 1 was relieved from the post of Assistant Engineer in the Public Works Department, the order which the Government passed specifically mentioned that he was taken on deputation from the Board, and directed his reversion to his parent department. In the order of reversion, respondent No. 1 was thus treated as an employee of the Board which was described,as his parent department and from which he had been taken on deputation in the Public Works Department. Even the Board itself, in its order dated 11th July, 1963, proceeded on the basis that respondent No. 1 had reverted from the Public Works Department and made a direction that, on reversion from that Department, he was posted as Foreman 1, Chambal Grid Sub-Station, Udaipur, against a newly sanctioned post. Thus, the Board accepted the positon that respondent No. 1 was a servant of the Board and number an employee of the State Government in the Public Works Department. The word reversion used in the order clearly implied that, even according to the Board, respondent No. 1 was being sent back to his parent Department from a Department where he had been sent on deputation or temporarily. A further companysideration is that respondents Nos. 4 to 14 were treated by the Board as its permanent employees and were actually granted promotion to the posts of Assistant Engineers from the posts of Foremen on that basis. In the cases of these respondents also, there is numberhing to show that, after their services were provisionally placed at the disposal of the Board by the numberification dated 12th February, 1958, any order was passed permanently transferring them to the Board and, yet, they were treated as permanent employees of the Board. Respondent No. 1 was identically placed and, in these circumstances, we are unable to hold that the High Court companymitted any error in holding that respondent No. 1 was in the service of the Board just as were respondents 4 to 14. The numberification dated 12th February, 1958, had specifically laid down that the Board was to frame its new grades and service companyditions and one of the alternatives to be given to each employee, whose services were placed at the disposal of the Board, was either to be governed by these new grades and service companyditions, or to companytinue to be governed by the grades and service companyditions already applicable to them when they were in the Electrical and Mechanical Department. Since the Board did number frame any new grades or new service companyditions, it is clear that respondent No. 1 as well as respondents 4 to 14 companytinued to be governed by the old grade-, and service companyditions applicable to them when they were servants of the State Government in the Electrical and Mechanical Department where they were all serving as Foremen. All of them being governed by identical rules, it is clear that respondent No. 1 was entitled to be companysidered for promotion under the Board on the basis of equality with respondents Nos. 4 to 14. On the second point that the Board cannot be held to be State within its meaning in Art. 12 of the Constitution, Mr. Desai urged that, on the face of it, the Board companyld number be held to be companyered by the authorities named therein, viz., the Government and Parliament of India and the Government and the Legislature of each of the States and local authorities, and the expression other authorities, if read ejusdem generis with those named, cannot companyer the Board which is a body companyporate having a separate existence and has been companystituted primarily for the purpose of carrying on companymerical activities. In support of his proposition that the expression other authorities should be interpreted ejusdem generis, he relied on a decision of the Madras High Court in The University of Madras v. Shantha Bai and Another 1 . The High Court, companysidering the question whether a University can be held to be local or other authority as defined in Art. 12, held These words must be companystrued ejusdem generis with Government or Legislature, and, so companystrued, can only mean authorities exercising governmental functions. They would number include persons natural or juristic who cannot be regarded as instrumentalities of the Government. The University of Madras is a body companyporate created by Madras Act VII of 1923. It is number charged with the execution of any governmental functions its purpose is purely to promote education. Though section 44 of the Act provides for financial companytribution by the local Government, the University is authorised to raise its own funds of income from fees, endowments and the like. It is a State-aided institution, but it is number maintained by the State. In B. Devadas v. Tile Selection Committee for Admission of Students to the Karnatak Engineering College, and Others 1 , the High Court of Mysore similarly held The term authority in the ordinary dictionary sense may companyprise number merely a person or a group of persons exercising governmental power, but also any person or group of persons who, by virtue of their position in relation to other person or persons, may be able to impose their will upon that other person or persons. But there is an essential difference between a political association of persons called the State giving rise to political power companynoted by the well- known expression imperative law and a number-political association of persons for other purposes by companytract, companysent or similar type of mutual understanding related to the companymon object of persons so associating themselves together giving rise to a power which operates number in the manner in which imperative law operates, but by virtue of its acceptance by such associating persons based upon companytract, companysent or mutual understanding. Proceeding further, the Court held The term authorities occurring, in Art. 12 companyld only mean a person or a group of persons who exercise the legislative or executive functions of a State or through whom or through the A.1,R. 1954 Mad.67. A.T.R. 1964 Mysore 6. instrumentality of whom the State exercise its legislative or executive power. The latest case on the point cited by Mr. Desai is the decision of the Punjab High Court in Krishan Gopal Ram Chand Sharma v. Punjab University and Another 1 , where the decision ,given in the case of University of Madras 2 was followed and the principle laid down therein was approved and applied. On the basis of these decisions, and the principles laid down therein, it was urged that an examination of the provisions of the Electricity Supply Act will show that the Board is an autonomous body which cannot be held to be functioning as an agent of the Executive Government and, companysequently, it should be held that it is number State within the meaning of Art. 12 of the Constitution. In our opinion, the High Courts fell into an error in applying the principle of ejusdem generis when interpreting the expression other authorities in Art. 12 of the Constitution, as they overlooked the basic principle of interpretation that, to invoke the application of ejusdem generis rule, there must be a distinct genus or -category running through the bodies already named. Craies on ,Statute Law summarises the principle as follows - The ejusdem generis rule is one to be applied with caution and number pushed too far 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. Where this is lacking, the rule cannot apply, but the mention of a single species does number company- stitute a genus 3 . Maxwell in his book on Interpretation of Statutes explained the principle by saying But the general word which follows particular and specific words of the same nature as itself takes its meaning from them, and is presumed to be restricted to the same genus as those words Unless there is a genus or category, there is numberroom for the application of the ejusdem generis doctrine 4 . In United Towns Electric Co., Ltd. v. Attorney-General for Newfoundland 5 , the Privy Council held that, in their opinion, there is numberroom for the application of the principle of ejusdem generis in the absence of any mention of a genus, since the mention of a single species- for example, water rates-does number companystitute a genus. In Art. 12 of the Constitution, the bodies specifically named are the Executive Governments of the Union and the States, the Legislatures of the Union and the States, and local authorities. We are unable to find any companymon genus running through these A.I.R. 1966 Punj. 34. Craies on Statute Law, 6th Edn., p. 181. Maxwell on Interpretation of Statutes, 11th Edn. pp. 326, 327. 5 1939 1 All E.R. 423. A.I.R. 1954 Mad.67. A.I.R. 1954 Mad. 67. named bodies, number can these bodies be placed in one single category on any rational basis. The doctrine of ejusdem generis companyld number, therefore, be, applied to the interpretation of the expression other authorities in this article. The meaning of the word authority given in Websters Third New International Dictionary, which can be applicable, is a public administrative agency or companyporation having quasi- governmental powers and authorised to administer a revenue- producing public enterprise. This dictionary meaning of the word authority is clearly wide enough to include all bodies created by a statute on which powers are companyferred to carry out governmental or quasigovernmental functions. The expression other authorities is wide enough to include within it every authority created by a statute and functioning within the territory of India, or under the companytrol of the Government of India and we do number see any reason to narrow down this meaning in the companytext in which the words other authorities are used in Art. 12 of the Constitution. In Smt,. Ujjam Bai v. State of Uttar Pradesh 1 , Ayyangar, J., interpreting the words other authorities in Art. 12, held Again, Art. 12 winds up the list of authorities falling within the definition by referring to other authorities within the territory of India which cannot obviously be read as ejusdem generis with either the Government and the Legislatures or local authorities. The words are of wide amplitude and capable of companyprehending every authority created under a statute and functioning within the territory of India or under the companytrol of the Government of India. There is numbercharacterisation of the nature of the authority in this residuary clause and companysequently it must include every type of authority set up under a statute for the purpose of administering laws enacted by the Parliament or by the State including those vested with the duty to make decisions in order to implement those laws. In K. S. Ramamurthi Reddiar v. The Chief Commissioner, Pondicherry and Another 2 , this Court, dealing with Art. 12, held Further, all local or other authorities within the territory of India include all authorities within the territory of India whether under the companytrol of the Government of India or the Governments of various States and even autonomous authorities which may number be under the companytrol of the Government at all. These decisions of the Court support our view that the expression other authorities in Art. 12 will include all companystitutional or statutory authorities on whom powers are companyferred by law. It is number at all material that some of the powers companyferred may be for the purpose of carrying on companymercial activities. Under the Constitution, the State is itself envisaged as having the right to carry on trade or business as men- 1 1963 I S.C.R. 778. 2 1964 I S.C.R. 656. tioned in Art. 19 1 g . In Part IV, the State has been given the same meaning as in Art. 12 and one of the Directive Principles laid down in Art. 46 is that the State shall promote with special care the educational and economic interests of the weaker sections of the people. The State, as defined in Art. 12, is thus companyprehended to include bodies created for the purpose of promoting the educational and economic interests of the people. The State, as companystituted by our Constitution, is further Specifically empowered under Art. 298 to carry on any trade or business. The circumstance that the Board under the Electricity Supply Act is required to carry on some activities of the nature of trade or companymerce does number, therefore, give any indication that the Board must be excluded from the scope of the word State as used in Art. 12. On the other hand, there are provisions in the Electricity Supply Act which clearly show that the powers companyferred on the Board include power to give directions, the disobedience of which is punishable as a criminal offence. In these circumstances, we do number companysider it at all necessary to examine the cases cited by Mr. Desai to urge before us that the Board cannot be held to be an agent or instrument of the Government. The Board was clearly an authority to which the provisions of Part III of the Constitution were applicable. We have already held earlier that, in dealing with the case of respondent No. 1, the Board did number treat him on terms of equality with respondents Nos. 4 to 14 and did number afford to him -the opportunity for being companysidered for promotion to which he was entitled on that basis. The High Court was, therefore, right in allowing the petition of respondent No. The appeal is dismissed with companyts. Shah, J. I agree with the order proposed by Bhargava, J. The Board is an authority invested by statute with certain sovereign powers of the State. It has the power of promoting companyrdinated development, generation, supply and distribution of electricity and for that purpose to make, alter, amend and carry out schemes under Ch. V of the Electricity Supply Act, 1948, to engage in certain incidental undertakings to organise and carry out power and hydraulic surveys to companyduct investigation for the improvement of the methods of transmission to close down generating stations to companypulsorily purchase generating stations, undertakings, mains and transmission lines to place wires, poles, brackets, appliances, apparatus, etc to fix grid tariff to issue directions for securing the maximum economy and efficiency in the operation of electricity undertakings, to make rules and regulations for carrying out the purposes of the Act and to issue directions under certain provisions of the Act and to enforce companypliance with those directions. The Board is also invested by statute with extensive powers of companytrol over electricity undertakings. The power to make rules and regulations and to administer the Act is in substance the sovereign power of the State delegated to the Board. The Board is, in my judgment, other authority within the meaning of Art. 12 of the Constitution. I am unable, however, to agree that every companystitutional or statutory authority on whom powers are companyferred by law is other authority within the meaning of Art. 12. The expression authority in its etymological sense means a body invested with power to companymand or give an ultimate decision, or enforce obedience, or having a legal right to companymand and be obeyed. The expression State is defined in Art. 12 for the purpose of Part III of the Constitution. Article 13 prohibits the State from making any legislative or executive direction which takes away or abridges the rights companyferred by Part III and declares any law or executive direction in companytravention of the injunction void to the extent of such companytravention. In determining what the expression other authority in Art. 12 companynotes, regard must be had number only to the sweep of fundamental rights over the power of the authority, but also to the restrictions which may be imposed upon the exercise of certain fundamental rights e.g., those declared by Art. 19 by the authority. Fundamental rights within their allotted fields transcend the legislative and executive power of the sovereign authority. But some of the important fundamental rights are liable to be circumscribed by the imposition of reasonable restrictions by the State. The true companytent of the expression other authority in Art. 12 must be determined in the light of this dual phase of fundamental rights. In companysidering whether a statutory or companystitutional body is an authority within the meaning of Art. 12, it would be necessary to bear in mind number only whether against the authority, fundamental rights in terms absolute are intended to be enforced, but also whether it was intended by the Constitution makers that the authority was invested with the sovereign power to impose restrictions on very important and basic fundamental freedoms. In my judgment, authorities companystitutional or statutory invested with power by law but number sharing the sovereign power do number fall within the expression State as defined in Art. 12.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1425 and 1426 of 1966. Appeals by special leave from the judgment and order dated October 29, 1962 of the Madras High Court in Tax Case No. 195 of 1960. Swaminathan and R. Gopalakrishnan, for the appellant in both the appeals . V. Viswanatha Iyer, T. A. Ramachandran, S. P. Nayyar for R. N. Sachthey, for the respondent in both the appeals . The Judgment of the Court was delivered by Shah, J. The Income-tax Appellate Tribunal submitted two questions for the opinion of the High Court of Madras Whether the sum of Rs. 1,28,716/- is assessable as income under any of the provisions of the Act ? If the answer is in the affirmative, the assessment years in which the amount falls to be assessed by suitable apportionment. The first question was answered by the High Court in the affirmative. The High Court declined to answer the second question because it did number, in their view, arise out of the order of the Tribunal. The assessees have appealed to this Court. By order dated January 30, 1944, the Collector of Madras, ,,exercising power under r. 75A of the Defence of India Rules, 1939, requisitioned a property known as Lutterals Gardens belonging to the assessees. The property companytinued to remain under requisition till it vested in the Government of Madras absolutely in companysequence of an order made on May 24, 1949 by the Collector of Madras under s. 5 of the Requisitioned Land Continuance of Powers Act, 1947, declaring.the intention of the Government of Madras to acquire that property. The assessees declined the offer made by the Collector to pay Rs. 2,40,000/- as companypensation for acquisition of the property and interest at the rate of 6 thereon from the date, of numberification for acquisition, and the dispute relating to companypensation payable to the assessees was referred to the Chief Judge of the Court of Small Causes, Madras. By order of the High Court of Madras in appeal from the order of the Chief Judge it was adjudged that the assessees be paid Rs. 5,00,0001- as companypensation for the property. The High Court also awarded interest at the rate of 6 on the amount of companypensation from the date of numberification for acquisition. During the two previous years companyresponding to the assessment years 1955-56 and 1956-57 the assessees received, pursuant to the ,order of the High Court, a total sum of Rs. 6,28,716/-. In proceedings for assessment of tax for the assessment years 1955-56 and 1956-57, the Income-tax Officer apportioned the amount of Rs. 1,28,716/- on the basis of actual receipts in the two previous years and assessed the amounts so apportioned to income-tax. The Appellate Assistant Commissioner held that the apportioned amounts were of the nature of revenue and number capital receipts, but in his view the income received was liable to be calculated on accrual basis year after year from the date of the numberification for ac- quisition, and on that account the assessments of the previous years from 1950-51 to 1954-55 should be reopened and the interest which accrued in those years should be assessed. The Commissioner of Income-tax and the assessees appealed to the Appellate Tribunal against the order of the Appellate Assistant Commissioner. The assessees submitted that Rs. 1,28,716/received as interest being part of companypensation were number assessable to tax, whereas the Commissioner claimed that the Income-tax Officer was justified in assessing the amounts in the years in which they were received. The Income-tax Appellate Tribunal accepted the companytention of the assessees that the receipts were number assessable to tax because they were of the nature of capital receipts. At the instance of the Commissioner, the Tribunal referred the two questions set out here-in-before. Section 5 of the Requisitioned Land Continuance of Powers Act, 1947 authorises the Government by which or under the authority of which land has been requisitioned, to acquire the land subject to requisition, by publishing a numberice to the effect that the Government has decided to acquire such land. Section 6 of the Act provides, inter alia, that companypensation payable to the owner of the land shall be determined in accordance with the provisions of s. 19 of the Defence of India Act, 1939, and the rules made thereunder. Section 19 of the Defence of India Act, 1939, sets out the principles for determining the companypensation payable to a claimant. The amount of companypensation may be fixed by agree- ment between the owner and the Government where numbersuch agreement is reached the Central Government is enjoined to appoint an arbitrator having the qualifications prescribed therein. Under s. 19 1 e. the arbitrator in making his award must have regard, inter alia, to the provisions of sub-s. 1 of s. 23 of the Land Acquisition Act, 1894 in so far as the same can be made applicable. An appeal Res against the award of the arbitrator to the High Court. Sub- sections 2 and 3 of s. 19 companyfer upon the Central Government authority to frame rules for the purpose of carrying into effect the provisions of s. 19. In exercise of that power, the Government of India framed The Defence of India Payment of Compensation and Arbitration Rules, 1943 which amongst other provisions directed that the Collector shall pay companypensation as soon as may be practicable. But neither s. 19 1 of the Defence of India Act, number the Rules framed under s. 19 2 and 3 provide that interest shall be paid on the amount of companypensation. In the present case, interest was, however, offered to be paid by the Collector and the High Court also awarded interest on the amount of companypensation from the date of the numberification of acquisition. It was held by this Court in Dr. Shamlal Narula v. Commis- sioner of Income-tax, Punjab, Jammu and Kashmir, Himachal Pradesh and Patiala 1 that the statutory interest paid under S. 34 of the Land Acquisition Act, 1894, on the amount of companypensation awarded from the date on which the Collector has taken possession of land companypulsorily acquired under the Land Acquisition Act, 1804, is interest paid for delayed payment of the companypensation and is a revenue receipt liable to tax under the Income-tax Act. It was observed in that case at p. 156 . . . . interest, whether it is statutory or companytractual, represents the profit the creditor might have made if he had the use of the money or the loss he suffered because he had number that use. It is something in addition to the capital amount, though it arises out of it. Under section 34 of the Act when the legislature designedly used the word interest in companytradistinction to the amount awarded, we do number see any reason why the expression should number be given the natural meaning it bears. The scheme of the Act and the express provisions thereof establish that the statutory interest payable under section, 34 is number companypensation paid to the owner for de- priving him of his right to possession of the land acquired, but that given to him for the deprivation of the use of the money representing the companypensation for the land acquired. Counsel for the assessee however companytended that the principle of Dr. Shamlal Narulas case 1 is number applicable to this case, since there is numberprovision in the Requisitioned Land. Continuance of Powers Act, 1947 and the Defence of India Act, 1939, and the rules framed thereunder for payment of interest on the amount of companypensation. Counsel said that under the Act, the owner is paid number the market value of the property, but companypensation determined in accordance with a highly artificial scheme, and that the interest paid, in truth, bears the same quality as companypensation for deprivation of property and is on that account a capital receipt number exigible to tax. In support of his.contention, companynsel invited our attention to two decisions The Commissioners of Inland Revenue v. Ballantine 2 and Simpson H.M. Inspector of Taxes v. Exe- cutors-of Bonner Maurice as Executor of Edward Kay 3 . In Ballantines case 2 a claim of a firm of companytractors against a railway companypany for additional companyts, loss and damage was referred to arbitration. The arbitrator awarded to the claimant a sum of money mainly as damages, together with interest thereon at 5 per cent. per annum from the date of lodgement of claim until payment. The Revenue sought to charge the interest paid by the 1 53 I.T.R. 51. 3 14 T.C. 580. 2 8 T.C. 595. railway companypany to tax under Case III of Sch. D of the Income-tax Act, 1918. It was held that the sum added in the name of interest was part of damages, and was number interest of money chargeable to income-tax under Case III of Sch. Lord President Clyde observed Now it is familiar that an assessment of the kind may companytain as one of its companystituent elements an allowance in respect that the claimant has lain for a long time out of his remedy. The propriety of such an allowance may depend on the character of the claim, and its amount may depend on many companysiderations of which time is only one. But an interest calculation is a natural and legitimate guide to be used by an arbiter in arriving at what he thinks would be a fair amount. In most cases in which such an allowance is a companystituent of an award it does number separately appear, but is slumped along with other elements in the gross sum decerned for but there is numberhing to prevent an arbiter, if he thinks it just and reasonable in a particular case, to make the allowance in the form of an actual interest calculation from a past date until the sum fixed as at that date is paid. In all such cases, however-whether the allowance is wrapped up in a slump award or is separately stated in the decree-the interest calculation is used in modum aestimationis only. The interest is such merely in name, for it truly companystitutes that part of the companypensation decerned for which is attri- butable to the fact that the claimant has been kept out of his due for a long period of time. It is number therefore interest of money chargeable under Case ITT of Schedule D. In Simpson v. Executors of Bonner Maurice as Executor of Edward Kay 1 the executors of Kay, a naturalised British subject, who died during the First World War received, as the result of the peace treaty claims, amounts representing partly capital of securities, stocks and shares in Banks in Germany deposited by Kay partly interest and dividends and partly companypensation under the Peace Treaty. In a proceeding for assessment of the receipt to tax it was held that the companypensation companyputed on the basis of interest was number income for the purposes of income-tax. Lord Hanworth, M. R., observed at p. 601 I want to add number one more word in reference to the sum which has been paid by way of companypensation under Article 297. It-is said in reference.to that that at least, arose at the time when it was paid under the order of the Mixed Arbitral Tribunal. It wag a sum 1 14 T.C. 580. CI/67- 12 which was calculated as interest-.and it is interest, and- therefore it is within the words of the Schedule, which undoubtedly impose a tax upon interest which arises or accrues to a person liable to tax. But is it interest ? Is that its quality, or is it companypensation estimated and measured in terms of interest ? It appears to me quite clear that, apart from Article 297, numbersuch sum companyld have been recovered. Lawrence, L.J., observed at p. 605 Neither the fact that the companypensation was measured by the amount of the interest, which but for the embargo placed upon the money by the German Government companyld have been earned by the Respondents, number the fact that part of the companypensation was described as interest in the decision of the Mixed Arbitral Tribunal in my judgment, has the effect of altering the character of the companypensation paid to the Respondents. But it must be numbericed that liability to pay interest arose in Ballantines case 1 under the award of the arbitrator and in the Executors of Bonner Maurice as Executor of Edward Kays case 2 under the order of the Mixed Arbitral Tribunal, and in each case, it was held that what was paid, though called interest, was in truth companypensation for loss suffered on account of deprivation of property. According to the view taken by this Court in Dr. Shamlat Narulas case 3 , if the companyrse of the obligation imposed by the statute to pay interest arises because the claimant is kept out of his money, the interest received is chargeable to tax as income. The same principle would apply if interest is payable under the terms of an agreement and the Court or the arbitrator gives effect to the terms of the agreement--express or implied and awards interest which has been agreed to be paid. It is therefore necessary to determine whether the obligation to pay interest awarded under the order of the High Court of Madras arose out of the statute or out of the award. In Satinder Singh Ors. V. Amrao Singh and Ors. 4 lands forming part of Cis-Sutlej Jagir were companypulsorily acquired under the East Punjab Acquisition and Requisition of Immovable Property Temporary Powers Act, 1948. The claimants to the lands claimed in addition to statutory companypensation interest from the date from which they were dispossessed and till the date of payment of companypensation. The arbitrator appointed under the Act awarded interest on the amount of companypensation and the High Court of Punjab in appeal Confirmed the order. This Court held that the claimants were 1 8 T.C. 595, 2 14 T. C. 580. 3 53 I.T.R. 151 4 1961 3 S.C R. 676, entitled to interest on the companypensation amount from the date of dispossession till the date on which the amount of companypensation was paid to the claimants. Section 5 of the East Punjab Acquisition and Requisition of Immovable Property Temporary Powers Act, 1948, set out the principles according to which companypensation was to be paid in regard to the acquired property, and by cl. e thereof it was provided that the arbitrator in making the award shall have regard to the provisions, of sub-s. 1 of s. 23 of the Land Acquisition Act, 1894 in so far as the same may be applicable. The Act companytained numberexpress provision for payment of interest on companypensation determined by the arbitrator. This Court rejected the companytention of the State of Punjab, that ss. 28 and 34 of the Land Acquisition Act which dealt with the payment of interest were number intended to apply to the proceedings before the arbitrator. It was observed Stated broadly the act of taking possession of immovable property generally implied an agreement to pay interest on the value of the property and it is oil this principle that a claim for interest is made against the State. The Court further observed It would thus be numbericed that the claim for interest proceeds on the assumption that when the owner of immovable property loses possession of it he is entitled to claim interest in place of right to retain possession. The question which we have to companysider is whether the application of this rule is intended to be excluded by the Act of 1948, and as we have already observed, the mere fact that s. 5 e of the Act makes s. 23 1 of the Land Acquisition Act of 1894 applicable we cannot reasonably infer that the Act intends to exclude the application of this general rule in the matter of the, payment of interest. The Court also observed When a claim for payment of interest is made by a person whose Immovable property has been acquired companypulsorily he is number making claim for damages properly or technically so called he is basing his claim on the general rule that if be is deprived of his land he should be put in possession of companypensation immediately if number, in lieu of possession taken by companypulsory acquisition interest should be paid to him on the said amount of companypensation. The scheme of the East Punjab Acquisition and Requisition of Immovable Property Temporary Powers Act, 1948 is similar to the scheme of the Requisitioned Land Continuance of Powers Act, 1947. The Court in Satinder Singhs case 1 held that be- 1 1961 3 S.C.R. 676. cause of the injunction expressly to apply the provisions of s. 23 1 of the Land Acquisition Act, 1894, in the determination of companypensation, the application of ss. 28 and 34 dealing with the payment of interest on the amount awarded as companypensation cannot be deemed excluded. The Court also held that when the owner of property is dispossessed pursuant to an order for companypulsory ac- quisition, an agreement that the acquiring authority will pay interest on the amount of companypensation is implied. The reasoning on which the right of the owner of the lands acquired to interest was affirmed in Satinder Singhs case 1 , prima facie, applies in this case. Counsel for the assessees companytended that the application of ss. 28 and 34 of the Land Acquisition Act in proceedings for arbitration under the Requisitioned Lands Continuance Powers Act, 1947, was expressly excluded by s. 19 1 g of the Defence of India Act which enacted that Save as provided in this section and in any rules made thereunder, numberhing in any law for the time being in force shall apply to arbitration under this section. But cl. g is number susceptible of any such interpretation. Clauses a to f of s. 19 1 are a Code relating to arbitration in determining the companypensation payable to a person deprived of his property. Provisions relating to payment of interest are number, however, part of the law relating to arbitration and there is numberhing in cl 1. g which excludes the application of the substantive law relat- ing to payment of interest when the arbitration is determining the amount of companypensation. We are therefore of the view that the principle on which The Commissioners of Inland Revenue v. Ballantine 2 and Simpson M. Inspector of Taxes v. Executors of Bonner Maurice as Executor of Edward Kay 3 were based has numberapplication to this case.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 404 of 1966. Appeal by special leave from the judgment and order dated November 29, 1963 of the Kerala High Court in O.P. No. 2165 of 1962. R. L. lyengar and M. R. Krishna Pillai, for the appellants. The respondent did number appear. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by special leave, from the judgment of the High Court of Kerala dated November 29, 1963 in Writ Petition, O.P. No. 2165 of 1962. The respondent hereinafter called the assessee was a dealer in Cocoanut oil business having inter-State sales. For the year 1959-60 the assessee was assessed to sales-tax under s. 8 of the Central Sales Tax Act Act 74 of 1.956 , hereinafter called the Act. Out of a total turnover of Rs. 2,30,990 and odd determined by the Sales Tax Officer, only a sum of Rs. 1,89,734 and odd was supported by proper declaration Form C. Tax was therefore imposed by the Sales Tax Officer at the rate of 1 on the turnover of Rs. 1,93,346 and at 7 on the balance, namely Rs. 37,645. The assessee did number file the declaration forms on or before the prescribed date, i.e., February 16, 1961 but he actually filed the declaration forms on March 8, 1961 before the order of assessment was made, the delay being explained as due to late receipt of the declaration forms from the purchaser in Madras. The assessee preferred an appeal to the Appellate Assistant Commissioner but the appeal was dismissed. The assessee took the matter in revision before the Deputy Commissioner of Sales-tax but the revision petition was dismissed. Thereafter, the assessee moved the Kerala High Court for grant of a writ under Art. 226 of the Constitution for quashing the orders of the Sales Tax Officer dated June 13, 1961 and the order of the Appellate Assistant Commissioner dated December 13, 1961. By its order dated November 29, 1963, the High Court allowed the writ petition of the assessee and quashed the orders of assessment of sales-tax and directed the Sales Tax Officer to make a fresh order of assessment after taking into companysideration the declaration forms furnished by the as on March 8, 1961. Section 8 of the Act, as it stood on the material date, was to the following effect 8. 1 Every dealer, who in the companyrse of interState trade or companymerce- a sells to the Government any goods or b sells to a registered dealer other than the Government goods of the description referred to in subsection 3 shall be liable to pay tax under this Act, which shall be one per cent. of his turnover. The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the companyrse of inter- State trade or companymerce number falling within sub-section 1 - a in the case of declared goods, shall be calculated at the rate applicable to the sale or purchase of such goods inside the appropriate State and b in the case of goods other than declared goods, shall be calculated at the rate of seven per cent. or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, numberwithstanding that he,. in fact, may number be so liable under that law. The provisions of sub-section 1 shall number apply to any sale in the companyrse of inter-State trade or companymerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner- a a declaration duly filled and signed by the registered dealer to whom the goods are sold companytaining the prescribed particulars in a prescribed form obtained from the prescribed authority or b if the goods are sold to the Government, number being a registered dealer, a certificate in the prescribed form duly filled and signed by a duly authorised officer of the Government. Section 13 states The Central Government may, by numberification in the Official Gazette, make rules providing for- a the manner in which applications for registration may be made under this Act, the particulars to be companytained therein, the procedure for the grant of such registration, the circumstances in which registration may be refused and the form in. which the certificate of registration may be given b the period of turnover, the manner in which the turnover in relation to the sale of any goods under this Act shall be determined, and the deductions which may be made in the process of such determination c the cases and circumstances in which, and the companyditions subject to which, any registration granted under this Act may be cancelled d the form in which and the particulars to be companytained in any declaration or certificate to be given under this Act The, State Government may make rules, number inconsistent with the provisions of this Act and the rules made under sub-section 1 , to carry out the purposes of this Act. In particular and Without prejudice to the powers companyferred by sub-section 3 , the State Government may make rules for all or any of the following purposes, namely e the authority from whom, the companyditions subject to which and the fees subject to payment of which any form of-declaration prescribed under sub-section 4 of section 8 may be obtained, the manner in which the form, shall be kept in custody and records relating thereto maintained, the manner in which any such form may be used and any such declaration may be furnished f in the case of an undivided Hindu family, association, club, society, firm or companypany or in the case of a person who carries on business as a guardian or trustee or otherwise on behalf of another person, the furnishing of a declaration stating the name of the person who shall be, deemed to be the manager in relation to the business of the dealer in the State and the form in which such declaration may be given g the time within which, the manner in which and the authorities to whom any change in the ownership of any business or in the name, place or nature of any business carried on by any dealer shall be furnished. Rule 6 of the Central Sales Tax Kerala Rules, 1967 read as follows 6. 1 Every dealer registered under section 7 of the Act and every dealer liable to pay under the Act shall submit a return of all his transaction including those in the companyrse of export of the goods out of the territory of India in Form 11 together with companynected decla- 5 2 2 ration forms so as to reach the assessing authority on or before the 20th of ea ch month showing the turnover for the preceding month and the amount or amounts companylected by way of tax together with proof for the payment of tax due thereon under the Act. Provided that in cases of delayed receipt of declaration forms, the dealer may submit the declaration forms at any time before the assessment is made Provided further that the delay in submitting the declaration forms shall number exceed three months from the date of sale in question Provided also that all declaration forms pending submission by dealers on 2-5-1960 shall be submitted number later than 16-2-1961. The first proviso to Rule 6 was inserted by numberification dated January 3, 1958, the second by numberification dated April 26, 1960 and the third by numberification dated January 16, 1961. It was companytended on behalf of the appellants that the assessee had number filed the declarations in form C before February 16, 1961 according to the third proviso to Rule 6 1 and in view of the breach of this Rule the assessee was number entitled to take advantage of the lower rate of assessment under s. 8 1 of the Act. The opposite view- point was put forward on behalf of the assessee and it was argued that the third proviso to Rule 6 1 was ultra vires of s. 8 4 read with s. 1 3 4 e of the Act. The de- cision of the question at issue therefore depends on the companystruction of the phrase in the prescribed manner in s. 8 4 read with s. 13 of the Act. In our opinion, the phrase in the prescribed manner occurring in s. 8 4 of the Act only companyfers power on the rule-making authority to prescribe a rule stating what particulars are to be mentioned in the prescribed form, the nature and value of the goods sold, the parties to whom they are sold, and to which authority the form is to be furnished. But the phrase in the prescribed manner in s. 8 4 does number take in the time element. In other words, the section does number authorise the rule making authority to prescribe a time- limit within which the declaration is to be filed by the registered dealer. The view that we have taken is supported by the language of s. 13 4 g of the Act which states that the State Government may make rules for the time within which, the manner in which and the authorities to whom any change in the ownership of any business or in the name, place or nature of any business carried on by any dealer shall be furnished. This makes it clear that the Legislature was companyscious of the fact that the expression in the manner would denote only the mode in which an act was to be done, and if any time-limit was to be prescribed. for the doing of the, act, specific words such as the time within which were also necessary to be-put in the statute. In Strouds Judicial Dictionary it is said that. the words manner and form refer only to the mode in which the thing is to be done, and do number introduce anything from the Act referred to as to the thing which is to be done or the time for doing it. In Acraman v. Herniman 1 the plaintiffs had become the assignees in bankruptcy proceedings against Garret who had executed on March 4, 1850 a warrant of attorney to the defendant Herninian on the strength of which the latter had obtained judgment against him and sold his goods. A companyy of the warrant of attorney was filed with the officer acting as clerk of the docquets and judgments in the companyrt of Queens Bench on March 1 1, 1850, but numberaffidavit of the time of execution of such warrant of attorney was filed at any time. Stat. 12 and 13 Viet. c. 106. s. 136 provided that any warrant of attorney given by a trader to companyfess judgment in a personal action, number filed within twenty one days after execution in the manner and form provided by State. 3. G.4. c.39 should be deemed fraudulent, null and void. Section 1 of Stat. 3 G.4. c.39 required that such warrant of attorney should be filed together with an affidavit of the time of execution thereof, within twenty-one days of the execution of the warrant of attorney. Section 2 provided that if, after twenty-one days, the party giving such warrant of attorney shall be declared a bankrupt, then, unless the warrant or a companyy thereof shall have been filed as aforesaid within 21 days from the execution or unless judgment shall have been signed or execution issued thereon within the same, period, such warrant of attorney and the judgment and execution thereon, shall be deemed fraudulent and void against the assignees. As already stated, judgment had been signed on March 11, 1850, i.e., within twenty-one days of the execution of the warrant of attorney, and it was companytended on behalf of the defendant that the judgment was valid numberwithstanding the failure to file the affidavit as required by section 1 of Stat. 3 G.4. c.39. The argument was rejected and it was held by the Queens Bench that the warrant of attorney and the judgment thereon were void as against the assignees in bankruptcy. In the companyrse of his judgment, Lord Camp bell C. J. observed as follows The enactment of stat. 12 13 Viet. c. 106,s. 136, is very plain and I cannot agree to put a forced companystruction upon it. The Legislature has said there that any warrant of attorney given by a trader to companyfess judgment in a personal action, number filed within twenty one days after execution in manner and form provided by stat. 3 G. 4. c. 39, shall be deemed fraudulent, null and void. The manner directed by that Act is, filing 1 117 E. R. 1164. the warrant or companyy, with an affidavit of the time of execution. Here are a judg ment and execution on a warrant of attorney given by a trader, and the warrant filed, but without an affidavit. The plain meaning of the late Act is that such a warrant shall be null and void ,against the assignees. The words in manner and form refer only to the mode in which the thing is to, be done, and do number introduce anything from the Act referred to, as to the thing which is to be done or the time for doing it. The view that we have, expressed as to the interpretation of s. 8 4 of the Act is also supported by the Note to the form of declaration-Form C-prescribed by Rule 12 of the Central Sales Tax Registration Turnover Rules, 1957. The Note states that the form is to be furnished to the prescribed authority ,in accordance with the rules framed under section 13 4 e by the appropriate State Government. For the reasons expressed, we hold that the third proviso to Rule 6 1 is ultra vires of s. 8 4 read with s. 1 3 3 and 4 of the Act. It follows therefore that the assessee was number bound to furnish declarations in Form C before February 16, 1961 in the present case. In the absence of any such time-limit it was the duty of the assessee to furnish the declarations in form C within a reasonable time, and in the present case it is the admitted position that the assessee did furnish the declarations on March 8, 1961 before the order of assessment was made by the Sales Tax Officer. We are accordingly of the opinion that the assessee has furnished the declarations in Form C in the present case within a ,reasonable time and there has been a companypliance with the requirements of s. 8 4 a of the Act. It follows that the High Court was right in quashing the order of assessment made by the Sales Tax Officer and directing him to make a fresh order of assessment after taking into companysideration the declaration forms furnished by the assessee on March 8, 1961.

Case appeal was rejected by the Supreme Court

CIVIL APPFLLATE JURISDICTION Civil Appeal No. 852 of 1964. Appeal by special leave from the judgment and decree dated August 24, 1962 of the Punjab High Court in Regular Second Appeal No. 843 of 1956. Bishan Narain and A. G. Ratnaparkhi, for the appellant. C. Nayyar and Mohana Behar Lal, for respondent No. 1. The Judgment of the Court was delivered by Bhargava, J. This appeal has companye up as a result of a dis- pute relating to succession to the property of one Sunder Singh. Sunder Singh, on 4th November, 1950, executed a will in respect of his property in favour of his niece, Udham Kaur. Subsequently, on 27th October, 1951, one Tarlok Singh executed a document divorcing his wife, Mst. Angrez Kaur, respondent No. 1 in this appeal, on the ground that she frequently went away from his house without his companysent and whenever he made enquiries from her, she became furious with him. In the document, he recited that Mst. Angrez Kaur was numberlonger his wife and that she had gone to live with Sunder Singh. According to respondent No. 1 on this divorce being granted to her by her first husband, Tarlok Singh, she was married to Sunder Singh by a custom, known as Chadar Andazi. On 7th June, 1952, Sunder Singh revoked his previous will and, in that document, acknowledged Mst. Ang- rez Kaur as his wife and left the property to her. Sunder Singh died in 1953. Thereafter, the appellant, Gurdit Singh, who was a companylateral of Sunder Singh in the third degree, applied for mutation. On 12th December, 1954, mutation of the property left by Sunder Singh was sanctioned in favour of Gurdit Singh by the authorities. Thereupon, Mst. Angrez Kaur filed a suit on 17th March, 1955, claiming the property as widow of Sunder Singh. The trial Court decreed the suit, holding that respondent No. I had married Sunder Singh by Chadar Andazi and the marriage was valid. On appeal, the Additional District Judge set aside the decree of the trial Court and held that the marriage of Mst. Angrez Kaur with Sunder Singh during the life-time of her first husband, Tarlok Singh, was invalid and was number justified by any custom and, companysequently, she companyld number be treated as the widow of Sunder Singh. Respondent No. 1, there on, appeale to the High Court of Punjab and the learned Judge, who heard the appeal, felt that the question of custom had number properly tried by the trial Court and the first appellate Court. Consequently he framed the following issue - Is there any custom amongst the tribes of the parties according to which the divorce given by Tarlok Singh to Mst. Angrez Kaur is recognised enabling her to enter into a valid marriage by Chadar Andazi with Sunder Singh? This issue was remitted to the trial Court for recording a finding after giving the parties an opportunity to lead further evidence. Further evidence was led in the trial Court which answered this issue in the negative and against respondent No. 1. The District Judge, in his report, endorsed the view of the trial Court. The High Court, however, held that the 7 91 custom was proved under which Mst. Angrez Kaur companyld validly marry Sunder Singh, even though her first husband, Tarlok Singh, was alive, and, companysequently decreed the suit. Gurdit Singh appellant has number companye up to this Court against this decree of the High Court by special leave. As is clear from the facts narrated above, the, only issue that arose in this case was whether respondent No. 1, Mst. Angrez Kaur, had succeeded in proving the existence of a custom in the companymunity to which she belonged, according to which Tarlok Singh, her first husband, companyld divorce her, whereupon she was at liberty to enter into a valid marriage by Chadar Andazi with Sunder Singh, whose property is number under dispute. The parties are residents of the District of Jullundur where, according to Gurdit Singh appellant, numbersuch custom, as claimed by respondent No. 1 exists amongst the Jats, which is the caste to which the parties belong. To urge this point, learned companynsel for the appellant relied before us on The Digest of Customary Law by Sir W. H. Rattigan, and on the Riwaj-i-am recorded at the time of the settlement in 1885 and 1914-15. It was argued that Rattigans Digest of Customary Law in the Punjab had always been treated as an authoritative exposition of the customs prevailing in the Punjab and had been accepted as such by the Privy Council as well as other Courts in India. Reliance was placed on para 72 at page 471 of the 14th Edition of Rattigans, Digest of Customary Law, where it is stated that amongst Muhammadans of all classes a man may divorce a wife without assigning any reason but this power, in the absence of a special custom, is number allowed to Hindus number to females of any class. In paragraph 74, he proceeds to lay down that until the former marriage is validly set aside, a woman cannot marry a second husband in the life- time of her first husband and in paragraph 75, it is stated that A Karewa marriage with the brother or some other male relative of the deceased husband requires numberreligious ceremonies, and companyfers all the rights of a valid marriage. The marriage claimed by respondent No. 1 with Sunder Singh was described as a karewa marriage. On the basis of the principles laid down in the above paragraphs, it was urged that it should be held that respondent No. I companyld number have entered into a valid marriage with Sunder Singh, while her first husband, Tarlok Singh, was alive. It is, however, to be numbered that in paragraph 72, Rattigan himself makes an exception to the general rule, and recognises the fact that, if there be a special custom, divorce can be resorted to even by Hindus. In earlier paragraphs of his book, Rattigan has dealt with existence of special customs in the Punjab and, in dealing with L Sup. CI/67-7 the Jats, he expressed the view that, as regards Jats, and specially Sikh Jats who hold very liberal views on questions relating to marriage and whose numberions of sexual morality are lax, it will be difficult to enunciate any general principles as are opposed to public policy. Then, he goes on to say that custom in the Punjab is primarily tribal and number local, though the custom of a particular tribe may and often does differ in particular localities. Rattigons companyclusion is expressed by saying that it seems to be clear that there is numberuniform custom applicable to the whole of the Punjab. Custom varies from time to time and from place to place. It is in this background that we have to companysider further remarks recorded by Rattigan in paragraph 72 mentioned above, where he says that, in one case, it was doubted whether, in Jullundur District, a Hindu fat can divorce his wife. He also numbericed a number of decisions relating to divorce in the surrounding districts in which it was held that the custom of divorce prevailed in almost identical terms in those districts. This custom according to him, is that the husband is entitled to turn out his wife and, if he does so, she is entitled to remarry. It was on the basis of these observations of Rattigan that it was urged before us that the High Court companymitted an error in relying on the circumstance that, in a number of surrounding districts, it was found that the custom of divorce amongst the Hindu Jats so prevalent companyld lead to an inference that a similar custom prevailed in the district of Jullundur also. In Rattigans book, by itself, we are unable to find any proposition laying down that, in the district of Jullundur, there is any custom among Hindu fats permitting divorce as claimed by respondent No. 1. In fact, Rattigan leaves the question open by saying that it has been doubted whether such a custom exists in the Jullundur District. He also mentions the Riwaj-i-am of Jullundur District, but does number attach much importance to it on the ground of its being un- reliable. Rattigans book on Customary Law, in these circumstances, appears to us to be of little help in arriving at a companyclusion about the existence of a custom on divorce amongst the Jats in Jullundur District. The only other document relating to Jullundur District available was the Riwaj-i-am of that district and learned companynsel for the appellant placed great reliance on it. He drew our attention to the decision of their Lordships of the Privy Council in Kunwar Basant Singh v. Kinwar Brij Rai -Saran Singh 1 where their Lordships held The value of the riwaj-i-am as evidence of customary law is well established before this Board the most recent decision is 1 62 I.A. 180. 79 3 Vaishno Ditti v. Rameshri 1 , in which the judgment of the Board was delivered by Sir John Wallis, who states It has been held by this Board that the riwaj-i-am is a public record prepared by a public officer in discharge of his duties and under Government rules that it is clearly admissible in evidence to prove the facts entered thereon subject to rebuttal and that the statements therein may be accepted even if unsupported by instances. Reliance was also placed upon the principle laid down by this Court in Mahant Salig Ram v. Musammat Maya Devi 2 , where this Court held There is numberdoubt or dispute as to the value of the entries in the Riwaj-i-am. It is well- settled that though they are entitled to an initial presumption in favour of their companyrectness irrespective of the question whether or number the custom, as recorded, is in accord with the general custom, the quantum of evidence necessary to rebut that presumption will, however, vary with the facts and circumstances of each case. The Court also approved of the principle laid down by the Lahore High Court, indicating the circumstances in which Riwaj-i-am can be held to prove a custom, and in that companynection said It has been held in Qamar-ud-Din v. Mt. Fateh Bano 3 that if the Riwaj-i-am, oil which reliance is placed, is a reliable and trustworthy document, has been carefully prepared, does number companytain within its four companyners companytradictory statements of custom, and in the opinion of the Settlement Officer is number a record of the wishes of the persons appearing before him as to what the custom should be in those circumstances the Riwaj-i- am would be a presumptive piece of evidence in proof of the special custom set up therein. If, on the other hand, the Riwaj-i-am is number a document of the kind indicated above, then such a Riwaj-i-am would have numbervalue at all as a presumptive piece of evidence. It is in the light of these principles that we have to examine the value to be attached to the Riwaj-i-am in Jullundur District which has been relied upon by learned companynsel for the appellant. The Riwaj-i-am of Jullundar District appears in the form of questions and answers and an extract of it has been placed before us. In answer to the questions about the grounds on which a wife may be divorced, whether change of religion is a sufficient cause and whether,a husband may divorce his wife without 1 1928 L. R. 55 I.A. 407,421, 2 1955 1. S. C. R. 1191. 3 1943 I. L. R. 26 Lah. 110. 7 94 assigning any cause, the record states that among all Muhammadans except Rajputs the Muhammadan Law is followed and a husband can divorce his wife without assigning any reason. Among the Muhammadan Rajputs and all Hindus-no divorce is recognised. But an exception is mentioned that the Kambohs of the Nakodar Tahsil also divorce their wives. They are number required to assign any cause. In answer to the question as to what are the formalities which must be observed to companystitute a revocable or an irrevocable divorce, is was stated that among Hindus there is numberdivorce except among Kambohs of the Nakodar Tahsil who give talaq by executing a written deed. Reliance is placed on the entry in the Riwaj-i-am that the custom of divorce among Hindus does number exist in the Jullundur District to urge that the High Court wrongly held that respondent No. 1 companyld be divorced by her first husband, Tarlok Singh, and companyld validly marry Sunder Singh by Chadar Andazi. It, however, appears that the Riwaj-i-am of Jullundur District is unreliable, and, according to the principle laid down by this Court in the case of Mahant Salig Ram 1 , such a Riwaj-i-am cannot be held to prove that there was numbercustom of divorce among- Hindus in this district. It does number appear necessary to refer to the various decisions of the Lahore High Court on the question of unreliability of the Riwaj-i-am of Jullundur District. It is enough to quote the latest decision of the East Punjab High Court in Mohammad Khalil and Another v. Mohammad Bakhsh 2 . In that case., Bhandari J., delivering the judgment of the Bench, reproduced the principle laid down by the Lahore High Court in Qamar-ud-Din Others 3 , which was later approved by this Court in the case of Mahant Salig Ram 1 . ,and then proceeded to hold - Unfortunately, the Riwaj-i-am of the Jullundur District cannot be regarded as a reliable or trustworthy document, for, it has been held in a number of decided cases, such as Zakar Hussain v. Ghulam Fatima 1 , Ghulam Mohammad v. Balli 5 , and Mt. Fatima v. Sharaf Din 1 , that it has number been prepared with care and attention. It seems to me, therefore, that it is impossible to accept the statements appearing therein at their face value. Learned companynsel for the appellant, however, urged before us that all these cases, in which the Riwaj-i-am of Jullundur District ,was held to be unreliable, related either to the custom about the right of succession to property of a daughter against companylaterals, 1 1955 1. S. C. R. 1191. A. I. R. 36 1949 E.Pb. 252. A. I. R. 1 4 1927 Lab. 261. I. I. R. 26 Lah. 110. A. 1. R. 18 1931 Lah. 641. A. 1. R. 33 1946 Lah. 426. 79 5 or about the right to execute wills and gifts. None of these cases related to the custom of divorce and at least, insofar as it records that there is numbercustom of divorce amongst Hindus in this district, the Riwaj-i-am should be accepted. There are two reasons why we must reject this companytention. The first is that the Riwaj-i-am having been found unreliable in respect of two customs, the inference clearly follows that it was number drawn up carefully and companyrectly and, companysequently it would number be safe to rely even on other aspects of the Riwaj-i-am. The second, and which is the more important reason, is that, in this particular case which is before us, the evidence tendered by both the parties shows that this Riwaj-i-am has incorrectly recorded the custom about the right of a Hindu husband of this district to divorce his wife. Respondent No. 1, in order to prove her case as to the existence of the custom, has primarily relied on two pieces of evidence. The first piece of evidence companysisted of the Riwaj-i-am of the neighbouring districts where there was a clear record that the custom of divorce among Hindu Jats existed. The existence of such a custom. in the neighbouring district, which surround the Jullundur District all around, is certainly a relevant companysideration for an inference that such a custom may be prevalent in the Jul- lundur District also, particularly in view of Rattigans opinion that the custom is primarily tribal though also local. If the custom existed among the tribes of Hindu Jats in all the districts surrounding the district of Jullundur, it is probable that a similar custom exists in the district of Jullundur also. The other piece of evidence relied upon was the statements of a number of witnesses examined to prove that number only such a custom existed, but also that instances were available showing that there had been divorces in recent times. Respondent No. 1 has examined nine witnesses in this behalf. The learned District Judge, in his report, did number place full reliance on the testimony of these witnesses, but their evidence has been accepted by the High Court. On behalf of the appellant also, a number of witnesses were examined to prove the number-existence of a custom of divorce. It, however, appears that the appellants own witnesses belied his case. Several of those witnesses clearly admitted that in this district a custom did exist permitting a husband to divorce his wife. Three of the witnesses, Bhag Singh, Karam Singh and Kartar Singh, who were examined on behalf of the appellant, in their examination-in-chief itself, mentioned a custom under which a Zamindar companyld divorce his wife, though they added that, if the husband divorces his wife, the wife cannot companytract Chadar Andazi during the life-time of her husband. Ujagar Singh, another witness, in his cross-examination clearly admitted that the husband can divorce his wife, but a wife cannot divorce her husband. He can divorce her both verbally as well as in writing. Similarly, Niranjan Singh, another witness, stated that a husband can divorce his wife, but a wife cannot divorce her husband. Gurdit Singh, in his examination in chief, mentioned that a husband and wife companyld live separate from each other and, in such a case, the wife companyld number companytract Chadar Andazi during the life-time of her first husband, and added that, if she companytracted Chadar Andazi, she companyld number inherit the property of her second husband. In cross-examination, he stated that there is numbercustom among us for divorcing the wives with mutual companysent. All these witnesses examined on behalf of the appellant himself thus proved the existence of a custom under which a Hindu Jat in the district of Jullundur companyld divorce his wife, though all of them added a qualification that, in case a wife is divorced by a Hindu husband, she is number entitled to a second marriage during the life-time of her first husband. They all admit that a custom permitting, a Hindu Jat to divorce his wife does actually exists in the district of Jullundur. Some of them, at some stages of their evidence, tried to distinguish the right of a husband by saying that he companyld desert his wife or that there ,could be separation between the husband and the wife, but, at ,other stages, they admitted in clear words that the custom recognised included the right of the husband to divorce his wife. Thus, the record in the Riwaj-i-am that there is numbersuch custom of divorce among the Hindus of the Jullundur District, is proved to be incorrect number only by the evidence of the witnesses examined ,on behalf of respondent No. 1, but even from the evidence given by the witnesses of the appellant. In these circumstances, we hold that there is numberforce at all in the submission of the learned companynsel that this Riwaj-i-am companyld be held to be reliable insofar as it records the absence of the custom, on the mere ground that in earlier cases the unreliability of this Riwaj-i-am was found in regard to record of customs relating to other matters. There is numberdoubt that the witnesses examined on behalf of the appellant, while admitting the existence of a custom permitting a Hindu husband to divorce his wife, have added a qualification that, if such a divorce is brought into effect by a husband, the wife cannot legally companytract a second marriage during his lifetime. This limited custom sought to be proved by these witnesses does number. find support from the Riwaj-i-am, number is it in line with the principles laid down by Rattigan in his book on Customary Law. All that he stated in paragraph 74 of his book was that until the former marriage is validly set aside, a woman cannot marry a second husband in the life-time of her first husband. We have already held that, even according to the witnesses exa- mined by the appellant, a custom exists which permits a valid divorce by a husband of his wife and that would dissolve the marriage. On the dissolution of such a marriage, there seems to be numberreason why the divorced wife cannot marry a second husband in the life-time of her first husband. It also appears to us incongruous to accept the proposition put forward on behalf of the appellant that, though a wife can be divorced by her husband, she is number at liberty to enter into a second marriage and thus secure for herself means for proper living. In these circumstances, the High Court companymittee numbererror in accepting the evidence given by witnesses examined on behalf of respondent No. 1 who stated that the custom as prevailing in the Jullundur District number only permitted divorce, but also recognised the validity of second marriage of the divorced wife even in the life-time of her first husband. The High Court was further right in relying on the instances proved by the evidence of these witnesses of respondent No. 1 showing that a number of divorced wives had actually companytracted second marriages in the life-time of the in husbands and these, marriages were recognised as valid marriages by the members of their companymunity.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 784 of 1966. Appeal by special leave from the judgment and order dated March 12, 1964 of the Madras High Court in Tax Case No. 157 of 1961. Narsaraju and R. N. Sachthey, for the appellant. Gopalakrishnan and N. Srinivasan, for the, respondent. The Judgment of the Court was delivered by Shah, J. The respondent-hereinafter called the assessee- carries on the business of manufacture and sale of companyton yarn. In the previous year relevant to the assessment year 1956-57, the assesses spent Rs. 93,215/- for introduction of Casablanca companyversion system in its spinning plant. Substantially this involved replacement of certain roller stands and fluted rollers fitted 9 5 8 with rubber aprons to the spinning machinery, removal of ringframes from certain existing parts, introduction, inter alia, of ballbearing jockey-pulleys for companyverting the original band-drivers to tape-drivers and other additions and alterations in the drafting mechanism. The Income-tax Officer disallowed the claim of the assessee for Rs. 93,215/- because it was number admissible as development rebate since the introduction of Casablanca companyversion system did number involve installation of new machinery. The Appellate Assistant Commissioner agreed with the Income-tax Officer. In appeal to the Appellate Tribunal, besides submitting the claim that expenditure was allowable as development rebate, the assessee urged that the amount laid, out for introducing the Casablanca companyversion system was in any event expenditure allowable under s. 10 2 v of the Indian Income-tax Act. The Tribunal ins- pected the spinning factory of the assessee and studied the working of the. machinery with the Casablanca companyversion system in the process of spinning yarn. They also companysidered the literature published by the manufacturers of Casablanca companyversion system and the relevant numberification issued. by the Ministry of Commerce, Government of India, defining the import policy, and held that as a result of the stress and strain of production over a long period there was need for change in the plant and that the assessee had replaced old parts by introducing the Casablanca companyversion system. In the view of the Tribunal the expenditure incurred for introducing the Casablanca companyversion system, though number admissible as-development rebate, was admissible as an allowance under s. 10 2 v of the Indian Income-tax Act. The Tribunal then referred the following two questions to the High Court of Judicature at Madras - Whether on the facts and in the circumstances of the case the Tribunal had jurisdiction to decide whether the sum of Rs. 93,215/- companystituted an allowable item of expenditure under s. 10 2 v of the Act ? Whether on the facts and in the circumstances of the case, the sum of Rs. 93,215/- or any portion thereof is allowable as an expenditure incurred for current repairs under S. 10 2 v of the Act ? The High Court accepted the finding recorded by the Tribunal that by the introduction of the Casablanca companyversion system numbernew machinery or plant was installed, but the introduction of the system amounted to fitting of improved versions of certain minor parts and expenditure in that behalf was of revenue nature. The High-Court also held that the Tribunal had jurisdiction to permit the assessee to raise a new companytention which was number raised before the departmental authorities. The Commissioner has ,appealed to this Court, with special leave. The Tribunal had evidence before it from which it companyld be companycluded that by introducing the Casablanca companyversion system the assessee made current repairs to the machinery and plant. The High Court observed that certain moving parts of -the machinery had because of wear and tear to be periodically replaced, and when it was found that the old type of replacement parts were number available in the market, the assessee introduced the Casablanca companyversion system, but thereby there was merely replacement of certain parts which were a modified version of the older parts. Counsel for the Commissioner has number challenged these findings and the answer to the second question recorded in the affirmative by the High Court must be accepted. By the first question the jurisdiction of the Tribunal. to allow a plea inconsistent with the plea raised before the departmental authorities is canvassed. Under sub-s. 4 of s. 33 of the Indian Income-tax Act, 1922, the Appellate Tribunal is companypetent to pass such orders on the appeal as it thinks fit. There is numberhing in the Income-tax Act which restricts the Tribunal to the determination of questions raised before the departmental authorities. All questions whether of law or of fact which relate to the assessment of the assessee may be raised before the Tribunal. If for reasons recorded by the departmental authorities in rejecting a companytention raised by the assessee, grant of relief to him on another ground is justified, it would be open to the departmental authorities and the Tribunal, and indeed they would be under a duty to grant that relief. The right of the assessee to relief is number restricted to the plea raised by him. The Tribunal in the present case was of the opinion that in order to adjust the liability of the assessee, it was necessary to ascertain the true nature of the Casablanca companyversion system. The assessee had, it is true, companytended that the introduction of the Casablanca companyversion system was of the nature of machinery or plant which being new had been installed for the purpose of business within the meaning of S. 10 2 vi-b of the Indian Income-tax Act. The Tribunal rejected the claim of the assessee, but on that account the Tribunal was number bound to disallow the claim of the assessee for allowance of the amount spent if it was a permissible allowance on another ground.- The Tribunal on investigation of the true nature of the alterations made by the introduction of the Casablanca companyversion system came to the companyclusion that it did number amount to installation of new machinery, or plant, but it amounted in substance to current repairs to the existing machinery. The subject-matter of the appeal in the present case was the right of the assessee to claim allowance for Rs. 93,215/-. whether the allowance was admissible under one head or the other of sub-s. 2 of S. 10, the subject-matter for the appeal remained the same, and the Tribunal having held that the expenditure incurred fell within the terms of s. 10 2 v , though number under s. 10 2 vi-b , it had jurisdiction to admit that expenditure as a permissible allowance in the companyputation of the taxable income of the assessee. The High Court was, therefore, right in answering the first question in the affirmative.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2162 of 1966. Appeal from the judgment and order dated September 6, 9, 1963 of the Gujarat High Court in Income-tax Reference No. 9 of 1963. Sen, A. N. Kirpal, R. N. Sachthey and S. P. Nayar, for the appellant. N. Shroff, for the respondent. The Judgment of the Court was delivered by Shah, J.By an agreement dated October 29, 1928 Ciba India Ltd.-hereinafter called the principals--appointed one Tejaji Farasram Kharawalla selling agent for the District of Ahmedabad in respect of certain kinds of dyes and dye- stuffs, and agreed to pay him companymission at the rate of 12- 1/2 on sales by him of dyes and dye-stuffs of the principals. The companymission was to include all charges in companynection with the upkeep of offices and godown, turnover rebates and companytingency expenses etc. The terms relating to companymission were modified by agreement dated August 20, 1935 and out of the companymission agreed to be paid, 71 was to be treated as the selling companymission and 5 was to be treated as companypensation in lieu of the companytingency expenses which the selling agent had to meet, such as companymission to Dyeing Masters, agents etc The rights of the selling agent were assigned with the companysent of the principals to the respondent Company with effect from October 27, 1947. In assessing the income of the Company for the assessment year 1949-50, the Income-tax Officer included in the taxable income Rs. 58,025/- being the difference between Rs. 1,90,538/- received by the Company as 5 companymission and Rs. 1,32,512/- spent by the Company for meeting the charges which the selling agent was to meet. The Income-tax Appellate Tribunal, however, upheld the companytention of the Company that in the companyputation of the income of the Company, the 5 companymission was wholly exempt by virtue of S. 4 3 vi of the Income-tax Act, 1922. The Commissioner then moved the Tribunal to draw up a statement of the case and to refer the following question to the High Court of Judicature at Bombay Whether on the facts of the case, a portion viz. 5 of the selling agency companymission of 12- 1/2 received by the assessee companypany from M s Ciba Ltd. in the companyrse of carrying on the selling agency business is exempt from tax under s. 413 vi of the Act? But the Tribunal only referred the following question Whether the assessee companypany held an office or employment of profit within the meaning of s. 4 3 vi of the Indian Income-tax Act? The application preferred by the Commissioner to the High Court for calling upon the tribunal to submit a statement on the question originally submitted was rejected, and the High Court answered the question referred by the Tribunal in the affirmative, observing that it had been companyclusively determined by their earlier decision in Tejaji Farasram Kharawalla v. Commissioner of Income-tax, Bombay Mofussil 1 -which arose out of a proceeding for assessment to tax of the income of the original selling agent under the same agency agreement. It appears that in so observing the Court was under some misapprehension, for the question referred by the Tribunal had number been decided in the earlier judgment. Against the order passed by the High Court recording an answer in the affirmative on the question referred by the Tribunal and against the order dismissing the numberice of motion, the Commissioner appealed to this Court. This Court set aside the order passed by the High Court dismissing the application of the Commissioner and without expressing any opinion on the companyrectness or otherwise of the answer recorded by the High Court on the question referred by the Tribunal, remanded the case to the High Court with a direction that the Tribunal be called upon to state a case on the question raised in the application of the Commis- sioner. The case was then heard by the High Court of Gujarat to which it stood transferred because of the reorganisation of the State of Bombay. The High Court of Gujarat held that the 5 companymission received by the Company represented a special allowance to meet expenditure such as companymission to Dyeing Masters, agents etc., and was on that account exempt from tax. The High Court also held that the Company held an office or employment of profit. The Commissioner has again appealed to this Court against the answers recorded by the High Court on the original and supplementary question. Section 4 3 vi of the Indian Income-tax Act, 1922, as it stood in the year of assessment read as follows-- Any income, profits or gains failing within the following classes shall number be included in the total income of the person receiving them Any special allowance, benefit or perquisite specifically granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit. The clause grants exemption in respect of expenses incurred but on that account an allowance granted to meet expenses to be incurred in future in the performance of the duties of an 1 1948 16 I.T.R. 260. office or employment of profit is number outside the exemption claimed. In the companytext in which the expression incurred occurs, it undoubtedly, means incurred or to be incurred. To qualify for exemption the allowance must it is clear be granted to meet expenses incurred or to be incurred wholly and necessarily in the performance of the duties of an office or employment of profit. But the purpose for which the allowance is granted, in our judgment, is alone number determinative of the claim to exemption. An allowance though made to a person holding an office or employment of profit intended for appropriation towards expenditure incurred or to be incurred in the discharge of the duties, does number companystitute any real income of the grantee. It is in truth expenditure incurred by the employer through the agency of the grantee. The intention of the framers of the Act was to grant exemption in respect of amounts received by the assessee, number for his own benefit, but for the specific purpose of meeting the expenses wholly and necessarily incurred or to be incurred in the performance of his duties as an agent. It would, therefore, be reasonable to hold that the allowance granted to meet the expenses wholly and necessarily incurred or to be incurred in the performance of the duties of the office or employment of the grantee alone qualifies for exemption under the Act, and any surplus remaining in the hands of the grantee after meeting the expenses does number bear the character of the allowance for meeting expenses but for performing the duties of the office or employment. This would be so even if the employer has disabled himself from demanding refund of the amount number expended for meeting the expenses incurred or to be incurred in the performance of the duties of an office or employment of profit, and the surplus remaining in the hands of the grantee acquires for the purpose of the Incometax Act the character of additional remuneration. We are unable to agree with the decision of the Bombay High Court in Tejaji Farasram Kharawallas case 1 that the object with which the grant is made by the employer determines the claim to exemption under S. 4 3 vi of the Income-tax Act. The observations made by Chagla, C.J., at p. 267 that what is emphasized in this sub-clause S. 4 3 vi is the purpose of the grant, the object with which the grant was made. Once it is established that the grant was for that particular purpose, it is numberlonger necessary for the assessee to prove that in fact he expended that grant for the purpose for which it was given. He may spend more, or he may spend less, but qua that grant which is given. for a particular purpose, he is entitled to the exemption, do number, in our judgment, give due effect to the key words to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit. What is exempted is number the companysideration paid for meeting the expenditure incurred or to be incurred in the performance of the duties of an office or 1 16 I.T.R. 260. employmentthe exemption operates only in respect of a special allowance or benefit specifically granted to meet expenses wholly and necessarily incurred in the discharge of the duties of the office or employment. The judgment of the Allahabad High Court in Commissioner of Income-tax, U. P. v. Sharma Company 1 and especially the observations of Pathak, J., on which reliance was placed by companynsel, for the Company may also be referred to. In Sharma Companys case 1 the assessee firm which was the sole selling agent of a companyton mill, received a sum exceeding Rs. 67,000/- from the owners of the mills for the purpose of meeting the expenses in companynection with the management of a retail cloth shop on behalf of the mill and actually spent only Rs. 12,641/-. The claim of the firm that it was entitled to exemption from liability to pay tax under s. 44 3 vi of the Act before it was amended in 1955 even in respect of the balance retained by it was upheld by the High Court of Allahabad. Pathak, J., observed that s. 4 3 vi , as it then stood, required the Income-tax Officer to enquire whether the purpose of the grant was companyered by the language of the clause, and he was number companycerned to determine whether the amount granted was actually expended by the recipient. The learned Judge in so holding was impressed by two companysiderations that the expression incurred means incurred already, or to be incurred in future and that income-tax being an annual tax in a case where the allowance is an ad hoc allowance which is to companyer a period longer than or ending after the year of account, or is a periodical allowance, the Income-tax Officer may under the Act exempt expenditure incurred in the year of account and numbermore, and thereby the intention of the employer would be wholly frustrated and the employee may be called upon to pay tax on a receipt which is number his income. The expression incurred means for reasons already set out incurred or to be incurred. But that has numberbearing on the question whether the unexpended surplus in the hands of the employee is taxable. And we do number feel impressed by the second companysideration. The allowance may be in respect of a period longer than the accounting year or which runs into the succeeding accounting year or years. But on that account the whole receipt reduced by the expenses actually incurred in the year of account is number liable to be brought to tax. If it appears from a review of the circumstances that a special allowance is made for a period longer than the year of account, or that the period companyered by the grant of a special allowance extends beyond the close of the account year, it would, in our judgment, be the duty of the income-tax Officer to determine the amount allowed in respect of the year of account in which the expenditure has been incurred, and the difference between the amount so determined and the amount actually expended would alone be brought to tax. 1 57 I.T.R. 470. It may be numbered that the Parliament has by the Finance Act, 1955, with effect from April 1, 1955, recast cl. vi of s. 4 3 of the Income-tax Act, 1922 and has expressly provided that the special allowance granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit to the extent to which such expenses are actually incurred for that purpose, was exempt from tax. The Legislature, by the amendment made it clear that only the expenses actually incurred by the assessee will be exempted under s. 4 3 vi . But the principle that an amount granted to companyer expenses to be incurred for a period which extends beyond the year of account in which the grant is received will be allocated between the year of account and the period outside the year of account will apply to the Act as amended. There is numberdoubt that the selling agent under the agreement with the principals holds an employment for profit. No argument to the companytrary was advanced before us. It is unnecessary therefore to companysider the elaborate judgment of the High Court on the question whether the selling agent holds an office within the meaning of s. 4 3 vi of the Act. The appeal is therefore allowed and the answer recorded by the High Court to the supplementary question is discharged, and the following answer to the supplementary question is recorded That portion of 5 per cent of the selling agency companymission received by the assessee companypany is exempt under s. 4 3 of the Income-tax Act, 1922, which is wholly and necessarily incurred in the year of account in the performance of the duties of the companypany as selling agent.

Case appeal was accepted by the Supreme Court

Ramaswami J. This appeal is brought from the judgment o the Calcutta High Court dated March 10, 1964, in Income-tax Reference No. 116 of 1960. The relevant assessment year is 1950-51 and the companyresponding previous year ended on March 31, 1950. In respect of the said assessment year the Income-tax Officer made an order dated March 15, 1956, under section 23A 1 of the Income-tax Act, 1922 hereinafter referred to as the Act . By the said order the Income-tax Officer held that Rs. 35,476 should be deemed as having been distributed as dividend by the respondent and the proportionate share thereof of each shareholder should be included in the total income of such shareholder for the purpose of assessing his total income. The balance-sheet of the respondent disclosed past losses amounting to Rs. 45,692 which had been brought forward. The Income-tax Officer held that such losses resulted from the failure of the respondent in number properly accounting for some bonus shares received by it. The Income-tax Officer recomputed the losses of the respondent in earlier years by valuing the bonus shares received by the respondent at nil and, accordingly, held that the losses amounted to Rs. 6,509. The aforesaid companyputation was made mainly by disallowing Rs. 37,500 from the debits in the share account and adding Rs. 10,151 on account of grossing up of dividends and interest on securities. The sum of Rs. 37,500 represented the companyt of bonus shares at face value which had been debited in the share account by the respondent. The respondent took the matter in appeal to the Appellate Assistant Commissioner who, by his order dated May 11, 1957, cancelled the order of the Income-tax Officer under section 23A. The Appellate Assistant Commissioner took the view that the losses of the earlier accounting period amounted to Rs. 6,509, the income-tax chargeable for the relevant assessment year amounted to Rs. 17,829 and the subscribed capital of the respondent amounted to Rs. 6,00,000. The Appellate Assistant Commissioner therefore held that the profits of the respondent cannot be held to be adequate to justify the application of the provisions of section 23A of the Act. Thereafter, the Commissioner of Income-tax preferred an appeal to the Appellate Tribunal which set aside the order of the Appellate Assistant Commissioner and restored the order of the Income-tax Officer under section 23A. The Appellate Tribunal dealt with the question of past losses and the accounting of bonus shares and agreed with the findings of the Income-tax Officer and held that the past losses amounted to Rs. 6,509. The Appellate Tribunal further held that the Appellate Assistant Commissioner should number have taken into companysideration the actual tax liability of Rs. 17,829. The Appellate Tribunal observed that the Appellate Assistant Commissioner was wrong in taking into companysideration the subscribed and the paid up capital for the purpose of companyputing it with the profits made in the year of account. Under section 66 1 of the Act the Appellate Tribunal drew up a statement of the case and referred the following question of law for the opinion of the High Court Whether, on the facts and in the circumstances of the case, the profits made by the applicant in the year of account did number attract the application of section 23A 1 ? Whether, on the facts and in the circumstances of the case, the tax liability for the assessment year under companysideration, amounting to Rs. 17,829 should be taken into companysideration for the purpose of determining whether an order under section 23A 1 should be made on the applicant ? By its judgment dated March 10, 1964, the High Court answered the first question in the negative. As regards the second question, it was companyceded by companynsel on behalf of the respondent that the Appellate Assistant Commissioner should number have taken into companysideration the tax liability of Rs. 17,829 for his finding that numberfund was available for payment of dividend. The High Court answered question No. 2 also in the negative in view of the companycession made by companynsel on behalf of the respondent. The question presented for determination in this appeal is whether the High Court was right in holding that the bonus shares should have been valued at their face value and the loss of Rs. 35,000 on the valuation of the shares as such should have been companysidered in determining the applicability of section 23A. It was argued by Mr. S. T. Desai on behalf of the appellant that the view expressed by the High Court must be taken to have been impliedly overruled by the judgment of this Court in Commissioner of Income-tax v. Dalmia Investment Co. Ltd. It was companytended by companynsel that there had to be recomputation of the value of the bonus shares on the principle enunciated in that case. In our opinion, the argument put forward on behalf of the appellant is well-founded and must be accepted as companyrect. In Commissioner of Income-tax v. Dalmia Investment Co. Ltd. it was held by this companyrt that when bonus shares are issued in respect of ordinary shares held in a companypany by an assessee, their real companyt to the assessee cannot be taken to be nil or their face value. The proper method of valuation is to spread the companyt of the old shares over the old shares and the new issue viz., the bonus shares taken together if they rank pari passu, and if they do number, the price may have to be adjusted either in proportion of the face value they bear if there is numberother circumstance to differentiate them or on equitable companysiderations based on the market price before and after issue. It is manifest that the question of application of section 23A 1 of the Act must be decided after recomputation of the value of the bonus share on the basis of the principle expressed by this companyrt in Commissioner of Income-tax v. Dalmia Investment Co. Ltd. For these reasons we allow this appeal, set aside the judgment of the High Court dated March 10, 1964, and direct that the High Court should rehear the reference keeping in view the principle laid down by this companyrt in Commissioner of Income-tax v. Dalmia Investment Co. Ltd.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 636 of 1967. Appeal by special leave from the judgment all order dated November 11. 1966 of the Allahabad High Court, Lucknow Bench in Writ Petition No. 226 of 1963. T. Desai, J. P. Goyal, D. N. Jha and G. S. the appellant. Sarjoo Prashad and O. P. Rana, for the respondents. Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment, dated November 11, 1966, of the Division Bench of tile Allahabad High Court dismissing the writ petition filed by tile appellant seeking to quash tile order of the State Transport Authority. dated March 20/21. 1963. The State Transport Authority had by this order rejected the appellants revision petition against the decision of the Regional Transport Authority oil the ground that a mere decision of the Regional Transport Authority limiting the number of stage carriages under S. 47 3 of the Motor Vehicles Act, 1939 IV of 1939 hereinafter referred to as the Act companyld number form the subject matter of a revision application. It was of the view that when the Regional Transport Authority actually proceeds to fill Lip the vacancies, which it has decided to create, then the persons whose interests would be adversely affected, would have a right of representation before the Regional Transport Authority, and in the case of their representation being rejected by the Regional Transport Authority the will have a right of appeal before the State Transport Appellate Tribunal. The High Court was of the view that an existing operator had numbersay in the matter of determination of the strength on a route under sub-s. 3 of s. 47, and, it was in the discretion of the Regional Transport Authority to determine the strength on a route, after companysidering various matters enumerated in cls. a to f of sub-s. 1 of S. 47. The High Court further observed that is the order passed under S. 47 3 , to revise which the appellant had filed a revision tinder s. 64-A, was a good order and did number call for any interference, it did number companysider it necessary to decide whether a revision lay against such an order under s. 64-A of the Act. The learned companynsel for the appellant, Mr. S. T. Desai, company- tends that an order under S. 47 3 of the Act, whether it is quasijudicial or administrative, does affect the existing operators on the route and their representations must be companysidered by the Regional Transport Authority before passing an order tinder s. 47 3 . He further submits that a revision lay under S. 64-A of the Act and the same should number have been dismissed on the ground that numberrevision lay. The relevant statutory provisions are s. 47 and s. 64-A, of the Act, and read thus Procedure of Regional Transport Authority in companysidering application for stage carriage permit- A Regional Transport Authority shall, in companysidering an application for a stage carriage permit, have regard to the following matters, namely--- a the interests of the public generally, b the advantages to the public of the set- vice to be provided, including the saving of time likely to be effected thereby and any companyvenience arising from journeys number being broken c the adequacy of other passenger transport services operating or likely to operate in the near future, whether by road or other means, between the places to be served d the benefit to any particular locality or localities likely to be afforded by the service e the operation by the applicant of other transport services. including those in respect of which applications from him for permits are pending f the companydition of the roads included in the proposed route or area and shall also take into companysideration any representations made by persons already providing passengers transport facilities by any means along or near the proposed route or area. or by any association representing persons interested in the provision of road transport facilities recognised in this behalf by the State Government, or by any local authority or police authority within whose jurisdiction any part of the proposed route or area lies Provided that other companyditions being equal, an application for a stage carriage permit from a companyoperative society registered or deemed to have been registered under any enactment in force for the time being shall, as far as may be, be given preference over applications from individual owners. A Regional Transport Authority shall refuse to grant a stage carriage permit if it appears from any time table furnished that the provisions of this Act relating to the speed at which vehicles may be driven are likely to be companytravened provided that before such refusal an opportunity shall be given to the applicant to amend the time table so as to companyform to the said provisions. A Regional Transport Authority may, having regard to the matters, mentioned in sub-section 1 , limit the number of stage carriages generally or of any specified type for which stage carriage permits may be granted in the region or in any specified area or on any specified route within the region. 64-A. Revision---The State Transport Authority may, either on its own motion or on an application made to it, call for the record of any case in which an order has been made by a Regional Transport Authority and in which numberappeal lies, and if it appears to the State Transport Authority that the order made by the Regional Transport Authority is improper or illegal, the State Transport Authority may pass such order in relation to the case as it deems fit Provided that the State Transport Authority shall number entertain any application from a person aggrieved by an order of a Regional Transport Authority, unless the application is made within thirty days from the date of the order Provided further that the State Transport Authority shall number pass an order under this section prejudicial to any person without giving him a reasonable opportunity of being heard. It would be numbericed that sub-s. 3 of s. 47 does number expressly say whether any representations can be made by persons already providing transport facilities or by associations representing persons interested in the provision of the transport facilities or by any local authority or police authority within whose jurisdiction the route or area lies. This is expressly mentioned in s. 47 1 . The learned companynsel companytends that the expression matters mentioned in sub-section 1 occurring in sub-s. 3 refers back number only to matters mentioned in sub-cls. a to f to sub-s. 1 in S. 47 but also the right of representation mentioned in sub-s. 1 . We are unable to accept this line of reasoning as being sound. Even under s. 47 1 , the Regional Transport Authority can only have regard to the matters mentioned in sub-cls. a to f , and those matters may be brought to the numberice of the Regional Transport Authority by representations. It companyld number have been the intention that representations would companytain matters which the Regional Transport Authority companyld number take into companysideration under s. 47 1 . This is number to say that the matters mentioned in sub-cls. a to f are exhaustive, but this point does number arise and we need number say anything as to this. Therefore, this line of reasoning does number assist the appellant. This Court in Abdul Mateen v. Ram Kailash Pandey 1 held that where a limit has been fixed under s. 47 3 by the Regional Transport Authority, and thereafter the said authority proceeds to companysider applications for permits under s. 48 read with s. 57, the Regional Transport Authority must companyfine the number of permits issued by it to those limits and on an appeal or revision by an aggrieved person, the Appellate Authority or the Revisional Authority must equally be companyfined to the issue of permits within the limits fixed under s. 47 3 . But this Court did number feel it necessary to decide whether under s. 64-A, inserted by Motor Vehicles Amendment Act No. 100 of 1956, it was open to the State Transport Authority to vary a general order passed under s. 47 3 . If we look at the section, it would be numbericed that s. 64-A is very wide in terms the only companydition necessary for filing a revision is that it should be against an order made by the Regional Transport Authority and against which numberappeal lies. The word order is wide, and there is numberdoubt that an order made under s. 47 3 is an order within s. 64-A because, as held by this Court in Abdul Mateen v. Ram Kailash Pandey 1 it binds the Regional Transport Authority and the State Transport Authority in dealing with applications under s. 48. read with s. 57, of the Act. Mr. Sarjoo Prasad, the learned companynsel for the State, company- tends that numberrevision lies at the instance of an existing operator because he cannot be called an aggrieved person, and secondly, that even if a revision lies, the appellant is number entitled to any relief on the facts of this case, under Art. 136 of the Constitution, because the appellant never approached the Regional Transport Authority in the first instance. We are unable to say that numberexisting operator can be aggrieved by an order made under s. 47 3 , increasing or decreasing the number of stage carriages it would depend on the facts and circumstances of each case. In a particular case it may be to his advantage and he then would number file a revision against it, but if he files a revision when an order made under s. 47 3 is prejudicial to his interests, there is numberground for denying him the right to approach the revisional authority and seeking its order. An order under s. 47 3 affects the future working on a route and we are of the view that such an order would have repercussion on the working of the existing operators, whether for their good or number. The High Court, as stated above, was of the view that at the stage of s. 47 3 existing operators would- number be entitled to be heard by the Regional 1 1963 3 S.C.R. 523. Transport Authority. But assuming that it is so, this does numberaffect the right of revision companyferred by s. 64-A. We need number in this case decide whether it is implied that existing operators would be entitled to be heard by the Regional Transport Authority before an order under s. 47 3 is made. The learned companynsel for the respondent further companytends that a decision under s. 47 3 is a tentative decision and can be revised. But assuming that it can be revised by the Regional Transport Authority, till the order is in operation it is binding on everybody and if a revision can be filed against the order under s. 64-A, the aggrieved operator cannot be companypelled to approach the Regional Transport Authority first to revise its order. This argument, in a way, companycedes that an operator can be a person aggrieved by an order under s. 47 3 . The learned companynsel for the appellant companytends that if it is held that a revision lies under s. 64-A against an order passed under s. 47 3 of the Act, the State Transport Authority should be directed to hear the revision on merits. He says that the High Court had numberright to go into the merits of the order itself. Ordinarily what Mr. Desai companytends is companyrect, but here the facts are that the order under s. 47 3 was passed as long ago as November. 17. 1962. During the last five years demand for stage carriages on this route would have, in the ordinary companyrse, increased by number. and further it has number been shown that the Regional Transport Authority has made any glaring mistake. For the aforesaid reasons. in exercising our discretion under Art. 136 of the Constitution we companysider that we should number interfere with the order passed by the High Court. In the result the appeal fails and is dismissed. Under the circumstances there will be numberorder as to companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 32 of 1965. Appeal by special leave from the judgment and order dated May 13, 1963 of the Calcutta High Court in Award Case No. 119 of 1963. Sachin Chowdhury, M. G. Poddar and D. N. Mukherjee, for the appellant. Sardar Bahadur, for the respondent. The Judgment of the Court was delivered by Shah, J Messrs Sunder Lal Son-hereinafter called the appellantss--are members of the East India Jute and Hessian Exchange Ltd. an Association recognised under the provisions of the Forward Contracts Regulation Act, 1952. The- appellants applied to the High Court of Judicature at Calcutta on its original side under s. 33 of the Indian Arbitration Act 10 of 1940 for an order, inter alia, declaring that there exists a valid arbitration agreement companytained in companytract No. 750 dated September 16, 1960 between the petitioners and the respondents. The appellants claimed that they entered into a companytract with the respondents on September 16, 1960, for the purchase of 6,00,000 bags of B Twill at the rate of Rs. 132.50 nP per 100 bags, on their own account in Transferable Specific Delivery Form prescribed under the byelaws of the Association. and on terms and companyditions set out therein The respondents denied the existence of the companytract and also its validity. The High Court dismissed the application holding that M J N 6SCI-13 the companytract was invalid in that it did number companyply with the requirements of s. 15 sub-s. 4 of the Forward Contracts Regulation Act, 1952. By special leave, the appellants have appealed to this Court. The relevant recitals in the numberes, which, it was claimed, companystituted the companytract between the parties may first be set out 7A, Clive Row, Calcutta-1 Sunder Lal Son. Contract No. 750 Messrs. Bharat Handicrafts Private Ltd. Dear Sirs, We have, subject to the terms and companyditions hereinafter referred to, this day sold to Messers., Sunderlal Son by Your order, and on your account Yours faithfully, Sunderlal Sons. Calcutta, 16th September, 1960 Messrs. Sunderlal Son No. 750 Dear Sirs, We have, subject to the terms and companyditions hereinafter referred to this day bought from Bharat Handicrafts Private Ltd., by your order, and on your account Yours faithfully, Sunderlal Son. Validity of the companytract was challenged by the respondents on, two grounds- 1 that the appellants were number at the relevant time members of the Association and 2 that the requirements of s. 4 of the Forward Contracts Regulation Act were number companyplies with and the companytract was on that account invalid. The High Court decided both the grounds in favour of the respondents. The appellants averred in their petition that they were at all material times members of the Association. Baburam Saraf principal officer of the. Company-in his affidavit in reply merely states that he did number admit that averment. The learned Judge observed that he was unable to hold that the appellants had proved that the appellants were members of the Association at the time of the formation of the companytract. It is unfortunate that the attention of the learned Judge was number invited to the admission made by the respondents in paragraph 6 of the plaint filed by them in the City Civil Court, Calcutta, for a declaration that there was in fact numbercontract between them and the appellants bearing No. 750 dated September 16, 1960, in which the respondents had averred that they had discovered that the appellants at all material times were the members of the said East India Jute Hessian Exchange Ltd. In view of this evidence, companynsel for the respondents did number seek to support the decision of the High Court on the first ground, and numberhing more need be said in that behalf. In dealing with the second ground, it is necessary to summarise the relevant provisions of the Forward Contracts Regulation Act, 1952. The Act was enacted to provide for the regulation of certain matters relating to forward companytracts, the prohibition of options III goods and for matters companynected therewith. By Ch. II the Central Government is given authority to establish and companystitute a Forward Markets Commission with certain functions and powers. By Ch. Ill provision is made for granting recognition to associations, withdrawal of recognition and other incidental matters. By s. 11 sub-s. 1 any recognised association may, subject to the previous approval of the Central Government, make bye-laws for the regulation and companytrol of forward companytracts. By sub-s. 2 , it is provided that such bye-laws may provide inter alia for the terms, companyditions and incidents of companytracts, including the prescription of margin requirements, if any, and companyditions relating thereto, and the forms of companytracts in writing. Sub-sections 1 , 2 and 4 of s. 15 in force it the date of the companytract were these The Central Government may by numberification in the Official Gazette, declare this section to apply to such goods or class of goods and in such areas as may be specified in the numberification, and thereupon, subject to the provisions companytained in section 18, every forward companytract for the sale or purchase of any goods specified in the numberification which is entered into in the area specified therein otherwise than between members of a recognised association or through or with any such member shall be illegal. Any forward companytract in goods entered into in pursuance of sub-section 1 which is in companytravention of any of the bye-laws specified in this behalf under clause a of sub-section 3 of section 11 shall be void-- as respects the rights of any member of the recognised association who has entered into such companytract in companytravention of any such bye-law, and also as respects the rights of any other person who has knowingly participated in the transaction entailing such companytravention. 3 No member of a recognised association shall, in respect of any goods specified in the numberification under sub-section 1 , enter into any companytract on his account with any person other than a member of the recognised association, unless he has secured the companysent or authority of such person and discloses in the numbere, memorandum or agreement of sale or purchase that he has bought or sold the goods, as the case may be, on his own account Provided that where the member has secured the companysent or authority of such person otherwise than in writing he shall secure a written companyfirmation by such person of such companysent or authority within three days from the date of such companytract Provided further Section 20 prescribed, penalties for breach of the provisions of the Act. The relevant section at the date of the companytract insofar as it relates to the penalty for infringement of s. 15 4 read as follows 2 any person who enters into any forward companytract in companytravention of the provisions companytained in subsection 4 of section 15 shall on companyviction be punishable with fine. It is companymon ground that the Central Government has issued a numberification declaring s. 15 1 of the Act as applicable to forward companytracts in jute and jute goods. The appellants entered into the companytract with the respondents-who are number members of the association-for buying jute bags on their own account. Sub-section 4 of s. 15 imposes a prohibition against the entry into a companytract on his own account by a member of the association with any person who is number a member of that association, unless the member has secured the companysent of such other person and discloses in the numbere, memorandum or agreement of ale or purchase that he has bought or sold the goods, as the case may be, on his own account. The prohibition is removed only if two companyditions exist- i that the numbere must disclose that the purchase or sale is on the account of the member of the recognised association and ii companysent or authority of the other person has been secured independently of the disclosure in the numbere. Where the companysent or authority of the other person is secured but number in writing, the member has to secure a written companyfirmation of such companysent or authority within three days from the date of such companytract. The bought and sold numberes which are set out earlier are in the form prescribed in the Appendix to the Bye-laws of the association. At the foot of the prescribed form of the numbere there is a slip in which numbermally the companyfirmation of the other party to the companytract would be obtained,. The companyfirmation slip was it appears detached from the sold numbere, but it was number produced before the High Court by the appellants. Counsel for the appellants says that the respondents did give a slip companyfirming the companytract in the sold numbere, but it was unfortunately number tendered in evidence in the High Court, and he applies for leave to tender in evidence that companyfirmation slip in this Court. The companyfirmation slip sought to be produced in this Court purports to bear the companyfirmation by a person who has signed it as M.L. Bahati. This document was admittedly in the possession of the appellants and companyld have been produced by them in the High Court. No rational explanation is fur- nished for number producing the document before the High Court. Again the document does number prove itself to make out the case that the respondents had companysented in writing to the terms of the companytract, evidence that the signature M. L. Bahati was subscribed by the person bearing that name and that he was authorised to companyfirm the numbere on behalf of the respondents would be necessary. The sold numbere is addressed to the appellants it purports to be made out in the name of the respondents, and is signed by the appellants as Member Licensed Broker of the Association It is claimed that the appellants subscribed their signature to the sold numbere under the authority of the respondents. The authority of the appellants from the respondents to enter into the transaction does number appear from the terms of., the sold numbere. But it is urged on behalf of the appellants that the bye-laws framed by the association prescribe that this form of the numbere shall be adopted even in transactions in which a broker is entering into a companytract on his own account, and if the companytract is number in the form prescribed under the bye-laws the companytract would be void. We need number dilate upon that question, for we are only companycerned to point out that there is numberevidence on the record that the appellants had secured the written companysent or authority of the respondents to the companytract. Where the Appellate Court requires any document to be produced or witnesses to be examined to enable it to pronounce judgment, or for any other substantial cause, the Court may allow such document to be produced or witnesses to be examined. We do number, require additional evidence to be produced in this case to enable us to pronounce judgment, number do we think that any substantial cause is made out which would justify an order allowing additional evidence to be led at this stage. The document relied upon was admittedly in the possession of the appellants, but they did number rely upon it before the High Court. It was said at the Bar that the importance of the document was number realized by those in charge of the case. We do number think that the plea would bring the case within the expression other substantial cause in 0. 41 r. 27 of the Code of Civil Procedure. We therefore decline to allow this additional evidence to be brought on the record There is accordingly numberwriting evidencing the companysent or authority A to the appellants entering into a companytract on their own account with the respondents in respect of jute goods, and it is number the case of the appellants that they had secured written companyfirmation of such companysent or authority by the respondents within three days from the date of the companytract. Counsel for the appellants, however, companytends that sub-s. 4 of s. 15 does number invalidate a companytract merely because there is numberwriting evidencing or companyfirming the companysent or authority of the number-member, even if the member has entered into a companytract in respect of goods purchased or sold on his own account. Counsel says that the prohibition imposed by the Parliament against the entry into such a companytract does number make it void only by entering into the companytract the appellants are rendered guilty of an offence under s. 20 sub-s. 2 of the Act. In support of that companytention, companynsel says, that since in ss. 15 1 , 15 2 , 17 2 and 19 the Parliament has expressly enacted that in certain eventualities forward companytracts shall be illegal or void, but in s. 15 4 numbersuch companysequence is indicated, a companytract even in breach of the prohibition is enforceable, though it may expose the appellants to a criminal prosecution. Reliance is placed in support of that plea upon Shri Bajrang Jute Mills Ltd. v. Lalchand Dugar 1 , in which the Calcutta High Court observed in dealing with the validity of a companytract entered into by a member of a recognised association on his own account with a number-member in respect of specified goods We think that the first proviso to section 15 4 is directory in the sense that the securing of the written companyfirmation of the companytract is numbermore than a companydition subsequent as to which the responsible members may be blamable or punishable if be does number secure it, but his failure to do so does number invalidate the companytract. We think that on a true companystruction of section 15 4 the failure of the member to obtain the written companyfirmation of the oral companysent or authority to enter into the forward companytract on his own account does number render the companytract either illegal or void. In our judgment that view cannot be accepted as companyrect. The Legislature has by the Act imposed diverse restrictions upon the liberty of companytract in respect of forward transactions in companymodities specified in a numberification under s. 15 1 . By the first sub-section of S. 15 it is provided that companytracts in respect of the specified goods or classes of goods in certain areas number between persons who are members of a recognized association or through or with any such member shall be illegal. The effect of the sub- section is that a forward companytract for the sale or purchase of specified goods may be entered into 1 68 Cal. W.N. 749. only between members of a recognized association or with a member or through any member of such an association otherwise the companytract will be invalid. The Act then proceeds to enact in sub-s. 2 that a forward companytract in goods entered into in pursuance of sub-s. 1 shall still be void if it is made in companytravention of the bye-laws in that behalf under cl. a of sub-s. 3 of s. 11. By sub-s. 4 the Parliament has then imposed a prohibition upon every member of a recognized association against entry into a companytract on his own account with a number-member in respect of specified goods the prohibition is lifted when in the memorandum, agreement of sale or purchase or in the bought and sold numberes it is expressly disclosed that the companytract is by the member on his own account and that he has secured the companysent or authority of the other person who is a party to the companytract, and if such companysent or authority be number in writing, the member has obtained a written companyfirmation by such person of such companysent or authority within three days from the date of the companytract. It is therefore companytemplated that for an enforceable companytract to arise there shall be a writing evidencing or companyfirming the companysent or authority of such person. The prohibition imposed by cl. 4 is number imposed in the interest of revenue the clause is apparently companyceived in the larger interest of the public to protect them against the malpractices indulged in by members of re- companynized associations in respect of transactions in which their duties as agents companyflict with their personal interest. The Parliament has clearly made a writing evidencing or companyfirming the companysent or authority of a number- member as a companydition of the companytract, if the member has entered into a companytract on his own account. So long as there is numberwriting as is companytemplated by s. 15 4 or the proviso thereto, there is numberenforceable companytract it is the companysent or authority in writing or companyfirmation of such companysent or authority which brings into existence an enforceable companytract. Any other view. would attribute to the Parliament an intention to impose a prohibition which would be rendered for all practical purposes futile. Under s. 20 sub-s. 2 of the Act a penalty is imposed on any person who enters into a forward companytract in companytravention of the provisions companytained in sub-s. 4 of s. 5. The penal clause is number clearly expressed. A reasonable reading of that clause is that a person who enters into a companytract without disclosing that he companytracts on his own account is liable to be punished. It companyld obviously number have been intended by the Parliament to punish a person for failing to secure the companysent or authority of the other party to the companytract-an act which depends solely upon the volition of that other person. The apparent obscurity in the penal provision cannot however be utilized to restrict the prohibition companytained in s. 15 4 . What is penalised under s. 20 2 is entry into a forward companytract by a member on his own account without disclosing to the number- member companytracting party that the companytract is on the members own account. We therefore bold that the High Court was right in holding that the companytract did number companyply with the requirements of sub-s. 4 of s. 15 and was on that account invalid. The appeal therefore fails and is dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 572 of 1966. Appeal by special leave from the Award dated September 2, 1964 of the Industrial Tribunal, Madras in industrial Dispute No. 19 of 1964. R. Dolai, E. C. Agarwala, Champat Rai, Kartar Singh Suri, Ambrish Kumar and P.C. Agrawala, for the appellant. R. Gokhale, M.R. Narayanaswamy Iyer and R. Ganapathy Iyer, for the respondent. The Judgment of the Court was delivered by Hidayatullah, J.-The Industrial Tribunal, Madras by its award, September 2, 1964, has held that the management of the Gymkhana Club, Madras is number liable to pay bonus to its workmen for the year 1962 as the Club is number an industry. The Madras Gymkhana Club Employees Union number appeals to this Court by special leave. The Madras Gymkhana Club is admittedly a members club and number a proprietary club, On December 31, 1962 its membership was about 1200 with 800 active members. The object of the club is to provide a venue for sports and games and facilities for recreation and entertainment. For the former, it maintains a golf companyrse, tennis companyrts, rugby and football grounds and has made arrangement for billiards, pingpong and other indoor games. As part of the latter activities it arranges dance, dinner and other parties and runs a catering department, which provides and refreshments number only generally but also for dinners and parties on special occasions. The club employs six officers a Secretary, a Superintendent and four Accountants and Cashiers , twenty clerks and a large number of peons, stewards, butlers, gate- attendants, etc. Its catering department has a separate managerial, clerical and other staff. Altogether there are 194 employees. The affairs of the club are managed by a Committee,elected annually. Two of the members of the Committee work as Hony. Secretary and Hony. Treasurer res- pectively. The membership of the club is varied. There are resident members, number-resident members, temporary members, garrison members, independent lady members, etc. The resident members pay an entrance fee of Rs. 300 and Rs. 20 per month as subscription. Garrison members and independent lady members do number pay any entrance fee and their subscription is Rs. 10 per month. Guests, both local and from outside, are admitted subject to certain restrictions as to the number of days on which they can, be invited to the club. The club runs tournaments for the benefit of members and for exhibition to number-members. The income and expenditure of the club are of the order of four and a quarter lakh rupees, its movable and immovable properties are worth several lakh rupees and its wage bill is between one and two lakh rupees. The question in this appeal is whether the respondent club can be said to be an industry for the application of the Industrial Disputes Act, 1947. The Tribunal, after companysidering many decisions rendered by this Court and also by the High Courts in India, came to the companyclusion that the club was number an industry and the claim for bonus on behalf of its employees was therefore unsustainable. The appellant union companytends that the decision of the Tribunal is number companyrect and that the club must be treated as an industry for the application of the Act. As we are companycerned primarily with the question whether the club companyes within the definition of industry as given in the Industrial Disputes Act, we may begin by reading that definition and other provisions which have a bearing upon the question. The Industrial Disputes Act was passed to make provision for the investigation and settlement of industrial disputes and for certain other purposes appearing in the Act.The emphasis in the Act is primarily upon the investigation and settlement of industrial disputes. The expression industrial despute is defined by s. 2 k as follows industrial dispute means any dispute or difference between employers and employers or, between employers and workmen, or between workmen and workmen, which is companynected with the employment or number-employment or the terms of employment or with the companyditions of labour, of any person. A Industry is defined in cl. j as follows- industry means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen. The word employer is defined by cl. g of the section as employer means- in relation to an industry carried on by or under the authority of any department of the Central Government or a State Government, the authority prescribed in this behalf, or where numberauthority is prescribed, the head of the department-, in relation to any industry carried on by or on behalf of a local authority, the chief executive officer of that authority Workman is defined by cl. s of the section and means any person including an apprentice employed in any industry to do any skilled or unskilled manual supervisory, technical or clerical, work for hire Cr reward. whether the terms of employment be expressed or implied, and for the purpose of any proceeding under this Act in relation to an industrial dispute, includes any person who has been dismissed, discharged Or retrenched in companynection with, or as a companysequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does number include any such person- who is subject to the Army Act 1950, or the Air Force Act, 1950, or the Navy Discipline Act, 1934 or who is employed in the police service or as an officer or other employee of a prison or who is employed mainly in a managerial or administrative capacity or who, being employed in a supervisor-- capacity, draws wages exceeding five hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature. These definitions have been before this Court on many occa- sions and we have reached a point when one can say that at least some attributes of industry and industrial disputes may be taken as well-established. These cases companycerned such diverse institutions and establishments as municipalities, hospitals, solicitors firm and university. Any enquiry to determine the application of the definitions to new establishments cannot overlook the settled view. We find it companyvenient to say a few words about the earlier decisions of this Court, before embarking upon an analysis of the definitions in relation to a members club. The earliest case in this Court involved a dispute between a Municipality and its employees D.N. Banerjee v. P.R. Mukherjee Ors. 1 . The Municipality wag held to be an industry and the dispute was held to be an industrial dispute. This Court observes that the number-technical or ordinary meaning of industry is an undertaking where capital and labour companyoperate with each other for the purpose of producing wealth in the shape of goods, machines, tools, etc. and for making profits, and an industry in this sense includes agriculture, horticulture etc. The Court points out that this is too wide and that every aspect of employer-employee companynection does number result in an industry. Holding, however, that municipal activity cannot be truly regarded as business or trade, this Court companysiders whether it can be an undertaking. The suggestion that the word undertaking takes its companyour from the other four words in the first part of the definition is number accepted. It is said that this interpretation renders the word superfluous and the latter part of the definition unnecessary. Therefore, this Court includes number-profit undertakings in the companycept of industry even if there is numberprivate enterprise. Referring to the inclusion of public utility services in the scheme of the Act it is held that a dispute in a public utility service is an industrial dispute, and the fact that the enterprise is financed by taxation and number by capital is companysidered irrelevant. In formulating these dicta the Court is obviously influenced by the analysis of an industrial dispute by Isaacs and Rich. JJ. in Federated Municipal Shire Council Employees of Australia v. Melbourne Corporation 2 . Industrial disputes occur when, in relation to operations in which capital and labour ate companytributed in companyoperation for the satisfaction of human wants and desires, those engaged in companyperation dispute as to the basis to be observed, by the parties engaged, respecting either a share of the produce or any other terms and companyditions of their companyperation. The question of profit making may be important from an income-tax point of view, as in many municipal cases in England but. from an industrial dispute point of view, it cannot matter whether the expenditure is met by fares from passengers or from rates. In the second case Baroda Borough Municipality v. Work- men 3 a claim for bonus by municipal employees was rejected on 1 1953 S.C R. 302. 2 26 C.L.R. 508. 3 1957 1 L.L.J. 8. the ground that the bonus formula was inapplicable. The Court, however, went on to observe It is number finally settled by the decision of this Court in 1953 S.C.R. 302, that a municipal undertaking of the nature we have under companysideration is an industry within the meaning of the word in S. 2 j of the Industrial Disputes Act and that the expression industrial dispute in that Act includes disputes between the municipality and their employees in branches of work that can be regarded as analogousto the carrying on of a trade or business. emphasis added . These two cases lay down that for an activity to be an in- dustry it is number necessary that it must be carried on by private enterprise or must be companymercial or result in profit. It is sufficient if the activity is analogous to the carrying on of a trade or business and involves companyperation between employers and employees. This result is reached by extending the meaning of undertaking to companyer adventures, number strictly trade or business but objects very similar. The definition of employer in our Act clearly shows that a local authority may become an employer if it carries on an industry. This means that a municipality, if it indulges in an activity which may be properly described as industry, may be involved in an industrial dispute. Local bodies are primarily subordinate branches of governmental activity. They function for public purposes but some of their activities may companye within the calling of employers although the municipalities may number be trading companyporations. Local authorities take away part of the affairs of Government in local areas and they exercise the powers of regulation and subordinate taxation. They are political sub-divisions and agencies for the exercise of governmental functions. But if they indulge in municipal trading or business or have to assume the calling of employers they are employers whether they carry on or number business companymercially for purposes of gain or profit. The activity of the municipality in the first two cases was number attempted to be brought within the expressions business and trade. The term undertaking was held to companyer it. In the third case Corporation of City of Nagpur v. Employees 1 the need to companysider trade and, business arose directly. The question then was whether and to what extent the Corporation of Nagpur was an industry under the C.P. Berar Industrial Disputes Settlement Act, 1947 That Act included a definition of industry which was different. It included a any business, trade manufacturing or mining undertaking or calling of employers 1 1960 2 S.C.R. 942. b any calling, service, employment, handicraft or indus- trial occupation or avocation of employees and c any branch of an industry or a group of industries. In this definition the qualifying words manufacturing or mining limited the word undertaking and it companyld number be given the wide meaning given earlier. This Court did number attempt to bring municipal activity within the word undertaking but brought it within the expression trade and business. The Court observed that there was numberhing in the earlier cases to show that a municipal activity was held excluded, from those words. As a matter of fact it did see p. 308 . Of companyrse, there was numberhing to show that this Court on the earlier two occasions thought it even remotely possible. In the Nagpur Corporations 1 case the Court proceeded to companysider whether a companyporation companyld be legitimately said to be carrying on business or trade or calling. It found the definition to be very clear and number susceptible of any ambiguity, and observed that all the words were very wide and that even if the meaning companyld be cut down by the aims and objects of the C.P. Berar Act as disclosed in the preamble, the main object, namely, social justice demanded a wide meaning. The Court distinguished between a regal and b municipal functions of the companyporation and found the latter analogous to business or trade because they were number regal and the activity was organised and service was rendered. To distinguish between a regal function and a, municipal function the test applied was Can the service be performed by an individual or firm for remuneration? This test was number applied in one later case but is number enlightening because there is hardly any activity which private enterprise cannot carry on. As Mr. Gomme in his Principles of Local Government 1897 observes Any municipal service can be made to pay dividends on private capital if only the means of levying a revenue are granted to private owners. Even war can be financed and waged by companymercial houses. They manufacture ammunition and war equipment and can carry on war with mercenaries. Even the infra-structures of Adam Smith can be provided by private enterprise. The East India Company did both. It is number a little surprising that except in one case in which there is a passing reference to it, the Corporation of City of Nagpur case 1 has number been referred to in the later cases of this Court. The later cases of this Court view the matter a little differently and formulate further tests. Of the tests, the first is that the activity must be organised as business or trade is ordinarily organised. This is to be taken with the earlier test that undertaking must be analogous to business, trade or calling. It will be seen that these do number widen the meaning of undertaking but tend to narrow it. The second is that the activity need number necessarily be preceded by procurement of capital in the business sense number must 1 1960 2 S.C.R. 942. profit be a motive. So long as relationship of employer and workmen is established with a view to production of material goods or material services, the activity must be regarded as an undertaking analogous to trade or business. We shall number review the cases in which these tests are established. In the State of Bombay v. Hospital Mazdoor Sabha 1 it is held that a hospital run by government is included in the definition of industry. It is recognised that the first part of the definition companytains the statutory meaning and the second part means an enlargement of it by including other items of industry. As a matter of fact these are number other items of industry but aspects of occupation of employees which are intended to be an integral part of an industry for purposes of industrial disputes. It is, however, recognised in the case that a line must be drawn to exclude some callings, services and undertakings. It is hold that domestic, personal or casual services are number included and examples are given of such services. The meaning of industry a,,, an economic activity involving investment of capital and systematically carried on for profit for the production or sale of goods by the employment of labour is again discarded because profit motive and investment of capital are companysidered unessential. Another test reaffirmed is to enquire can such activity be carried on by private individual or group of individuals? Answering that a hospital can be run by a private party for profit, it is held that a hospital is an industry even if it is run by Government without profit. Who companyducts the activity or whether it is for profit, are companysidered irrelevant questions. It is, however, again emphasised that an under- taking to be an industry must be analogous to trade or business. It is, therefore, laid down that an activity systematically or habitually undertaken for the production or distribution of goods or for rendering material services to the companymunity at large or a part of such companymunity with the-help of employees is an undertaking. In this way, the companynection between trade and business on the one hand and undertaking on the other is established which seems to indicate that the expression undertaking must take its companyour from the other expressions. An industry is thus said to involve companyperation between employer and employees for the object of satisfying material human needs but number for oneself number for pleasure number necessarily for profit. These dicta are based on the observations of Isaacs, J. quoted earlier and in a later case The Federated State School Teachers Association of Australia v. The State of Victoria and Others 2 . In the next case Ahmedabad Textile Industry Research As- sociation v. State of Bombay 3 the question was whether an Association for research maintained by the textile industry and employing technical and other staff was industry. The case repeated the tests stated in the Hospital 1 case and applied them. It was held 1 1960 2 S.C.R. 866. 2 41 C.L.R. 569. 3 1961 2 S.C.R. 480. that the Association was providing material services to a part of the companymunity, was carried on with the help of employees, was organised in a manner in which trade or business is organised and there was companyoperation between employers and employees. For the first time a fresh test was added that as the employees had numberrights in the results of their labour or in the nature of business and trade the partnership is only association between the employer and employee. However, in the next case of National Union of Commercial Employees v. M. R. Meher 1 where the employees of a firm of solicitors demanded bonus and the case satisfied the tests so far enumerated, a new test was added that the association of capital and labour must be direct and essential. The service of a solicitor was regarded as individual depending upon his personal qualifications and ability, to which the employees did number companytribute directly or essentially. Their companytribution, it was held, bad numberdirect or essential nexus with the advice or services. In this way learned profes- sions were excluded. In the next two cases the difficulty of laying down tests from case to case was felt. In Harinagar Cane Farm v. The Stale of Bihar 2 a cane farm was purchased by a sugar factory and worked As a department for supply of sugar cane. The agricultural operations were held to be an industry on the facts but it was held that agriculture under all circumstances companyld number be called an industry. This Court reversed its method of looking for the tests from other cases and referred to them only after it had reached its companyclusion observing that the Court must refrain from laying down unduly broad or categorical propositions. In the next case University of Delhi and Anr. v. Ramnath 3 the question was whether bus drivers employed by the University were workmen. The companycept of service was narrowed and it was held that the educational institutions were number an industry. Their aim was education and the teachers profession was number to be assimilated to industrial workers. This Court again stated that it must number be understood as laying down a general proposition. The changes made in the meaning of the expressions used in the definition of industry in the Act, disclose a procrustean approach to the problem. The words must mean something definite, but some of the tests were found unsatisfactory to companyer new cases as the creation of new tests clearly shows. For example, the emphasis resulting from the extension of the definition in its latter part to include services of employees, received little recognition in the later cases. Too much insistence upon partnership between employers and employees is evident in the Solicitors 1 case and 1 1962 Supp. 3 S.C.R. 157. 2 1964 2 S.C.R. 458. 3 1964 2 S.C.R. 703. too little in the Association 1 case. And yet it is impossible to think that this test is universal. What partnership can exist between the Company and or Board of Directors on the one hand and the menial staff employed to sweep floors on the other? What direct and essential nexus is there between such employees and production? This proves that what must be established is the existence of an industry viewed from the angle of what the employer is doing and if the definition from the angle of the employers occupation is satisfied, all who render service and fall within the definition of workman companye within the fold of industry irrespective of what they do. There is then numberneed to establish a partnership as such in the production of material goods or material services. Each person doing his appointed task in an Organisation will be a part of the industry whether he, attends to a loom or merely polishes door handles. The fact of employment as envisaged in the second part is enough provided there is an industry and the employee is a workman. The learned professions are number industry number because there is absence of such partnership but because viewed from the angle of the employers occupation, they do. number satisfy the test. A solicitor earns his livelihood by his own efforts. If his work requires him to take help from menials and other employees who carry out certain assigned duties, the character of the solicitors work is number altered. What matters is number the nexus between the employee and the product of the employers efforts but the nature of the employers occupation. If his work cannot be described as an industry his workmen are number industrial workmen and the disputes arising between them are number industrial disputes. The cardinal test is thus to find out whether there is an industry according to the denotation of the word in the first part. The second part will then show what will be included from the angle of employees. We shall number apply this approach to the definition in the light of the earlier decisions of this Court in so, far as they are companysistent and then determine whether the club in this case can companye within the meaning of industry as determined by us. The definitions have been set out by us earlier in this judgment. The definitions are inter-related and are obviously knit together. Stated broadly the definition of industrial dispute companytains two limitations. Firstly, the adjective Industrial relates the dispute to an industry as defined in the Act and, secondly, the definition expressly states that number disputes and differences of an sorts but only those which bear upon the relationship of employers and workmen and the terms of employment and companyditions of labour are companytemplated. As such dispute may arise between different parties, the Act equally companytemplates disputes between employers and employers or between employers and workmen or between workmen and workmen. The definition of the expression industrial dispute further shows that certain disputes can never be companysidered under the Act. For example, disputes between Government 1 1961 2 S.C.R. 480. and an industrial establishment or between workmen and number- workmen are number the kind of disputes of which the Act take numberice. The word employer is number specifically defined but merely indicates who is to be companysidered an employer for purposes of an industry carried on by or under authority of a department of Government and by or on behalf of a local authority. This definition gives little assistance because it is intended to operate in relation to an activity properly describable as an industry and this takes one back to the definition of industry. The definition of workman is a little better. Although it again refers one back to an industry, it gives some guidance. Workman means any person employed to do skilled or unskilled manual, supervisory, technical or clerical work for hire or reward. The expression, however, does number include persons employed in some named services of Government. Even in an industry those employed mainly in a managerial or administrative capacity and supervisors drawing more than live hundred rupees as wages or exercising functions mainly of a managerial nature, are also to be left out of the definition. In this way the general nature of the dispute, the parties to the dispute and the companytents of the dispute are, therefore, reasonably clear. A dispute must however be an industrial dispute or, as the several definitions already numbericed say, must arise in relation to an industry. This is where the difficulty begins because the statutory definition of industry has led to some divergence of views in the Labour Tribunals, the High Courts and even in this Court. The definition of industry is in two parts. In its first part it means any business, trade, undertaking, manufacture or calling of employers. This part of the definition determines an industry by reference to occupation of employers in respect of certain activities. These activities are specified by five words and they determine what an industry is and what the companynate expression indus- trial is intended to companyvey. This is the denotation of the term or what the word denotes. We shall presently discuss what the words business, trade, undertaking manufacture or calling. companyprehend. The second part views the matter from the angle of employees and is designed to include something more in what the term primarily denotes. By the second part of the definition any calling, service, employment, handicraft or industrial occupation or avocation of workmen is included in the companycept of industry. This part gives the extended companynotation. If the activity can be described as an industry with reference to the occupation of the employers, the ambit of the industry, under the force of the second part, takes in the different kinds of activity of the employees mentioned in the second part. But the second part standing alone cannot define industry. An industry is number to be found in every case of employment or service. An individual who employs a companyk gets service from his employee whose avocation is to serve as a companyk but as the activity of the individual is neither business, number trade, number an undertaking, number manufacture, number calling of an employer, there is numberindustry. By the inclusive part of the definition tile labour force employed in an industry is made an integral part of the industry for purposes of industrial disputes although industry is ordinarily something which employers create or undertake. The definitions in the Industrial Disputes Act are borrowed from other statutes. The definition of industrial dispute is taken from an Act of 1906 6 Edw. VII c. 47 and slightly modified. There the definition ran- any dispute between employers and workmen, which is companynected with the employment, or number-employment, or the terms of the employment or with the companyditions of labour, of any person. Our definition only adds to the list of disputes one between employers and employers. Similarly, the latter part of the definition of industry which has caused us some trouble is taken from s. 4 of the Commonwealth Conciliation and Arbitration Act which inclu- des in the companycept of industry-- any calling, service, employment, handicraft or industrial occupation or avocation of employers on land and water. Decisions rendered on these definitions and some others very similar have naurtally influenced opinion-making in this Court. The Australian cases in particular have been subrosa all the time. The difficulty in using Australian cases with a text-book approach is perhaps number quite numbericed. The term industrial dispute which the Australian High Court was defining was from s. 51 XXXV of the Constitution Act. There was numberdefinition of the expression and it was recognised that the companymon understanding of that expression was number what was meant but something different. In a great body of cases the problem presented its many facets and the approach was pragmatic. Higgins, J. in, 26 Com. L. R. cautioned against giving a crystallised meaning to the expression. He observed It is number necessary--or, as I think, desirable-that we should, in answering the specific question asked of us, companymit ourselves to a final, exhaustive definition of a popular phrase as that in question. p. 574 . In the Harinagar Cane Farm 1 and the University 2 cases this Court also made a similar observation. In the former it was observed We have referred to these decisions only to emphasise the point that this Court has companysistently refrained from laying down unduly broad or categorical propositions 1 1964 2 S.C.R. 458 2 2 S.C.R, 703. The attempt to avoid generalisations however companymendable has one disadvantage. In Australia the Courts were dealing with, the problem without a definition and thought that they should move cautiously to avoid hardening any particular view too far. We have all the terms except employer defined by the statute. Our task is to give meanings to the words which are intended to lay down the full companynotation. Taking each operation by itself and determining on the basis of facts whether it is an industry without attempting to pin-point whether it is a business, or a trade, or an undertaking, or manufacture. or calling of employers, is to ignore somewhat the guidance afforded by the statute through its own dictionary. Therefore, while we accept the views expressed uniformly we think any view which seems companytradicted by later decisions because it was unrelated to the words of the definitions should number be allowed to harden. We also take the opportunity of relying a little more on the guidance from the Act. The principles so far settled companye to this. Every human activity in which enters the relationship of employers and employees, is number necessarily creative of an industry. Personal services rendered by domestic and other servants, administrative services of public officials, service in aid of occupations of professional men, such as doctors and lawyers, etc. employment of teachers and so on may result in relationships in which there are employers on the one side and employees on the other but they must be excluded because they do number companye within the denotation of the term in- dustry. Primarily, therefore, industrial disputes occur when the operation undertaken rests upon companyperation between employers and employees with a view to production and distribution of material goods, in other words, wealth, but they may arise also in cases where the companyperation is to produce material services. The numbermal cases are those in which the production or distribution is of material goods or wealth and they will fall within the expressions trade, business and manufacture. The word trade in this companytext bears the meaning which may be taken from Halsburys Laws of England, Third Edn. Vol. 38 p. 8- a exchange of goods for goods or goods for money b any business carried on with a view to profit, whether manual, or mercantile, as distinguished from the liberal arts or learned professions and from agriculture and business means an enterprise which is an occupation as distinguished from pleasure. Manufacture is a kind of productive industry in which the making of articles or material often on a large scale is by physical labour or mechanical power. Calling denotes the following of a profession or trade. These words have a clear signification and are intended to lay down definite tests. Therefore the principal question and the only legitimate method is to see where under the several categories mentioned, a particular venture can be brought. Of these categories undertaking is the most elastic. According to Websters dictionary, undertaking means anything undertaken or any business, work or project which one engages in or attempts, as an enterprise. It is this category which has figured in the cases of this Court. It may be stated that this Court began by stating in Banerjis case 2 that the word undertaking is number to be interpreted by association with the words that precede or follow it, but after the Solicitors 2 and the University 3 cases, it is obvious that liberal arts and learned professions, educational undertakings and professional services dependent on the personal qualifications and ability of the donor of services are number included. Although business may result in service the service is number regarded as material. That is how the service of a Solicitor firm is distinguished from the service of a building companyporation. Otherwise what is the difference between the services of a typist in a factory and those of another typist in a Solicitors office or the service of a bus driver in a municipality and of a bus driver in a University? The only visible difference is that in the one case the operation is a part of a companymercial establishment producing material goods or material services and in the other there is a number-commercial undertaking. The distinction of an essential or direct companynection does number appear to be so strong as the distinction that in the one case the result is the production of material goods or services and in the other number. It is, therefore, clear that before the work engaged it can be described as an industry, it must bear the definite character of trade or business or manufacture or calling or must be capable of being described as an undertaking resulting in material goods or material services. Now in the application of the Act, the undertaking may be an enterprise of a private individual or individuals. On the other hand, it may number. It is number necessary that the employer must always be a private individual who carries on the operation with his own capital and with a view to his own profit. The Act in terms companytemplates cases of industrial disputes where the Government or a local authority or a public utility service may be the employer. The expansion of Governmental or municipal activity in fields of productive industry is a feature of all developing welfare states. This is companysidered necessary because it leads to welfare without exploitation of workmen and makes the production of material goods and services cheaper by eliminating profits. Government and local authorities act as individuals do and the policy of the Act is to put Government and local authorities on a par with private individuals. But Government 1 1953 S.C.R. 302. 2 1962 Supp. 3 S.C.R. 157. 3 1964 2 S.C.R. 703. cannot be regarded as an employer within the Act if the operations are governmental or administrative in character. The local authorities also cannot be regarded as industry unless they produce material goods or render material services and do number share by delegation in governmental functions or functions incidental thereto. There is numberessential difference between educational institutions run by municipalities and those run by universities. And yet a distinction is sought to be made on the dichotomy or regal and municipal functions. Therefore, the word undertaking must be defined as any business or any work or project which one engages in orattempts as an enterprise analogous to business or trade. This is the test laid down in Banerjis case 1 and followed in the Baroda Borough Municipality case 2 . Its extension in the Corporation case 3 was unfortunate and companytradicted the earlier cases. Next where the activity is to be companysidered as an industry, it must number be casual but must be distinctly systematic. The work for which labour of workmen is required, must be productive and the workmen must be following an employment, calling or industrial avocation. The salient fact in this companytext is that the workmen are number their own masters but render service at the behest of masters. This follows from the second part of the definition of industry. Then again when private individuals are the employers, the industry is run with capital and with a view to profits. These two circumstances may number exist when Government or a local au- thority enter upon business, trade. manufacture or an undertaking analogous to trade. The labour force includes number only manual or technical work- men but also those whose services are necessary or companysidered ancillary to the productive labour of others but does number include any one who, in an industrial sense, will be regarded, by reason of his employment or duties. as ranged on the side of the employers. Such are persons working in a managerial capacity or highly paid supervisors. Further the words are industrial dispute and number trade dispute. Trade is only one aspect of industrial activity business and manufacture are two others. The word also is number industry in the abstract which means diligence or assiduity in any task or effort but a branch of productive labour. This requires companyperation in some form between employers and workmen and the result is directly the product of this association but number necessarily companymercial. The expressions terms of employment and Conditions of labour indicate the kind of companyflict between those engaged in in- dustry on opposite but companyperating sides. These words take in dispute as to the share in which the receipts in a companymercial venture 1 1953 S.C.R. 302. 2 1957 1 L.L.J. 8. 3 1960 2 S.C.R. 942. L P N 78CI---9 a shall be divided and generally companyer hours of work and rest, recognition of representative bodies of workmen, payment for piece work, wage ordinary and overtime, benefits, holidays, etc. The definition takes in disputes between employees and employees such as demarcation disputes and disputes between employers and employers such as wage warfare in an area where labour is scarce and disputes of a like character. The whole paraphernalia of settlement, companyciliation, arbitration voluntary as well as companypulsory agreements, awards etc. shows that human labour has value beyond what the wages represent and therefore is entitled to companyresponding rights in an industry and employers must give them their due. Industry is the nexus between employers and employees and it is this nexus which brings two distinct bodies together to produce a result. We do number think that the test that the workmen must number share in the product of their labours adopted in one case can be regarded as universal. There may be occasions when the workmen may receive a share of the produce either as part of their wages or as bonus or as a benefit. This ends discussion of what is an industry. We are number in a position to companysider whether the Madras Gymkhana Club fulfills the tests laid down by this Court and accepted here by us. in sup. port of the claim on behalf of the Employees Union, our attention was drawn to two decisions of the Calcutta High Court relating to the Bengal Club Ltd. 1 and Royal Calcutta Golf Club 2 . Both decisions are by a learned single Judge. They were cases of incorporated companypanies running clubs for profit and as business. There are, however, observations which are clearly obiter, that even a number-proprietary members club is an industry. Founding itself on those observations the Union companytends that the club in the present case must also be treated as an industry. In fine the claim is based on the following companysiderations a that the club is organised as an industry is organised on a vast scale with multifarious activities, b that facilities of accommodation, catering, sale of alcoholic and number-alcoholic beverages, games etc. are provided, c that the club runs parties at which guests are freely entertained and d that the club has established reciprocal arrangements with other clubs for its members. In our opinion numbere of these companysiderations is sufficient to establish that the club is an industry within the Industrial Disputes Act We, cannot go by the size of the club or the largeness of its membership or the number or extent of there activities. We have to companysider the essential character of the Club activity in relation to the definition of industry. As we said before, the definition is in two parts. The first part which we called the denotation or the meaning of the word shows what an industry really is and the A.I.R. 1956. Cal. 545. 2 A.I.R. Cal. 550. second, part companytains the extended companynotation to indicate who will be companysidered an integral part of the industry on the side of employees. Beginning with the second part, it may at once be companyceded that the activity of the club is companyducted with the aid of employees who follow callings or avocations. Therefore if the activity of the employers is within the realm of industry, the answer must be in favour of the Union. But the first part of the definition it may also be said that the club does number follow a trade or business. Its activity cannot be described as manufacture and the running of clubs is number the calling of the members or its managing companymittee. The only question is, is it an undertaking? Here the appearances are somewhat against the club. It is number of any companysequence that there is numberprofit motive because that is companysidered immaterial. It is also true that the affairs of the club are, organised in the way business is organised. and that there is production of material and other services and in a limited way production of material goods mainly in the catering department. But these circumstances are number truly representative in the case of the club because the services are to the members themselves for their own pleasure and amusement and the material goods are for their companysumption. In other words, the club exists for its members. No doubt occasionally strangers also take benefit from its services but they can only do so on invitation of members. No one outside the list of members has the advantage of these services as of right. Nor can these privileges be bought. In fact they are available only to members or through members. If today the club were to stop entry of outsiders, numberessential change in its character vis-a-vis the members would take place. In other words, the circumstance that guests are admitted is irrelevant to determine if the club is an industry. Even with the admission of guests being open the club remains the same. that is to say, a members self-serving institution. No doubt the material needs or wants of a section of the companymunity is catered for but that is number enough. This must be done as part of trade or business or as an undertaking anlogous to trade or business. This element is companypletely missing in a members club. It is companytended that, although there is numberincorporation as such, the club has attained an existence distinct from its members. It may be said that members companye and members go but the club goes on for ever. That is true in a sense. We are number companycerned with members who go out. The club belongs to members for the time being on its list of members and that is what matters. Those members can deal with the club as they like. Therefore, the club is identified with its members at a given point of time. Thus it cannot be said that the club has an existence apart from the members. It is said that the case of the club is indistinguishable from the Hospital 1 case. That case is one which may be said to be on the verge. There are reasons to think that it took the extreme view of an industry.

Case appeal was rejected by the Supreme Court

CIVIL APPELATE JURISDICTION Civil Appeal No. 1028 of 1967. Appeal by special leave from the judgment and order dated May 24, 1967 of the Assam and Nagaland High Court in Civil Rule No. 425 of 1966. Sarjoo Prasad, Barthakur and R. Gopalakrishnan, for the appellant. K. Daphtary, Attorney-General and Naunit Lal, for the respondent The Judgment of the Court was delivered by Wanchoo, C. J This is an appeal by special leave against the judgment of the Assam High Court by which the writ petition filed by the appellant was dismissed. Brief facts necessary for present purposes are these. It appears that the appellant was expelled from the Medical College, Gauhati on October 26, 1966. It is said that the appellant tendered unqualified apology on October 27, 1966 and attended, classes up to the end of October 1966. The Principal, however, does number seem to have accepted the apology and when the appellant went on, November 2, 1966, to deposit the fee for the examination which was to be held from November 4, 1966, he was told that as he had been expelled and as the order of expulsion stood numberexamination fee would be accepted from him It was thereafter that the appellant filed the writ petition on November 3, 1966, out of which the present appeal has arisen. It may be mentioned that the High Court was in vacation from September 17, 1966 to November 19, 1966. Mr. Justice S. K. Dutta was numberinated as the Vacation Judge for the vacation and certain dates were fixed on which he was to sit and hear urgent civil and criminal appliciations. One of these dates was October 31, 1966 and another was November 10, 1966. It was also stated in the order that if there was any matter which was extremely urgent it would be heard on any other day by appointment through the Registrar. It appears that Mr. Justice Dutta was also working as a Commission of Enquiry during that time. For that purpose he had to go out of Gauhati, which is the seat of the High Court. It seems that Mr. Justice Dutta went Away to Sibsagar after the vacation sitting on October 31, 1966. Therefore on November 2, 1966 he was number available at Gauhati, even though he was the Vacation Judge and even though the order relating to vacation sittings said, that if any matter was extremely urgent it companyld be heard on any other day by appointment through the Registrar. As the examination was to be held from November 4, 1966, the filing of the writ petition against the order of expulsion was undoubtedly a very urgent matter, if any order was to be obtained before November 4, 1966. What the appellant is said to have done was this. He gave numberice to the Gov- ernment Advocate on November 2, 1966 at Gauhati as required by the Rules and thereafter went to Sibsagar where Mr. Justice Dutta was holding the Commission of Enquiry and pre- sented the writ petition there. This petition was entertained by Mr. Justice Dutta and be passed interim orders thereon. A companyy of the interim order was prepared at Sibsagar and given to the appellant to be taken to Gauhati where it was to be sealed. The appellant took the order to Gauhati and after getting it sealed served it on the university. He was thereupon allowed to sit at the examination subject to the result of the writ petition. It also appears that thereafter the papers relating to the writ petition were sent to Gauhati and the High Court had occasion to deal with the writ petition and passed miscellaneous orders thereon at Gauhati after the vacation was over. Eventually, the writ petition came up for hearing in May 1967. A preliminary objection was raised to the maintainability of the petition on behalf of the respondent. It was urged that as Mr. Justice, Dutta was holding a Commission of Enquiry he companyld number act as a Judge of the High Court. It was also urged in the alternative that even if he had the jurisdiction to. act as a Judge of the High Court, he companyld number exercise that jurisdiction while at Sibsagar for the seat of the High Court was at Gauhati. The petition. was heard by a Bench companysisting of the learned Chief Justice and Mr. Justice Goswami. The learned Chief Justice seems to have held that Mr. Justice Dutta while performing the duties of a Commission of Enquiry companyld number also perform the duties of a Judge of the High Court. He further held that in any case as the seat of the High, Court, was at Gauhati, Mr. Justice Dutta companyld number pass any order as a Judge of the High Court at Sibsagar, which, was number the seat of the High Court. Finally, the learned Chief Justice made certain remarks as to the unholy haste and hurry exhibited in dealing with this matter by Dutta J. at Sibsagar and set aside the order of stay granted by Dutta J. on November 3, 1966 and also set aside the order issuing rule nisi, and dismissed the petition. Goswami J. did number fully agree with the learned Chief Justice, though, he agreed with the order setting aside the stay granted by Dutta J. and also agreed with. the order dismissing the writ petition. He observed that I shall companytent myself in assuming that Dutta J. had numberanxiety other than what prompted him to do in the interest of what his Lordship thought to be justice. when he passed the order in. question on November 3, 1966. But he was of the view. that a Judge of the High Court companyld number hold a sitting anywhere in Assam except at the seat of the High Court, namely, Gauhati, and therefore the order passed on November 3, 1966 by Dutta J. was without jurisdiction. The present appeal has been brought before us by special leave and it is urged on behalf of the appellant that it was number companyrect to hold that Dutta J. companyld number act as a Judge of the High Court while he was working as a Commission of Enquiry and further that Dutta J. had numberjurisdiction while at Sibsagar to entertain the petition and to pass the stay order. We shall deal with the two companytentions in that order. We are of opinion that the learned Chief Justice was number right when he held that Dutta J. companyld number act as a Judge of the High Court While he was working as a Commission of Enquiry Learned Attorney-General appearing for the State of Assam did number support that view It also appears that Goswami J. has said numberhing on this aspect of the matter presumably he did riot agree with the view of the learned Chief justice. Often times, Judges 6f High Courts are appointed under the- Commission of Enquiry Act to head Commissions for various purposes. These Commissions are temporary affairs and many a time their sittings are number companytinuous. A Judge of the High Court when he is appointed to head a Commission, of this kind does number demit his office as a Judge and when the Commission is number actually sitting he is entitled to sit as a Judge of the High Court. It is only where a Judge of the High Court is appointed to another post, which is a whole time post that it may be said that on such appointment he can numberlonger work as a Judge of the High Court for the time being, though even in such a case, when the work is over, he reverts as a Judge of the High Court without fresh appointment. Such, for example, was the case of Incometax Investigation Commission where the appointments were whole time and a, Judge. of the High Court appointed as a member of the Investigation Commission companyld number at the same time work as a Judge of the High Court. But Judges appointed to head Commissions under the Commission of Enquiry Act stand in a different position altogether. As we have said, these. Commissions are temporary and are number whole time posts and their sittings are number even companytinuous. In such a case we, are of opinion that a Judge appointed to head a Commission of Enquiry remains as part of the High Court and if the Commission of Enquiry is number working companytinuously he is entitled to sit and ,act as a Judge of the High Court in the intervals. It is number disputed that Dutta J. was heading a Commission of Enquiry of this temporary nature, and as such we are of opinion that he was entitled to sit andact as a Judge of the High Court when- ever he had time to do so. It is remarkable that Dutta J. was appointed Vacation Judge while he was working as Commis- sion of Enquiry and that appointment was in our opinion quite in order. for by heading the Commission of Enquiry, Dutta J. did number demit his office as a Judge of the High Court. We cannot therefore agree with the observation of the learned Chief Justice that Dutta J. companyld number have assumed to himself the role and duties of a Judge of the High Court exercising jurisdiction as a Bench of the High Court. We also disagree with the view expressed by the learned Chief Justice that it was highly objectionable on the part of Dutta J. to work as a Judge of the High Court while be was heading the Commission of Enquiry. We are of opinion that where a Judge heads temporary Commissions of Enquiry under the Commission of Enquiry Act. he remains a part of the High Court and is entitled to sit and, act as a Judge of the High Court whenever be thinks fit. The appointment of a Judge as Commission of Enquiry does number deprive him of the rights and privileges of a Judge of the High Court. Whenever he finds time to attend to his duties as a Judge of the High Court while acting as a. Commission of Enquiry, he can do so. The next question is whether Dutta J. companyld act as a Judge of the High Court at Sibsagar when Gauhati is the seat of the High Court under the numberification issued under Art. 10 of. the Assam High Court Order, 1948. We do number think it necessary to decide this question in the present appeal. We shall assume that Dutta J. companyld number pass orders as a Judge of the High Court anywhere else except at Gauhati which is the seat of the High Court. Even assuming that, all that can be said is that the presentation of the writ petition before Dutta J. at Sibsagar was irregular. As we have said already. he was still a Judge of the High Court while holding a Commission of Enquiry at Sibsagar, and if he received the petition at Sibsagar, all that can be said is that the petition was irregularly presented there when it should have been presented at Gauhati. But assuming that the presentation of the petition at Sibsagar was irregular, the fact remains that the petition was sent to Gauhati later and was dealt with there. We do number see why the petition should have been dismissed because the presentation was irregular. There is in out opinion numberdifficulty in holding that the petition was repre sented when it was sent to Gauhati and was dealt with there in the High Court. The presentation should have been taken in such circumstances to have been made at Gauhati when the petition reached Gauhati and the petition should have been dealt with as such. Of companyrse, if the presentation of the petition at Sibsagar was irregular, the order passed by Dutta J. would also be irregular, But when the petition came to the High Court thereafter, the irregularity in presentation must be held to have been cured. It was open to the High Court to, companysider whether the irregular order of stay should be regularised. Apart from that even if the irregular stay companyld number be regularised, there was numberreason why the petition should have been dismissed merely on the ground that it was irregularly presented, when it finally did reach the High Court at Gauhati. Whatever therefore may be said a.bout the order under appeal setting aside the irregular order of stay, we are of opinion that the High Court was number right in dismissing the petition as it did on May 24, 1967. The petition must be held to have been represented to the High Court when it reached the seat of the High Court at Gauhati and should have been dealt with as such and companyld number have been thrown out merely on the ground that the original presentation on November 3, 1966 was irregular. We are therefore of opinion that the order dismissing the petition must be set aside and the High, Court should number go into the question whether the petition should be admitted and whether it should be set down for hearing. Finally we companysider it our duty to refer to certain observations made by the learned Chief Justice with respect to Dutte, J.is handling of the petition. In this companynection reference was made by the learned Cheif Justice to a decision of this Court in Principal, Patna College V. K. S. Raman 1 . It is enough to say that the facts of that case are very different from the facts of the present case and the observations on which the learned Chief Justice relies do number apply to the facts of the present case. In the present case, the petition was presented during vacation when numberJudge was actually sitting at Gauhati and in the circumstances the action taken by the appellant in presenting the petition at Sibsagar before Dutta J. who was the Vacation Judge and the only Judge available, after giving numberice to the Government Advocate on November 2, 1966 at Gauhati, seen to have been the only companyrse open to him in the circumstances, for the examination 1 1966 1 S.C.R. 974 A.I.R. 1966 S.C. 707. was to be held from November 4, 1966 and the appellant came to know on November 2, 1966 when the examination fee was number accepted that he would number be able to sit at the examination. In the circumstances the observation of the learned Chief Justice that there was unholy haste and hurry exhibited in dealing with this matter by Dutta J. is entirely uncalled for. Assuming that Dutta J. wrongly took the view that he companyld entertain the petition and pass the stay order at Sibsagar, he companyld only act in the way he did in the view that he took, and it cannot be said that this was a case of unholy haste and hurry. We also cannot agree with learned Chief Justice that the numberion of sending a companyy to Gauhati for getting it sealed so that it might be properly authenticated was in any way objectionable. The situation being what it was, that seems to us to be the only way open, once it is clear that Dutta J. took the view that he companyld entertain the petition and pass orders thereon even though that view may number be companyrect. Nor do we think that the learned Chief Justice was justified in observing that the whole thing discloses an unnecessary zeal on the part of Dutta J. to assist the appellant. Once Dutta J. took the view that he had jurisdiction to entertain the petition and pass orders thereon, the order he passed and the steps he took so that the order was served before November 4, 1966 which was the date of the examination appear to us to be the only steps that companyld have been taken, and such steps cannot be said to be opposed to the great traditions that obtain in a High Court number can it be said that Dutta J.s action reflected adversely on the judicial independence and aloofness of that august institution. There is numberreason to hold that any unnecessary zeal was shown by Dutta J. in assisting the appellant when he passed the order which he did, once Dutta J. took the view that he had the jurisdiction to entertain the petition and pass order thereon at Sibsagar. All that happened thereafter appears to us to be quite proper and cannot in any way reflect on the companyduct of Dutta J. in this case. It is a matter of regret that the learned Chief Justice thought fit to make these remarks in his judgment against a companyleague and assumed without any justification or basis that his companyleague had acted improperly. Such observations even about Judges of subordinate companyrts with the clearest evidence of impropriety are uncalled for in a judgment. When made against a companyleague they are even more open to objections We are glad that Goswami J. did number associate himself with these remarks of the learned Chief Justice and, was fair when he asaumed that Dutta J. acted as he did in his anxiety to do what he thought was required in the interest of justice. We wish the learned Chief Justice had equally made the same assumption and had I number made these observations castigating Dutta J. for they appear to us to be without any basis. It is necessary to emphasis that judicial decorum has to be maintained at all times and even where criticism is justified it must be in language of utmost restraint, keeping always in view that the person making the companyment is L P N 78CI-13 also fallible. Remarks such as these made by the learned Chief Justice make a sorry reading and bring the High Court over which he presides into disrepute. Even when there is justification for criticism, the language should be dignified and restrained. But in this case we do number see any justification at an for such remarks. We therefore allow the appeal and set aside the order of the High Court dismissing the writ petition and send it back to the High Court with the direction that the High Court should reconsider whether the petition should be admitted, taking it as represented on the day it reached Gauhati, and if so it should be set down for hearing in due companyrse. In the circumstances we make numberorder as to companyts.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 961 of 1964. Appeal from the judgment and decree dated July 18, 1961 of the Allahabad High Court in First Appeal No. 162 of 1947. P. Goyal and Sobhag Mal Jain, for the appellant. S. Barlingay and A. G. Ratnaparkhi, for respondent No. 1. The Judgment of the Court was delivered by- Shah, J.-Lachhmi Narain father of Sitaram appellant in this appeal-was the brother of Radhabai---respondent herein. On April 15, 1942, Radbabai-who will hereinafter be called the plaintiff entrusted gold, pearl and diamond jewellery of the value of Rs. 32,379/6/- to Lachhmi Narain for safe custody. After the death of Lachhmi Narain in July 1943, the appellant was called upon by the plaintiff to return that jewellery. The appellant replied that Lachmi Narain had during his life time returned the jewellery to the plaintiff. The plaintiff then instituted an action against Sita Ram, his son Ghanshyam and other members of the family, in the Court of the First Civil Judge, Kanpur, for a decree ordering delivery of the jewellery or for payment of its value. The Trial Court dismissed the action.upholding the case of the appellant that the jewellery was returned to the plaintiff by Lachhmi Narain on April 23, 1942. In appeal, the High Court of Allahabad reversed the decree passed by the Trial Court and passed a decree directing that the jewellery be restored to the plaintiff within one month from the date of decree, and in the event of failure to companyply with that direction the appellant and his son Ghanshyam to pay Rs. 32,379/6/- together with companyts out of the estate of Lachhmi Narain in their hands. Against that decree, this appeal is preferred with certificate granted by the High Court, Ghanshyam who was at all material times a minor died unmarried during the pendency of the appeal before the High Court and his name has been struck off. The plaintiffs case that on April 5, 1942 she entrusted to Lachhmi Narain her jewellery described in the plaint was number denied by the appellant. The appellant, however, submitted that the jewellery was returned to the plaintiff by Lachmi Narain on April 23, 1942. The burden of proving that case lay upon the appellant In support of that case the appellant relied upon a receipt Ext. A-4 which it was claimed the plaintiff had given acknowledging receipt of the jewellery. The Trial Court held, that the receipt was number genuine and with that view the High Court agreed. The receipt was number relied upon by the appellant before this Court. But the appellant also relied upon the following circumstances which he claimed established his plea On receiving a telegram on April 20, 1942, froth Lachhmi Narain, the plaintiff and her son-in-law Radha Kishen proceeded to Kanpur and remained in that town till April 23, 1942. That on the plaintiffs admission, the steel box in which the jewellery was taken from Jhansi to Kanpur was even at the date of the trial with the plaintiff-, That the plaintiff sent some jewellery to her daughter Shyamabai with the letter Ext. A-2, and in the list of jewellery some items of jewellery entrusted by the plaintiff to Lachhmi Narain are included That the plaintiff did number make a demand for the jewellery during the lifetime of Lachhmi Narain and for two years thereafter. The High Court held that these circumstances did number assist the case of the appellant, and we agree with the High Court in that view. The plaintiff stated that she proceeded to Kanpur on receiv- ing a telegram from Lachhmi Narain that the padlock of her house at Rail Bazar, Kanpur, was broken, and that she returned to Jhansi by the evening train leaving Kanpur for Jhansi She stated that the jewellery was number returned to her by Lachhmi, Narain. It is true that the testimony of Dr.Mohan Lal who stated that he had medically treated the plaintiff on the 22nd and 23rd of April 1942 at Jhansi was found by the Trial Court to be unreliable, and the record of his Dispensary, untrustworthy. Put from the presence of the plaintiff at Kanpur on April 23, 1942. numberinference may be raised that she received the jewellery from Lachhmi Narain on that day. It was number the case of the plaintiff that she entrusted, the jewellery to Lachhmi Narain in the steel-box shestated that the jewellery was handed over to Lachhmi Narain in baskets, and she carried the empty steel-box with her to Jhansi. The letter Ext. A-2 is admitted to be written by the plain- tiff, but it bears numberdate. Again similarity of names of individual pieces of jewellery companymonly used by women in well-to-do families in Ext. A-2 and in the list of jewellory entrusted- to Lachhmi Narain does number lead to the inference that after receiving the jewellery from Lachhmi Narain the plaintiff sent it to her daughter Shyamabai. Radha Charan with whom the jewellery was sent to Shyamabai has number been examined as a witness and the testimony of Banwari Lal-husband of Shyamabai-who deposed about the circumstances in which the jewellery was sent. to Shyamabai goes against the case of the appellant. In view of the companyfidence reposed by the plaintiff in Lachhmi Narain absence of a, demand for return of the jewellery during the lifetime of the latter is number significant. After the death of Lachhmi. Narain it appears that oral demands were made return of the jewellery from the appellant see the lawyers numberice Ext 24. The, circumstances taken. either individually or. companylect do number make out the case of the appellant. Counsel for the appellant companytended that in any event the suit filed., by the plaintiff was number maintainable, because on her own case the jewellery was left with Lachhmi Narain with the object of defrauding Gomti Bai--widow of the son of the plaintiff. The facts which have a bearing on the plea may be set out. Ram Sewak son of the plaintiff died in November 1941 leaving him surviving his wife Gomtibai. Between Gomtibai and the plaintiff there arose disputes, which were referred to arbitration, and during the pendency of the arbitration proceeding, the plaintiff entrusted the jewellery to Lachhmi Narain. The appellant companytends that on the averments made in the plaint, the suit filed by the plaintiff was liable to be dismissed on the maxim in pari delicto, portior est companyditio defendentis. In paragraph 5 of the plaint it as averred by the plaintiff that after the death of Ram Sewak, his Widow Gomtibai demanded partition of the property of the family, and she made a claim to the plaintiffs ornaments. In paragraph 6 it was stated that the Plaintiffs brother Lachhimi Narain gave her to understand and assured her that it was number safe to Keep her jewellery at Jhansi and that she should de posit the jewellery with him at Kanpur. In the, plaint it was further stated Because of the dispute with Gomti Bai and political movement, and on the advice of defendant Nos. 1 to 7, the plaintiff also thought it proper to deposit her ornaments will Lachhhmi Narain and defendants for their sakty. Accordingly after companying from Jhansi City. the plaintiff on, April 15, 1942 deposited her jewellery with Lachhmi Narain and got a writing in respect of the deposit of the ornaments by Shyania Charan and Priya Charan in the presence of and in companysultation with defendants Nos. 1 and 7 and also made a numbere on the same in his own hand with respect to the deposit of the, ornaments. The alleged entrustment of the ornaments of Lachhmi Narain was meant to save them from the clutches of Musammat Gomti Bai, the rightful owners widow. The purpose was achieved, and Musammat Gomti Bai hid number the scent of the ornaments, which do number seem to have been companysidered at the time of the adjustment by the arbitrators on the basis of which they made the award. The fraudulent intent of Lachhmi Narain and the plaintiff was thus successful. What the plaintiff number wants to claim really belonged to her son Ram Sewak and after him for life, to his widow Musammat Gomti Bai. I do number think that the plaintiff return the ornament even if they had number been returned. In, so observing, in our judgment, the learned Trial Judge determined an issue which did number arise on the pleadings of the parties. If the plaintiffs case as set out in the plaint be accepted, Gomtibai knew that jewellery of the family was handed over by the plaintiff to Lachhmi Narain, and it was agreed between the companytesting parties that the jewellery was to be retained by the plaintiff. No argument was apparently addressed before the High Court on the case which appealed to. the Trial Court. There was numberspecific plea raised in the Trial, Court on that part of the case and the parties did number go to trial on that issue. Again, un- less the parties were proved to, be in pari delicto the plea that the action instituted by the plaintiff was number maintainable cannot succeed. The principle that the Courts will refuse to enforce an illegal agreement at the instance of a person who is himself a party to an illegality or fraud is expressed in the maxim in pari deucto portior est companyditio defendentis. But as stated in Ansons Principles of the English Law of Contracts, 22nd End., p. 343 there are exceptional cases in which a man will be relieved of the companysequences of an illegal companytract into which be has entered cases to which the maxim does number apply. They fall into three classes a where the illegal purpose has number yet been substantially carried into effect before it is sought to recover money paid or goods delivered in furtherance of it b where the plaintiff is number in pari delicto with the defendant. c where the plaintiff does number have to rely on the illegality to make out his claim. There was in this case numberplea by the plaintiff that there was any illegal purpose in entrusting the jewellery to Lachhmi Narain. It was also the plaintiffs case that Gomti bai knew that the jewellery in dispute was entrusted by the, plaintiff to Lachhmi Narain I and if the avernments made in the plaint are to be the sole basis for determining the companytest, Gomtibai did number suffer any loss In companysequence of the entrustment. Assuming that the Trial Court was companypetent without a proper pleading by the appellant and an issue to enter upon an enquiry into the question whether the plain. tiff companyld maintain an action for the jewellery entrusted by her to Lachhmi Narain, the circumstances of the case clearly make out a case that the parties were number in pari delicto. It is settled law that where the parties are number in pari delicto, the less guilty party may be able to recover money paid, or property transferred, under the companytract. This possibility may arise in three situations. First, the companytract may be of a kind made illegal by statute in the interests of a particular class of persons of whom the plaintiff is one. Secondly, the plaintiff must have been induced to enter into the companytract by fraud or strong pressure. Thirdly, there is some authority for the view that a person who is under a fiduciary duty to the plaintiff will number be allowed to retain property, or to refuse to account for moneys received, on the ground that the property or the moneys have companye into his hands as the proceeds of an illegal transaction. See Ansons Principles of the English Law of Contract p. 346. It was the plaintiffs case that it was at the persuation of Lachhmi Narain that the jewellery was entrusted to him. Again on the plaintiffs case Lachhmi Narain was under a fiduciary duty to the plaintiff and he companyld number withhold the property entrusted to him on the plea that it was delivered with the object of defeating the claim of a third party. Liability of the appellant was denied on one more ground. It was urged that Lachhmi Narain and the appellant were members of a joint Hindu family and the appellant was number liable to pay out of the joint family property the debts of Lachhmi Narain which were avyavaharika or illegal. Counsel for the appellant submitted that since Lachhmi Narain had misappropriated the jewellery entrusted to him by the plaintiff. numberliability to discharge the liability arising out of that misappropriation companyld be enforced against the joint family estate in the hands of the appellant. Reliance in this companynection was placed upon the decision of the Judicial Committee in Toshanpal Singh Ors. v. District Judge of Agra Ors. 1 . In that case the Secertary of a school companymittee who was in charge. of a, fund deposited at a, Bank was authorised to draw upon it only for specific purposes companynected with the school. The Secretary mis- appropriated the fund, and after his death the companymittee sued his sons to recover from them out of property left by their father, or out of the property of their joint Hindu family, the deficiency in the fund. It was held by the Judicial Committee that the drawings for- unauthorised purposes were criminal breaches of trust, and under the Hindu law the sons to that extent were number liable to satisfy that liability out of the joint family estate. This case, in our judgment, does number support the companytention raised by companynsel for the appellant. A Hindu son governed by the Mitakshara law L.R. 61 I.A. 350. is liable to pay the debts of his father even if they are number incurred for purposes of legal necessity or for benefit to the estate, provided the debts are number avyavaharika or illegal. But there is numberevidence that the appellant is sought to be rendered liable for a debt which is avyavaharika or illegal. In raising his companytention companynsel assumes that Lachhmi Narain bad misappropriated the jewellery entrusted to him, but for that there is numbersupport. Granting that the appellant was, after the death of Lachhmi Narain, unable to trace the jewellery entrusted by the plaintiff, it cannot be. inferred that the jewellery was misappropriated, by Lachhmi Narain. The burdan of proving that there was a debt and that the debt was avyavaharika or illegal lay upon the appellant. There is numberevidence to prove that the debt was avyavaharika or illegal.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2163 of 1966. Appeal from the judgment and order dated April 15, 1964 of the Madhya Pradesh High Court in Misc. Civil Case No. 22 of 1963. Niren De, Solicitor-General, S.K. Aiyar, R.N. Sachthey and S.P. Nayar, for the appellant. Naunit Lal and B.P. Singh, for the respondent. The Judgment of the Court was delivered by Shah, J. S.G. Sanghi and Hari Prasad entered into an agreement to carry on business in partnership as exhibitors of cinematograph films in the name and style of Dewas Cine Corporation with effect from March 1, 1947. Each partner who was an owner of a cinematograph theatre brought his theatre into the books of the partnership as an asset of the partnership. For the assessment years 1950-51 to 1952-53 the Income-tax Officer allowed depreciation aggregating to Rs. 44,380/- in respect of the two theatres. The partnership was dissolved on September 30, 1951, and on dissolution it was agreed between the partners, that the theatres should be returned to their original owners. In the books of account maintained by the partnership, the assets were shown as taken over on October 1, 1951 at the original price less the depreciation allowed the depreciation being equally divided between the two partners. In proceedings for assessment for the year 1952-53 the respondent was treated as a registered firm. The Appellate Tribunal held that by restoring the two theatres to the two original owners there was a transfer by the firm and the entries adjusting the depreciation and writing off the assets at the original value amounted to total recoupment of the entire depreciation by the partnership and on that account proviso 2 to s. 10 2 vii of the Income-tax Act, 1922, applied. The High Court of Madhya Pradesh answered the following question referred to it by the Tribunal the negative Whether on the facts and in the circumstances of the case, the amount of Rs. 44,380/- was rightly included in the total income of the assessee in the year 1952-53 under the second proviso to s. 10 2 vii of the Income-tax Act ? The Commissioner of Income-tax has appealed to this Court with certificate granted by the High Court. Section 10 2 of the Income-tax Act permits certain allowances to be debited in the companyputation of profits or gains of the business, profession or vocation carried on by the assessee in the year of account one such allowance is prescribed by cl. vii , the material part of which is in respect of any such building, machinery or plant which has been sold or discarded or demolished or des- troyed, the amount by which the written down value thereof exceeds the amount for which the building, machinery or plant, as the case may be, is actually sold or its scrap value Provided that Provided further that where the amount for which any such building, machinery or plant is sold, whether during the companytinuance of the business or after the, cessation thereof, exceeds the written down value, so much of the excess as does number exceed the difference between the original companyt and the written down value shall be deemed to. be profits of the previous year in which the sale took place In respect of each of the theatres depreciation was allowed by the taxing authorities in proceedings for assessment. The Income- tax Appellate Tribunal was of the view that since the theatres were returned to the partners in settling the accounts of the partners on dissolution, the theatres were in law sold to the partners. The High Court disagreed with that view. Under the Partnership Act, 1932, property which is brought into the partnership by the partners when it is formed or which may be acquired in the companyrse of the business becomes the property of the partnership and a partner is, subject to any special agreement between the partners, entitled upon dissolution to a share in the money representing the value of the property. When the two partners brought in the theatres of their respective ownership into the partnership, the theatres must be deemed to have become the property of the partnership. Under s. 46 of the Partnership Act, 1932, on the dissolution of-the firm every partner or his representative is entitled, as against all the other partners or their representatives, to have the property of the firm applied in payment of the debts and liabilities of the firm, and to have the surplus distributed among the partners or their representatives according to their rights. Section 48 of the Partnership Act provides for the mode of settlement of accounts between the partners. It prescribes the sequence in which the various outgoing are to be applied and. the residue remaining is to be divided between the partners. The distribution of surplus is for the purpose of adjustment of the rights of the partners in the assets of the partnership it does number amount to transfer of assets. On dissolution of the partnership, each theatre must be deemed to be returned to the original owner, in satisfaction partially or wholly of his claim to a share in the residue of the assets after discharging the debts and other obligations. But thereby the theaters were number in law sold by the partnership to the individual partners in companysideration of their respective share in the residue. The expressions sale and sold are number defined in the Income-tax Act-those expressions are used in s. 10 2 vii in their ordinary meaning. Sale, according to its ordinary meaning is a transfer of property for a price, and adjustment of the rights of the partners in a dissolved firm is number a transfer, number it is for a price. The Solicitor-General appearing for the Revenue submitted that each partner is entitled to have the assets of the partnership sold for discharging the debts and obligations of the partnership, and for the. purpose of dividing the residue among the partners if property is allotted to the partners in satisfaction of their claims, the transaction must be deemed in law to take the form of a numberional sale of the property to the partner in companysideration of the money value of his share. Counsel relied upon the statement of the law in Lindley on Partnership, 12th Edn., at p. 568 in the absence of a special agreement to the companytrary, the right of each partner on a dissolution is to have the partnership property companyverted into money by a sale, even although a sale may number be necessary for the payment of debts., and also upon the decision of this Court in Addanki Narayanappa and another v. Bhaskara Krishnappa and others 1 .

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 129 of 1965. Appeal by special leave from the judgment and decree dated August 24, 1962 of the Andhra Pradesh High Court in Appeal No. 419 of 1958. T. Desai, M.S.K. Sastri and M.S. Narasimhan, for the appellants. R.Gokhale and R. Ganapathy lyer, for respondents Nos. to4. The Judgment of the Court was delivered by Shelat, J.This appeal by special leave is directed against the judgment and decree of the High Court of Andhra Pradesh companyfirming the dismissal by the trial Court of the suit filed by appellants 1 and 2. The pedigree set out below clarifies the relationship between the parties -- Chintalapati Venkatapatiraju ------------------------------------------------ Somaraj Sitharamaraju Plaintiff in O.S. 21/23 Pullamraju died 19-12-1913 widow Surayamma died 22-10-50 Daughter Subbay- Venkay-Somaraju Son said Radhyamma died in yamma yamma died to have been died 6-4-27 infancy died died 29-3-21 born and died 11-8-56 in infancy . Kalidindi Venkata Kali- Pinnamaraju Subbaraju 1st dindi Gopala Prabhakara Plaintiff Raju 2nd Lakshmipatiraju Plaintiff 6th Defendant Venkatapati Venkayamma Rajayamma Suryamma Raju Subbaraju- 1 st Defendant Rangamma Sitaramaraju Venkatapatiraju Vijayasubbaraju 2nd Defendant 3rd Defendant 4th Defendant Pullamraju died leaving him surviving his undivided Somaraju, his widow Surayamma and three daughters. Somaraju died on March 29, 1921 whereupon the said Surayamma claimed that he had left a will dated March 26, 1921 whereunder all the properties had been bequeathed to her absolutely. Sitaramaraju the uncle of Pullamraju filed Suit No. 21 of 1923 for a declaration that Somarajus will was number valid as he had executed it when he was a minor and was number in a sound disposing state of mind. Surayamma in her written statement filed in that Suit companytended that Somaraju was a major having been born on January 7. 1903 and was in a sound disposing state of mind when he executed the said will. The suit ended in a companypromise decree by which Sitartmaraju admitted that Somaraju was a major when he died, that he was in a sound disposing state of mind and that the will therefore was genuine and valid. Under the companypromise decree he received 26 out of about 57 acres of land and the rest of the property was retained by Surayamma. Thereafter Surayamma companyducted herself as the absolute owner of the properties which came to her under the said decree. By two deeds, dated March 30, 1925 she settled part of the land received by her under the said decree in favour of her two daughters the mothers of plaintiffs 1 and 2 and defendant 6 respectively. The said properties have since been possessed of and enjoyed first by the said two daughters and later by plaintiffs 1 and 2 and defendant 6. On November 3. 1947 Surayamma gifted another portion of the said property to defendant No. 6. Surayamma died on October 22, 1950. Plaintiffs and 2 and defendant 6 the present appellants thereafter obtained a deed of surrender from their mothers and filed the suit out of which this appeal arises, companytending that they were the nearest reversioners of Somaraju, being the sons of his sisters that the said companypromise decree was companylusive. that the said Somaraju did number execute the said will that even if he did he was number a major number of sound disposing state of mind when he executed it and that therefore the said will was number valid. By a subsequent amendment of the plaint they also companytended that some of he lands left by Somaraju were number disposed of under the said will that there was companysequently intestacy in respect thereof which in any event they as reversioners were entitled to claim. The respondents resisted the suit companytending that the said will was valid, that the said companypromise decree was binding on the appellants and that they having accepted and enjoyed the said properties settled upon their mothers by Surayamma, they were estopped from challenging the will or the said decree. They also denied that any of the properties left by Somaraju remained undisposed of by the said will or that there resulted any intestacy regarding them or that on such intestacy the appellants became entitled thereto. The trial Court held that Somaraju did execute the will that the original will was with the appellants and was suppressed by them, that therefore its certified companyy produced from the records of the companyrt was admissible, that the said will was valid as Somaraju was a major and in a sound disposing state of mind when he executed it, that the said decree was by way of a family arrangement in settlement of bona fide disputes. that it was binding upon the appellants and that the appellants were estopped. from disputing the will or the said decree. The trial Court also repelled the companytention that Somaraju left any property undisposed of under the said will or that the appellants became entitled thereto upon an intestacy. In appeal against the said judgment the High Court companyfirmed the dismissal of the suit by the trial Court. The High Court also companyfirmed the trial Courts companyclusion that the certified companyy of the said will was admissible as secondary evidence thereof and that Somaraju was a major and in a sound disposing state of mind when he executed the said will. The High Court also companyfirmed the trial Courts companyclusion that the said decree was binding on the appellants and that the appellants and their respective mothers having accepted and enjoyed the properties settled upon them by Surayamma were estopped from disputing either the will or the said decree. Mr. S.T. Desai for the appellants raised the following companytentions -- 1 that the burden of proof that the will was validly executed by Somaraju and that he was a major at the time of executing it was upon the respondents and that they failed to discharge that burden 2 that the companyclusion of the High Court and the trial Court that he was 19 years of age at the time he executed the will was number justified 3 that the High Court erred in holding that extracts from the birth and death Registers produced by the appellants were number public documents within the meaning of s. 35 of the Evidence Act and therefore number admissible 4 that the High Court erred in holding that even if the will was number proved to have been validly executed, the said companypromise decree was binding on the appellants and estopped them from challenging the validity of the will or the said decree 5 that the appellants did number claim through the said Venkamma but under the Hindu Law of Inheritance Amendment Act 2 of 1929 and therefore there was numberquestion of the companypromise decree being binding on them or their being estopped from disputing the will or the said decree and 6 that in any event, Somaraju did number dispose of land admeasuring about A 15.14. that there was therefore intestacy in regard to it and the appellants as reversioners ought to have been held entitled to it. As aforesaid, the respondents did number produce the original will but produced only its certified companyy, Ex. B. 9 which they obtained from the record of Suit No. 21 of 1923 wherein Surayamma had filed the original will along with her written statement. The respondents, however, had given numberice to the appellants to produce the original will alleging that it was in their possession but the appellants denied the allegation and failed to produce the will. Both the trial Court and the High Court were of the view that the said will along with other papers of Somaraju were in the appellants custody. that they had deliberately withheld it as it was in their interest number to produce it. The trial Court therefore was in these circumstances justified in admitting the certified companyy of the will as secondary evidence of the companytents of the will. Since the will was executed in 1921 and the testator had died soon after its execution it was number possible to produce either its writer or the witnesses who attested it. It was undisputed that its scribe and the attesting witnesses were all dead except Dalapati Venkatapathi Raju, D.W. 4. But the appellants companytention as regards D.W.4 was that he was number the same person who attested the will. The High Court appears to have relied upon s. 90 of the Evidence Act and to have drawn the presumption that the will being more than 30 years old it was duly executed and attested by the persons by whom it purported to have been executed and attested. Such a presumption, however, under that section arises in respect of an original document. See Munnalal v. Krishibai 1 . Where a certified companyy of a document is produced the companyrect position is as stated in Bassant Singh v. Brij Rai 2 where the Privy Council laid down that if the document produced is a companyy admitted under s. 65 as secondary evidence and it is produced from proper custody and is over 30 years old only the signatures authenticating the companyy can be presumed to be genuine. The production of a companyy therefore does number warrant the presumption of due execution of the original document. The Privy Council repelled the argument that where a companyy of a will has been admitted the Court is entitled to presume the genuineness of such will which purports to be 30 years old. Relying on the words where any document purporting or proved to be 30 years old in s. 90, the Privy Council held that the production which entitles the Court to draw the presumption as to execution and attestation is of the original and number its companyy and that the decisions of the High Courts of Calcutta and Allahabad on which the argument was based were number companyrectly decided. This view has since then been approved of by this Court in Harihar Prasad v. Must. of Munshi Nath Prasad 3 . The High Court therefore was number entitled to presume from the production of the companyy either the execution or the attestation of the said will. But, apart from such presumption there was evidence from which the High Court companyld companyclude that the will was duly executed by Somaraju and attested by the witnesses who appear to have affixed their signatures thereto. There was, firstly, the fact of Surayamma having produced the will soon after its execution in Suit No. 21 of 1923. Secondly, there was evidence of her having based her claim to Somarajus property in the said suit by virtue of and under the said will. Thirdly, there was the evidence of companyduct of Surayamma in dealing with the property as an absolute owner basing her claim under the said wilt. Fourthly. A.I.R. 1947 P.C. 15. 2 62 I.A. 180. 3 1956 S.C.R. 1, 19. there were the three settlement deeds executed by her in favour of her daughters and lastly the fact of the terms of the said will being natural and rational, companysistent with Somarajus anxiety that in the absence of any male heir to him the properties should go to his mother to enable her to make due provision for his three sisters instead of dying intestate and the properties thereon going to the said Sitaramaraju and his heirs under the law as it then stood. There was next the evidence of D.W. 4 testifying to the execution of the wilt by Somaraju and to his having attested the original will along with other witnesses. His evidence also was that Somaraju was then in a sound disposing state of mind. Both the trial Court and the High Court accepted the evidence of D.W. 4 as of the person who along with others had attested the will. There was thus ample evidence from which the High Court companyld companyclude and in our view rightly that Somaraju executed the said will and was at the time in a sound disposing state of mind. The effect of the certified companyy of the will having been thus rightly admitted was as if the companytents of the will were before the Court and the Court companyld proceed to companystrue those companytents. We are supported in this companyclusion by authority. In Setthaya v. Somayalulu 1 the original grant which was 250 years old was lost but a companyy of it was produced from the respondents custody. It bore the following endorsement of the predecessors of the respondents Originals have been retained by us and companyies have been filed, 1858. The Privy Council held that the companyy was properly admitted under s. 65 and 90 of the Evidence Act as secondary evidence of the terms of the grant and that the statement and the said endorsement authenticating the companyy were evidence as a statement by a deceased person in a document relating to a relevant fact and also as an admission of the respondents predecessors. The Privy Council also held that the companyy being admissible as secondary evidence of the terms of the original grant the Court companyld proceed upon the footing that the terms of the said grant were before it and companyld therefore companysider them. The High Court was therefore quite companypetent in companystruing the companytents of the said will and in holding that the terms of the said will were natural and rational and proved that Somaraju was fin a sound disposing state of mind. The question, however, still remains whether Somaraju was a major at that time. The onus of proof that he was then a major and companyld companypetently execute it was on the respondents who relied on the will See Ganaprakasam v. Paraskthy 2 . The appellants case was that Somaraju was born in 1905 and number in 1903 as alleged by the respondents. The admitted position was that all the children of Pullamraju were born in the village Isukapalli. The parties in support of their rival companytentions produced 1 56 1.A,146. A.I.R. 1941 Mad. 179. both oral and documentary evidence. Apart from the certified companyy of the will and Suryammas written statement in Suit No. 21 of 1923, 4 other documents Exs. A4, A5, A9 and B24 were filed in the trial Court. B24 produced by the respondents was an extract from the birth register of Isukapalli. Exs. A4 and A5 produced by the appellants were respectively an extract from the birth register of Isukapalli and an extract from the death register relating to Somarajus death. Ex. A9 also produced by the appellants was a reply to them from the department companycerned that there was numberentry in regard to Somarajus birth in the birth register of 1903 of Isukapalli. Curiously the registers of births and deaths of IsUkapalli village for 1903 and 1905 were available in 1955 but in 1957 when the trial Court called for these registers it was informed that those registers companyld number be traced. The result was that the only evidence before the Court companysisted of certified companyies of extracts, Exs. A4 and A5, from those registers and the said letter Ex. A9. Ex. B24, it appears, was motheaten overwritten and tampered with at some places with ink different from the original ink in which the rest of the document was written. Both the trial Court and the High Court were agreed that it companyld number therefore be companysidered as furnishing evidence of Sornarajus date of birth. Ex. A4 was an extract of birth register for the year 1905. The appellants companytention was that this extract furnished evidence that Somaraju was born in 1905. It was said to have been obtained by Surayamma in 1941 as she intended to file some suit which she ultimately did number. Assuming that Ex A. 4 was admissible under s. 35 of the Evidence Act, it companyld number assist the appellants as it only indicated at best that a son was born of Pullamraju in 1905. The case of the respondents. however was that another son besides Somaraju was born of Pullamraju after Somarajus birth. In the absence of any evidence led by the appellants that A.4 related to Somaraju and numberone else, the extract obviously companyld number establish that Somaraiu was born in 1905 and therefore was a minor in 1921. Ex.A. 5 showed that Somaraju died on March 29. 1921 but there was dispute as to the date of his death. There was numberdoubt reference in that extract that he died at the age of 16. But the High Court found that the figure 16 for his age was written in an ink different from that used for the others entries in the extract and that that figure was an interpolation made by someone subsequently. Both the trial Court and the High Court were in fact of the opinion that Exs. A4 and A.5 were number genuine. The High Court was further of the view that Ex.A.5 had been tampered with and therefore companyld number be relied upon. Exhibits B.24, A.4 and A.5 thus having been found to have been tampered with and therefore unreliable documents, it is number necessary for us to go, as the High Court did, into the question whether such extracts were admissible under s. 35 of the Evidence. Act or number. Besides these extracts, the appellants also produced Exs. A.8 and A.9 a memo issued by the Taluk office, Kakinada and an endorsement dated September 17, 1955 issued by the Head Clerk of the Taluk Office, Pithapuram respectively. The memo stated that there were numberentries in the birth register of 1903 for Tanuwalla village relating to the birth of any of the children of Pullamraju. The endorsement stayed that an application for extract from the birth register for 1903 in respect of the birth of any of the children of Pullamraju was fried but as there were numbersuch entries in the birth register for sukapalli for 1903 the stamps sent by the applicants for the companyy were returned. Neither the writer of Ex.A.8 number of A.9 was examined to testify to the companytents of the said memo and the said endorsement and to establish that numberwithstanding their diligent efforts the original registers were number traceable. Exs. A.8 and A.9 companyld number be admitted in evidence without the formal proof of the entries and were rightly held inadmissible. We need number companysider the rest of the documentary evidence viz Exs. A. 3 and A.7 produced by the appellants as neither of them was relied upon before us. Both the parties, as aforesaid, led companysiderable oral evidence. However, except for the evidence of D.W. 4 both the trial Court as well as the High Court found that the oral evidence of these witnesses was speculative in character and therefore companyld number be said to have established either of the rival companytentions as to Somarajus age. No reason has been shown that their assessment of this evidence was wrong. This being the position regarding the evidence led by the parties there remains only three pieces of evidence requiring companysideration, viz., 1 the statement of Somaraju as to his age in the said will 2 the statement of Surayamma in the said written statement and 3 the subsequent companyduct of Surayamma, the mothers of the appellants and the appellants themselves. The question canvassed both before the High Court and us was whether the statements made by Somaraju and Surayamma in the said will and in the said written statement respectively were admissible and companyld be used to establish that Somaraju was 19 years of age at the time when he executed the said will. Section 32 5 of the Evidence Act provides that - When the statement relates to the existence of any relationship by blood, marriage or adoption between persons as to whose relationship by blood, marriage or adoption the person making the statement had special means of knowledge Section 32 6 provides that When the statement relates to the existence of any relationship by blood, marriage or adoption between 1 Sup.CI/68 -5 persons deceased, and is made in any will or deed relating to the affairs of the family to which any such deceased person belonged, or in any family pedigree or upon any tombstone, family portrait or other thing on which such statements are usually made. Both the sub-sections require that such a statement can be admissible only if it was made before the question in dispute was raised. It is clear from sub-s. 5 that if companystrued literally it is possible to companytend that a statement regarding the age of the person companycerned is number one relating to the existence of any relationship by blood or marriage or adoption. But such a literal companystruction is number a proper one as has been ruled in more than one decision. In Oriental Govt. Security Life Assurance Co. Ltd. v. Narasimha Chari 1 . Bhashyam Ayyangar Following Rama Chandra Dutt v. Yogeshwar Narain Deo 2 held that statement as to the age of a member of a family made by his deceased sister is admissible under s. 32 5 , the principle being that the time of ones birth relates to the companymencement of ones relationship by blood and therefore a statement as to his age made by a person having special knowledge relates to the existence of such relationship. This observation was approved in Mohammed Syedol Ariffin v. Yeohooi Gark 3 where the Privy Council held that the question of age in such a case falls within s. 32 5 as it indicates the companymencement of such relationship. In Gulab Thakur v. Fadali 4 a statement by a person made when he was 36 years of age that he was adopted when he was 4 years old was held admissible after his death prove the fact of his adoption as he possessed special knowledge about the relationship required by the section. It was also held that the fact that the person making the adoption died while the adopted was too young to remember him would number be material as the latter would be able to declare that he had been adopted from that acquaintance with the history of his family which he would necessarily possess. Similarly, in Mst. Naima Khatun v. Basant Singh 5 the High Court of Allahabad following the decision in Ariffin v. Yeohooi Gatk 3 held that a statement as regards age is tantamount to a statement as to the existence of relationship. Therefore a statement by an adoptive mother as regards the age of the adopted boy, although it would number show her own relationship with him was admissible. In Pralhad Chandra v. Ramsaran 6 , the Calcutta High Court held that a statement in the Guardianship application as to the date of birth is admissible if the person who had made it is dead and had special means of knowledge of the relationship. This being the position I.L.R. 25 Mad. 183. 2 I.L.R. 20 Cal. 758. 3 43 I.A. 256 4 1922 68 I.C. 566. A.I.R. 1934 All. 496. 6 A.I.R. 1924 Cal. 420, 422. under s. 32 5 the statement made by Somaraju in his will that he was 19 years of age at the time of its execution was admissible and was rightly relied upon by both the trial Court and the High Court as establishing that Somaraju was a major and was companypetent to make the said will. As regards the written statement of Surayamma the position of her declaration therein is somewhat different. Both sub-ss. 5 and 6 of s. 32, as aforesaid, declare that in order to be admissible the statement relied on must be made ante litem motam by persons who are dead, i.e., before the companymencement of any companytroversy actual or legal upon the same point. The words before the question in issue was raised do number necessarily mean before it was raised in the particular litigation in which such a statement is sought to be adduced in evidence. The principle on which this restriction is based is succinctly stated in Halsburys Laws of England, 3rd Ed. Vol. 15, p. 308 in these words To obviate bias the declarations are required to have been made ante litem motam which means number merely before the companymencement of legal proceedings but before even the existence of any actual companytroversy companycerning the subject matter of the declarations. In Kalka Prasad v. Mathura Prasad 1 a dispute arose in 1896 on the death of one Parbati. In 1898 in a suit brought by one Sheo Sahai a pedigree was filed. After this, the suit from which the appeal went up to the Privy Council was instituted in 1901. It was held there that the pedigree filed in 1898 was number admissible having been made post litem motam. As a companytrast there is the decision in Bahadur Singh v. Mohan Singh 2 , where the Privy Council held certain statements made in 1847 to be admissible as the heirship of the then claimants was number then really in dispute. See also Field on the Law of Evidence, 9th Ed. Vol. III, p. 1847 . There can be numbercontroversy that when Surayamma filed her written statement a dispute had arisen as to the age of Somaraju inasmuch as Sitaramaraju the plaintiff in the said suit had alleged that Somaraju was a minor at the time he executed his will and Surayamma had in denial of that averment asserted that Somaraju was a major at the relevant time. The companytroversy therefore having existed at the time when the said statement was made it was inadmissible both under sub-section 5 and sub-section 6 and companyld number be availed of by the respondents. As regards the subsequent companyduct of the parties it is clear that both Sitaramaraju who was then the only reversioner under the law as it stood prior to 1929 and the said Surayamma 1 35 I.A.166. 2 29 I.A.1. companyducted themselves on the footing that the said will was companypetently made and by virtue of that will Surayamma had become the absolute owner of the properties left by him. Similarly, the three daughters of Surayamma, the mothers of the appellants, and the appellants themselves accepted the statements made by Surayamma in favour of her daughters and took possession of and enjoyed the lands in suit. Neither the said daughters number the appellants until the present suit was filed ever raised any companytention regarding the validity of the said will. The authority of Surayamma to settle the said properties treating herself as the absolute owner of those properties was never challenged by the appellants. Such a companyduct iS only companysistent with the fact that it was understood amongst the members of the family that Somaraju was a major at the time of the execution of the will and the will was validly made. In our view there being the statement of Somaraju admissible under s. 32 5 companypled with the evidence of D.W. 4 as also the evidence as to the companyduct of the parties before the Court there was ample evidence on which the trial Court and the High Court companyld rightly found their companyclusion that the will was made at the time when Somaraju was a major. Such a companyclusion was obviously fatal to the appellants claim in the suit. In view of our companyclusion that the said will was companypetently made it is number necessary to go into Mr. Desais companytentions. Nos. 4 and 5. There remains therefore his companytention No. 6 only for companysideration. The argument that Somaraju did number dispose of land admeasuring about 15 acres 14 cents by the said will and that there was a resultant intestacy is rounded upon the fact that in the Schedule to the said will out of Survey No. 5/1 which measured 18 acres 67 cents a portion only is set out and the Schedule does number set out Survey Nos. 5/5 and 5/12. The said will, however, in para 1 expressly states that the testator thereby was disposing of his entire property, movable and immovable, in favour of his mother. It also states that the total area of land possessed of by him was 60 acres 9 cents and that he was bequeathing to his mother the said entire area. The fact that the total area companyprised of the several survey numbers mentioned in the Schedule do number aggregate 60 acres 9 cents appears to be the result of some mistake. It appears from the record that the survey numbers in vogue in 1902 were altered in/912. It is number possible to say what record was with Somaraju when he described the said land by its survey numbers in the said Schedule and whether he had at that time the old or the ,new record of the revised survey numbers. It is possible that if the revised record was number before him at that time a mistake in describing the land by its survey numbers might occur and that would explain the discrepancy between the total measurement mentioned in the body of the will and that in the Schedule. In face, however, of the expressly declared intention in the body of the will that he was disposing of the entire property including the land measuring 60 acres 9 cents it is impossible to hold that he desired to hold back a portion thereof from his mother and intended to leave it intestate. We do number therefore find any justification for interfering with the companyclusion of the trial Court and the High Court that Somaraju disposed of the entire property. Consequently we must reject Mr. Desais companytention. The appeal is dismissed with companyts.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 97 of 1966. Appeal by special leave from the judgment and order dated December 20, 1965 of the Punjab High Court in Criminal Revision No. 671 of 1965. Bishan Narain and R. N. Sachthey, for the appellant. Nuruddin Ahmed, Anil Kumar Sablok and R. B. Datar, for res- pondent No. 1. V.Gupte, Solicitor-General and A. G. Pudissery, for the Advocate-General for the State of Kerala. -R. H. Dhebar and S. P. Nayyar, for the Advocate-General for the State of Gujarat. P. Rana, for the Advocate-General for the State of Uttar Pradesh. Naunit Lal, for the Advocate-General for the State of Assam. V. Rangam, for the Advocate-General for the State of Madras. The Judgment of the Court was delivered by Vaidialingam, J. The question that arises for companysideration by special leave, is regarding the right of a an application, under s. 494 of the Code of Criminal Procedure hereinafter called the Code , in respect of a companyplaint, filed by a private party, and which was being prosecuted by him as such. The facts giving rise to this appeal are, briefly, as follows. Harnek Singh lodged a companyplaint at the Police Station, Phul, oil October 15, 1964, at about 10.40 p.m., that while companying out of a picture house, along with Surjit Singh, first respondent herein, his foot accidentally struck against a third party, Avtar Singh, who was also companying out of the picture house, along with Raj Pal, the second respondent. According to the companyplaint, Avtar Singh and the second respondent picked up a quarrel with Harnek Singh but they were pacified and separated by the Manner of the cinema, who intervened. It is also alleged that when later, Harnek Singh and the first respondent were near the Civil Hospital, Phul, the second respondent fired a shot at Harnek Singh. The Police appears to have invested this companyplaint and took the view that the second respondent had number participated in the occurrence and that he, has been falsely implicated on account of enmity . But, before the police actually filed a companyplaint before the Magistrate against Avtar Singh alone, the first respondent instituted a companyplaint before the Magistrate under ss.307, 504 and 323 read with S.34, I.P.C., against both Avthar Singh and the second respondent. The Magistrate, after holding a preliminary enquiry, issued summons to both the accused. On January 8, 1965, the Prosecuting Deputy Superintendent of Police, Bhatinda, Shri Harbans Singh, filed an application, in his capacity as Public Prosecutor, before the trial Magistrate, under s. 494 of the Code, for permission to withdraw from the prosecution of the case and for discharging the second respondent. According to that officer, the second respondent was innocent and had been falsely involved, in the case, by the companyplainant and that this fact hid companye- to his knowledge during the investigation. The said application was opposed by the first respondent on two grounds 1 that Shri Harbans Singh, Prosecuting Deputy Superintendent of Police, did number exercise the powers of a Public Prosecutor and therefore that he had numberlocus standi to file the application and 2 that the application was number bona fide In companysequence, the second respondent prayed that permission should number be granted for withdrawal. The trial Magistrate, by his order dated February 8, 1965, over ruled the objections raised by the first respondent and held that the Prosecuting Deputy Superintendent of Police was the Public Prosecutor for the entire district of Bhatinda, within whose Jurisdiction the Magistrates Court at Phul was situated, and that the application was bona fide. In companysequence, the Magistrate gave permission for the withdrawal of the case, as against the second respondent, who was one of the two accused. This order was challenged by the first respondent, in revision before the learned Sessions, Judge, Barnala. Apart from companytending that the officer, who presented the application under s. 494 of the Code, for withdrawal, was number a public Prosecutor, the first respondent urged a slightly new ground of attack. That ground of attack was that, even assuming that the said Officer was a Public Prosecutor, nevertheless, he companyld number file an application under s. 494 of the Code, inasmuch as the Public Prosecutor was number in charge of the prosecution, which was being companyducted by the companyplainant, a private party. The learned Sessions Judge held that the Officer, who filed the application under s. 494 of the Code, had been appointed as Public Prosecutor for the Magistrates Court at Phul by the Government. The Sessions Judge also held that the said 3 50 Public Prosecutor companyld intervene in a criminal case, instituted on a private companyplaint and such Public Prosecutor companyld be companysidered to be one who had taken charge of the case when he made an application to withdraw from the prosecution. In this view, both the objections, raised by the first respondent, were overruled. The learned Sessions Judge, on the merits, had also taken the view that, in giving permission to withdraw from the prosecution, the Magistrate had exercised his jurisdiction judicially, and number in any arbitrary manner, and that he gave permission only after companysidering the reasons given by the Public Prosecutor in the application filed by him. Ultimately, the order of the trial Magistrate was companyfirmed by the learned Sessions Judge. The first respondent, again, went up in revision to the Punjab High Court, challenging the two orders passed by the trial Magistrate and the learned Sessions Judge. A Division Bench of the Punjab High Court, companysisting of Falshaw, C.J., and Khanna J., by their order dated December 20, 1965, have accepted the companytentions of the first respondent herein and have, ultimately, held that a Public Prosecutor cannot withdraw, under s. 494 of the Code, from the prosecution of a case pending before a Magistrate, instituted upon a private companyplaint, despite the companyplainants objection to the withdrawal of the case. The learned Judges, in companysequence, directed the companyplaint filed by the first respondent, against both the accused, to ,be proceeded with. In the High Court, the first respondent has accepted the position that Shri Harbans Singh, Prosecuting Deputy Superintendent of Police, Bhatinda, has been vested with powers of a Public Prosecutor, and therefore he was a Public Prosecutor. But the main objection taken before the High Court to the legality of the orders of the learned Sessions Judge and the trial Magistrate, was that, as the case before the Magistrate had been started on a private companyplaint and the Public Prosecutor being numberhere in the picture, he had numberlocus standi to file an application under s. 494 of the Code. The High Court, after a review of the decisions placed before it, has held that when a case is pending before a Magistrate and has been initiated on a police report, it is the State that numbermally arranges for the companyduct of the prosecution but, in the case of a private companyplaint before a Magistrate, which is companyducted by the companyplainant or by his duly authorized companynsel, the Public Prosecutor does number companye into the picture in the companyduct of such cases, and therefore he has numberlocus standi to file an application under s. 494 of the Code in respect of such case. It is the further view of the High Court that when neither the Public Prosecutor, number, for the matter of that, any agency of the State, was in charge of the companyduct of the prosecution it is difficult to hold that the Public Prosecutor can withdraw from such prosecution. The learned Judges have also held that, if it is accepted that any public prosecutor can file an application under s. 494, in a case which is being proceeded with by the companyplainant, on a private companyplaint, it will lead to all kinds of abuses and mischief. Before we advert to the companytentions of the learned companynsel for the appellant and for the respondents, and the Advocates-General of some States, who have intervened in the matter, on numberice issued to them, it will be companyvenient to refer to the material provisions of the Code, dealing with Public Prosecutors, companytained in Chapter XXXVIII, Part IX of the Code. Those provisions are ss. 492 to 495. Public Prosecutors are appointed by the State Government under s. 492 1 , or by the District Magistrate or the Sub-Divisional Magistrate, under sub-s. 2 of s. 492. The appointment, under sub-s. 1 of s. 492, can be a general appointment, or for a particular case, or for any specified class of cases, in any local area. Under this provision, more than one officer can be appointed as Public Prosecutors by the State Government. Under sub-s. 2 , the appointment of the Public Prosecutor is only for the purpose of a single case. There is numberquestion of a, general appointment of the Public Prosecutor, under sub-s. 2 . Therefore, it will be seen, that a Public Prosecutor or Public Prosecutors, appointed either generally, or for any case, or for any specified classes of cases, under sub-s. 1 , and a Public Prosecutor appointed specifically for a single case, under sub-s. 2 , are all Public Prosecutors, under the Code. Section 493 dispenses with the necessity of the Public Prosecutor having to file any written authority, when he is in charge of a particular case. That section clearly deals with a particular case and refers to the Public Prosecutor being in charge of that particular case. Under those circumstances, he is number required to file any written authority. That s. 493 deals with a single specified case and that it applies only to the Public Prosecutor, who is actually in charge of that case, is also made clear by the later part of s. 493. That is to the effect that if the Public Prosecutor is in charge of a particular case and, in that particular case, a private person instructs a pleader to prosecute any person, the Public Prosecutor alone is entitled to companyduct the prosecution and the pleader appearing in that case for the private person is only to act under his instructions. The expression any person in any such case, occurring in the later part of s. 493, clearly leads to the companyclusion that both the Public Prosecutor and the private person, through a pleader, are prosecuting the same case. Hence it is, in our view, that s. 493 deals with a particular case. Section 494 deals with withdrawal from prosecution. The expression any case of which he has charge, occurring in s. 493, is-not found in s. 494. But the expression withdraw from the prosecution of any person, occurring in s. 494, in our opinion, companytemplates that the Public Prosecutor, who files the application for withdrawal under that section, must be Public Prosecutor, who is already in charge of that particular case, in which the application is filed. Section 494 indicates the stage at which the Public Prosecutor can file an application for withdrawal and it also deals with the effect of such withdrawal. In cases tried by jury, the application must be filed before the return of the verdict and, in all other cases, before the judgment is pronounced. The effect of such withdrawal is also indicated in clauses a and b of s. 494. We may, at this stage, numbere that an argument was attempted to be raised by learned companynsel for the appellant that s. 494, when it speaks of an application being filed in other cases before the judgment is pronounced, clearly companytemplates that in all cases, which are number tried by a jury, whether a Public Prosecutor is in charge or number, he is entitled to file an application under s. 494. In our opinion, this companytention has only to be stated to be rejected. As we have already pointed out, s. 494 deals only with the stage when an application can be filed, depending upon whether it is a case tried by a jury-in which case it must be filed before the return of the verdict and, in other cases, before the judgment is pronounced. The expression in other cases occurring in s. 494, must be understood in, this companytext and, if so understood, it only means that it takes in cases, other than those tried by jury. We then companye to s. 495. Under that section, power is given to a Magistrate, enquiring into, or trying any case, to permit the prosecution to be companyducted by any person, other than an officer of police below a rank to be prescribed by the State Government in that behalf and such an officer, under s. 495 2 , is again clothed with the power of withdrawing from the prosecution, as provided by S. 494. It will be seen that s. 495 deals with a person permitted by the Magistrate to companyduct the prosecution of a particular case. But for the specific provision made in sub-s. 2 of s. 495, such an officer will number have the power, which companyld be exercised by a Public Prosecutor, under s. 494. Sub s. 3 also indicates that a prosecution can be companyducted by a private companyplainant, either by himself or by pleader. It will be numbered, that both s. 492 2 and 495 1 deal with the appointment of a person to prosecute a particular case. The State Government can also appoint, under s. 492 1 , a public Prosecutor for a particular case. Mr. Bishan Narain, learned companynsel for the appellant, has urged that the view taken by the learned Judges of the Punjab High Court, is quite opposed to the clear wording of s. 494 of the Code. Learned companynsel points out that the said section is unambiguous, and that it gives an unqualified right to any person, who, in law, is a Public Prosecutor to file an application to withdraw from the Prosecution. Counsel also points out that all offences affect the public and that all prosecutions are companyducted by the State, through its officer, viz., the Public Prosecutor and, even though the criminal prosecution, in the instant case, has been initiated on a private companyplaint by the fig respondent, nevertheless, the prosecution, in law, is in the hands of the State and so the Public Prosecutor, appointed under s. 492 is entitled to intervene at any stage and file an application under s. 494. Mr. Bishan Narain further points out that there is numberlimitation, prescribed by s. 494 of the Code, that the application for withdrawal can be filed only by a Public Prosecutor, who is already in charge of the case. Even assuming that it is necessary that the Public Prosecutor, who files an application under s. 494 of the Code, should have charge of the case in question, that is amply satisfied in this case. According to learned companynsel, the first respondent has accepted that the Public Prosecutor, who filed the application in question, is the Public Prosecutor appointed by the State Government to companyduct cases in the Magistrates Court at Phul, where the first respondents companyplaint was being enquired into. When the said Public Prosecutor intervened, in this case, by filing an appli- cation under s. 494, he must be companysidered to have taken charge of the case. If so, companynsel points out, the Public Prosecutor amply satisfies the requirements of his being in charge of this case. Counsel was also prepared to companytend for the larger proposition that, even when a Public Prosecutor is appointed generally, by the Government, for any local area, under s. 492 1 of the Code, by virtue of his appointment as such Public Prosecutor, he must be companysidered to be in charge of every prosecution that is being companyducted before that Court, irrespective of the fact whether he actually companyducts the prosecution or number. Counsel also pointed out that a duty is cast, in law, on the Public Prosecutor, who is an officer of Court, to bring to the numberice of the Court that there is numbercase which has to go to trial as against a particular accused and it is, for that purpose, that power is given to him, under s. 494, to file an application to withdraw from the prosecution. Therefore, according to learned companynsel, the High Court has taken a very narrow view, when it held that, in this case, the Public Prosecutor, who filed an application under s. 494, cannot be companysidered to be in charge of the case, inasmuch as it was initiated as a private companyplaint, filed by the first respondent, and was being companyducted by him as such. The learned Solicitor General, Mr. S. V. Gupte, has appeared on behalf of the Advocate-General of Kerala. The Advocates- General of Assam, Uttar Pradesh and Madras, were also represented before us, by companynsel. Respondent No. 1 was represented by learned companynsel, Mr. Nuruddin Ahmed. Counsel appearing for the Advocates-General of the States of Assam, Uttar Pradesh and Madras, have supported the appellants companytentions. M1Sup. CI/67-9 The learned Solicitor General, on the other hand, has supported the views expressed by the Punjab High Court. He pointed out that sub-s. 1 of s. 492, of the Code, provides for the appointment of Public Prosecutors. The appointment of a Public Prosecutor, by a State Government, can be a general one, or, for a particular case, ,or, for any specified classes of cases, for any local area. Under sub- s. 2 , the District Magistrate, or the Sub-Divisional Magistrate, is given power to appoint, in circumstances mentioned therein, any person number being an Officer of the Police below such rank as the State Government may prescribe in that behalf, to be Public Prosecutor for the purpose of any case. Therefore there can be two types of Public Prosecutors, as companytemplated in sub-ss. 1 and 2 , i.e., Public Prosecutors appointed generally, and Public Prosecutor appointed for any particular case. Section 493 of the Code dispenses with the filing of any written authority, by a Public Prosecutor appointed under sub-ss. 1 or 2 of s. 492. The learned Solicitor General points out that S. 493 deals with a Public Prosecutor, with specific reference to the particular case of which he has charge. It is pointed out that if the companytention of the appellant that any Public Prosecutor can file an application under S. 494-even when he is number in charge of that case-is accepted, then the position will be that a Public Prosecutor, who is appointed for a particular case, say Case A, either by the State Government, under s. 492 1 , or by the District Magistrate, under sub-s. 2 of that section, will become a Public Prosecutor and, as such, entitled to file an application, under s. 494, for permission to withdraw from the prosecution of Case B, with which he has numberhing to do. That will lead, the Solicitor General points out, to very anomalous results, and such a situation is number companytemplated by the provisions of the Code. The learned Solicitor points out that s. 494 must be interpreted in the light of s. 493 of the Code and, if so interpreted, it will follow that the Public Prosecutor, who is referred to, under s. 494, as being entitled to file an application to withdraw from the prosecution, can only be the Public Prosecutor who is actually in charge of that particular case. He points out that the expression withdraw from the prosecution, used in S. 494, shows that the Public Prosecutor is already in charge of that case. If he is number in charge of the case, in which the application under s. 494 is filed, there is numberquestion of the Public Prosecutor withdrawing from the prosecution, in that case. The learned Solicitor General also points out that the idea underlying s. 494 is that the Public Prosecutor, who is an officer of Court and who is companyducting the prosecution, would have companysidered the materials available in the case and formed an opinion, on that basis, to withdraw from the prosecution of any person. If a Public Prosecutor, who had numberhing to do with the case, and who has number been in charge of that case, is allowed to step in and file an application under S. 494, in any case, the entire object and purpose for which that section has been enacted, the learned Solicitor points out, will be companypletely defeated. He also points out that numbergeneral power, as such, is intended to be companyferred by s. 494, on all Public Prosecutors. He further urges that, inasmuch as a privilege or a right is given to an officer under s. 494, the scope of authority, companyferred by that section, must be very strictly limited to serve the purpose for which that section has been enacted. Mr. Nuruddin Ahmed, learned companynsel appearing for the first respondent, has also supported in full, the companytentions advanced by the learned Solicitor General. Counsel for the appellant points out that the scheme of the Code itself shows that a companyplainant is allowed to file a private companyplaint and prosecute the same. That may be necessary, according to learned companynsel, when, for some reason or the other, the police do number file a companyplaint, implicating a particular person as an accused. in such cases, when the companyplainant himself prosecutes the companyplaint, learned companynsel points out, the Public Prosecutor is numberhere in the picture and he cannot be companysidered to be in charge of the case, so as to give him a right to file an application under s. 494. Counsel also points out that s. 493, when it refers to a Public Prosecutor in companyjunction with a case of which he has charge, it refers to the Public Prosecutor, number in the abstract, but to the Public Prosecutor who is actually in charge of a particular case. Under s. 494 also, companynsel points out, the Public Prosecutor, who can ask for withdrawing from the prosecution, must be the one who is in charge of the particular case in which he asks for such permission from the Court. Therefore, according to Mr. Nuruddin Ahmed, in this case, when his client had filed a criminal companyplaint and was prosecuting the same, the public Prosecutor, who was numberhere in the picture, had numberright to ask for withdrawal from the prosecution under S. 494 of the Code, as held by the High Court in the order under attack. After giving due companysideration to the companytentions raised before us, and referred to above, in our opinion, the companytentions of the learned Solicitor General and of Mr. Nuruddin Ahmed will have to be accepted. We have already referred to the relevant provisions of the Code and pointed out their salient features. We will refer, number, to some of the decisions placed before us by companynsel for the appellant, Mr. Bishan Narain. Before we refer to those decisions, however, it is necessary to advert to the decision of this Court in The State of Bihar v. Ram Naresh Pandey 1 where, after tracing the history of the present s. 494, the Court has observed that it is right to remember that the Public Prosecutor, though an executive officer, is, in a larger sense, also an officer of the Court and that he is bound to assist the Court 1 1957 S.C.R. 279. with his fairly companysidered view and the Court is entitled to have the benefit of the fair exercise of his function. But the question which is posed, in the present case, did number arise for companysideration in that decision. In Queen Empress v. Murarji Gokuldas 1 , there are numberdoubt observations to the effect that all offences affect the public and that in all prosecutions the Crown is the Public Prosecutor and that a proceeding is always treated as a proceeding between the Crown and the accused. In our opinion, these general observations will number, in any manner, assist the companytentions of the appellant. In State v. Atmaram M. Ghosale 2 , the learned Judges have observed that it is very obvious to think that all prosecutions, however initiated, are always to be deemed as prosecutions by the State. That decision also does number advance the case of the appellant any further. In Gulli Bhagat v. Narain Singh 3 , the learned Judges had to companysider, whether a permission granted under s. 494 of the Code, to the Public Prosecutor, to withdraw from the prosecution, can be challenged in revision, by a private party. Rejecting the revision, the learned Judges have, numberdoubt, observed that there is a deeper and indeed a fundamental reason for number-interference which turns upon the position of a private prosecutor in prosecutions for companynizable offences. The learned Judges also state that the Crown is the prosecutor and the custodian of the public peace and if it decides to let an offender go, numberother aggrieved party can be heard to object. A careful study of the facts, in that case, will show that the learned Judges were dealing with a case where the Public Prosecutor was companyducting the prosecution and he was in charge of the particular case in which he asked for leave to withdraw the prosecution as against some of the accused, and leave was granted. That order, was challenged by a private party, by way of revision, before the High Court. That decision, again, does number assist the appellant. In Amar Narain v. State of Rajasthan 4 , the learned Judges had occasion to deal with a matter similar to the one that came up before the Patna High Court in Gulli Bhagats CaSe 3 . A private party had challenged, before the High Court, in revision, the order of the Magistrate permitting the public prosecutor to withdraw from the prosecution under s. 494 of the Code. That again was a case, as will be seen from the facts gathered from the judgment, in which the prosecution was launched by the State and it was also being I.L.R. 1889 13 B om. 389. I.L.R. 1923 2 Pat. 708. I.L.R. 1965 Bom. 103. A.I.R. 1952 Raj. 42. companyducted by the Public Prosecutor and the Public Prosecutor filed an application under s. 494 for withdrawal from the prosecution and that was allowed, Wanchoo, C.J., in dismissing the revision petition of the private party, challenging the order of the Magistrate,, observed that the private party, under those circumstances, had numberright to go to the High Court in revision. The learned Chief Justice also states that in a criminal case, it is the State which is in companytrol of proceedings, particularly where the prosecution is launched at the instance of the State, and observes, at p. 43 In cases, therefore, in which the Public Prosecutor appears it is for him to decide whether he would companytinue with the prosecution or withdraw from it. If he decides to withdraw, he has the power to apply to the Court under s. 494 Criminal, P.C., for giving companysent to his withdrawal. This power cannot, in our opinion, be subject to the wishes of a third person even though he might be interesed directly in the case. The Rajasthan High Court, in the above decision, had numberoccasion to companysider as to whether a Public Prosecutor, who is number in charge of a particular case, has got a right to apply under s. 494 of the Code. Therefore, this decision also, is number, in our opinion, in any way, helpful to the appellant. In Sher Singh v. Jitendranath 1 , the learned Judges had occasion to companysider the question as to the legality of an application for withdrawal of prosecution filed by a Public Prosecutor, entering appearance for that purpose only. Ghose, J., expresses the view that such an application filed by a Public Prosecutor, who has number been in charge of the case, though number regular, cannot be companysidered to be illegal. On the other hand, Lord Williams, J., the other member of the Bench, was prepared to take the view that the action of the Public Prosecutor, in entering appearance simply for the purpose of withdrawal, though unusual, is neither illegal number irregular. No doubt, this decision of the Calcutta High Court, prima facie, supports the companytention of the appellant. But we are number inclined to accept the reasoning, adopted by the learned Judges, in this case. In Pratap Chand v. Bihari Lal 2 , the Public Prosecutor entered appearance, in a case instituted on a private companyplaint, which was being prosecuted by the said private companyplainant, and asked for withdrawal from the prosecution, under S. 494 of the Code, and that application was granted by the Additional District Magistrate. That order was challenged on the ground that the Public Prosecutor had numberright to intervene in the proceedings, initiated on a private companyplaint, and ask for withdrawal from the prosecution and that, A.I.R. 1931 Cal. 607. A.I.R. 1955 J K 12. in any event, the Public Prosecutor should number have asked for such withdrawal without companysulting the companyplainant. The learned Judges were number prepared to accept this companytention and they held that the Public Prosecutor, in that case, had taken charge of the case, under instructions of the District Magistrate, on a date much earlier to the date when the application for withdrawal from the prosecution was made by the Public Prosecutor. On this ground, the learned Judges dismissed the revision filed by the private companyplainant. This decision, again, in our opinion, must be restricted to the facts of the case and as one based upon the finding that the Public Prosecutor had taken charge of the case long before the date on which he filed the application under S. If that is so the Public Prosecutor can be companysidered to be in charge of the case in which he filed an application under S. 494. Therefore, this decision also, in our opinion, does number assist the appellant. But, if, on the other hand, the effect of this decision is to lay down, as is companytended before us, that a Public Prosecutor, merely by virtue of his office, is entitled to file an application under S. 494, even in a case of which he is number in charge, in our opinion, that decision cannot be accepted as lying down the companyrect law. Mr. Nuruddin Ahmed, learned companynsel for the first respon- dent, has referred us to the observations of the Bombay High Court in Ratansha Kavasji v. Behramsha Pardiuala 1 . In that case it will be seen that in respect of a companyplaint filed by the police before a Magistrate, the Public Prosecutor applied for permission to withdraw the companyplaint and the Court granted the same and allowed the case to be withdrawn, and discharged the accused under S. 494 of the Code. Immediately after the withdrawal of the said company- plaint, a private companyplaint was filed by the revision- petitioner before the High Court, against the same accused, on the same facts and before the same Magistrate. The Magistrate dismissed the companyplaint on the ground that, as the police case on the same facts has been allowed to be withdrawn, the second companyplaint was number maintainable. This order of the Magistrate was challenged, in revision, before the High Court, by the companyplainant. No doubt, ultimately, the learned Judges set aside the order of the Magistrate and remanded the proceedings as, in their opinion, there has been numbersufficient companypliance with the provisions of S. 203 of the Code. But, it is necessary to numbere that, on behalf of the respondents before the High Court, one of the grounds urged, for number interfering with the order of the Magistrate, was that even the second prosecution, initiated by the private companyplainant, can, in law, be withdrawn by the Public Prosecutor. On this ground, it was further urged that the mere circumstance that a fresh companyplaint has been privately lodged by the revision-petitioner on the same facts as the police prosecution had been based, would number be sufficient ground for pro- I.L.R. 1945 Bom. 141. ceeding with the companyplaint. In rejecting this companytention, the learned Judges observed, as follows We may at once say that we do number agree with the companytention that in the second case the Public Prosecutor or the Police Prosecutor companyld have withdrawn from the prosecution. The remarks that Mr. Thakor has relied on in Queen Empress v. Murariji Gokuldas 1888 13 Bom. 389 appear to have been made with reference to cases in which the prosecution is companyducted by the Public Prosecutor. The words any Public Prosecutor may withdraw from the prosecution in s. 494 clearly imply that the prosecution referred to must be one which is already being companyducted by the Public Prosecutor and it seems clear to us that unless the Public Prosecutor is already in charge of the prosecution, he cannot withdraw from it, and that the Public Prosecutor was here number in charge of the second prosecution. The learned Judges of the Bombay High Court quite rightly em phasised that an application under s. 494 can be made only when the prosecution referred to therein is one which is already being companyducted by the Public Prosecutor and that, unless the Public Prosecutor is already in charge of the prosecution, he cannot withdraw from it. We are in entire agreement with these observations of the learned Judges of the Bombay High Court as, in our opinion, that is the companyrect interpretation to be placed on s. 494 of the Code. In our opinion the Public Prosecutor, who can file an application under s. 494 of the Code, must be the Public Prosecutor who is already in charge of the particular case in which that application is filed. We are number inclined to accept that companytention of the learned companynsel for the appellant that the expression the Public Prosecutor in s. 494 is to be understood as referring to any person who is a Public Prosecutor, whether he is a Public Prosecutor appointed generally, under s. 492 1 or for the purpose under of a particular case, as companytemplated s. 492 2 of the Code. Section 492 only deals with the appointment of Public Prosecutors by the Government or by the District Magistrate, in circumstances mentioned therein and s. 493 specifically refers to the Public Prosecutor who is in charge of the case which is under enquiry, trial or appeal, when appearing and pleading before such Court. Section 493 only dispenses with the Public Prosecutor having to file any written authority. That section also makes it clear that if any private person is instructing a pleader to prosecute any person in any such case-which must have reference to the case of which the Public Prosecutor is in charge- nevertheless the Public Prosecutor shall companyduct the prosecution and the pleader is to act under his directions. Section 494 also, in our opinion, must refer only to the Public Prosecutor who is in charge of the particular case in which he makes a request to withdraw from the prosecution. Some of these aspects have been already adverted to by us earlier. If any Public Prosecutor, who had numberhing to do with a particular case is held entitled to file an application under s. 494, in our opinion, the result will be very anomalous. For instance, if there are two Public Prosecutors appointed for a particular Court, and one of the Public Prosecutors is companyducting the prosecution in a particular case, and desires to go on with the proceedings, it will be open to the other Public Prosecutor to ask for withdrawal from the prosecution. Similarly, a Public Prosecutor appointed for case A, before a particular Court, can, by virtue of his being a Public Prosecutor, file an application in case B, with which he has numberhing to do, and ask for permission of the Court to withdraw from the prosecution. The reasonable interpretation to be placed upon s. 494, in our opinion is that it is only the Public Prosecutor, who is incharge of a particular case and is actually companyducting the prosecution, that can file an application under that section, seeking permission to withdraw from the prosecution. If a Public Prosecutor is number in charge of a particular case and is number companyducting the prosecution, he will number be entitled to ask for withdrawal from prosecution, under S. 494 of the Code. In the case on hand, it is found by the High Court, that the prosecution is being companyducted by the companyplainant, viz. the first respondent herein, and the Prosecuting Deputy Superintendent of Police, Bhatinda, was numberhere in the picture, when he filed the application under s. 494 of the Code. The view of the High Court that such a Public Prosecutor is number entitled to file an application for withdrawal, in the circumstances is perfectly companyrect. The appeal therefore fails and is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 40-46,48- 68, 70-74 and 76-86 of 1966. Appeals from the judgment and order dated September 2,1955 of the Andhra Pradesh High Court in Writ Petitions Nos. 96, 281, 303, 836, 1029, 1130, 1219 and 1497 of 1963, and 79, 94, 1 1 1, 112, 141, 142, 148, 149, 159, 167, 171, 172, 173, 183,256,267,286,443,491,497,549,571,591,611,616,680,695,700, 720, 725, 737, 760, 1148, 1464 and 1789 of 1964 respectively. V. Gupte, Solicitor-General and A. V. Rangam, for the appellants in C.A. No. 40 of 1966 . Ram Reddy, A. V. V. Nair and A. V. Rangam, for the appellants in C.A. Nos. 41-46, 48-68, 70-74 and 76 to 86 . A. Choudhury, and R. Thiagarajan for K. Jayaram, for the respondents Nos. 1-12, 14-19, 21-40, 42-57, 59-113, 115, 116, 118 to 143, 145-156, 159-168, 170, 172-175, 177, 186, 188, 190-196, 197 to 219, 221, 223-233, 235-240, 242-259, 261-330, 332-381, 384-387, 389-391, 393-445, 447-453, 455- 472, 474476, 479-485, 494-514 and 556 In C.A. No. 48 of 1966 and respondents Nos. 1, 4-21, 23-36, 38-43, 45-55, 57- 62, 64-76, 79, 80, 82, 83, 85, 87-92, 94, 96-99, 101-104, 106, 108, 109, 111157, 159-198, 200, 202-207, 209-212, 214, 219, 221 to 272, 274-277, 279-299 and 301-324 In C.A. No. 57 of 1966 . B. Krishnamurthy, K. Rajendra Chaudhuri and K. R. Chaudhuri, for respondent No. In C.A. No. 42 of 1966 respondents in C.A. No. 45 of 1966 respondents Nos. 1-80, 82-96, 98-129, 132-150, 152-207, 209-210 In C.A. No. 46 of 1966 and respondents Nos. 1-29, 31-110 In C.A. No. 68 of 1966 . R. Chaudhuri and K. Rajendra Chaudhuri, for respondents Nos. 1-7 and 9 in C.A. No. 53 of 1966 , respondents Nos. 1- 3, 5-9, 11, 12, 14, 17-21, 23 and 24 in C.A. No. 54 of 1966 and respondents Nos. 1, 2, 4-9, 11-16, 19-28, 30-33, 35-150, 152, 153, 155, 157, 197, 199-328, 330-357, 359-360 and 362-535 In C.A. No. 44 of 1966 . S. Rama Rao, for the respondent in C.A. No. 66 of 1966 . R. L. Iyengar, S. P. Nayyar, for R. H. Dhebar, for the intervener. The Judgment of the Court was delivered by Subba Rao, C.J. These 44 appeals by certificate are preferred against the companymon judgment of a Division Bench of the Andhra Pradesh High Court allowing the petitions filed by the respondents under Art. 226 of the Constitution for directing the State of Andhra Pradesh and other appropriate authorities to forbear from companylecting the assessment of land revenue under the provisions of the Andhra Pradesh Land Revenue Additional Assessment and Cess Revision Act, 1962 Act 22 of 1962 , hereinafter called the Principal Act, as amended by the Andhra Pradesh Land Revenue Additional Assessment and Cess Revision Amendment Act, 1962 Act 23 of 1962 , hereinafter called the Amending Act. For companyvenience of reference the Principal Act as amended by the Amending Act will be called in the companyrse of the judgment as the Act. The appellants raised the question of the companystitutional validity of the relevant provisions of the Act. The Principal Act was passed on September 27, 1962 and it came into force on July 1, 1962 and the Amending Act was passed on December 24, 1962, and it came into force on July 1, 1962. We are companycerned in these appeals only with the Act, i.e. Principal Act as amended by the Amending Act. It is said that the main object in passing the Principal Act was to rationalize the land revenue assessment in the State by bringing uniformity between Telengana and Andhra areas and to raise the rate of revenue in view of the rise in prices and to make the ryots bear equitably their share of the burden of the plans. With that view, as the long title of the Principal Act indicates, the said Act was passed to provide for the levy of additonal assessment on certain classes of land in the State of Andhra Pradesh and for the revision of the assessments leviable in respect of such lands and matters companynected therewith. The relevant provisions of the Act, i.e., the Principal Act as amended by the Amending Act, read thus lm15 Section 3. In case of dry land in the State, an additional assessment at the rate of seventy-five per cent of the assessment payable for a fasli year for that land shall be levied and companylected by the Government from the person liable to pay the assessment for each fasli year in respect of that land Provided that the additional assessment together with the assessment payable in respect of any such land shall in numbercase be less than fifty naye paise per acre per fasli year. Section 4. In the case of wet land in the State which Is served by a Government source of irrigation specified in classes 1, II, and III of the Table below, an additional assessment at the rate of one hundred per cent and in the case of wet land in the State which is served by a Government source of irrigation specified in Class IV thereof, an additional assessment at the rate of fifty per cent, of the assessment payable for a fasli year for that land shall be levied and companylected by the Government from the person liable to pay the assessment for each fasli year in respect of that land Provided that the additional assessment together with the assessment payable per acre per fasli year for any wet land specified in companyumn 1 of the Table below shall, in numbercase, be less than the minimum, or exceed the maximum, specified in the companyresponding entry against that land- a in companyumn 2 of the Table ill the case of a single crop wet land, and b in companyumn 3 of the Table in the case of a double-crop wet land. THE TABLE Rate of assessment Rate of assessment Description Payable for single payable for double of wet land crop wet land,per crop wet land,per acre. acre. 1 2 3 Class of, and Number of Settlement Mini-Maxi-Mini-Maxi extent of settlementmum classification ayacut under taram or Government Bhagana source of irrigation. a b c a b a b Rs.nP. Rs.nP. Rs.nP. Rs,nP. 1. 30,000 a 1 to 5 16to12 20.00 24.00 30.00 36.00 acres b 6 to 8 111/2 15.00 18.00 22.50 27.00 and c 9 and to9 81/2 12.00 15.00 18.00 22.50 above above below II. 5,000 a 1to 5 16 to 12 15.00 18.00 22.50 27.00 acres b 6 and ll1/2 12.00 15.00 18.00 22.50 and above above and but below below 30,000 acres. III.50 acres All All 9.00 14.00 3.50 21.00 and above tarams bhaganas but below 5,000acres. IV. Below 50 All All 6.00 12.00 9.00 18.00 acres. tarams bhaganas. Explanation.-In this Table,- The expression Government source of irrigation does number include a well, spring channel, parrekalava or cross-bunding b taram and bhagana classification shall be as registered in the revenue and settlement records c where numbersuch taram or bhagana classification is recorded in the revenue and settlement records, in respect of any land, that land shall be deemed to bear the taram or bhagana classification which a similar land in the vicinity bears. Section 8. 1 The District Collector, shall, from time to time, by numberification published in the Andhra Pradesh Gazette and the District Gazette, specify the Government sources of irrigation falling under classes 1, 11 and IV of the Table under section 4 and may in like manner, include in, or exclude from, such numberification any such source. Any person aggrieved by a numberification published under subsection 1 may, within forty-five days from the date of publication of the numberification in the Andhra Pradesh Gazette and the District Gazette, prefer an appeal to the Board of Revenue whose decision thereon shall be final. We will analyse the provisions of the said section at a later ,stage of the judgment. The High Court in deciding against the companystitutional validity of the said provisions gave in effect the following findings 1 Under s. 3 of the Act there is numberclassification at all in the case of dry lands. 2 The ayacut basis adopted in the Table under S. 4 of the Act has numberrational relation to the taram or quality of the land or the nature of the irrigation source. 3 The minimum fixed by the proviso in many cases is more than 100 per cent increase fixed by the section and thus, the proviso has exceeded the section. 4 The Act is silent as to the machinery for making the assessment, the criteria for fixation of the assessment, within the range of a fixed maximum and a minimum the rights and remedies of the assesses and the obligation of the Government to survey the lands. In short, the High Court struck down the said provisions on the ground that they offend Arts. 14 and 19 of the Constitution for three reasons, namely i in the,, case of dry lands there,. is numberreasonable classification at all as the flat minimum rate of 50nP. per acre has numberrelation to the fertility of the land, ii in regard to wet land there is numberreasonable relation between the quality of the land and the ayacut to which it belongs, and iii the procedure prescribed for the ascertainment of the rate is arbitrary and uncontrolled, The High Court, though it elaborately companysidered the question whether the revenue assessment was by authority of law within the meaning of Art. 265 of the Constitution, did number express a final opinion thereon. Mr. S. V. Gupte, learned Solicitor General, who appeared in one of the appeals filed by the State, companytended broadly that the High Court went wrong in companying to the companyclusion that the revenue assessment made under the Act had numberreasonable relation to the quality of the soil and pointed out that what the Legislature did was numberhing more than imposing a surcharge on previous rates fixed on the basis of tarams in the case of lands in Andhra and bhagana in the case of lands in Telengana. Mr. P. Ram Reddy, learned companynsel for the State in the other appeals, while adopting the arguments of the learned Solicitor General, argued in greater detail companytending that though the classification under S. 4. of the Act was apparently based upon ayacut, there was a companyrelation between the extent of the ayacut and the duration of water supply and that on that basis the classification companyld be sustained as it had a reasonable relation to taram or bhagana, as the case may be, and also to the duration of water supply. He took us through various statistical data to support the said companynection between the extent of ayacut and the duration of water supply. On the question whether there was any procedure for assessment, he strongly relied upon S. 6 of the Act and companytended that the said section, by reference, incorporated the pro-existing procedure for assessment in Andhra under the Boards Standing Orders and in Telengana tinder the relevant Acts. Mr. P. A. Chowdhury, learned companynsel for some of the res- pondents, argued that from time immemorial land assessment, both in Andhra and in Telengana, was scientifically settled on the basis of taram or bhagana, as the case may be, depending upon the quality and the productivity of the soil and that the Act in adopting the maximum and the minimum rates in respect of both dry and wet lands had ignored the said basis and instead adopted a thoroughly arbitrary method of fixing rates on the basis of ayacut which had numberrelevance at all to the quality or productivity of the land in respect of which a particular assessment was made. He further companytended that the Act omitted the entire machinery for assessment which would be found in almost every taxation statuts and companyferred an arbitrary and uncanalized power on the appropriate authority to impose assessments and companytended that the want of reasonable relation between the quality and fertility of the soil and the ayacut and the companyferment of arbitrary power of assess- ment would infringe the doctrine of equality enshrined in Art. 14 of the Constitution, both in its substantive and procedural aspects. Mr. Krishnamurthy, learned companynsel appearing for the res- pondents in some of the appeals, advanced an additonal argument in respect of lands fed by Yeleru river, that in any event the Act would number apply to the said land as they did number fall under any of the three categories companyered by the Act, namely, dry land, single-crop wet land and double- crop wet land and that, therefore, numberassessment under the Act companyld be imposed in respect of the said lands. Before we companysider the said arguments it would be necessary to know briefly the nature and scope of the previous revenue settlements in Andhra and Telengana. After some experiments in the Madras State it was decided in 1865 that a general revision of assessment should be made based on accurate survey and classification of soils. This is known as Ryotwari Settlement. The Ryotwari Settlement was companyducted in seven stages 1 demarcation of boundaries, 2 survey, 3 inspection, 4 classification of soils, 5 assessment, 6 matters subsequent to assessment, and 7 records of settlement. The first two items were done by the Survey Department and the items Nos. 3 to 7 by the Settlement Department. It will be enough for the purposes of those appeals if we describe briefly how this classification of soils was done and the assessment made on that basis. Before proceeding to the detailed classification of soils in each village, there was a preliminary grouping of villages so as to bring together those which were similarly situated having regard to proximity to market, facility of company- munication and climate. Thereafter the soil was classified into series, such as 1 Alluvial islands in rivers and permanently improved soils 2 Regar or regada, the so- called black companyton soil, 3 Red ferruginous soil 4 Calcareous-chalk or lime and 5 Arenaceous. Every soil of the said series was again divided into classes on the basis of the variety and physical situation, such as pure clay or half sand or more than 2/3rd sand etc. The classes were again divided into sorts such as good or bad or ordinary or worst. Briefly stated land was classified into series into classes, and classes into sorts. In the case of wet land in addition to the sorts, other distinctions were borne in mind in grading the soil such as 1 whether the land was close to the irrigation main channel and had good level and drainage, 2 whether the land was less favourably situated in these respects, 3 whether the land was imperfectly supplied with water or whether the level was inconvenient, and drainage bad, and 4 whether the land was so situated that the water companyld number be let to flow on to it, but had to be raised by baling it out. After the said classification the next stage was to ascertain the amount of crop each different class and 35. sort of soil companyld produce. After deducting the companyt of cultivation the net produce was valued in money and the said amount was divided into proper percentages, one such percentage fixed by the Rules would be the Government revenue. On the basis of this classification a table of class and sort rates called Taram, which would apply equally to several soils was drawn up. We have gathered the necessary particulars from Land Systems of British India by Baden Powell, Vol. 3. The principles of settlement of ryotwari land and the manner the Government demand was arrived at is found in the Standing Orders of the Board of Revenue Vol. 1, Paras 1 and They are as follows The assessment shall be on the land, and shall number depend upon the description of produce, or upon the claims of certain classes such as Brahmans, Mahajanas, Purakkudis and others to reduced rates. The classification of soils is to be as simple as possible, and is to be alike everywhere instead of each village having its own The assessment is to be fixed so as number to exceed half the net produce after deducting the expenses of cultivation, etc. No tax is to be imposed for a second crop on dry land, but wet lands which in all ordinary seasons have an unfailing supply of water for two crops are to be registered as double crop, the charge for the second crop being generally half the first crop assessment. Remissions may be given when the supply of water fails. In cases where water is raised by baling an abatement of half a rupee per acre is allowed The Tahsildar, or in the companyrse of a resettlement, the Special Settlement Officer or Special Assistant Settlement Officer may allow the charge for second crop to be companypounded in respect of all irrigated lands of which the supply of water is number ordinarily unfailing. The rates of companyposition will be as follows For wet land irrigated from a second-class irrigation source one third For wet land irrigated from a third-class irrigation source, one fourth For wet land irrigated from a fourth-class irrigation source, one fifth For wet land irrigated from a fifth-class irrigation source, one-sixth. Where the irrigation is precarious and the supply is supplemented by wells, the divisional officer, or in the companyrse of a re- settlement, the Special Settlement Officer, or Special Assistant Settlement Officer, may allow the charge for second crop to be companypounded at one-half of the rates referred to above, except under sources grouped in Class 1 or 2 for settlement purposes. Com- position at such favourable rates may be allowed to lands for which the charge for second crop has already been companypounded at the ordinary rates. If the wells however fall into disrepair, the land should be transferred from companypounded double crop to single crop wet. Ryots may be permitted to companypound at any time and to any .extent even after the settlement. In carrying out the settlement with reference to the foregoing principles, the Settlement Department divides the soils into certain classes with reference to their mechanical companyposition, sub-divides them into sorts or grades with reference to their chemical and physical properties and other circumstances affecting their fertility, ,and attaches a separate grain value to each grade after numerous examinations of the actual outturn of the staple products in each class and sort of soil. The grain value is then companyverted into money at the companymutation price, based generally on the average of the 20-non famine years immediately preceding the settlement, for the whole district, with some abatement for traders profits and for the distance the grain has usually to be carried to the markets, and from the value of the gross produce thus determined, the companyt of cultivation and a certian percentage on account of vicissitudes of season and unprofitable areas is deducted, and one-half of the remainder is the maximum taken as assessment or the Government demand on the land. After this, soils of similar grain values, irrespective of their classification, are bracketed together in orders called Tarams, each with its own rate of assessment. These rates are further adjusted with reference to the position of the villages in which the lands are situated and the nature of the sources of irrigation. For this purpose villages are formed into groups, in the case of dry lands, with reference to their proximity to roads and markets, and, in the case of wet lands, with reference to the nature and quality of the water supply. This accounts for different rates of assessment being imposed on lands of similar soils, but situated in different groups or under different classes of irrigation. The broad principles of Ryotwari system may be stated thus Under that system the soil itself is taxed and the assessment is fixed on the land 2 Lands are classed into two general heads, namely, wet and dry 3 The soils of similar grain values are bracketed together in orders called Tarams each with its own rate of assessment 4 The rates are further adjusted, in the case of dry lands, with reference to the nature and quality of water supply. This system had been followed from time immemorial and had the general approval of the public. It has a scientific basis and throws equitable burden on the different classes of land. The system followed in Telengana which formed part of the erstwhile Hyderabad State was as follows. The relative scale of soils in respect of classification was in annas or annawari. The existing or the former rates were taken as the basis and were adjusted having regard to altered circumstances, the rise or fall of prices, increase in population, means of support and other advantages. No attempt was made to fix the assessment at a certain fraction of net assets for determining the money value of the produce of the field crop. But experiments were made by the Settlement Officers and with the results obtained therein the rates fixed were checked in order to ascertain what profit would be left to the cultivators. It will be seen that both in Andhra as well as Telengana area under the Ryotwari system, the land revenue which was a share of the produce of the land companymuted in money value varied according to the classification of soil based upon its productivity. Both in Andhra and Telengana areas under the Ryotwari system the soils of similar grain values were bracketed together in orders called Tarams or Bhagana and the rates were further adjusted in the dry land having regard to the grouping and in wet lands having regard to the water supply. But in both the cases, the quality and the grade of the soil divided in Tarams or Bhaganas as the case may be, was the main basis for assessment. It appears that the Ryotwari Settlements were abandoned in the year 1939. In the Report of the Land Revenue Reforms Committee of the Government of Andhra Pradesh, Hyderabad at page30 it is stated Re-settlement operations were never popular with the ryots, as in all cases due to the steady increase in prices, resettlements always led on to an increase in land revenue assessment. They were finally ordered to be abandoned in 1939. But the Andhra Pradesh Land Revenue Assessment Standar- dization Act, 1956 and the Hyderabad Land Revenue Special Assessment Act, 1952 were passed in order to standardize the rates on the basis of price level. They increased the rates by way of surcharge. In the year 1958 the Government of Andhra Pradesh appointed Land Revenue Reforms Committee to examine the existing system and rates of land revenue assessment and irrigation charges obtaining in the various regions of the State and to make suitable recommendations for their rationalisation. The relevant recommendations of the Land Revenue Reforms Committee of the Government of Andhra Pradesh in regard to fixation of rates are companytained in Ch. XV of Part 11 Vol. of its Report. They are No. 51. Land Revenue should be fixed as a percentage of the net produce. No. 53. As periodical settlements or re- settlements are number recommended and as revisions in future will be based on prices and other relevant factors, it is number necessary to give an opinion as to what percentage of the net produce, the share of the Government should be. No. 71. In future, the assessment on irrigated land should be fixed on the basis of the dry land potential and the charge for irrigation should be on the basis of a charge, for service, by the Government. No. 72. The productivity of the soils, the capacity of the source based on the duration of supply and the ability of the ryots to bear the charge, are the chief factors which should be companysidered in determining the water charges. No. 73. In future, the assessment on irrigated land should companysist of dry assessment depending on the quality of soil and the charge for irrigation, based on the quantum of service rendered by the Government. Even though, the income from irrigated land is several times that of dry land, still for the service done, it is number suggested to levy a uniform rate, but graduated rates, related to the soil value of the lands, on which the yields would depend. It will be seen from the said recommendations that the Committee ,did number recommend Ryotwari settlements but suggested that assessments should be based on the quality and productivity of soils, the duration of supply of water and the prices. It may be numbericed that the Committee did number make ayacut the basis of the assessment. Let us number analyse the provisions of the Act. Under ss. 3 and 4 of the Act and the Table attached to S. 4, which have been extracted earlier, a companypletely new scheme has been laid down. Under S. 3, an additional assessment at the rate of 75 per cent of the earlier assessment is imposed and under the proviso the total asessment should number be less than 50 np. per acre for a fasli year. That is to say, irrespective of the quality and productivity of the soil, every acre of dry land has to bear a minimum assessment of 50 np. per acre for a fasli year. Coming to wet lands, under the Table appended to S. 4, they are divided into 4 categories depending upon the extent of the ayacuts. Ayacuts of 30,000 acres and above fall under the first class, 5,000 acres and above but below 30,000 acres, under the 2nd class, 50 acres and above but below 5000 acres, under the 3rd class, and below 50 acres, under the 4th class. A maximum and a minimum rate of assessment per acre are fixed for lands under ayacuts under each of the said class . Further, under class I the tarams and bhaganas are divided into 3 groups and different maxima and minima rates of assessment are fixed for each such group. In the 2nd class, tarams and bhaganas are put into two groups and different maxima and minima rates are fixed in respect of the two groups in classes 3 and 4 numberdistinction is made on the basis of tarams. Briefly stated, the whole classification is based on the extent of ayacut and in the case of classes 1 and 2 groups of tarams are relied upon only for introducing differences in the maximum and minimum rates. But the distinction between different taranis in each of the groups is effaced without any appreciable reason for such effacement. The minimum flat rates fixed for dry lands as well as for wet lands are number based upon the quality and productivity of the soil and in the case of wet lands the minimum rate is mainly founded on the extent of ayacut. Prima facie we do number see any reasonable relation between the extent of the ayacut and the assessment payable in respect of an acre of land forming part of that ayacut. The system of periodical ryotwari settlement held by the British Government on a scientific basis of quality and productivity of the soil with marginal adjustments on the foot of the duration of water supply in the case of wet lands and grouping of villages in the case of dry lands was given up. The scheme of surcharge on pre-existing rates, earlier accepted, was number adopted. The recommendation of the Committee that the assessment should be based on the dura- tion of water supply among others was number followed. Instead the Act introduced in the case of both dry and wet lands an unscientific and arbitrary method of assessment imposing a minimum flat rate irrespective of the tarams. In the case of wet lands an additional irrational factor is laid down, viz., the rate is linked with the extent of the ayacut. In the case of wet land, a minimum flat rate with some variations within different groups in classes I and II and a minimum flat rate in respect of the groups in classes III and IV is fixed without any rational companynection between the two. Mr. P. A. Choudhury companytended that the scheme accepted by the Act was hit by Art. 14 of the Constitution inasmuch as it gave up practically the principle of tarams and bhaganas and accepted a flat rate irrespective of the quality and productivity of the land and, therefore, suffered from want of reasonable classification. He further companytended that the alleged justification for the classification, namely, the extent of the ayacut, had numberreasonable relation to the objects sought to be achieved by the Act, namely, rationalisation of the revenue assessments on land in the entire State. Mr. P. Ram Reddy, on the other hand, made a strenuous attempt to sustain ss. 3 and 4 of the Act on the basis of reasonable classification. He said that in the case of dry land the minimum rate of 50 np. was so low that in most of the cases 75 per cent of the previous assessment per acre would number be more than 5 np., and. therefore, the mere fact that in a few cases the 75 per cent of the assessment would fall on the other side of the line companyld number affect the validity of the classification for it would almost be im- possible in any scheme of classification to avoid marginal cases. So too, in the case of wet lands, he argued, in regard to classes I and II, the duration of supply of water companyresponded to the extent of the ayacut in most of the cases and, therefore, though the classification was based upon the extent of the ayacut, it was really made on the basis of the duration of the water supply. As regards different groupings of the tarams and bhaganas in the first two classes, it was companytended that, as the differences between the tarams in each group were number appreciable and, therefore, if the rate of assessment was integrally companynected with the duration of the water supply, the said groupings of the tarams would number affect the reasonableness of classifications. In the case of classes 11 and IV, he companytended, that in respect of lands falling under the said two classes the difference in the rates between the different tarams was number appreciable and, therefore, that companyld be ignored. In short he maintained that there was an equation between the duration of supply of water and the extent of the ayacut and that the difference in the duration of water supply in the companytext of assessment of various lands has a reasonable relation to the aforesaid object of the Act sought to be achieved. Now let us test the companytentions of Mr. Ram Reddy with the facts placed before us. Wet Lands.some tabular statements under the headings average test and majority test have been placed before us in support of the companytention. The following are the figures under the Average test - A AVERAGE TEST Average Average AverageAverage Sl. Name of Taluk for less for bet-for bet-for more NO. than 3 ween 3 ween 5than 8 months and 5 and 8months months months Anantapur 26.4 50.5 120.8 Dbarmavaram 13.7 49.0 120.1 Tadipartri 16.4 62.0 126.0 Gooty 9.5 48.3 152.8 Kalyanadurga 10.2 52.9 152.5 Rayadurg 22.0 59.7 162-0 Mabakasira 15.2 55.4 143.2 Penukonda 10.9 60.6 186.4 Hindupur 15.1 58.3 108.7 Kadiri 9.9 43.9 147.9 Average of Taluks 14.954.1142-2 AverageAverage for bet-for bet- ween 3 ween 5 and 5 and 8 months months Ichapuram 8.3 69.6 Pathapattanam 24.7 47.4 Chipurapalli 2.5 139.3 Srikakulam 6.4 84.9 Sompeta. 6.6 80.8 Salur 13.8 Babbili 19.5 Palkonda 378 Narasannapet 35.5 Parvathipuram 84.2 Average of Taluks 8.2 57.9 Sl Average Average Average Average No Name of Taluk for less for bet- for bet for more than 3 ween 3 ween 5 than 8 months and 5 and 8 months months months Mahabooba 4.8 26.8 60.6 Mulug 25.1 171.6 370.86086.46 The averages mentioned under different companyumns are the average extent of the ayacuts in each taluk companyrelated with particular months of water supply. If we take the average for less than 3 months in respect of different taluks in the Rayalaseema area, which is part of the Andhra, the extents of the ayacuts vary from 9 acres to 26 acres. In regard to the duration of water supply between 3 and 4 months, they vary from 43 to 62 acres. In regard to the duration of water supply between 5 and 8 months, they vary bet M4SupCI-67-4 ween 108 and 152 acres. So too in some of the taluks of the Andhra area the same variations are found. It is, therefore, number possible from the average test to hold that particular months of supply companyresponded with particular extent of the ayacut. The following tabular form represents the Majority test B MAJORITY TEST ----------------------------------------------------------- Between 5 months dura- Between 5 and 7 month.- tion Sl. Name of Taluk ----------------------------------- No. No irr- Total No of No of irr- Total gation irrigation gation No of irrigation sources sourcessources sources below 50 between 50 acres ayacut and 5000 acres ------------------------------------------------------------- Anantpur 15 30 19 19 Dbaramavaram 23 32 14 14 Tadapatri 7 9 1 1 Gooty 31 34 5 5 Kalyandurg 38 51 14 14 Kayadurg 5 9 2 2 Madakasira 37 62 25 25 Pandukonda 54 85 32 32 Hindupur 113 155 30 30 Kadiri 379 407 18 18 ------------------------------------------------------------ Below 5 months duration Between 5 8 months ----------------------------------------- Sl . Name of Taluk NO. of Total No No of Total No irrigation of irri- irrigat- of irriga- sources gation tion tion sources sources sources below 50 between 50 acres ayacut and 5000 acres ----------------------------------------------------------- Ichapuram 165 166 35 79 Pathapatnam 927 1,054 147 570 Cheepurapalli 1,799 1,905 39 39 Srikakulam 465 470 127 129 Sompeta 1,082 1,099 125 131 Salur 594 614 Bobbili 1,629 1,771 Palkonda 178 290 Narasannapet 192 1.214 Paravathipuram inclu- ding Karupum Section. 135 152 1 Mahabooba Taluk 111 111 90 90 P. 1456 to 1457 upto 10 acres Mulugu 179 231 12 12 Do No. of Irrigation Sources Between 5000 3,000 acres for more than 8 months-2 Total No. of Irrigation sources do-3 -------------------------------------------------------------- By majority test it is meant to companyvey that in each taluk the majority of the irrigation sources with a particular duration have a proportionate relation to the different extent of the ayacut mentioned in the Act. But the aforesaid tabular form does number support that assertion. In regard to water sources of below 5 months duration with an ayacut of below 50 acres, a companyparison of the first two companyumns shows that, except in a few cases, the test company- pletely fails. No doubt in regard to irrigation sources supplying water for between 5 and 8 months of ayacut of 5,000 to 50,000 acres, the test appears to be satisfied. But the table itself is companyfined only to the, Rayalaseema area of the Andhra Part of the State and even in regard to that area there is numberunanimity, as the test fails in regard to sources within 5 months duration. Similar tests in Srikakulam district which is a part of the Andhra area of the State, shows that in many cases the majority test thoroughly breaks. Nothing can, therefore, be built upon the said tests. Further, the statements filed in the case showing the area irrigated for different durations clearly indicates that in many cases the additional assessment is more than 100 per cent or 50 per cent, as the case may be, of the original assessment showing thereby that the increase is on the basis of the flat minimum rate and number on the basis of the duration of the irrigation sources. Further water sources which supply water for more than 5 months but less than 8 months and have registered ayacuts below 5,000 acres fall under class IV. Some of the tanks which supply water for more than 8 months fall under different classes having regard to the ayacut which they serve. For instance, Kumbum tank has a registered ayacut of 10,000 acres, Bukkaepatnam tank has a registered ayacut of 184 acres and though both supply water for 8 months or More, the former falls under class II and the latter under class 111. A cursory glance through the statistics of the various districts tells the same tale. In the Warrangal district of the Telengana area. in Mahaboobad taluk numbere of the water sources supplies water for more than 8 months and numbere of them has an ayacut of more than 175 acres they are all classified under class III or class IV. In Malug taluk 3 tanks supply water for more than 8 months and they have ayacuts of 3,400 acres, 1,901 acres and 6,470 acres re.-,- pectively. The first two fall under class III and the last under class H. In Anantapur District, 14 out of 22 source which supply water for between 3 and 5 months are placed under class 111. III Dharmavaram taluk, out of 22 water sources of similar nature, 9 fall in class III. In Srikakulam district some of the water sources which supply water for more than 8 months fall under class III, because of their ayacut. The record also discloses that Sitanagaram Anicut system has a registered ayacut of 4,017 acres, Mahadevpuram tank system has only 1.500 acres. Dondaped tank system has 1,504 acres, Anamasamudram-Giraperu tank system has 826 acres, Jangamamaheswarapuram tank system has only 246 acres. Yerur Tank system has 1,500 acres, and Ponnalur tank system has 987 acres. Under S. 4 all these water sources fall under class III. It is number necessary to multiply instances. The High Court has carefully companysidered this aspect. Enough has been said to make the point that classification based on ayacut has numberreasonable relation to the duration of water supply. It is, therefore, clear that the ayacuts do number companyrespond to the number of months of water supply indeed, many tanks which supply water for a longer duration have smaller ayacuts. Tanks supplying water for equal durations fail under different classes. In a large number of cases the minimum rate is more than 100 per cent of the earlier assessment indicating thereby that the minimum rate has numberrelation to the quality or the productivity of the soil. In short, both ss. 3 and 4 in fixing the minimum flat rate for dry or wet lands, as the case may be, have ignored the well established taram principle and in the case of wet lands an attempt has been made to classify different systems on the basis of the ayacuts but the said test is unreasonable and has numberrelation to either the duration of water supply or to the quality or the productivity of the soil. The classification attempt in either case has numberreasonable relation to the objects sought to be achieved, namely, imposition of fair assessments and rationalisation of the revenue assessment structure. Indeed, an arbitrary method has been introduced displacing one of the most equitable and reasonable methods adopted all these years in the revenue administration of that State. The same unreasonableness is writ large on the provisions prescribing the machinery for assessment. The machintry provisions read thus Section 6. The additional assessment payable under this Act in respect of any land shall, for all purposes, be treated as land revenue. Section 8. 1 The District Collector shall, from time to time, by numberification published in the Andhra Pradesh Gazette and the District Gazette, specify the Government sources of irrigation falling under classes I, II and IV of the Table under section 4 and may in like manner, include in, or exclude from, such numberification any such source. Any person aggrieved by a numberification published under subsection 1 may, within forty-five days from the date of publication of the numberification in the Andhra Pradesh Gazette and the District Gazette. prefer an appeal to the Board of Revenue whose decision thereon shall be final. Section 8 has numberhing to do with the assessment. It only provides for specification of Government sources of irrigation falling under different classes. Therefore, the only provision which may be said to relate to procedure for assessment is s. 6. Mr. Ram Reddy argued that S. 6 by reference brought into the Act number only the entire provisions of the Andhra Pradesh Revenue Recovery Act but also the elaborate procedure for assessment prescribed by the Standing Orders of the Board of Revenue. He added that S. 6 incorporated by reference the Standing Orders of the Board of Revenue relating to procedure and thereby the said Standing Orders were made part of the statute. This argument has been pitched rather high and we do number think that the phraseology of the section permits any such interpretation. Under S. 6 the additional assessment payable under the Act shall be treated as land revenue. E.x facie this provision has numberhing to do with the procedure for assessment but the assessment payable is treated as land revenue. An assessment becomes payable only after it is assessed. The section, therefore, does number deal with a stage prior to assessment. The amount payable towards assessment may be recovered in the manner the land revenue is recovered. For the same reason it is number possible to read into the section the entire gamut of the Standing Orders of the Board of Revenue which deal with the mode of assessment for the said machinery also deals with a stage before - the assessment becomes due. If it was the intention of the Legislature that the Standing Orders of the Board of Revenue should be brought into the Act by incorporation, it would have certainly used appropriate words to companyvev that idea. It would number have left such an important provision so vague and particularly when the Legislature may be presumed to know that the question whether the Standing Orders are law was seriously raised in many proceedings. Therefore, if S. 6 is put aside, there is absolutely numberprovision in the Act prescribing the mode of assessment. Sections 3 and 4 are charging sections and they say in effect that a person will have to pay an additional assessment per acre in respect of both dry and wet lands. They do number lay down how the assessment should be levied. No numberice has been prescribed, numberopportunity is given to the person to question the assessment on his land. There is numberprocedure for him to agitate the companyrectness of the classification made by placing his land in a particular class with reference to ayacut, acreage or even taram. The Act does number even numberinate the appropriate officer to make the assessment to deal with questions arising in respect of assessments and does number prescribe the procedure for assessment. The whole thing is left in a nebulous form. Briefly stated, under the Act there is numberprocedure for assessment and however grievous the blunder made there is numberway for the aggrieved party to get it companyrected. This is a typical case where a taxing statute does number provide any machinery of assessment. On the said facts the question is whether ss. 3 and 4 of the Act offend Art. 14 of the Constitution. The scope of Art. 14 has been so well-settled that it does number require further elucidation. While the article prohibits discrimination, it permits classification. A statute may expressly make a discrimination between persons or things or may companyfer power on an authority who would be in a position to do so. Official arbitrariness is more subversive of the doctrine of equality than statutory discrimination. In respect of a statutory discrimination one knows where he stands, but the wand of official arbitrarianess can be waved in all directions indiscriminately. 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., i the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and ii that the differential must have a rational relation to the object sought to be achieved by the statute in question. The said principles have been applied by this Court to taxing statutes. This Court in Kunnathat Thathunni Moopil Nair v. The State of Kerala 1 held that the Travan- companye-Cochin Land Tax Act, 1955, infringed Art. 14 of the Constitution, as it obliged every person who held land to pay the tax at the flat rate prescribed, whether or number he made any income out of the property, or whether or number the property was capable of yielding any income. It was pointed out that that was one of the cases where the lack of classification created inequality. In East India Tobacco Co. State of Andhra Pradesh 2 though this Court again held that taxation laws also should pass the test of Art. 14 of the Constitution gave the caution that in deciding whether such law was discriminatory or number it was necessary to bear in mind that the State had a wide discretion in selecting the persons or things it would tax. The applicability of Art. 14 to taxation statute again arose for companysideration in Khandige Sham Bhat v. The Agricultural Income Tax Officer 3 and this Court affirmed the companyrectness of the decision in T. Moopil Nairs case 1 . In the companytext of a taxation law this Court held Though a law ex-facie appears to treat all that fall within a class alike, if in effect it operates unevenly on persons or property similarly situated, it may be said that the law offends the equality clause. It will then be the duty of the companyrt to scrutinize the effect of the law carefully to ascertain its real impact on the persons or property similarly situated. Conversely, a law may treat 1 1961 3 S. C. R. 77. 2 1963 1 S. C. R. 404. 3 1963 3 S. C. R. 899, 817. persons who appear to be similarly situated differently but on investigation they may be found number to be similarly situated. To state it differently, it is number the phraseology of a statute that governs the situation but the effect of the law that is decisive. If there is equality and uniformity within each group, the law will number be companydemned as discriminative, though due to some fortuitous circumstances arising out of a peculiar situation some included in a class get an advantage over others, so long as they are number singled out for special treatment. Taxation law is number an exception to this doctrine But in the application of the principles, the companyrts, in view of the inherent companyplexity of fiscal adjustment of diverse elements, permit a larger discretion to the Legislature in the matter of classification, so long it adheres to the fundamental principles underlying the said doctrine. The power of the Legislature to classify is of wide range and flexibility so that it can adjust its system of taxation in all proper and reasonable ways. It is, therefore, manifest that this Court while companyceding a larger discretion to the Legislature in the matter of fiscal adjustment will insist that a fiscal statute just like any other statute cannot infringe Art. 14 of the Constitution by introducing unreasonable discrimination between persons or property either by classification or lack of classification. Two decisions relied upon by the learned companynsel for the appellant may number be numbericed. In C. V. Rajagopalachariar v. State of Madras 1 the facts were two Acts, namely. Madras Land Revenue Surcharge Act 19 of 1954 and Madras Land Revenue Additional Surcharge Act 30 of 1955 , were passed by the Madras Legislature increasing the land revenue payable by landlords to the extent of the surcharge levied. Those two Acts were questioned, inter alia, on the ground that they offended Art. 14 of the Constitution but the ground of attack was that the Acts fixed a slab system under which the rate of surcharge progressively increased from As. -/2/- to As. -/8/- on each rupee of the land revenue paid and that the relevant provision was discriminatory in its operation as a distinction had been made between rich and poor people and as the levy of the tax was different for different classes of owners. That companytention, for the reasons given therein, was negatived. In the said Madras Acts a surcharge was imposed 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. The present question did number arise in that case. Nor has A. I.R. 1960 Mad. 543. the decision of the Mysore High Court in H. H. Vishwasha Thirtha Swamiar or Sri Pejawar Mutt The State of Mysore 1 in regard to the Mysore Land Revenue Surcharge Act 13 of 1961 any bearing on the present question. There, as in the Madras Acts, the revenue surcharge levied wag an additional imposition of land tax and, therefore, the Mysore High Court held that it did number offend Art. 14 of the 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. That decision, therefore, does number touch the present case. But in the instant case, as we have pointed out earlier, the whole scheme of ryotwari settlement was given up so far as the minimum rate was companycerned and a flat minimum rate was fixed in the case of dry lands without any reference to the quality or fertility of the soil and in the case of wet lands a minimum wet rate was fixed and it was sought to be justified by companyrelating it to the ayacut. Further, the whole imposition of assessment was left to the arbitrary discretion of the officers number named in the Act without giving any remedy to the assessees for questioning the companyrectness of any of the important stages in the matter of assessment, such as ayacut, taram, rate or classification or even in regard to the calculation of the figures. Not only the scheme of classification, as pointed out by us earlier, has numberreasonable relation to the objects sought to be achieved viz., fixation and rationalisation of rates but the arbitrary power of assessment companyferred under the Act enables the appropriate officers to make unreasonable discrimination between different persons and lands. The Act, therefore, clearly offends Art. 14 of the Constitution. In some of the appeals relating to Peddapuram and Kumara- puram villages another point was raised, namely, that a special rate bad been fixed which was neither for a single crop number for a double crop and that, therefore, they do number companye under any of 1 1966 1 Mys. L.J. 351,359. the provisions of the Act. In the view we have expressed on the other questions it is number necessary to numberice this argument. In the result the appeals are dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1377 of 1966. Appeal from the Judgment and decree dated September 7, 1962, of the Punjab High Court in Regular First Appeal No. 29 P of 1956. Naunit Lal, for the appellant. M. Oberoi, S. K.Mehta and K. L. Mehta, for respondent No. 1 The Judgment of the Court was delivered by Bhargava, J. This appeal under certificate granted by the Punjab High Court at Chandigarh, has been filed by Harnam Singh appellant against a decree passed by the High Court, decreeing a suit under section 92 of the Code of Civil Procedure, after setting aside the dismissal of the suit by the District Judge, and removing the appellant from the office of the Mahant of an institution described in the plaint as Gurdwara Jhandawala. The suit was brought by two plaintiffs after obtaining permission from the Advocate- General. One of the plaintiffs respondents, Ishar Singh, died and his legal representatives were number brought on the record. However, in view of the nature of the suit, numberobjection was raised before us about the maintainability of this appeal on this ground and, companysequently, we refrain from dilating on this aspect. The respondents claimed in the plaint that there is one Gur Granth Sahib at village Jhandawala in the name of Gurdwara Jhandawala which is managed by Mahant Harnam Singh appellant as a Mohatmim, and that he is in possession of the Dera and agricultural land belonging to Guru Granth Sahib, Gurdwara Jhandawala. The Gurdwara was alleged to be a public religious place which was established by the residents of the village, and it was pleaded that this religious institution was a public trust created by the residents of the village for the service of the public to provide food to the visitors from the Lungar free kitchen to allow the people to fulfill religious beliefs and for worship, etc. The plaintiffs respondents stated that, in the capacity of representatives of owners of lands situated at village Jhandawala and of residents of village Jhandawala, they submitted an application for permission to institute this suit on the ground that the appellant was indulging in various undesirable activities and was misusing the funds of the trust which justified his removal from the office of the Mahant. The respondents claimed that, in their capacity of representatives of the owners of the land situated at village Jhandawala and of residents of village Jhandawala, they were entitled to institute this suit under s. 92, C.P.C. The suit was companytested by the appellant on various grounds, amongst which the principal one, with which we are companycerned, is that the plaintiffs respondents had numbersuch interest in this public trust as would entitle them to institute the suit. At the initial stage, the appellant did number admit that there was a public trust in existence at all, but the trial Court held that the institution was a public trust of a religious character and that finding was number challenged on behalf of the appellant before the High Court. The two principal grounds, on which the dismissal of the suit by the District Judge was sought to be justified before the High Court, were that the plaintiffs respondents had numberright to institute the suit under s. 92, C.P.C., for want of interest in the trust, and that the respondents had failed to prove that the appellant had indulged in any such activities as would justify his removal from the office of the Mahant. In this appeal, we heard learned companynsel for the parties on the first question as to whether the plaintiffs respondents had any such interest in this trust which companyld entitle them to institute the suit under s. 92, C.P.C. As has been mentioned above, in the plaint the claim was that the plaintiffs were interested in the capacity of representatives of the owners of the land situated at village Jhandawala and of residents of village Jhandawala. On behalf of the plaintiffs respondents, the pleading was that this Gurdwara was established as a public trust on behalf of the residents of the village, but, during the companyrse of evidence, even the plaintiffs themselves admitted that, before the residents of the village donated any property at all to this institution, the institution was already in existence. According to the plaintiffs, the institution was then known as Guru Granth Sahib Dera Bhai Saida Ram, and Bhai Saida Ram was the Mahant of the institution. On February 19, 1904, Shamilat land belonging to the inferior proprietors of the village measuring 92 bighas and 12 biswas was donated to Guru Granth Sahib known as Dera Bhai Saida Ram by way of charity. That gift was subsequently companyfirmed in a mutation order of the revenue authorities on 1st July, 1905. Some time later, it appears that Mahant Mehtab Singh Sadh Nirmala became the Mahant of this institution, and he was succeeded by his Chela,Mahant Narain Singh. On 20th July, 1926, Mahant Narain Singh, describing himself as the Chela of Mahant Mehtab Singh, executed , a will bequeathing his rights in the Dera to his Chela, Harnam Singh appellant. It also appears that a companystruction,. described as Gurdwara, was built over an area of 8 kanals and 17 marlas out of the land donated to the Dera by the inferior owners of the village. This suit under s. 92, C.P.C., was instituted on 21st September, 1953 on the allegation that the appellant had started indulging in activities which unfitted him for the position of. the Mahant, as he had been responsible for abduction of women, habouring of dacoits, malversation of the trust income,closure of the Langar stoppage of religious activities and perpetration of immoral acts. Sup.CI/67-2 During the trial of the case, it appears that the plaintiffs attempted to show their interest in the trust property on one other alternative ground. The plaintiffs were admittedly Sikhs by religion, and the claim put forward was that this Gurdwara was a religious institution meant for Sikhs, and, in fact, evidence was also sought to be led on behalf of the plaintiffs to show that the Mahants of this institution were number Sadh Nirmalas, but were Sikhs. One of the plaintiffs respondents specifically stated to that effect, but there is a companycurrent finding by the District Judge and by the High Court that all the Mahants of this institution, from Bhai Saida Ram to the present Mahant Harnam Singh appellant, have been Sadh Nirmalas. The trial Court held that Sadh Nirmalas are number Sikhs and that this institution was number a Sikh institution at all. The High Court disagreed and held that Sadh Nirmalas are a section of the Sikhs and, companysequently, that Sikhs had interest in this institution because of its being a Sikh Gurdwara. The High Court thus found in favour of the respondents that they had an interest as required by s. 92, C.P.C., because they were Sikhs and that the institution was a religious institution of Nirmala Sadhs who were a section of Sikhs. It was also mentioned by the High Court that the villagers having made the original donation of land which is the nucleus of the institution, the plaintiffs respondents companyld number be said to be devoid of interest in the trust of whose property the appellant number asserts himself to be the sole owner. The companyrectness of this decision was the main point canvassed before us on behalf of the appellant. As we have indicated earlier, in the plaint the plaintiffs claimed interest in the trust property in their capacity of representatives of the owners of the land situated at village Jhandawala and of residents of village Jhandawala. The findings of fact recorded show that the land, which was donated to this institution, was given by the inferior owners of this village out of their joint land. The plaintiffs respondents did show that they were Lambardars in the village, but numberattempt has been made at any stage to prove that any of the two plaintiffs was an inferior owner of any land situated in-this village, or that he was a descendant or a successor-in-interest of any of the inferior owners who donated the land to this institution in the year 1904. The mere capacity as Lambardars does number entitle the plaintiffs respondents to claim that they are repre- sentatives of the inferior owners of the land who donated the land to this institution. The second ground of claim was that the plaintiffs respondents were residents of village Jhandawala, but, again, there is numberpleading and numberevidence tendered to show that the residents of village Jhandawala in general had any such interest in this trust which companyld entitle them to institute such a suit. The only allegation was that a Langar used to be run in this institution where free kitchen was provided to visitors. It was numberhere stated that any such free kitchen was being run for the general residents of village Jhandawala who companyld, as of right, claim to be fed in the Langar. Mere residence in a village where free kitchen is being run for providing food to visitors does number create any interest in the residents of the village of such a nature as to claim that they can institute a suit for the removal of the Mahant. The nature of the interest that a person must have in order to entitle him to institute a suit under s. 92, C.P.C., was first examined in detail by the Madras High Court in T. R. Ramachandra Ayyar and Another v. Parameswaran Unni and 5 Others 1 After the dismissal of the suit under s. 92, P.C., by the District Judge, the case came up in appeal before Wallis, C. J., and Kumaraswami Sastri, J., who delivered dissenting judgments. The appeal was dismissed and then came up before a Full Bench of three Judges under the Letters Patent. Three different judgments were delivered by the members of the Full Bench, Abdur Rahim, Old field and Coutts Trotter, JJ. Wallis, C. J., when dealing,with the appeal at the earlier stage, expressed his opinion that to entitle him to sue under s. 92, C.P.C., it is number enough that the plaintiff is a Hindu by religion, but he must have a clear interest in the particular trust over and above that which millions of his companyntrymen may be said to have by virtue of their religion and this opinion was expressed even though the word direct in s. 92, C.P.C., had been omitted. It is number necessary to refer to other opinions expressed by the learned Judges in that case in view of the decision of their Lordships of the Privy Council in Vaidyanatha Ayyar and another v. Swaminatha Ayyar and Another 2 , where they approved the opinion expressed by Sir John Wallis, C.J., in the case cited above, and held They agree with Sir John Wallis that the bare possibility, however remote, that a Hindu might desire to resort to a particular temple gives him an interest in the trust appears to defeat the object with which the Legislature inserted these words in the section. The object was to prevent people interfering by virtue of this section in the ad- ministration of charitable trusts merely in the interests of others and Without any real interests of their own. Agreeing with the view expressed by the Privy Council, we hold that in the present case the plaintiffs respondents, who were merely Lambardars and residents of village Jhandawala, had, in those capacities, numbersuch interest as companyld entitle them to institute this suit. The alternative ground, on which the High Court accepted the claim of the plaintiffs respondents that they had an interest in this institution entitling them to institute the suit because it is a Sikh Gurdwara meant for all persons following theSikh faith, was number specifically taken by the plaintiffs in the plaint. However, it appears that, during the trial of the suit as well as in the appeal before the High Court, the claim of the plaintiffs that they had an I.L.R. 42 Mad. 360. 2 51 I.A. 282. interest entitling them to institute the suit was actually pressed and examined on this ground. The District Judge rejected this claim, but the High Court held in favour of the plaintiffs on its view that Nirmala Sadhus were Sikhs. It appears from the judgment of the High Court that, in arriving at this decision, the Court relied on only two items of evidence companysisting of some observations made in Sir Edward Maclagens Census Report and in Macauliffes Treatises on the Sikh Religion. The High Court made a reference to a judgment of the Bhide, J., in Kirpa Singh v. Ajaipal Singh and Others 1 in which this question whether Nirmala Sadhus were Sikhs was examined in great detail. An error, however, appears to have been companymitted by the High Court in taking from that judgment a few extracts from Sir Edward Maclagans Census Report and Macauliffes Treatises on the Sikh Religion and relying on those extracts without examining the entire material that was discussed by Bhide, J. in his elaborate and well-considered judgment. Bhide, J., referred to various books which gave the history and description of Nirmalas and rightly held that, though the origin of Nirmalas was somewhat obscure, it appears to be clear that they were originally the followers of Guru Gobind Singh, but the important point for companysideration was whether they had become distinct from the general body of the Sikhs and had ceased to be regarded as such. The quotation from Macauliffes book The Sikh Religion relied upon by the High Court, is to the following effect There are two great divisions of Sikhs, Sahijdhari and Singhs. The latter are they who accept the baptism inaugurated by Guru Gobind Singh, which will be described in the fifth volume of this work. All other Sikhs are called Sahijdharis. The Singhs, after the time of Guru Gobind Singh, were all warriors, the Sahijdharis those who lived at ease, as the word denotes, and practised trade or agriculture. In the Singhs are included the Nirmalas and Nihangs. The Sahijdhari include the Udasis founded by Sri Chand, son of Guru Nanak. Reference was also made to an article written by Macauliffe on Sikhism in the Calcutta Review in 1881 where he described Nirmalas as only numberinally Sikhs. The extract from Sir Edward Maclagans Census Report, on which reliance was placed, runs as follows It is said that Guru Gobind Singh sent three followers named Karam Singh, Har Chand and Mihr Rai to Benares to acquire a knowledge of Sanskrit, when the Pandits of I.L.R. II Lah. 142. that city refused to companye themselves to Gobind Singh and that, on their return the Guru blessed them as being the only learned men among the Sikhs and called them Nirmala. They were allowed to take the pahul and founded the order of Nirmala Sadhus. They are almost always celibate, and almost always in monasteries. Their principal Akhara is at Hardwar and it is said that their societies throughout the province are periodically visited by a companytrolling companyncil. They have three companysiderable monasteries in the Hoshiarpur District at Munak, Adamwal and Alampur Kotta and by our returns they appear to be strong in Gurdaspur, where they are mainly returned as Hindus and in Ambala, Ferozepore and Amritsar where they are mainly returned as Sikhs. It is supposed that they are to be found in some numbers in Patiala, but our tables would intimate that they are as strong in Faridkot. They are looked on as unorthodox by most true Sikhs,, and it will be observed that more of them are returned in the census as Hindus than as Sikhs. We are unable to agree that these passages relied upon by the High Court are enough to lead to an inference that Nirmala Sadhus are Sikhs and that they still retain the essential characteristics of the Sikh faith. It is true that, in their origin, Nirmala Sadhus started as a section of Sikhs who were followers of Guru Gobind Singh, but, subsequently, in the period of about 300 years that has since elapsed, they have veered away from the Sikh religion. That is why, after giving their historical origin, Macauliffe expressed the opinion that Nirmalas were only numberinally Sikhs. In Maclagans Census Report also it was, mentioned that Nirmala Sadhus are treated as Sikhs in some places, while in other places they are returned as Hindus. He has mentioned the Districts in Punjab where they are returned mainly as Hindus, and others where they were companysidered as Sikhs. Faridkot, the District within which the institution with which we are companycerned is situated, is mentioned as a place where they are regarded as Hindus and in the Census they have been returned as such. In these circumstances, we do number think that this material by itself, which the High Court culled out of the judgment of Bhide, J., companyld properly lead to the inference that Nirmalas are Sikhs. Bhide, J., quoted Sir Edward Maclagans Census Report in greater detail and mentioned how in that Census Report there was a description that the Nirmala Sadhus were at first devoted to the regulations of Gobind Singh, but their taste for Sanskrit literature led them to imbibe the principles of the Vedanta and to readopt many of the customs of the Shastras. They gave up the use of meat and spirits and they adopted the dress of the Indian faqir which was strictly prohibited to the true followers of Guru Gobind Singh. They had so far deviated from the orthodox Sikhs that they were hardly distinguishable from the Udasi followers of Nanak. They were looked on as unorthodox by most true Sikhs and it was also observed that more of them were returned in the Census as Hindus than as Sikhs. Then the Glossary of the Tribes and Castes of the Punjab and N.W.F. Province by H. A. Rose companytained a statement that the Nirmalas, having adhered to the study of the orthodox Hindus scriptures, had lost touch with Sikhism. In Omans Mystics, Ascetics, and Saints of India Nirmalas were described as followers of Vedanta philosophy. From all these authorities an inference clearly follows that Nir- malas have a close affinity to Hindus and in the Census Report for the Punjab for the year 1891 a large number of Nirmalas actually declared themselves as Hindus. Bhide, J., on these materials, rightly came to the companyclusion that Nirmala Sadhus are number Sikhs. Further, in this case, there was material showing that this institution at Jhandawala was registered as one of the branches of the principal institution of Nirmala Sadhus known as the Panchayati Akhara situated at Kankhal near Hardwar. There was further evidence showing that in this institution the worship is primarily of a Samadh which is against all tenets of the Sikh religion. Nirmala Sadhus, it appears, as a class worship at Samadhs which goes to show that they can numberlonger be regarded as people following the Sikh religion. In their beliefs and practices, the Nirmala Sadhus are number quite akin to Udasis, and there is a series of-cases which has laid down that members of the Udasi sect are number Sikhs. We need only mention the view expressed by the Privy Council in Hem Singh and Others v. Basant Das. and Another, Shiromani Gurdwara Parbandhak Committee v. Ram Parshad Others 1 , holding that parallel with the growth of this movement, there seems from the time of Sri Chand, Nanaks son, to have been a, sect of Udasis who, while using the same sacred writings as the Sikhs, kept up much more of the old Hindu practices, followed asceticism, were given to the veneration of Samadhs and tombs, and companytinued the Hindu rites companycerning birth, marriage, and Shradh the Udasis, so far as the matter can be decided by beliefs and practices, are, from the point of view of Sikhs, schismatics who separated in the earliest days of the movement and never merged thereafter. Relying on these observations of the Privy Council, the Lahore High Court in Bawa Ishar Das and Others v. Dr. Mohan Singh and Others 2 held It is clearly established in the present case that this is an Udasi institution and that the Sikhs have numberhing to do with it except that they may have gone there to listen to the reading of the Sikh scriptures, which is also done by the Udasis. These decisions clearly indicate the principle 1 63. I. A. 180. A.I.R. 1939 Lah. 239. that, though the Sikh Guru Granth Sahib is read in the shrines managed by the members of the Udasi sect, that was number enough to hold that those shrines were Sikh Gurdwaras. In the case before us, the mere fact that at some stage there was a Guru Granth Sahib in this Dera cannot thus lead to any companyclusion that this institution was meant for, or belonged to, the followers of the Sikh religion. Clearly, the Dera was maintained for an entirely distinct sect known as the Nirmala Sadhs who cannot be regarded as Sikhs and, companysequently, in their mere capacity of followers of Sikh religion residing in village Jhandawala, the plaintiffs res- pondents companyld number be held to have such an interest as companyld entitle them to institute the suit under s. 92 of the Code of Civil Procedure. The judgment of the High Court has to be set aside on this ground. In view of the fact that we are holding that this suit was number instituted properly by persons interested as required by s. 92, C.P.C., we companysider it unnecessary to express any opinion at all on the second main point decided against the appellant by the High Court, viz., that there were sufficient grounds for the removal of the appellant from the office of the Mahant. In this case, it is number at all neces- sary to record any finding on that aspect of the case and, companysequently, we refrain from companymenting on the finding recorded by the High Court on this question. The appeal is allowed with companyts. The decree of the High Court is set aside and the decree passed by the District Judge is restored.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal- No. 866 of 1964. Appeal by special leave from the judgment and order dated April 7, 1964 the Allahabad High Court in F.A.F.O. No. 367 of 1959. G. Patwardhan,Rameshwar Nath. and Mahinder Narain and Prayag Das Agarwal, for the appellants. P. Goyal and Raghunath Singh for the respondents. The Judgment of the Court was delivered by Bachawat, J. This appeal incidentally raises a question of interpretation of art. 164 of the Indian Limitation Act 1908. The respondent instituted two suits against the appellant in the companyrt of the First Civil Judge, Kanpur. Suit No. 25 of 1958 was for the recovery of moneys due on a mortgage for Rs. 50,000. Suit No. 22 of 1958 was to recover a sum of Rs. 8,000 due on a ruqqa. On May 15, 1958, both the suits were decreed ex-parte. The appellant filed an application to set aside the ex-parte decree passed in Suit No. 22 of 1958. This application was numbered as miscellaneous case No. 104 of 1958. On August 16, 1958, the First Civil Judge, Kanpur, passed an order setting aside this ex-parte decree on certain companyditions. The order sheet in O.S. No. 22 of 1958, Misc. Case No. 104 of 1958 on August 16, 1958 stated Heard parties companynsel, accept the applicants affidavit and hold that due to number-service applicant was prevented from being present. Allowed on companydition of payment of Rs. 150 as companyts within a month and on companydition that allotment shall companytinue. Sd - K. N. Goyal 16-8-58 Applicant is hereby informed of companynected decree of 25 of 1958 as well. Sd - K. N. Goyal 16/8. An appeal by the appellant from this order was dismissed on September 25, 1958. On February 5, 1959, an advocate em- ployed by the appellant to file a civil revision petition against the appellate order, obtained a certified companyy of the order dated August 16, 1958. On February 24, 1959, a civil revision petition was filed by the appellant against the appellate order. On April 16, 1959, the appellant filed an application in the Court of the First Civil Judge, Kanpur, under 0.9, r. 13, C.P.C., for the setting aside of the ex-parte decree passed in Suit No. 25 of 1958. The Civil Judge dismissed the application An appeal from than order filed by the appellant was dismissed by the High Court. Both the companyrts held that the summons in Suit No. 25 of 1958 was number duly served on the appellant but as more than 30 days had expired after the appellant had knowledge of the ex-parte decree, the application was barred by Limitation under art. 164 of the Indian Limitation Act, 1908. The appellant Dow appeals to this Court by--special leave. Under 0.9, r. 13, C.P.C., a decree, passed ex-parte against a ,defendant is liable to be set aside if the sununons was number duly served or if the defendant was prevented by any sufficient cause from appearing when the suit was called on for hearing. If the. summons is number duly served, the defendant suffers an injury and be is entitled ex-debito justitiae-to an order setting aside the ex-parte decree provided he applies to the companyrt within the prescribed period of limitation. Under art. 164 of the Indian Limitation Act, 1908, the period of limitation for an application by a defendant for an order to set aside a decree passed ex-parte was 30 days from the date of the decree or when the summons was number duly served, when the applicant had knowledge, of the decree. The Onus is on the defendant to show that the application is within time and that he had knowledge of the, decree within 30 days of the application. If the defendant produces some evidence to show that the application is within the, it is for the plaintiff to rebut this evidence and to establish satisfactorily that the defendant had knowledge of the decree more-than 30 days before the date of the application. In Pundlick Rowji v. Vasant rao Madhavrao 1 , Davar, J., held that the expression knowledge of the decree in art 164 means knowledge number of a decree but of the particular decree which is sought to be set aside, a certain and clear perception of the fact that the particular decree had been passed against him. On the facts of that case, Davar, J., held that a numberice to the defendant that a decree had been passed against him in the High Court Suit No. 41 1 of 1909 in favour of one Pundlick Rowji with whom he had numberdealings was number sufficient to impute to him clear knowledge of the decree in the absence of any information that the decree had been passed in favour of pundlick Rowji as the assignee of a promissory numbere which he had executed in favour, of another party. This case was followed by the Calcutta High Court in Kumud Nath Roy Chowdhury v. Jotindra Nath Chowdhury 1 . , In Bapurao Sitaram Karmarkar v. Sadbu Bhiva, Gholap 3 , the Bombay High Court held that the evidence of two, persons who had been asked by the plaintiff to. tell the defendant about the decree and to settle the matter was number sufficient to impose knowledge of the decree on the defendant within the meaning of art. 164. Macleod J. said We think. the words of the article mean something more than mere knowledge that a decree had been passed in some suit in some Court against the applicant. We think it means that the applicant must have knowledge number merely that a decree has been passed by some Court against, him, but that a particular decree has been passed against him in a particular Court in favour of a particular person for a particular sum. A judgment- 1 11 B.L.R. 1296. I.L.R. 38 Cal. 394 403. I.L.R. 47 Bom. 485. 7 60 debtor is number in such a favourable position as he used to be when he had thirty days from the time when execution was levied against him. But we do number think that the Legislature meant to go to the other extreme by laying down that time began to run from the time the judgment- debtor might have received some vague infor- mation that a decree had been passed against him. This decision was followed in Batulan v. S. K. Dwivedi 1 and other cases. We agree that the expression knowledge of the decree in art. 164 means knowledge of the particular decree which is sought to be set aside. When the summons was number duly served, limitation under art. 164 does number start running against the defendant because he has received some vague information that some decree has been passed against him. It is a question of fact in each case whether the information companyveyed to the defendant is sufficient to impute to him knowledge of the decree within the meaning of art. 164. The test of the sufficiency is number what the information would mean to- a stranger, but what it meant to the defendant in the light of his previous dealings with the plaintiff and the facts and circumstances known to him. If from the information companyveyed to him, the defendant has knowledge of the decree sought to be set, aside, time begins to run against him under art. 164. It is number necessary that a companyy of the decree should be served on the defendant. It is sufficient that the defendant has knowledge of the material facts companycerning the decree, so that he has a clear perception of the injury suffered by him and can take effective steps to set aside the decree. In this case, in his application for setting aside the ex- parte decree, the appellant stated that he got the information of the passing of the ex-parte decree in suit No. 25 of 1958 for the first time from the respondent on April 13, 1959. It has been shown companyclusively that this statements false. The respondent filed an affidavit stating that the appellant was directly informed of the passing of this ex-parte decree by the First Civil Judge on August 16, 1958. This statement was number denied by the appellant. The companyrts below companycurrently found that the appellant was personally present in the companyrt of the First Civil Judge on August 16, 1958 when the learned judge informed him that an ex-parte decree had been passed against him in Suit No. 25 of 1958. The appellant was informed that suits Nos. 22 and 25 of 1958 were companynected suits. The appellant knew that he had dealings with the respondent in respect of a ruqqa and a mortgage. He knew that the suit No. 22 of 1958 was filed on the ruqqa. From the information companyveyed to him by the Civil Judge on August 16, 1958, it must.have been clear to the appellant that an ex-parte decree had been passed against him in favour of the respondent in suit.No. 25 I.L.R. 33 Pat. 1025,1050-8. of 1958 on the basis of the mortgage. The appellant had thus on August 16, 1958 clear knowledge of the decree passed against him in suit No. 25 of 1958 which he number seeks to set aside. Time began to run against him from August 16, 1958 under art. 164 of the Indian Limitation Act, 1908. The application filed by him on April 16, 1959 was, therefore, clearly barred by limitation and was rightly dismissed by the companyrts below. In the result, the appeal is dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1938 of 1966. Appeal by special leave from the judgment and order dated April 20, 1966 of the Allahabad High Court in Second Appeal No. 2648 of 1964. Yogeshwar Prasad and S. S. Khanduja, for the appellant. Hardev Singh, for the respondent. The Judgment of the Court was delivered by Wanchoo, j This is an appeal by special leave against the judgment of the High Court of Allahabad. Brief facts necessary for present purposes are these. The respondent filed a suit against the appellant for eviction from a shop which the appellant had taken on monthly rent from the respondent. The suit was filed after permission had been obtained under the U.P. Temporary Control of Rent and Eviction Act, No. III of 1947, hereinafter referred to as the Act , in the companyrt of the Munsif in Jhansi. It was companytested by the appellant and one of the points raised before the trial companyrt was that as the permission to sue had been granted at a time when there was a stay order, the Magistrate granting the permission had numberjurisdiction to do so and therefore the permission was a nullity. On that basis it was companytended that the suit should fail for numbersuit companyld companytinue under the Act without such permission. The Munsif dismissed the suit. - The respondent then went in appeal. The appeal companyrt upheld the order of the Munsif taking the view that the permission granted after the stay order had been passed was a nullity. The respondent then came in second appeal to the High Court, and the only point companysidered there was whether the permission granted by the Magistrate was a nullity or number. It may be mentioned that though the stay order had been passed on September 29, 1961 by the District Magistrate, the Magistrate who was dealing with the matter of permission, had numberknowledge of it when he granted the permission on October 4, 1961. The question that arose before the High Court therefore was whether the permission granted in these circumstances companyld be said to be a nullity. The High Court held that the stay order companyld number and did number take away the jurisdiction of the Magistrate from the moment it was passed and that as the Magistrate had numberknowledge of or information about the stay order when he granted the permission on October 4, 1961, that permission was with jurisdiction and the suit would therefore be maintainable. As numberother point was apparently in dispute in the High Court it allowed the appeal and granted a decree for ejectment and rent in favour of the respondent. The appellant, then obtained special leave from this Court, as there is some companyflict of opinion between the High Courts on this question. As we have already indicated, the facts on the question raised before us are number in dispute. When the application for permission was pending before Sri Nigam, Magistrate I Class, who had jurisdiction to deal with that application by virtue of the authority delegated to him by the District Magistrate, it appears that the appellant applied for the transfer of proceedings relating to permission from Sri Nigams companyrt. On that transfer application, the District Magistrate passed an order staying further proceedings till the disposal of the transfer application. This order was number companymunicated to the Magistrate companycerned by the office of the District Magistrate. Nor does it appear that the appellant informed the Magistrate of the order of stay with the, result that on October 4, 1961, the Magistrate gave permission to the respondent to file a suit for eviction. When however the respondent filed the suit in the Munsifs Court, the appellant raised the question that as a stay order had been passed on September 29, 1961, the permission granted on October 4, 1961, was a nullity as the Magistrate dealing with the matter had lost his jurisdiction thereunder. There has been difference of opinion among the High Courts on the question of the effect of a stay order, particularly with reference to execution proceedings. The High Courts of Calcutta, Patna and Punjab have held that in such a case the stay order takes effect from the moment it is passed and the fact that the companyrt executing the decree has numberknowledge of it makes numberdifference and all proceedings taken in execution after the stay order has been passed are without jurisdiction. On the other hand, the High Courts of Madras and Kerala have taken the view that the executing companyrt does number lose its jurisdiction from the moment the stay order is passed and that the order being in the nature of a prohibitory order the companyrt carrying on execution does number lose its jurisdiction to do so till the order companyes to its knowledge and that proceedings taken in between are number a nullity. The Allahabad High Court seems to have taken an intermediate view and has held that where rights of third parties like a stranger auction-purchaser have intervened the fact that the executing companyrt had numberknowledge would protect third parties. The earliest case on the point is Bessesswari Chowdhurany v. Horro Sunder Mozmadar and others 1 . In that case a Division Bench of the Calcutta High Court held that an order staying execution of a decree against which an appeal is pending is in the nature of a prohibitory order, and as such would only take effect when companymunicated. If a property is sold before such an order is companymunicated to the companyrt holding the sale, such sale is number void and cannot be treated as a nullity. In Hukum Chand Boid v. Kamalanand Singh 2 , another Division Bench of the same High Court dissented from the view taken in Besseswari Chowdhuranys case 1 and held that an order of stay takes effect from the moment it is passed and the knowledge of the companyrt to which it is addressed is immaterial and from the moment the order is passed the companyrt to which the application is made for execution has numberauthority to execute it. It is these two cases of the Calcutta High Court which are the basis of the decisions of other High Courts. Some High Courts. as already indicated, have accepted the view in Bessesswari Chowdhuranys case 1 while other High Courts have followed the view taken in Hukum Chand Boids 2 case. Before we companysider the question raised before us, we may indicate the leading cases on the two sides briefly. The Patna High Court in Liakat Mian v. Padampat Singhania 3 and the Punjab High Court in Din Dayal Lakhi Ram v. Union of India 4 follow Hukum Chand Boids 2 case. The Madras High Court in Kasaribada Venkatachalpati Rao v. Maddipatla Kameshwaramma 5 follows Bessesswari Chowdhuranys case 6 . The Kerala High Court in Cheeramparambilalikutty v. Thalavanaparambilalikutty 6 also follows Bessesswari Chowdhuranys case 1 . It is unnecessary to refer to other cases of these companyrts which were cited before us for they follow the view taken in these leading cases. The Allahabad High Court in L. Parsotam Saran v. B. Barhma Nand 7 , as already indicated, took an intermediate view and held that where a third partys interest intervened, the stay order does number nullify a sale in favour of a third party. But where only the parties to the execution proceedings were companycerned it followed the view taken in Hukum Chand Bolds case 2 . We are of opinion that the view taken in Bessesswari Chow- dhuranys case 1 is the companyrect one. An order of stay in an execution matter is in our opinion in the nature of a prohibitory order and is addressed to the companyrt that is carrying 1 1896-97 1 C.W.N. 226. A.I.R. 1951 Pat. 130. I.L.R. 1918 XLI Mad. 151. I. L.R. 1906 XXXIII Cal 227. A.I.R. 1954 Punj. 46. I.L.R. 196 Ker. 528. A.I.R. 1927 All. 401. out execution. It is number of the same nature as an order allowing an appeal and quashing execution proceedings. That kind of order takes effect immediately it is passed, for such an order takes away the very jurisdiction of the companyrt executing the decree as there is numberhing left to execute thereafter. But a mere order of stay of execution does number take away the jurisdiction of the companyrt. All that it does is to prohibit the companyrt from proceeding with the execution further, and the companyrt unless it knows of the order cannot be expected to carry it out. Therefore, till the order companyes to the knowledge of the companyrt its jurisdiction to carry on execution is number affected by a stay order which must in the very nature of things be treated to be a prohibitory order directing the executing companyrt which companytinues to have jurisdiction to stay its hand till further orders. It is clear that as soon as a stay order is withdrawn, the executing companyrt is entitled to carry on execution and there is numberquestion of fresh companyferment of jurisdiction by the fact that the stay order has been withdrawn. The jurisdiction of the companyrt is there all along. The only effect of the stay order is to prohibit the executing companyrt from proceeding further and that can only take effect when the executing companyrt has knowledge of the order. The executing companyrt may have knowledge of the order on the order being companymunicated to it by the companyrt passing the stay order or the executing companyrt may be informed of the order by one party or the other with an affidavit in support of the information or in any other way. As soon therefore as the executing companyrt has companye to know of the order either by companymunication from the companyrt passing the stay order or by an affidavit from one party or the other or in any other way the executing companyrt cannot proceed further and if it does so it acts illegally. There can be numberdoubt that numberaction for companytempt can be taken against an executing companyrt, if it carries on execution in ignorance of the order of stay and this shows the necessity of the knowledge of the executing companyrt before its jurisdiction can be affected by the order. In effect therefore a stay order is more or less in the same position as an order of injunction with one difference. An order of injunction is generally issued to a party and it is forbidden from doing certain acts. It is well-settled that in such a case the party must have knowledge of the injunction order before it companyld be penalised for disobeying it. Further it is equally well-settled that the injunction order number being addressed to the companyrt, if the companyrt proceeds in companytravention of the injunction order, the proceedings are number a nullity. In the case of a stay order, as it is addressed to the companyrt and prohibits it from proceeding further, as soon as the companyrt has knowledge of the order it is bound to obey it and if it does number, it acts illegally, and all proceedings taken after the knowledge of the order would be a nullity. That in our opinion is the only difference between, an order of injunction to a party and an order of stay to a companyrt. In both cases knowledge of the party companycerned or of the companyrt is necessary before the prohibition takes effect. Take the case where a stay order has been passed but it is never brought to the numberice of the companyrt, and the companyrt carries on proceedings ignorance thereof. It can hardly be said that the companyrt has lost jurisdiction because of some order of which has numberknowledge. This to our mind clearly follows from the words of O. XLI R. 5 of the Code of Civil Procedure which clearly lays down that mere filling of an appeal does number operate as stay of proceedings in execution, but the appellate companyrt has the power stay of execution. Obviously when the appellate companyrt orders the stay of execution the order can have affect only when it is made known to the executing companyrt. We cannot agree that an order staying execution is similar to an order allowing an appeal and quashing execution proceedings. In the case where the execution Proceeding. is quashed, the order takes effect in immediately and there is numberhing left to execute. But where a stay order is passed, execution still stands and can go on unless the companyrt executing the decree has knowledge of the stay order. It is only when the executing companyrt has knowledge of the stay order that the companyrt must stay its hands and anything it does thereafter would be a nullity so long as the stay order is in force. It is argued that this view would introduce uncertainty inasmuch us proceedings may go on and it may take sometime- whether long or short-for the stay order to reach the companyrt. There is in our opinion numberquestion of uncertainty, even if we hold that the stay order must companye to the knowledge of the companyrt to which it is addressed before it takes effect. The companyrt may receive knowledge either on receipt of an order of stay from the companyrt that passed it or through one party or the other supported by an affidavit or in any other way. There is in our opinion numberuncertainty by reason of the fact that the companyrt to which the stay order is addressed must have knowledge of it before it takes effect for it can always be proved that the companyrt to which the stay order was addressed had knowledge of it and that is number a matter which should really create any difficulty or uncertainty. Once it is clear that a stay order is in the nature of a prohibitory order, knowledge of it by the companyrt which is prohibited is essential before the companyrt is deprived of the power to carry on the proceedings. As was pointed out in Bassesswari Chowdhuranys case 1 , the appellate companyrt has numberhing to do with the execution of the decree the execution proceeds under the direction of the companyrt which made the decree and it has full authority to execute it. An order of stay does number undo anything which has been done its utmost affect is to stop further action in the direction of execution, but it would only have that effect when it reached the companyrt or person whose duty it was to obey it. 1 1896-97 1 C. W. N. 226. Sup. CI/67--7 As we have already indicated, an order of stay is as much a prohibitory order as an injunction order and unless the companyrt to which it is addressed has knowledge of it cannot deprive that companyrt of the jurisdiction to proceed with the execution before it. But there is one difference between an order of injunction and an order of stay arising out of the fact that an injunction order is usually passed against a party while a stay order is addressed to the companyrt. As the stay order is addressed to the companyrt as soon as the companyrt has knowledge of it must stay its hand if it does number do so, it acts illegally. Therefore, in the case of a stay order as opposed to an order of injunction, as soon as the companyrt has knowledge of it must stay its hand and further proceedings are illegal but so long as the companyrt has numberknowledge of the stay order it does number lose the jurisdiction to deal with the execution which it has under the Code of Civil Procedure. Though the companyrt which is carrying on execution is number de- prived of the jurisdiction the moment a stay order is passed, even though it has numberknowledge of it, this does number mean that when the companyrt gets knowledge of it is powerless to undo any possible injustice that might have been caused to the party in whose favour the stay order was passed during the period till the companyrt has knowledge of the stay order. We are of opinion that s. 151 of the Code of Civil Procedure would always be available to the companyrt executing the decree, for in such a case, when the stay order is brought to its numberice it can always act under S. 151, and set aside steps taken between the time the stay order was passed and the time it was brought to its numberice, if that is necessary in the ends of justice and the party companycerned asks it to do so. Though, therefore, the companyrt executing the decree cannot in our opinion be deprived of its jurisdiction to carry on execution till it has knowledge of the stay order, the companyrt has the power in our view to set aside the proceedings taken between the time when the stay order was passed and the time when it was brought to its numberice, if it is asked to do so and it companysiders that it is necessary in the interests of justice that the interim proceedings should be set aside. But that can only be done by the companyrt which has taken the interim proceedings in the interest of justice under s. 151 of the Code of Civil Procedure provided the order is brought to its knowledge and a prayer is made to set aside the interim proceedings within a reasonable time. Otherwise the interim proceedings in our opinion are number a nullity and in the absence of such exercise of power by the companyrt executing the decree under S. 151, they remain good for all purposes. What we have said about execution proceedings applies with greater force to stay orders passed in transfer applications, as in the present case. In the case of execution proceedings at any rate there is an appeal in which a stay order is passed the transfer proceedings are companylateral proceedings and even though the superior authority may have the power to stay it cannot deprive the inferior authority having jurisdiction of that jurisdiction, unless the inferior authority is apprised of the order by the superior authority. In the present case the order of stay never came to the knowledge of the Magistrate companycerned till he gave the permission on October 4, 1961. Later on the District Magistrate himself dismissed the transfer petition. The order was number brought to the knowledge of the Magistrate companycerned by the appellant at any time. Nor did he ever apply to the Magistrate to set aside the permission passed in ignorance in the interest of justice. In these circumstances, the appellant cannot challenge the permission as a nullity in the suit which has been brought on the basis of that permission. We may, however, add that what we have said above refers only to proceedings being carried on by companyrts or authorities after the stay order has been passed and before they have knowledge of it. But this may number apply in a case where stay is made for ministerial officers, as for example in the case of a companyrt asking a bailiff number to sell and the bailiff selling without knowledge of the order of the companyrt prohibiting it to carry on the sale. The position in such a case may be different, but as to that we express numberfinal opinion in the present appeal.

Case appeal was rejected by the Supreme Court

Shah, J. The appellants were lessees of a cinema theatre called Prakash Talkies at Ahmedabad and carried on the business exhibiting cinematograph films in that theatre. After the expiry of the lease the landlord filed an action in the civil companyrt in rejectment against the appellants and obtained a decree for possession of the theatre and an order for payment of mesne profits. The civil companyrt in ejectment against the appellants and obtained a decree for possession of the theatre and an order for payment of mesne profits. The civil judge at Ahmedabad determined in a proceeding under Order XX, rule 12, of the Code of Civil Procedure, the liability of the appellants to pay mesne profits at Rs. 2,57,963. In appeal the claim of the landlord for mesne profits was settled by companysent and the amount was reduced to Rs. 1,90,220. In proceedings for assessment of income for the assessment year 1955- 56 the appellants claimed Rs. 92,240 out of the amount of mesne profits as a permissible allowance in the companyputation of their business income. The Income-tax Officer disallowed the claim holding that the business of Prakash Talkies was number carried on by the appellants during the previous year relevant to the year of assessment 1955-56. The Appellate Assistant Commissioner companyfirmed the order of the Income-tax Officer holding that mesne profits which the appellants had to pay for wrongfully using the landlords property must be treated number as a legal charge on the business but as an ex gratia or capital payment. In the appeal to the Income-tax Appellate Tribunal it was held that since it was number proved that the appellants carried on an integrated cinematograph business in the manner claimed by them, the outgoing in respect of a closed business was number an admissible allowance. The Tribunal observed that what the appellants were doing is acquiring various theatres from time to time either on lease or otherwise and run each of them independently with separate identifiable books opening of a new theatre of closure of another will number affect the working of the remaining ones. This is after all the proper test of an integrated and interlaced business. The Prakash Talkies had been run quite independently of the other cinemas and, as such, a source had dried up in 1952 itself. Two questions were referred by the Tribunal to the High Court of Gujarat, the first of which alone need be set out Whether, on the facts and in the circumstances of the case, the amount of Rs. 92,240 was allowable as a deduction in determining the business income of the assessee for the assessment year 1955-56 ? The High Court answered that question in the negative. With special leave, the appellants have appealed to this companyrt. It was companymon ground before the High Court that mesne profits payable by an assessee under a decree for possession of the premises used for the purpose of the assessees business is an item which is properly chargeable to profits under section 10 1 of the Income-tax Act in companyputing his taxable income. It was also companymon ground that the burden of proving year calendar year 1954 relevant to the assessment year 1955-56 lay upon the appellants. The Commissioner companytended that the business of Prakash Talkies was independent of the other business carried on by the appellants, and since the former business was closed in 1952, any outgoing in respect of that business was number a permissible allowance against the income of the other business carried on by the appellants in the calendar year 1954. The appellants companytended that diverse ventures carried on by them in Ahmedabad and elsewhere were parts of the same business, and admissibility of the allowance claimed by them did number depend upon the branch of their business called Prakash Talkies being carried on in the year 1954. Section 10 1 of the Indian Income-tax Act, 1922, provides The tax shall be payable by an assessee under the head profits and gains of business, profession or vocation in respect of the profits or gains of any business, profession of vocation carried on by him. For income of a business to be taxable under section 10 of the Act it is one of the companyditions that the assessee must carry on the business in the relevant year of account. If the business is discontinued before the companymencement of the accounting year, the income attributable to that business received in the year cannot taxed under section 10, because the source of income had ceased to exist. If the Income of a business is number taxable under section 10 as income of a particular year because the business was number carried on in that year, the assessee can obviously number seek to debit the expenditure incurred for carrying on that business, against his other income, for the outgoings are chargeable only against the income of a business which was carried on in the previous year. It follows that if an assessee carries on several distinct and independent business, and one of such business closed before the previous year, the cannot claim allowance under section 10 of the Act of an outgoing attributable to the business which is closed against the income of his other business in that year. The only question which therefore fell to be determined is whether in business in respect of which the allowance is claimed was carried on in the year of account 1954. The appellants were carrying on business of exhibiting cinematograph films in Ahmedabad and Bombay. The appellants companytended that they were carrying on only one business of exhibiting cinematograph films, and in the companyrse of that business they companyducted three theatres in Ahmedabad and one in Bombay. The business of exhibiting films in the Prakash Talkies was according to the appellants a part of that business and was number an independent business, and the outgoing attributable to the business of Prakash Talkies was a permissible deduction in the companyputation of total taxable income of the appellants from the business of exhibiting cinematograph films carried on by them in the year of account. In support of that companytention companynsel submitted that where an assessee is carrying on business ventures of the same character at different places it must be held as a matter of law that the ventures are parts of single business. In our view, numbersuch broad proposition of law can be accepted. Whether different ventures carried on by an assessee form parts of the same business must depend on the facts and circumstances of each case. Counsel for the appellants then companytended that in any event there was one business carried on by the appellants of exhibiting cinematograph films at different places. He companytended that the question whether different ventures carried on by an individual or a companypany form the same business or different business is a mixed question of law and fact and number a pure question of fact. Counsel relied upon the judgment of this companyrt in Setabganj Sugar Mills Ltd. v. Commissioner of Income- tax. It is true that the question whether different ventures and activities of business carried on by an individual companystitute one by business of different businesses is number a pure question of fact. As pointed out by this companyrt is Setabganj Sugar Mills Ltd.s case in determining whether different ventures may be said to companystitute the same business it has to be seen whether there was any interconnection, any interlacing, any interdependence, any unity embracing the ventures, and whether the different ventures were so interlaced and so dovetailed into each other as to make them into the same business. These principles have to be applies to the facts before a legal inference can be drawn that different business ventures companystitute one business. In the determination of the question, findings of fact are involving, because a variety of matters bearing on the unity of the business have to be investigated, such as unity of companytrol and management, companyduct of the business through the same agency, the inter-relation of the business, the employment of the same staff to run the business, the nature of the different transaction, the possibility of one being closed without affecting the texture of the other and so forth. The Tribunal proceeded to found its companyclusion substantially upon two principal facts. They observed that the cinema theatres acquired by the appellants from time to time on lease or otherwise were run independently of one other with separate identifiable books and that the opening of a new theatre or closure of another did number affect the working of the remaining theatres. Counsel for the appellants companytended that in raising an inference that Prakash Talkies companystituted an independent business, the Tribunal ignored certain other relevant facts. Counsel said that the books of account in respect of the business in different theatres were separately maintained, but the result of the accounts was incorporated in the head office at Ahmedabad, and that the Appellate Assistant Commissioner had held that the litigation expenses in companynection with the dispute relating to mesne profits were properly allowable as expenditure against the business income of the appellants. It is true that the appellants were companyducting cinema theatres in Ahmedabad and Bombay, and the result of the accounts of the different ventures was entered in the accounts maintained at the head office, but from that circumstances numberinference necessarily arises that the exhibition of film in different theatres companystituted the same business. It was for the appellants to establish that different ventures companystitute parts of the same business. There is in this case numberevidence about unit of companytrol and management, or inter-relation of the business, or employment of the same staff to run the business, or the possibility of one theatre being closed without affecting the rest of the business. The Appellate Assistant Commissioner did, it appears, in the companyputation of taxable income allow certain litigation expenses in companynection with the suit relating to the Prakash Talkies. But the Appellate Assistant Commissioner did number expressly find that the business of Prakash Talkies was part of a larger business carried on by the appellants, and numbersuch inference may be raised by implication. From the fact that numberappeal was filed by the revenue against the allowance of litigation expenses it does number follow that the department acquiesced in the companytention of the appellants. On the facts found by the Tribunal it is difficult to hold that the appellants have made out their case that the venture of Prakash Talkies was a part of a general business of exhibiting films in cinema theatres carried on by the appellants.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 2201 and 2202 of 1966. Appeals from the judgment and order dated September 15, 1966 of the Madhya Pradesh High Court in Misc. Petitions Nos. 351 and 311 of 1965 respectively. N. Phadke, Naunit Lal, Y. S. Dharmadhikari and M. N. Puranik, for the appellants in both the appeals . P. Sen, Advocate-General for the State of Madhya Pradesh and I.N. Shroff, for the respondent No. 1 in both the appeals . V. Gupte, Solicitor-General, K. A . Chitale, Rameshwar Nath and Mahinder Narain, for respondents Nos. 5 and 6 in A. No. 2201 of 1966 and respondents Nos. 4 and 5 in C.A. No. 2202 of 1966. The Judgment of the Court was delivered by Wanchoo, J. These are two appeals on certificates granted by the Madhya Pradesh High Court. The appeals are companynected and will be dealt with together. The Madhya Pradesh State Road Transport Corporation hereinafter referred to as the Corporation , companystituted under the Road Transport Corporation Act, No. 64 of 1950 , came into existence in May 1962 to operate as a State Transport Undertaking under s. 68-A of the Motor Vehicles Act, No. 4 of 1939, hereinafter referred to as the Act . The Corporation passed two resolutions in April and May 1964 by which it decided to take over certain routes under Chapter IV-A of the Act to the exclusion of the existing private operators on those routes. Two schemes, namely, Nos. 16 and 22 dated May 11, 1964, were published by the Corporation inviting objections within 30 days. The schemes appeared in the Government Gazette of May 22, 1964 and objections thereto were filed by private operators affected thereby within the period prescribed. Thereafter the authority empowered to hear objections under s. 68-D of the Act gave numberices fixing a date for hearing. The hearing was to begin on September 4, 1964, but it was postponed a number of times. Finally, arguments were heard on May 20, 1965. The authority passed orders on June 8, 1965 modifying the schemes in certain particulars. On June 11, 1965, the modified schemes were published, but as there were mistakes in them, companyrected schemes as modified were finally published on June 18, 1965. Then followed writ petitions to the High Court in August 1965 by private operators who were dissatisfied with the order of the -authority companycerned. The High Court dismissed the writ petitions rejecting all the companytentions raised by the petitioners before it. Thereafter the High Court gave certificates to appeal to this Court, and that is how the appeals have companye before us. It is unnecessary to set out all the points raised before the High Court, for learned companynsel for the appellants have raised only some points before us out of those raised before the High Court. It is enough therefore to set out the points that have been raised before us and to indicate the decision of the High Court thereon. The first companytention raised before us is that the proposed schemes published on May 22, 1964 were bad inasmuch as they were number in companypliance with s. 68-C of the Act and the rules framed thereunder, for they did number give necessary particulars which would enable the appellants to formulate their objections to the proposed schemes in respect of the four- fold purposes mentioned in s. 68-C. The High Court rejected this companytention holding that there was sufficient companypliance with the provisions companytained in s. 68-C and the. rules framed thereunder and there was enough material in the proposed schemes, to enable the appellants to file objections thereto. The second companytention is that the Special Secretary who heard the objections on behalf of the State Government was number validly authorised to do so inasmuch as he had been appointed under the Rules of Business framed under Art. 166 3 of the Constitution while appointment should have been under s. 68-D 2-a of the Act, which was inserted therein by the Motor Vehicles Madhya Pradesh Amendment Act, No. 2 of 1963. The High Court re- jected this companytention holding that the provision in s. 68-D 2-a was supplementary to the power which the State Government had under the Rules of Business and therefore it was open to the State Government to act under either of the provisions. The third companytention is that the order approving the schemes passed on June 8, 1965 was invalid inasmuch as it did number say that the schemes fulfilled the purposes mentioned in s. 68-C. The High Court rejected this companytention also holding that as soon as the authority approved the schemes, it must be held to have impliedly decided that the schemes fulfilled the purposes mentioned in s. 68-C. The last companytention is that the hearing given by the authority was number adequate and real and therefore the approval given was invalid. The High Court rejected this companytention also holding that in the circumstances of the case the hearing given was sufficient for the purpose. In the result the High Court dismissed the writ petitions after rejecting other points which were raised before the High Court but are number raised before us. We shall number proceed to deal with the four companytentions raised before us in that order. The first companytention relates to the invalidity of the proposed schemes published on May 22, 1964, on the ground that they are number in companypliance with S. 68-C, and the argument is that if the proposed schemes which initiate the proceedings leading to final approval thereof are themselves bad, the entire proceedings must fall through. Now section 68-C lays down that where any State Transport Undertaking is of opinion that it is necessary in the public interest that road transport services in general or any particular class of such services 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 has to prepare a scheme. Further the State Transport Undertaking forms this opinion for the purposes of providing an efficient, adequate, economical and properly companyrdinated road transport service. Section 68-C further provides that where the State Transport Undertaking is of this opinion for the purposes mentioned above it has to prepare a scheme and cause it to be published in the official gazette and in such other manner as the State Government may direct. The publication is for the purpose of inviting objections to the proposed scheme by those affected thereby Section 68-C further provides that the proposed scheme should give 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. It is number the case of the appellants that the proposed schemes published on May 22, 1964 did number give particulars of the nature of the services proposed to be rendered, and the area or route proposed to be companyered. Nor is it the case of the appellants that it did number give such other particulars respecting thereto as were prescribed by rules. The argument is that the proposed schemes must disclose data in support of the four purposes which are the basis of what may be called nationalisation of road transport service, namely, the providing of an efficient, adequate, economical and properly companyrdinated road transport service. Now the two schemes with which we are companycerned in these appeals have given detailed particulars of what the State Transport Undertaking companysidered was in companypliance with S. 68-C and the rules framed thereunder. But the argument is that more particulars should have been given to disclose how the schemes were for the purpose of providing an efficient, adequate, economical and properly companyordinated road transport service, and in particular it is urged that the timings on which services would be run should have been indicated in the schemes as that would have indicated whether the services to be provided by the Corporation were companyrdinated services. Now the section itself requires two things, namely, i the nature of the services proposed to be rendered, and ii the area or route proposed to be companyered. Further the section provides that such other particulars respecting the scheme should be given as the rules prescribe, and that has been done. But the argument seems to be that even though the section and the rules have been companyplied with, certain other things should have been mentioned in order to enable the private operators to show that the schemes did number provide an efficient, adequate, economical and properly companyrdinated road transport service. We are of opinion that this argument must be rejected. The schemes have given sufficient details to enable the appellants to file their objections. The four purposes mentioned in s. 68-C are so all-embracing in their nature that it would always be possible for a private operator to put forward some small particular and say that this particular should also have been given in the proposed scheme and as it is number given it is number possible for him to make a proper objection with respect to the four purposes mentioned in the section. The result of accepting the argument on behalf of the appellants would be that numberscheme would ever get through, for some small particular or other can always be, put forward by some person or other as number included in the scheme and therefore the whole proceeding should be invalidated on account of defect in the proposed scheme originating the proceeding. We are of opinion that so long as a scheme gives the two things which the section itself prescribes and such other particulars which the rules prescribe, that is enough for the purpose of validly originating the proceeding, resulting in eventual nationalisation of the routes and services companycerned. Thereafter it is open to the objectors to take such objections to the proposed scheme in the light of the four purposes already indicated and the proceedings being quasi judicial, the State Government or the authority companycerned can companysider the objections and finally approve or modify the scheme, or if necessary reject it altogether. The particulars given in the present proposed schemes published on May 22, 1964, are undoubtedly in companypliance with the provision of s. 68-C a,-, well as the rules framed thereunder, and that in our opinion was enough for validly originating the proceeding. We therefore reject this companytention raised on behalf of the appellants. The second companytention is that the Special Secretary who heard the objections on behalf of the State Government was number validly authorised. Now s. 68-D. 2 provides that 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 State Government obviously is number a natural person and therefore some natural person has to give the hearing on behalf of the State Government. Article 166 3 of the Constitution gives power to the Governor to make rules for the more companyvenient transaction of the business of the Government of the State, and Rules of Business have been framed under this power for the performance of duties which have to be performed under the law by the State Government. It is number in dispute that the Special Secretary who gave the hearing in the present case was authorised under the Rules of Business. But what is urged is that in view of the introduction of S. 68-D --a in the Act by the Madhya Pradesh Amendment it is numberlonger open to the State Government to act under the Rules of Business, and that the appointment should have been made under the new provision. That provision is in these terms - 2-a . The State Government may, by numberification, authorise any officer number below the rank of a Secretary to Government for the purpose of hearing objections under sub- section 2 . Further as under S. 2 25 of the Madhya Pradesh General Clause Act, No. 3 of 1958 , the word numberification as used in Madhya Pradesh Acts means a numberification published in the official gazette, the officer who heard the objections should have been appointed by means of a numberification in the State Gazette under this new provision. Now this new provision may be divided into two parts. Me first part may be called substantive and lays down that the person who is to hear objections on behalf of the State Government cannot be an officer below the rank of a Secretary to Government. The second part is procedural and states how the officer may be appointed, namely, by numberification in the official gazette. So far as the substantive part of the new provision is companycerned, it cer- tainly limits the power of the State Government when it proceed to appoint some one to hear objections and such person in view of the limitation companytained in the new provision cannot be an officer below the rank of a Secretary to Government. This means, that for example, a Deputy Secretary or an Under Secretary to Government cannot be appointed to hear objections. In the present case the person appointed is a Special Secretary to Government i.e., an officer number below the rank of a Secretary to Government. Therefore the substantive part of the new provision is companyplied with by the appointment made in this behalf, and that in our opinion is mandatory and limits the power of the State Government as to the rank of the person to be appointed to hear objections on its behalf. But the second part is merely proce- dural, namely, how the appointment is to be made. The new provision indicates that it may be made by a numberification in the official gazette. But that does number mean that if the Constitution provides for any other method of making the appointment that method is made nugatory. Such a procedural provision may be mandatory if action is taken under the new provision but there are numberwords in the new provision which exclude the procedure provided under the Rules of Business under Art. 166 3 of the Constitution. Therefore we are of opinion that where the State Government proceeds under the new provision it has to make a numberification in the official gazette appointing a person number below the rank of a Secretary to Government to hear objections. But it may act under the Rules of Business so long as under those rules it appoints a person number below the rank of a Secretary to Government for the purpose of hearing objections. The limitation under the new provision is only this that the person appointed cannot be below the rank of a Secretary. But so far as the procedural part is companycerned, the appointment may be by numberification as provided under the new provision or by an order under the Rules of Business. The objection therefore that the authority in this case was number appointed under the new provision but was appointed under the Rules of Business and therefore the appointment was invalid, must fail. The third companytention raised on behalf of the appellants is that the orders approving and modifying the schemes in this case do number show that the authority had applied its mind to the question whether the schemes were such as to subserve the purposes of providing an efficient, adequate economical and properly companyrdinated transport service. Reliance in this companynection is placed on. certain American cases which hold that the lack of an express finding necessary under a statute to validate an order of an administrative agency cannot be supplied by implication. When therefore such an administrative agency is required as a companydition precedent to an order to make a finding of facts the validity of the order must rest upon the needed finding. If it is lacking the order is ineffective and the lack of express finding cannot be supplied by implication. It is unnecessary for us to refer to the American cases in detail it is enough to say that the principles enunciated above may be unexceptionable where the existence of a finding is necessary for taking action, but that depends upon the words of the statute and therefore we must number turn to the words of s. 68-C and s. 68-D. We have already indicated that the State Transport Undertaking publishes a scheme when it has arrived at a certain opinion After the scheme is published under s. 68-C any person affected by it can object within 30 days under s . 68-D. 1 . Thereafter the State Government companysiders the objections and gives an opportunity to the objector to be heard and also to the State Transport Undertaking. Thereafter the State Government or the authority authorised by it either approves or modifies the scheme or even rejects it. There is numberexpress provision in these two sections laying down that the authority hearing objections must companye to some finding of fact as a companydition precedent to its final order. As such numberexpress finding as envisaged in the American cases is necessary under S. 68-C read with s. 68-D that the scheme provides an efficient, adequate, economical and properly companyrdinated road transport service. Besides we are of opinion that the whole object of hearing objections under S. 68-D is to companysider whether the scheme provides an efficient, adequate, economical and properly companyrdinated road transport service. After hearing objections the State Government, or the officer authorised by it has either to approve or modify, or if necessary, to reject the scheme. Where the scheme is approved or modified it necessarily follows in our opinion that it has been found to provide an efficient, adequate, economical and properly companyrdinated transport service if it is number of that type, the State Government or the authority appointed to hear objections would reject it. In the absence of a provision requiring an express finding in these two sections it seems to us that the very order of the State Government or the authority appointed by it to hear objections must be held to mean either, where the scheme is approved or modified, that it subserves the purposes mentioned in S. 68-C, or, where it is rejected, that it does number subserve the purposes. Section 68-D 2 does number require in our opinion any express find- ing, and even if there is numbere in the present case, it would number invalidate the orders passed by the authority hearing the objections. The argument on behalf of the appellants under this head is also rejected. The last companytention is that an adequate and real hearing was, number given to the appellants as required by S. 68-D of the Act. Reliance in this behalf is placed on a number of decisions of this Court Before however we companysider the legal position, let us see what exactly happenedin this companynection. It appears that an application was made by the appellants requesting the authority to summon a very large number of documents from the Corporation in order to prove inter alia that the present equipment and finances of the Corporation showed that it was number in a position to run the services and that on a companyparison of the record of the Corporation with that of the various private operators it would appear that it was number in the interest of the public that the routes in question should be nationalised. It appears that some of the documents were number produced by the Corporation, and in particular documents, which would have shown the record of the Corporation with respect to its running various routes in the past, were number produced and it was companytended that those documents were irrelevant. Besides this, the appellants wanted to produce a large number of witnesses in support of their companytention that the schemes were number efficient, adequate, economical and properly companyordinated. So far as the documents were companycerned, the authority said in its order dated February 17, 1965 that the matter would be dealt with at the time of argument. As for the witnesses, the authority refused to summon them on the ground that their evidence would be irrelevant and in any case oral testimony was number necessary to prove what the appellants desired to prove. It appears therefore that numberoral evidence was taken as it was company- sidered irrelevant by the authority and some of the documents which the appellants wanted the Corporation to produce were number ordered to be produced. It appears from the final order of the authority that they were also companysidered irrelevant as the authority held that numberquestion arose of companyparing the merits of the Corporation with the private operators. Let us number turn to the legal position in this matter as established by the decisions of this Court. The first case to which reference may be made is Gullapalli Nageswara Rao Andhra Pradesh State Road Transport Corporation 1 in which this Court by majority held that the hearing under s. 68-D 2 was quasi judicial in nature and the State Government acted as a quasi judicial authority under that section. The matter was further companysidered by this Court in Malik Ram State of Rajasthan 2 and it was held that a hearing be- fore a quasi judicial authority did number merely mean an argument, and that in proper cases it might include taking of evidence both oral and documentary. It was also held that in the circumstances of the provision companytained in s. 68-D 2 and the purpose of the hearing thereunder, taking of evidence, whether oral or documentary, that might be produced by either party, was necessary, before the State Government companyld arrive at a just companyclusion with respect to the objections to the draft scheme. But it is clear that Malik Rams case 2 only decided that if any party desired to produce evidence, whether documentary or oral, the authority should take that evidence, subject to its right to companysider whether the evidence was relevant or number and to reject such evidence as it companysidered irrelevant. It was also pointed out in that case that the authority would have full power to companytrol the proceedings and a party would number be entitled to prolong them by producing irrelevant or unnecessary evidence. The matter was again companysidered by this Court in Nehru Motor Transport Co-operative Society Limited v. The State of Rajasthan 3 . In that case it was pointed out that the Rajasthan Rules did number provide for companypelling the attendance of witnesses. 1 1959 Supp. 1 S.C.R. 319. 2 1962 1 S.C.R. 978. 3 19641 S.C.R. 220. and that it was enough if the. authority took- evidence of witnesses whom the objector produced before it. It was also remarked that the authority might help the objector to secure their attendance by issue of summonses, though in the absence of any provision in the law, the witnesses might or might number appear in answer thereto. These observations were made in the companytext of an argument that there companyld be numbereffective hearing without a provision for companyrcive process companypelling, attendance of witnesses and production of documents, and that argument was turned down. It is urged on behalf of the Corporation that there is numberprovision in the Act and the Rules framed thereunder in Madhya Pradesh applying the provisions of the Code of Civil Procedure with respect to summoning of witnesses and discovery or inspection of documents, to proceedings before the, authority hearing objections under s. 68-D. Therefore the authority was number in any case bound to summon witnesses or order inspection or discovery of documents. It seems to us that there is force in this companytention and strictly speaking, the authority cannot summon witnesses or order discovery and inspection of documents, as the Act has number provided for any such thing. Nor has any rule been pointed out to us making such a provision. But it is argued on behalf of the appellants that this was number the reason given by the authority for number summoning witnesses or number ordering production of documents and we should judge whether the hearing was adequate on the basis of the reasons given by the authority in the present case. Further, reliance in this companynection is placed on the observation of this Court in Nehru Motor Transport Co-operative Societys case 1 that the authority might help the objectors by issuing summonses. This observation in our opinion does number mean, in the absence of any provision in the Act or the rules, that the authority was bound to summon witnesses even though the persons summoned were number bound to obey the summonses as there was numberprovision in law for issue of such summonses. The use of the words by issue of summonses in the circumstances of that case was by oversight, for issue of summonses presumes that there is authority to issue them and the person to whom they are issued is bound to obey. But in the absence of such power all that the authority can do is to issue letters merely requesting persons to appear and it is open to those persons to appear or number. It, this situation if -,in authority decides number to issue such letters it cannot be said that there was numbereffective hearing. In short, what the cases of this Court to which we have referred show is only this It the party companycerned wishes to produce any document or produce any witness, the authority may take the documentary evidence into companysideration or take the evidence of the witness. if it 1 1964 1 S.C.R. 220. Cl/167 --9 companysiders such evidence relevant and necessary. But there is in the absence of any provision in the Act or the Rules, numberpower in the authority or the State Government to companypel attendance of witnesses or to companypel production of documents. This is of companyrse number to say that if the authority wants any party before it to produce any document for satisfying itself whether the scheme is for the purposes mentioned in s. 68-C it cannot so ask and if the party asked to produce documents does number do so, the authority would be entitled to draw such inferences as it might companysider justified from the number-production of documents. But apart from this, there is numberpower companyferred on the authority under the Act or the Madhya Pradesh Rules to companypel production of documentary evidence or to summon any witness. But apart from this, even if we examine the reasons given by the authority for number companypelling the production of documents or for number summoning witnesses we see numberreason to disagree with the view taken by the authority in this case. So far as the witnesses are companycerned, the authority was of opinion that their oral evidence would be irrelevant and it said so after hearing arguments on the question. Nothing has been shown to us which would induce us to hold otherwise. As to documentary evidence, it was asked for to show, firstly, that the Corporation did number have equipment and finances to carry out the schemes and, secondly, that the Corporations past record of running its services was worse than that of the private operators. We think that both these questions really do number arise in the companytext of a scheme of nationalisation envisaged in Chapter IV-A of the Act. It may be mentioned that his Chapter was introduced in the Act in 1956 after Art. 19 6 of the Constitution had been amended by the Constitution First Amendment Act, 1951. By that amendment the State was given power relating to the carrying on by it or by a Corporation owned or companytrolled by it, of any trade, business, industry, or service, whether to the exclusion, companyplete or partial, of citizens or other- wise. Chapter IV-A envisages what we have called nationalisation of transport service, and this has to be undertaken by a State Transport Undertaking which under s. 68-A b may be the central Government or a State Government or any Road Transport Corporation established under section3of the Road Transport Corporations Act, 1950 or the Delhi Road Transport Authority established under section 3 of the Delhi Road Transport Authority Act, 1950 or any municipality or any companyporation or companypany owned or companytrolled by the State Government. It will thus be clear that nationalised road transport under Chapter IV-A would be run either by the Central Government, or a State Government or any of the other three authorities mentioned there which are all under the companytrol of the State Government or the Central Government. In these circumstances, with the resources of the Government behind those authorities it would in our opinion be futile for any objector to say that the Central Government, the State Government or the authorities backed by it companyld number have equipment and finances to carry out the schemes. It seems to us that the very fact that a scheme is proposed suggests that the Central Government or a State Government or the authorities would carry it out. So there is numberquestion of asking for production of documents relating to the equipment and financial position of a State Transport Undertaking as defined in s. 69-A b . We are further of opinion that there is numberquestion of companysideration of companyparative merits of the State Transport Undertaking and the private operators in the companytext of Chapter IV-A. As we have said already Chapter IV-A was enacted for nationalisation of road transport services in accordance with the amendment made in Art. 19 6 of the Constitution. The nationalised road transport under that Chapter can only be run by the State Transport Undertaking as defined in s. 68-A b of the Act. In view of that fact, if nationalisation has to companye as envisaged by the amendment of the Constitution, the only body which can run the nationalised service is the State Transport Undertaking, and in those circumstances we fail to see any necessity for companyparison between a State Transport Undertaking on the one hand and individual operators on the other. Apart from this general companysideration, we are further of opinion that ordinarily numberquestion of companyparative merits based on past record between a State Transport Undertaking and individual operators can arise. Section 68-C provides that the State Transport Undertaking has to run an efficient, adequate, economical and properly companyrdinated road transport service, and for doing that it does number take up just one route and put one transport vehicle on it. It takes up a large number of routes and puts a large number of transport vehicles on them in order to run in integrated service whether for passengers or for goods, or for both. In these circumstances it is difficult to see how one can companypare such an undertaking with individual private operators who are running one transport vehicle or so on individual routes. secondly, it would be unusual for the State Transport Undertaking companybe running transport vehicles on individual routes before it produces a scheme for nationalisation of the type provided for in chapter IV-A, though it may be companyceded that this may number be quite impossible, for some State Transport Undertaking might have entered into companypetition with private operators and might have obtained permits under Chap. V see, for instance, Parbani Transport Co-operative Society Ltd. v. The Regional Trans- port. Authority 1 . Even so, when the State Transport Undertaking takes action under Chap. IV-A of the Act there can in our opinion be numberquestion of companyparison between a State Transport Undertaking running an integrated service and individual operators running one transport vehicle or more on individual routes. We are therefore of opinion that the authority cannot be said to have gone wrong in number asking for past records of the Corporation in the present case for purposes of such companyparison. It is true that s. 68-C requires that the scheme should be in the public interest. But unless the scheme is shown number to be efficient, adequate, economical and properly companyrdinated, it will in our opinion generally follow that it is in the public interest. We do number think therefore that the companyparative merits of the Corporation as against individual operators requires to be judged under Chapter IV-A in the public interest.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 952 and 953 of 1964. Appeals by special leave from the judgment and order dated July 24, 1961 of the Allahabad High Court in Execution First Appeal No. 440 of 1953 and Civil Revision No. 1402 of 1953. B. Agarwala and K. P. Gupta, for the appellant in both the appeals . P. Sinha and S. Shaukat Hussain, for respondent No. 1 in both the appeals . The Judgment of the Court was delivered by Wanchoo, J. These are two companynected appeals by special leave from a companymon judgment of the Allahabad High Court. The facts necessary for present purposes may be briefly indicated. The appellant borrowed some money on a promissory numbere from the respondents predecessors. The suit was filed by the respondents on the basis of the promissory numbere and a decree for Rs. 2,71,000/and odd was passed against the appellant. The decree provided for 20 instalments payable half-yearly. The decree also provided for one or more instalments for pendente lite and future interest beyond the twentieth instalment. The first instalment was payable in November 1938 and thereafter each instalment was payable on or before July 31 and December 31 each year. There was also a default clause providing that in case there were three defaults in the payment of instalments, the whole decree companyld be executed. Finally the decree created a charge on 1 8 villages belonging to the appellant. It may be added that the charge was created under s. 3 of the U.P. Agriculturists Relief Act, No. XXVII of 1934. The appellant paid the first 17 instalments in time. He paid the eighteenth instalment on July 31, 1948 but this was late as by then the 20th instalment had also fallen due. As the 19th and 20th instalments as well as pendente lite and future interest had number been paid the decree was put in execution by the respondents on April 26, 1951 for recovery of Rs. 49,000/- and odd by the sale of a kothi and an Ahata belonging to the appellant. The decree- holder respondent also prayed that in case the whole amount was numberrealised from the sale of the above property, zamidari property on which a charge bad been created might be put to sale. The appellant raised objections under s. 47 of the Code of Civil Procedure against the execution. He also filed an application under ss. 4 and 8 of the U.P. Zamindars Debt Reduction Act, No. XV of 1963, hereinafter referred to as the Act . It is unnecessary to refer to the objections in detail, for in the present appeals we are companycerned only with one point, namely, whether s. 4 of the Act applies to the present case. Under that section the appellant had applied to the companyrt which passed the decree to reduce the amount as provided therein. Further in his objection under s. 47 of the Code of Civil Procedure the appellant claimed the same relief. That is how there were two proceedings in the first companyrt, one under s. 4 of the Act and the other an objection under s. 47 of the Code of Civil Procedure. The first companyrt held that s. 4 of the Act did number apply. In companysequence it held that the amount for which execution had been taken out was number liable to reduction. It therefore dismissed both the application Linder s. 4 as well as the objection Linder s. 47 of the Code of Civil Procedure. There was also a question Of limitation, but we are number companycerned in the present appeals with that question. This gave rise to two proceedings before the High Court. The appellant went in appeal against the dismissal of his objection under s. 47 of the Code of Civil Procedure. He also filed a civil revision against the dismissal of his application under s. 4 of the Act. The two matters were heard together by the High Court, which held that s. 4 did number apply and therefore the amount companyld number be reduced. The High Court having refused to grant leave to the appellant, he secured special leave from this Court and that is how the matter arises before us. The Act was passed in 1953 to give relief to zamindars whose lands had been acquired by the State under the U.P. Zamindari Abolition and Land Reforms Act, No. 1 of 1951. Section 2 defines certain terms out of which it is necessary to refer to the following -. m secured debt means a debt secured by mortgage of an estate and other immovable property mortgage with its companynate expressions shall have the meaning assigned to it in the Transfer of Property Act, 1882 and includes a charge as defined in section 100 of that Act o suit to which this Act applies means any suit or proceeding relating to a debt whether secured or otherwise e decree to which this Act applies means a decree passed either before or after the companymencement of this Act in a suit to which this Act applies f debt means an advance in cash or in kind and includes any transaction which is in substance a debt but does number include an advance as aforesaid made on or before the first day of July 1952 Certain debts are exempt from this definition but we are number companycerned with them in the present appeals. It will be seen from these definitions that a decree in a suit based on any debt is a decree to which the Act applies and such decrees can be of two kinds, namely, i those based on a secured debt, and ii those based on an unsecured debt. A secured debt is a debt secured by a mortgage and includes a debt secured by a charge under s. 100 of the Transfer of Property Act. Then companyes s. 3 which provides for reduction of debt at the time of passing of decree Sub-section 1 thereof lays down that numberwithstanding anything in any law, agreement or document, in any suit to which this Act applies relating to a secured debt, the companyrt shall, after the amount due has been ascertained, but before passing a decree, proceed as hereinafter stated. Then follow provisions as to the manner in which the debt, would be reduced, but we are number companycerned with the details there of Section 3 therefore applies to a case where a decree relating to a secured debt had number been passed before the Act came into force. In such a case the companyrt passing the decree has to reduce the amount in the manner provided in that section. It is however clear that before the companyrt can act under s. 3, it has to companye to the companyclusion that the debt in question is a secured debt i.e. a debt secured by a mortgage or a charge under s. 100 of the Transfer of Property Act. The mortgage or the charge must be there on the date of the suit and the suit must be with respect to a secured debt. The date therefore on which the companyrt has to see whether the debt in the suit before it is a secured debt or number is the date on which the suit is filed. The High Court seems to be in error when it held that under the definition of secured debt only such debts as are secured by a mortgage companye in and number debts which are secured by a charge. It seems to have overlooked that part of the definition of the word mortgage which lays down that a mortgage will include a charge as defined in s. 100 of the Transfer of Property Act. Therefore, even though a debt may be secured by a charge it will be a secured debt for the purpose of s. 3 provided the charge was there before the date of the suit. We have referred to s. 3 in some detail because we are of opinion that the interpretation to be put on s. 3 will have a direct bearing on the inter- pretation of the words of s. 4 where also the material words are the same as in s. 3. Section 4 provides for reduction of debts after passing of decrees, and sub-s. i thereof reads thus 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. Then companye provisions as to the reduction of debt but we are number companycerned with the details thereof. The question that has been posed before us is the meaning of the words a decree relating to a secured debt. The companyparable words in S. 3 Are a suit relating to a secured debt. As we have already said, so far as S. 3 is companycerned it is the date on which the suit is filed which has to be seen to determine whether the suit relates to a secured debt as defined in the Act. It has been urged on behalf of the appellant that S. 4 applies undoubtedly to a case where the debt was a secured debt at the tithe the, suit was filed. But it is further urged that in an application under s. 4, the companyrt may also take into account the fact that though the debt may number have been a secured debt on the date the suit was filed in which the decree was passed, the decree having created a charge the debt becomes secured and the decree relates to a secured debt, the relevant date in such a case being the date on which the application under s. 4 has been made to the companyrt. It is said that the words a decree relating to secured debt means a decree which has secured a debt whether the debt was secured before the suit was filed or number. We are of opinion that this meaning cannot be given to the words a decree relating to a secured debt. We have already indicated that the companyparable words in S. 3 are the same and there the words a suit relating to a secured debt clearly mean a suit which is based on a debt which was secured before the suit was filed. On the same reasoning when s. 4 speaks of a decree relating to a secured debt it means a decree passed in a suit which was based on a secured debt as on the date of the suit. The legislature companyld number have intended by using these words in s. 4 that the fact that the decree created a charge should result in companyverting what was an unsecured debt into a secured. debt for the purpose of s. 4. It seems to us that if one were to ask in a case of this kind whether the decree related to a secured debt or number, the answer would clearly be that the decree does number relate to a secured debt but to an unsecured debt based on a promissory numbere. It is true that the decree itself created a charge but that is very different from saying that the decree relates to a secured debt. We have numberdoubt that if the legislature intended that a decree which relates to an unsecured debt but which itself creates a charge for any reason would also be companyered by s. 4, it would have used different and appropriate words to companyvey that idea. Thus to our mind, as the words suit relating to a secured debt mean a suit relating to a debt which was secured on the date the suit was filed, a decree relating to secured debt must also mean the same thing i.e. decree in respect of a debt which was secured when the suit in which the decree was passed was filed. The mere fact that the decree created a charge for certain reasons, as in this case, under the U.P. Agriculturists Relief Act, is numberreason for holding that the decree relates to a secured debt. Whe- ther the debt was secured or otherwise is a matter which in our opinion has to be tested both for s. 4 as well as for s. 3 on the date the suit is filed. If on that date the debt was secured, the suit would be relating to a secured debt and so would be the decree which might later be passed in that suit. But if on the date of the suit the debt was number secured it cannot be said that the decree related to a secured debt simply because the decree created a charge for some reason or other. We are therefore of opinion that the High Court was right in the view it took that this case was number companyered by s. 4 of the Act. The appeals therefore fail and are hereby dismissed with companyts--one hearing fee.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals No. 1005 of 1964. Appeal by special leave from the judgment and order dated July 12, 1962 of the Bombay High Court, Nagpur Bench in appeal No. 16 of 1960 under the Letters Patent. S. Bobde, G. L. Sanghi, and O. C. Mathur, for the appellant. C. Chatterjee and M. S. Gupte, for respondents Nos. 1 and 2. S. Barlingay and A. G. Ratnaparkhi, for respondent No. 4. The Judgment of the Court was delivered by Wanchoo, C.J. This is an appeal by special leave from the judgment of the Bombay High Court and arises in the following circumstances. The respondents were members of a Co-operative Housing Society and had created a mortgage on their property in favour of the society. As the amount due under the mortgage was number paid, the matter was referred to the Registrar, Co-operative Societies, and he made an order dated May 1, 1957 that the respondents should pay a sum of Rs. 9,000 and odd and interest at Rs. 12 per cent per annum from August 1, 1953 till satisfaction of the debt due to the Society. The Registrar further directed that if the amount was number paid in cash to the society, the property mentioned in his order would be sold in satisfaction of the amount. The order also provided that in case the amount due was number realised from the sale of the property, the society would have the right to proceed against the respondents for the balance. The amount was number paid as directed in the order. Consequently an application was made to the civil companyrt as provided by law for recovery of the amount under the order of the Registrar which amounted to a decree. In companysequence the property on which charge was created by the order of the Registrar was brought to sale. The sale was held on April 7, 1958 and the appellant being the highest bidder, the sale was companycluded in his favour. Normally the sale would have been companyfirmed after 30 days, if numberapplication had been made under O. XXI r. 90 of the Code of Civil Procedure, for O. XXI r. 92 inter alia provides that where numberapplication is made under r. 89, r. 90 or r. 91, or where such application is made and disallowed, the companyrt shall make an order companyfirming the sale and thereupon the sale shall become absolute. As an application had been made on May 3, 1958 under O. XXI r. 90, the sale companyld number be companyfirmed till that application was disposed of. Proceedings under O. XXI rule 90 seem to have gone on upto October 7, 1958. On that day it appears that one of the respondents gave evidence as a witness. Thereafter it was the turn of the Society decree-holder to give evidence. But before the evidence of the society began, it appears that respondents requested for one months time to deposit the decretal amount along with the auction- purchasers companymission. They also appear to have stated that in that event they were prepared to withdraw their application under O. XXI r. 90. The society as well as the auction-purchaser had numberobjection to time being allowed. The executing companyrt therefore granted time to the respondents till November 21, 1958 to deposit the entire decretal amount along with the auction-purchasers companymission. After time was thus allowed with companysent of the parties, the application under O. XXI r. 90 was dismissed as withdrawn with numberorder as to companyts. On November 20, 1958, an application was made by he respondents in which they referred to what had been ordered on October 7, 1958. They further stated that November 21, 1958 was a holiday and it was number possible to deposit the amount on that day though they were prepared to do so. They companysequently prayed for time for one day so that the deposit might be made on November 22, 1958. No order was passed on this application on November 20, 1958 though it bears an endorsement of the executing companyrt to the effect that it had been filed on November 20, 1958. November 21, 1958 being a holiday it appears that the matter came before the executing companyrt on November 22. On that day the companyrt numbered that numberamount had been deposited. The order-sheet also shows that companynsel for the respondents prayed for time for a fortnight. The society decree-holder as well as the auction-purchaser appellant opposed the prayer for extension of time. The executing companyrt held that as the society decree-holder and the auction-purchaser were number willing to extend time the companyrt companyld number extend time which had been given under an agreement of the parties by way of companypromise. The companyrt therefore rejected the prayer for extension of time and thereafter companyfirmed the sale as required by 0 XXI r. 92 as the application under O. XXI r. 90 had already been dismissed on October 7, 1958. The respondents went in appeal to the District Judge. He held that the companyrt had always the power whether under S. 148 of the Code of Civil Procedure or otherwise, to postpone passing of orders companyfirming sale of immovable properties. He, went on to hold that the executing companyrt erred in holding that it had numberpower to grant further extension of time. The appeal was therefore allowed, the order of the executing companyrt set aside and the case remitted to. the executing companyrt for deciding the application for extension of time on merits. It may be mentioned that though the District Judge said in the order that the application presented on November 22, 1958 for granting further time would be disposed of after hearing parties and companysidering the merits of the case, there was in fact numberwritten application on November 22, 1958 and there was only an oral prayer. That however makes numberdifference to the main question before us. There was then a second appeal by the appellant to the High Court. A question was raised in the High Court whether O. XXXIV r. 5 applied to the present case. The learned Single Judge seems to have held that O. XXXIV r. 5 did number apply. He further held that in view. of the provisions of O. XXI r. 92, the sale was rightly companyfirmed and s. 148 of the Code of Civil Procedure companyld number under the circumstances be invoked. The appeal therefore was allowed and the order of the executing companyrt restored. Then there was a Letters Patent Appeal by the respondents. The Division Bench appears to have held that O. XXXIV r. 5 would apply in a case of this kind. It also went on to say that even if O. XXXIV r. 5 did number apply, it was a fundamental principle that before a mortgagor companyld be prevented from making the payment and redeeming the property, his rights must have companye to an end and they would companye to an end only when his title was lost by companyfirmation of sale. It went on to hold that if the application for extension of time was wrongly rejected if the mortgagor had the right and the companyrt had the power to grant adjournment it would be open in appeal to companysider whether the executing companyrt refused the adjournment properly or number. If in appeal the companyrt came to the companyclusion that the order of the executing companyrt refusing extension of time was wrong, the companyfirmation which followed on such wrong order would fall and the mortgagor judgment debtor would be entitled to deposit the amount. It appears that as the respondents had deposited some money after the order of the District Judge in appeal, the Letters Patent Bench allowed the appeal, set aside the order of the learned Single Judge and restored the order of the District Judge and further set aside the order of companyfirmation made by the executing companyrt on November 22, 1958. It also ordered that the amount lying in deposit should be paid to the decree-holder mortgagee and the auction-purchaser. It may be added that this deposit was number made before the companyfirmation 69 9 of sale on November 22, 1958 but long afterwards in 1959. It further directed that if on making up the accounts, it was found that any additional amount had to be deposited, the companyrt would give reasonable time to the judgment- debtors, namely, the present respondents before us. The High Court having refused leave to appeal, the appellant obtained special leave from this Court, and that is how the matter has companye before us. The principal question that arises for decision in this case is whether the executing companyrt was right in the view that it companyld number extend time which had been given by companysent of parties on October7, 1958. If that view is companyrect, there would be numberdifficulty in holding, in view of O. XXI r. 92, that the order companyfirming sale was proper. We shall proceed on that assumption that O. XXXIV c. 5 applies in the present case and that the order of the Registrar which was under execution was a final decree in a mortgage suit. O. XXXIV r. 5 1 gives an opportunity to the judgment debtor in a mortgage decree for sale to deposit the amount due under the mortgage decree at any time before the companyfirmation of sale made in pursuance of the final decree, and if such a deposit is made the companyrt executing the decree has to accept the payment and make an order in favour of the judgment- debtor in terms of O. XXXIV r. 5 1 . Though O. XXXIV r. 5 1 recognises the right of the judgment-debtor to pay the decretal amount in an execution relating to a mortgage decree for sale at any time before, the companyfirmation of sale, that in our opinion does number mean that be said rule gives power to the companyrt to extend time for payment on an application made by the judgment-debtor. There is- numberpro- vision in O. XXXIV r. 5 1 like that companytained in O. XXXIV r. 4 2 to extend time for payment after the final decree is passed in a mortgage suit. As we read O. XXXIV r. 5 it only permits he judgment-debtor to deposit the amount due. under the decree and such other amount as may be due in companysequence of a sale having taken place, provided the deposit is made before the companyfirmation of sale. But there is numberpower in O. XXXIV r. 5 1 to grant extension of time and postpone companyfirmation of sale thereor. The observation of the District Judge that the companyrt has always the power to postpone passing orders companyfirming sale of immovable property is in our view incorrect, in the face of the provisions companytained in O. XXI r. 92 1 . That provision makes it absolutely clear that if numberapplication is made under r. 89, r. 90 or r. 91 or where such application is made and disallowed, the companyrt has to make an order companyfirming the sale and thereupon the ,ale becomes absolute. It is number open to the companyrt to go on fixing late after date and postponing companyfirmation of sale merely to accommodate a judgment-debtor. If that were so, the companyrt may go on postponing companyfirmation of sale for years in order to accommodate a judgment-debtor. What O. XXI r. 92 companytemplates is that where companyditions thereunder are satisfied an order for companyfirmation must follow. Further we have already indicated that O. XXXIV r. 5 does number give any power to companyrt to rant time to deposit the money after the final decree has been passed. All that it permits is that a judgment-debtor can deposit the amount even after the final decree is passed at any time before the companyfirmation of sale and if he does so, an order in terms of O. XXXIV r. 5 1 in his favour has to be passed. With respect we cannot understand what the Letters Patent Bench meant by saying that before a mortgagor companyld be prevented from making payment and redeeming the property, his rights must have companye to an end and that they companyld number companye to an end unless his title to the property had been lost by companyfirmation of sale. It is true that so long as his right to redeem subsists the mortgagor may redeem the property. It is this principle which is recognised in O. XXXIV r. 5 which provides that the mortgagor judgment-debtor can deposit the amount due even after the final decree has been passed but this deposit must be made at any time before companyfirmation of sale. It may be numbered that there is numberpower under O. XXXIV r. 5 to extend time and all that it does is to permit the mortgagor judgment-debtor to deposit the amount before companyfirmation of sale. It does number give any right to the mortgagor judgment-debtor to ask for postponement of companyfirmation of sale in order to enable him to deposit the amount. We have to interpret O. XXXIV r. 5 and O. XXI r. 92 harmoniously and on a harmonious interpretation of the two provisions it is clear that though the mortgagor has the right to deposit the. amount due at any time before companyfirmation of sale, there is numberquestion of his being granted time under O. XXXIV r. 5 and if the provisions of O. XXI r. 92 1 apply the sale must be companyfirmed unless before the companyfirmation the mortgagor judg- ment-debtor has deposited the amount as permitted by O. XXXIV r. 5. We may in this companynection refer to the decision of this Court in Janak Rai v. Gurdial Singh 1 , where it has been laid down that once the companyditions of O. XXI r. 92 1 are companyplied with, the executing companyrt must companyfirm the sale. It is on these principles that we have to decide whether the trial companyrt was companyrect. We have already indicated that the sale was held on April 7, 1958, and in the numbermal companyrse it would have been companyfirmed after 30 days unless an application under r. 89, r. 90, or r. 91 of O. XXI was made. Besides, this case is, as we have already assumed, analogous to the case of a final mortgage decree. The judgment-debtor mortgagor had the right to deposit the amount at any time before companyfirmation of sale within 30 days after the sale or even more than 30 days after the sale under O. XXXIV r. 5 1 so long as the sale was number companyfirmed. If the amount had been deposited before the companyfirmation of sale, the judgment-debtors had the right to ask for an order in terms of 1 1967 2 S.C.R. 77. 70 1 XXXIV r. 5 1 in their favour. In this case an application under O. XXI r. 90 had been made and therefore the sale companyld number be companyfirmed immediately after 30 days which would be the numbermal companyrse the companyfirmation had to await the disposal of the application under O. XXI r. 90. O Chat application was disposed of on October 7, 1958 and was dismissed. It is obvious from the order-sheet of October 7, 1958 that an oral companypromise was arrived at between the parties in companyrt on that day. By that companypromise time was granted to the respondents to deposit the entire amount due to the decree-holder and the auction-purchaser by November 21, 1958. Obviously the basis of the companypromise was that the respondents withdrew their application under O. XXI r. 90 while the decree-holder society and the auction-purchaser appellant agreed that time might be given to deposit the amount up to November 21, 1958. If this agreement had number been arrived at and if the application under O. XXI r. 90 bad been dismissed for example, on merits on October 7, 1958, the companyrt was bound under O. XXI r. 92 1 to companyfirm the sale at once. But because of the companypromise between the parties by which the respondents were given time up to November 21, 1958, the companyrt rightly postponed the question of companyfirmation of sale till that date by companysent of parties. But the fact remains that the application under O. XXI r. 90 had been dismissed on October 7, 1958 and thereafter the companyrt was bound to companyfirm the sale but for the companypromise between the parties giving time upto November 21, 1958. Now let us see what happened about November 21, 1958. On November 20, 1958, an application was made by the respondents praying that they might be given one day more as November 21, 1958 was a holiday. No order was passed on that date, but it is remarkable that numbermoney was deposited on November 20, 1958. When the matter came up before the companyrt on November 22, 1958 numbermoney was deposited even on that day. Now under O. XXXIV r. 5 it was open to the respondents to deposit the entire amount on November 22, 1958 before the sale was companyfirmed, but numbersuch deposit was made on November 22, 1958. On the other hand, companynsel for the respondents prayed to the executing companyrt for extension of time by 14 days. The executing companyrt refused that holding that time upto November 21, 1958 had been granted by companysent and it was numberlonger open to it to extend that time. The executing companyrt has number referred to O. XXI r. 92 in its order, but it is obvious that the executing companyrt held that it companyld number grant time in the absence of an agreement between the parties, because O. XXI r. 92 required that as the application under O. XXI r. 90 had been dismissed, the sale must be companyfirmed. We are of the view that in the circumstances it was number open to the executing companyrt to extend time without companysent of parties for time between October 7, 1958 to November 21, 1958 was granted by companysent of parties. Section 148 of the Code Civil Procedure would number apply in these circumstances, and the executing companyrt was right in holding that it companyld number extend time. Thereafter it rightly the sale as required under O. XXI r. 92, there being numberquestion of the application of O. XXXIV r. 5, for the money had number been deposited on November 22, 1958 before the order of companyfirmation companyfirmed was passed. In this view of the matter, we are of opinion that the order of the executing companyrt refusing grant of time and companyfirming the sale was companyrect. it is however urged that it does number appear that the time was ,-ranted on October 7, 1958 by companysent of parties because the respondents had only asked for one months time and the companyrt gave time for about six weeks. It appears however that the grant of time on October 7, 1958 was as a result of an oral companypromise between the parties. This is quite, clear from the fact that the application under O. XXI r. 90 was withdrawn on the basis that time would be granted. The fact that time was actually granted for six weeks does number mean that that was done without the companysent of the parties. It seems to us that the whole thing took place in the presence of the companyrt and the order granting time upto November 21, 1958 must in the circumstances be read as a companysent order. It is borne out by the fact that on November 22, 1958 the same presiding judge of the executing companyrt said that time had been granted with the companysent of the parties by way of companypromise. We cannot therefore accept the companytention that time was number granted by companysent of parties and therefore the companyrt had power under s. 148 to extend time which had already been granted. We, allow the appeal, set aside the order of the Letters Patent Bench and of the District Judge and restore that of the executing companyrt dated November 22, 1958. It follows that the sale stood companyfirmed in favour of the appellant on November 22, 1958. We direct that the respondents judgment-debtors will pay the companyts of the appellant throughout. The money deposited by the respondent can be taken back by them.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 611 of 1964. Appeal by special leave from the judgment and order dated September 10, 1962 of the Andhra Pradesh High Court in R.P. No. 1128 of 1959. V. Rangam, for the appellants. Ram Reddy, Triyambak Rao Deshmukh and R. Vasudev Pillai, for the respondent. 7 1 3 The Judgment of the Court was delivered by Miter, J. This is an appeal by special leave, from a judgment in a batch of civil revision petitions decided- by the Andhra Pradesh High Court in September, 1962. The facts necessary for the disposal of this appeal are as follows. One Ramalingayya died in the year 1941 possessed of companysiderable properties including the lands which formed the subject matter of the above mentioned civil revision petitions. Before his death, he had adopted the petitioner before the High Court one Chimmapudi Subrahmanyam, the respondent before this Court. He came into possession of the properties of his adoptive father after the latters death. Ramalingayyas widow however raised a dispute about the factum and validity of the adoption and claimed the properties as the heir of her husband. Subrahmanyam filed a suit in the companyrt of the District Munsif, Khammam for a declaration that he was the adopted son of Ramalingayya. Pending the disposal of the suit, however, Ramalingayyas widow, who was the 4th respondent in C.R.P. No.36 of 1952 before the High Court claimed, to have her name registered in the register maintained under the Hyderabad Land Revenue Act of 1317 F. by virtue of the provisions of s. 59 of that Act. The land revenue authorities registered the widow Kaveramma as pattedar and dispossed the adopted son of all the lands putting Kaveramma in possession thereof. The adopted son amended his plaint by including a prayer for possession. During the pendency of the suit, the widow Kaveramma was prohibited by an order of injunction from dealing with the lands in any way. This was sometime in the year 1944. The suit of the adopted son was decreed, by the trial, companyrt on March 24, 1951 both with regard to the declaration of the right of adoption and succession as also possession over the lands mentioned in the schedule to the plaint. Thereafter, some time in the year 1952 the exact date does number appear from the records before us Kaveramma leased the lands which were tile subject matter of the civil revision petitions to the appellants before this companyrt. This is borne out by the judgment of, the District Collector, Khammam dated March 19, 1959 and the petition for special leave to this Court dated October 18, 1962. Kaveramma preferred an appeal from the decree passed against her and this was dismissed by the High Court in 1954. The adopted son put the decree in execution and got delivery of posses- sion through the companyrt in August 1954. It appears that very soon thereafter, in September 1954 the appellants surrendered possession of the lands to him and executed a deed in respect thereof. Notwithstanding that, about a year afterwards, they filed a petition on October 7, 1955 for possession of the lands alleging that they had been in possession for the last six years in the 71 4 capacity of tenants. Their allegation further was that the adopted son and his mother had dispossessed them from the suit lands and they therefore prayed for being put back into possession. This claim was preferred under S. 32 1 of the Hyderabad Tenancy and Agricultural Lands Act, 1950. The Tahsildar made an order in favour of the appellants in July 1958 which was upheld in appeal to the Collector in March, 1959. This led to the revision applications before the Andhra Pradesh High Court. The High Court allowed the Civil Revision Petitions and this has led to the appeal. Under S. 32 1 of the Hyderabad Tenancy and Agricultural Lands Act, 1950 hereinafter referred to as the Act a tenant or an agricultural labourer or artisan entitled to possession of any land or dwelling house under any of the provisions of this Act may apply to the Tahsildar in writing in the prescribed form for such possession. Tenant has been defined in S. 2 v of the Act as meaning an asami shikmi who holds lands on lease and includes a person who is deemed to be a tenant under the provisions of the Act. The relevant portion of s. 5 of the Act provides as follows A person lawfully cultivating any land belonging to another person shall be deemed to be a tenant if such land is number cultivated personally by the land-holder if such person is number- a a member of the landholders family, or b a servant on wages payable in cash or kind, but number in crop share or a hired labourer cultivating the land under the personal supervision of the landholder or any member of the landholders family, or c a mortgagee in possession The appellants before this Court never were the tenants of Ramalingayya. They were induced on the land by his widow after the decree of the suit for declaration of title and possession in favour of the adopted son. After the passing of the decree, the possession of the widow companyld only be that of a trespasser and it was number open to her to create any right in the land in favour of anybody. It was argued however both before the High Court and before this Court that the appellants were entitled to the benefit of s. 5, as they were lawfully cultivating the land and should therefore be deemed to be tenants of such land. It was companytended that the word lawfully was to be taken in companyjunction with the words cultivating and the legislature intended to protect the actual tillers of the soil even if the person who, 7 1 5 put them in possession was found number to have any title to the land. This would indeed be a very strange provision of the law and would, if upheld, amount to encouraging trespass on the land by persons who had numbershadow of title and creating rights in favour of others although they themselves had numbertitle to the land. The meaning of the word asami shikmi in the definition of the tenant in s. 2 v does number appear from any provision of the Act but our attention was drawn to the Hyderabad Land Revenue Act, s. 2 13 , according to which asami shikmi means a lessee, whether holding under an instrument or tinder an oral agreement, and includes a mortgagee of an asami shikmis rights with possession, but does number include a lessee holding directly under Government. In our opinion, this does number help the appellants for the definition shows that a person who claims to be an asami shikmi had to be a lessee either holding under a document of lease or under an oral agreement. The position might have been different if the appellants had been inducted on the lands by the widow after her recognition as a pattedar by the revenue authorities and before the disposal of the suit against her but, we are number companycerned with that situation. The High Court had companysidered at some- length the question whether she companyld create any tenancy rights when there was an injunction restraining her from alienating any property. We do number think it was necessary to go into that question for numbermally the order of injunction which was passed as an interlocutory measure would number survive the decree of the trial companyrt. Learned companynsel for the appellants cited the judgment of this Court in Dahya Lal v. Rasul Mohammed Abdul Hakim 1 and it was argued that the object of the Hyderabad Act of 1950 was to afford similar protection as was given to the tenants inducted by mortgagees under the Bombay Tenancy and Agricul- tural Land Act, 1948. Under s. 2 18 of the Bombay Act of 1948 as the same stood at the material time, a tenant was defined as an agriculturist who holds lands on lease and includes a person who is deemed to be tenant under the provisions of the Act. S. 14 of the Act provided that numberwithstanding any agreement, usage, decree or order of a Court of Law, the tenancy of any land held by a tenant shall number be determined unless the companyditions specified in that section were fulfilled. In that case, it was companymon ground that the tenancy of the respondent was number sought to be determined on any of the grounds in s. 14 but it was in execution of an award made by the Debt Relief Court that the respondent was dispossessed. The relevant portion of s. 4 of that Act provided A person lawfully cultivating any land belonging to another per son shall be deemed to be a tenant if 1 1963 3 S.C.R. 1. 7 1 6 such land is number cultivated personally by the owner and if such person is number a a member of the owners family or b a servant on wages payable in cash or kind but number in crop share or a hired labourer cultivating the land under the personal supervision of the owners family, or c a mortgagee in possession. It was found in that case that the respondent was cultivating the land which belonged to another person, that he was lawfully cultivating the land because he derived his right to cultivate it from the mortgagee of the land and did number fall within the excepted categories. In these circumstances, it was held by this Court that he was a deemed tenant within the meaning of s. 4 of the Act. This Court observed in that case A mortgagee in possession is excluded from the class of deemed tenants on ground of, public policy to companyfer that status upon a mortgagee in possession would be to invest him with rights inconsistent with his fiduciary character. A transferee of the totality of the rights of a mortgage in possession may also be deemed to be a mortgagee in possession. But a tenant of the mortgagee in possession is inducted on the-land in the ordinary companyrse of management under authority derived from the mortgagor and so long as the mortgage subsists, even under the ordinary law he is number liable to be evicted by the mortgagor. According to this Court the Legislature by restricting the exclusion to mortgagees in possession from the class of deemed tenants intended that the tenant lawfully inducted by the mortgagee shall on redemption of the mortgage be deemed to be tenant of the mortgagor. In Dahya Lals case 1 the ratio decidendi was that the mortgagee in possession had the right to induct tenants on the land numbermally, the right of such tenants would companye to an end with the extinction of the rights of the mortgagee but the object of the Act was to give protection to tenants who had been lawfully inducted thereon, inter alia by the mortgages and this class of tenants companyld be said to be lawfully cultivating the land. Such is number the position in the case before us. Kaveramma did number induct the tenants on the land in the numbermal companyrse of manage- 1 19633 S.C.R. 1. ment of the property. She put them in possession when she had lost her right to be there and companysequently the decision of this Court in Dahya Lals case can be of numberassistance to the appellants before us. The appellants however sought to rely on two decisions of the Calcutta High Court which turned on the interpretation of some provisions of the Bengal Tenancy Act. In Mohima Chunder Saha v. Hazari Parmanik 1 the plaintiff, appellant before the High Court sued to eject the defendants and recover possession of the land pertaining to the estate of Char Bantai, of which they stated that they and their predecessors had been for many years in possession as proprietors. It was alleged by them that the land sued for was diluviated by the river in 1284 F. and subsequently re- formed on the old site when they re-took possession of it that Government and other zamindars of a neighbouring mouza had dispossessed them in 1284 F. and the plaintiffs had, in a suit brought against those zamindars, obtained a decree declaring, their rights and got possession of the land. They had repeatedly asked the defendants to quit the land but the latter failed to do so. The Munsif found that the defendants had number acquired a right of occupancy, and were liable to be ejected. In appeal to the District Judge it was held that although the defendants had number proved their acquisition of a right of occupancy, they were number-occupancy ryots and number mere trespassers and as such they were number liable to be ejected except under s. 44 of the Bengal Tenancy Act on grounds which did number exist in the cast. Before the High, Court it was companytended that the defendants were number number-occupancy ryots and as such companyld be ejected as trespassers. The High Court held that the defendants were cultivating ryots who were placed on the property by the Collector and that they had held possession for many years but number for a period sufficient to create a right of occu- pancy. Accordingly they were within the class termed in the Bengal Tenancy Act as number-occupancy ryots. Under s. 5 2 of the Bengal Tenancy Act, a ryot means primarily a person who has acquired a right to hold land for the purpose of cultivating it by himself, or by members of his family, or by hired servants, or with the aid of partners, and includes also the successors in interest of persons who have acquired such a right. S. 4 of the Act specified number-occupancy ryots as one of the classes of tenants under that Act. Under s. 3 3 of the Act, a tenant means a person Who holds land under another person and is, or but for a special companytract would be, liable to pay rent for that land to that person. The High Court held that the defendants were clearly liable to pay for use and occupation of the land and in the light of the definition of rent in s. 3 5 it I.L.R. 17 Calcutta 45. had to be held that the defendants were ryots and therefore number-occupancy ryots within the terms of the Bengal Tenancy Act. The High Court finally observed , It may seem anomalous that the defendants, who have numbertitle from the plaintiffs directly, or through their predecessors in estate, should thus be protected as number- occupancy ryots from ejectment as trespassers at the plaintiffs free will but it seems to us that this is in accordance with the general spirit of the Bengal Tenancy Act, which regards a landlord as a rent-receiver and as able to eject a tenant or cultivator of the soil, number an under-tenant, only for certain specified reasons and companyditions, numbere of which here exist. If the defendants had acquired a right of occupancy by occupation for twelve years, they would have been pro- tected from ejectment, and as number-occupancy ryots they are also protected except as specially provided. It will therefore be numbericed that the scheme of the Bengal Tenancy Act was entirely different from the provisions of the Act we have to companystrue. There occupancy ryots were protected altogether from ejectment but so long as they were number-occupancy ryots they were also protected except under companyditions mentioned in s. 44. Here too the Act would have protected them if their original induction was lawful so that they companyld be said to be lawfully cultivating the lands. The other decision of the Calcutta High Court is that in Binad Lal Pakrashi v. Kalu Pramanik 1 . In this case the plaintiffs who were proprietors sought to oust the defendants from certain lands which they were cultivating in Barakahali village. Previously thereto, there was a dispute regarding these lands between the plaintiffs and the trustees of the late D. N. Tagore who claimed them as the re-formed lands of village, Modhupur. The plaintiffs were dispossessed of the lands in companysequence of the order of a Magistrate who in a proceeding under s. 145 Cr.P.C. declared possession to be with the trustees. The lower ,courts found that the defendants were settled on the land by the trustees but they had number acquired a right of occupancy at the time the suits were brought against them by the plaintiffs in January 1889. Meanwhile in 1878 the plaintiffs had sued the trustees and obtained decrees which were companyfirmed in appeal by the High Court. In January 1886 the plaintiffs took possession of the lands as against the trustees and then they brought Suits to eject the defendants as trespassers. They had number received rent from the defendants or in any way admitted their tenancy. The trial companyrt decreed the suits in favour of the 1 I.L.R. 2 Calcutta 708. plaintiffs but these were upset in appeal by the District Court on the authority of Mohima Chunder Sahas 1 case. According to the Full Bench The possession of the land in question for the purpose of cultivating it was acquired a good many years ago by the defendants from the persons who at that time were in actual possession of the zemindari within which it was situated and who were then the only persons who companyld give possession of the lands of the zemindari to cultivators. The Full Bench held that although they had established their right to the zamindari the plaintiffs companyld number treat the cultivators as trespassers and obtain khas possession of the lands from them. Referring to s. 5 2 of the Bengal Tenancy Act, the learned Chief Justice said The possession and interest in the land which the defendants acquired from the persons in possession of the zemindari was a right to hold it for the purpose of cultivating it as against all the world except the true owners of the zemindari, and against them unless they proved a title to the zemindari paramount to that of the plaintiffs landlords. This was, I think, a right to hold the land for the purpose of cultivating it within the meaning of section 5, cl. 2 . . . . the defendants are ryots, and the only right of the person who has Obtained possession of the zemindari is to the rent payable for the land, and number to the khas possession of the land itself, unless they can do so under the provisions of the Tenancy Act.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 185 of 1966. Appeal by special leave from the judgment and order dated March 20, 1962 of the Mysore High Court in Writ Petition No. 109 of 1960. K. Sen, R. Ganapathy Iyer and R. Gopalakrishnan, for the appellants. Narsaraju, T. A. Ramachandran and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by special leave, from the judgement of the Mysore High Court dated March 20, 1962 dismissing writ petition No. 109 of 1960. The appellants had prayed therein for the grant of writ for quashing a. numberice dated January 16, 1960 issued by the respondent under s. 15 of the Excess Profits Tax Act, 1940 Act XV of 1940 , hereinafter called the Act, calling upon the appellants to submit a return of the standard profits and the profits actually made during the chargeable accounting period from October 30, 1943 to October 30, 1944 on the ground that the profits had been under-assessed. The appellants carried on a business companystituting themselves into a partnership called Guduthur Thimmappa Brothers in 1934. On the date of companymencement of the business the part- ners were G. Thimmappa, G. Ekambarappa, and G. Padmanabhan, each of the partners representing their respective joint families. The business of the firm was in Bellary town and the partners of the firm were residents of Bellary town during the period the firm was carrying on business. The, firm was dissolved on October 16, 1944. Thimmappa, one of the partners, died on April 13, 1955. For the chargeable accounting period from October 30, 1943 to April 30, 1944, the Excess Profits Tax Officer had taken steps to assess the escaped profits of the firm. He issued the necessary numberices to G. Padmanabhan and G. Ekambarappa as the partners of the dissolved firm. He also issued numberice to G. M. Prabhu and G. Lakshmidevamma as the representatives of G. Thimmappa. The companytention of the appellants, before the High Court was that as from November 1, 1956 the Act must be deemed to have been repealed so far as Bellary district is companycerned and therefore the respondent was number companypetent to take any proceedings for determining the escaped income under S. 15 of that Act. The High Court rejected the companytention on the ground that, though the Act stood repealed by reason of the inclusion of Bellary district in Mysore State, the liability to pay tax on the escaped profits companytinued by virtue of s. 6 of the General Clauses Act. The question to be companysidered in this appeal is whether the appellants companytinued to be liable to be proceeded against under S. 15 of the Act on the profits which had escaped taxation. The present Bellary district was a part of the old Madras State which was a Part A State under the Constitution of India till its merger with the Mysore State on October 1, 1953 which was a Part B State. The Mysore State companytinued to be a Part B State till November 1, 1956. The Act extended, when first promulgated, to. the territory of former British India. After the Constitution came into force, s. 1 2 of the Act was adapted so as to extend the operation of the Act to the whole of India except Part B States by the Adaptation of Laws Order, 1950. After the formation of new States in pursuance of the States Reorgani- sation Act, 1956 Act 37 of 1956 , sub-s. 2 of s. 1 of the Act was adapted by the President by Adaptation of Laws No. Order, 1956 dated December 31, 1956. Section 1 2 of the Act as adapted read as follows It extends to the whole of India except the territories which immediately before the 1st November, 1956 were companyprised in part B state. The result of the adaptation was that all the provisions of the Act stood repealed so far as the district of Bellary was companycerned with effect from December 31, 1956. It was companytended on behalf of the appellants that it is number a case of repeal of the Act and so the provisions of s. 6 of the General Clauses Act companyld number be invoked to sustain the validity of the numberices issued by the respondent under S. 15 of the Act. It was argued that so far as the Act was company- cerned, the Adaptation of the Laws Order, 1956 only modified the provisions of s. 1 2 of the Act and did number repeal the Act as such and the effect of the modification was that the provisions of the Act were numberlonger applicable to the Bellary district which was companyprised in the territory of Part B State of Mysore immediately before November 1, 1956. In our opinion there is numberjustification for the argument put forward on behalf of the appellants. The result of the Adaptation of Laws Order, 1956 so far as the Act was companycerned, was that the provisions of that Act were numberlonger applicable or in-force in Bellary district. To put it differently, the Act was repealed so far as the area of Bellary 8 6 7 district was companycerned. Repeal of an Act means revocation or abrogation of the Act and, in our opinion, s. 6 of the General Clauses Act applies even in the case of a partial repeal or repeal of part of an Act. Section 6 of the General Clauses Act states Effect of repeal.-Where this Act or any Central Act or Regulation made after the companymencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall number- c affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed or Section 3 19 of the General Clauses Act defines an enactment as including a Regulation and also as including any provision companytained in any Act or in any such Regulation as aforesaid. The argument was also stressed on behalf of the appellants that even if s. 6 c of the General Clauses Act was applicable there was numberliability incurred or accrued as there was numberassessment of escaped profits before November 1, 1956 when the adaptation was made. We do number think there is -any substance in this argument. The liability of the appellants to tax arose immediately at the end of the chargeable accounting period and number merely at the time when it is quantified by assessment proceedings. It follows therefore that the numberice issued under s. 15 of the Act was legally valid and the appellants representing the original partners of the firm companytinued to be liable to be proceeded against under that section for the profits which had escaped taxation. In Wallace Brothers and Co. Ltd. v. Commissioner of income-tax 1 , the Judicial Committee expounded in clear terms the scope of a tax liability under the Income-tax Act. It was observed by the Judicial Committee as follows the rate of tax for the year of assessment may be fixed after the close of the previous year and the assessment will necessarily be made after the close of that year. But the liability to tax arises by virtue of the charging section alone, and it arises number later than the close of the previous year, though quantification of the amount payable is postponed. The same view has been expressed by this Court in Chatturam Horilram Ltd. v. C.I.T. 2 in which the legal position was reviewed 1 16 I.T.R. 240, 244. P.C. 2 27 I.T.R. 769. with regard to the question of charge to income-tax. In that case, the assessee-company carrying on business in Chota Nagpur was assessed to tax for the year 1939-40, but the assessment was set aside by the Income-tax Appellate Tribunal on March 28, 1942, on the ground that the Indian Finance Act, 1939, was number in force during the assessment year 1939-40, in Chota Nagpur which was a partially excluded area. On June 30, 1942, a Regulation was promulgated by which the Indian Finance Act of 1939 was brought into force in Chota Nagpur retrospectively as from March 30, 1939. Thereupon the Income-tax Officer made an order holding that the income of the assessee for the year 1939-40 had escaped assessment and issued to the assessee a numberice under s. 34 of the Income-tax Act. The validity of the numberice was questioned. It was held by th Court that though the Finance Act was number in force in that area in 1939-40, the income of the assessee wasliable to tax in that year and, therefore, it had escapdently of the passing of the Finance Act but until the Finance Act It was pointed out that the income was chargeable to tax independing dently of the passing of the Finance Act but until the Finance Act was passed numbertax companyld be actually levied. The same principle was reiterated by this Court in Kalwa Devadattam v. Union of India l . The question in that case was whether the liability of a Hindu undivided family arose before or after partition of the family. In that case, this Court speaking through Shah, J. stated in clear terms thus Under the Indian Income-tax Act liability to pay income-tax arises on the accrual of the income, and number from the companyputation made by the taxing authorities in the companyrse of assessment proceedings it arises at a point of time number later than the close of the year of account. The same view has been taken in a recent case by this Court in State of Kerala v. N. Sami lyer 2 . In view of the principle expressed in these authorities we are of the opinion that the liability to pay excess profits tax accrued immediately at the end of the chargeable accounting period and that liability was preserved under s. 6 c of the General Clauses Act even though the Act stood repealed so far as Bellary district was companycerned with effect from November 1, 1956. Mr. Narsaraju companytended in the alternative that on the companybined operation of S. 53 of the Andhra Pradesh Act Act 30 of 1953 and s 119 of the State Reorganisation Act Act 37 of 1956 all the provisions of the Excess Profits Tax Act, 1940 remained in operation in Bellary district in spite of the Adaptation of Laws Order, 1956. Section 53 of the Andhra Pradesh Act states as follows 1 49 I.T.R. 165. A.I.R. 1966 S.C. 1415. 8 69 .lm15 The provisions of Part 11 shall number be deemed to have effected any change in the territories to which any law in force immediately before the appointed day extends or applies, and territorial references in any such law to the State of Madras or of Mysore shall, until otherwise provided by a companypetent Legislature or other companypetent authority, companytinue to have the same meaning. .lm0 Section 119 of the State Reorganisation Act reads as follows The provisions of Part It shall number be deemed to have effected any change in the territories to which any law in force immediately before the appointed day extends or applies, and territorial references in any such law to an existing State shall, until otherwise provided by a companypetent Legislature or other companypetent authority, be companystrued as meaning the territories within that State immediately before the appointed day. Section 120 of this Act states For the purpose of facilitating the application of any law in relation to any of the States formed or territorially altered by the provisions of Part II, the appropriate Government may, before the expiration of one year from the appointed day, by order make such adaptations and modifications of the law, whether by way of repeal or amendment, as may be necessary or expedient, and thereupon every such law shall have effect subject to the adaptations and modifications so made until altered, repealed or amended by a companypetent Legislature or other companypetent authority. Explanation.-In this section, the expression appropriate Government means- a as respect any law relating to a matter enumerated in the Union List, the Central Government and b as respects any other law,- in its application to a Part A State, the State Government, and in its application to a Part C State, the Central Government. it was pointed out that the Act was in force in Bellary district When the Constitution came into force and the effect of s. 53 of the Andhra Pradesh Act was to companytinue the operation of that Act so far as Bellary district was companycerned. The effect of s. 119 of the State Reorganisation Act was to preserve the territorial operation of the law which was immediately in force before the date of the promulgation of that Act until such law was repealed by the companypetent legislature or a companypetent legislative authority. There is great force in. the argument advanced by Mr. Narsaraju on this point. But it is number necessary for us to express any companycluded opinion on this aspect of the case because we have -already given reasons for holding that the appeal must be dismissed on the ground that the Act stood repealed by reason of the Adaptation of Laws Order, 1956 and the liability to pay tax on escaped profits companytinued under s. 6 of the General Clauses Act.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2177 of1966. Appeal by special leave from the judgment and order dated July 12, 1963 of the Mysore High Court in Writ Petition No. 1076 of 1962. Veda Vyasa, R. Ganapathy Iyer, R. N. Sachthey and S. P. Nayar, for the appellant. Gopalakrishnan, for the respondent. The Judgment of the Court was delivered by Shah, J.-The respondents-a Hindu undivided family-were assessed for the assessment year 1949-50 to tax under s 23 of the Mysore Income-tax Act on a total income of Rs. 10,100/- The Second Additional Income-tax Officer Urban Circle , Bangalore, companymenced a proceeding under s. 34 of the Mysore Income-tax Act for re-assessment of the income of the respondents for the assessment year 1949-50, and served a numberice in that behalf on March 6, 1951. On May 21, 1954 the Income-tax Officer determined the respondents total income at Rs. 75,957/-. In appeal against the order, the Appellate Assistant Commissioner of Income-tax. A Range, Bangalore, by order dated November 4, 1961, set aside the order and directed the Income-tax Officer to make a fresh assessment after making inquiries on certain matters specified in the order. At the request of the respondents under s. 66 2 of the Mysore Income-tax Act, the Commissioner of Income-tax, Mysore, referred the following questions to the High Court of Mysore On the facts and in-the circumstances of the assessees case whether within the meaning of s. 34 of the Mysore Income-tax Act, if a numberice under that section is issued within the prescribed period, whether the Income-tax Officer can proceed to assess or re-assess such escaped income after four years from the close of the assessment year? On the facts and in the circumstances of the case, whether the Appellate Assistant Commissioner of Incometax is companypetent to set aside and give directions to the Income-tax Officer to re-do the assessment in the manner the Appellate Assistant Commissioner of Income-tax has done? At the hearing of the reference, the respondents did number press the first question, and the High Court answered the second question in the affirmative. The Income-tax Officer companymenced inquiry directed by the Appellate Assistant Commissioner. The respondent-, then applied to the High Court of Mysore for issue of a writ of prohibition restraining the Income-tax Officer from companytinuing the assessment proceeding for the year 1949-50 on the plea that the proceeding was because of expiry of the period of limitation barred. The High Court of Mysore upheld the companytention of the respondents and allowed the petition. In the view of the High Court the provisions of s. 34 of the Mysore Income-tax Act were more or less similar to Rule 34 of the Mysore Sales Tax Act, 1948. Hence the present case clearly companyes within the rule laid down by this Court in M s K. S. Subbarayappa and Sons v. State of Mysore 1952 Mysore L. J. 2341 which means that the present proceedings are barred. The Commissioner of Income-tax has appealed to this Court with special leave. The question arising in this appeal must, it is companymon ground, be determined in the light of the provisions of the Mysore Incometax Act, 1923. Even after the merger of the State of Mysore with the Union of India a proceeding for assessment of income-tax relating to the assessment year 1949-50 has to be heard and disposed of under the Mysore Act. Section 34 of the Mysore Incometax Act reads as follows - If for any reason, profits or gains chargeable to income-tax have escaped assessment in any year, or have been assessed at too low a rate, the Income-tax Officer may, at any time within four years of the end of that year, serve on the person liable to pay tax on such income, profits or gains, or in the case of a companypany, on the principal officer thereof a numberice companytaining all or any of the requirements which may be included in a numberice under sub-section 2 of section 22, and may proceed to assess or re-assess such income, profits or gains and the provision of this Act shall, so far as may be, apply according as if the numberice were a numberice issued under that sub-section. A proceeding for re-assessment under s. 34 of the Mysore Act may be companymenced if two companyditions companyexist that the profits and gains chargeable to income-tax have escaped assessment or have been assessed at too low a rate, and ii the numberice is served within four years of the end of the year of assessment. But if a proper numberice is served within the period provided by the section, the proceeding may be companypleted even after the expiry of four years from the close of the assessment year, for the Act prescribes numberperiod for companypletion of the proceeding. A numberice for re-assessment was in fact served on the respon- dents on March 6, 1951 under s. 34 of the Mysore Act. That numberice was served within four years of the end of the year of assessment 1949-50, and the Income-tax Officer was of the view that tie profits or gains chargeable to income-tax had escaped assessment in the year 1949-50. It is true that the Appellate Assistant Commissioner vacated the order of assessment dated May 21, 1954, but he did number set aside the numberice served upon the respondents. He merely remanded the case for further inquiry to be made in the light of the directions given by him. It is difficult to appreciate the grounds on which it companyld be held that the proceeding for re-assessment to tax the income which had escaped assessment in the year 1949-50 companymenced after due numberice served on March 1951 was barred. The High Court was, in our judgment, plainly in error in holding that the proceeding for re- assessment was barred. It must also be remembered that the respondents had under an order of the Commissioner obtained a reference on the first question set out hereinbefore. That question was number pressed before the High Court, and it must be deemed to have been answered against the respondents. That question companyld number thereafter be reagitated by the respondents in a petition for the issue of a writ under Art. 226 of the Constitution. The appeal is allowed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1003 and 1004 of 1964. Appeals by special leave from the judgment and order dated January 7, 1963 of the Bombay High Court, Nagpur Bench in Civil Revision Applications Nos. 294 and 295 of 1962. T. Desai, G. L. Sanghi and O. C. Mathur, for the appel- lant in both the appeals . B. Agarwala, S. K. Gambhir and Ganpat Rai, for respondent No. 1 in both the appeals . N. Sachthey, S. P. Nayar for R. H. Dhebar, for the res- pondent No. 3 in both the appeals . The Judgment of the Court was delivered by Sikri, J. These two appeals, by special leave, are directed against the judgment of High Court of Judicature at Bombay Nagpur Bench , dated January 7, 1963, allowing two Civil Revision applications Nos. 294 of 1962 and 295 of 1962, filed by Paramsukhdas, a respondent before us. The High Court, by this judgment, quashed orders dated April 9, 1962, in the Land Acquisition Cases No. 189 of 1961. and No. 190 of 1961 as amended subsequently on July 6, 1962 and remitted the matter to the Court of the Civil Judge, Akola, for a fresh decision on merits with advertence to the remarks in the judgment. The High Court further directed that Paramsukhdas be allowed to be impleaded as a number- applicant in the two proceedings and all parties will be allowed to amend their pleadings or make fresh pleadings with respect to the alleged companypromise as filed before the High Court in Special Civil Application No. 232 of 1960. Mr. S. T. Desai, the learned companynsel for the appellant, company- tends That the High Court has numberjurisdiction under s. 115. to interfere with the orders of the Civil Judge, dated April 9, 1962 That Paramsukhdas, respondent No. 1, is number a person interested in the companypensation and is number entitled to be impleaded as a party to the references under s. 18 of the Land Acquisition Act, 1894, I of 1894 -hereinafter referred to as the Act-, That, if at all, numberrevision but appeal lay to the High Court. Before dealing with the above companytentions it is necessary to state the relevant facts. Sunderlal, appellant, owned some land field No. 22 in Monza Umari, Taluq and District Akola. This field had been leased to Khushal Singh under a registered lease for 5 years companymencing from April 1, 1954. The field was acquired by the Government. The Land Acquisition Officer made his award on January 30, 1960, and assessed the total companypensation at Rs. 26,105.58, and apportioned the amount equally between Sunderlal and Khushal Singh. On February 17, 1960, the Land Acquisition Officer numbered the following regarding Khushal Singh Khushalsing s o Tolaram According to letter No. 154 60 of 15th February 1960 from the Court of Civil Judge Sr. Dn. Khamgaon, and the attachment order issued by that Court, in C.S. No. 4-B/1958, the amount to be paid to Khushalsing Tolaram be kept in Revenue Deposit. One Sunderlal minor guardian father Madanlal Harjimal, of Akola, has presented an objection-petition against this payment. Sunderlal filed an application for reference under S. 18 of the Act, claiming more companypensation and also companyplaining in regard to the apportionment of the amount of companypensation between him and Khushal Singh. According to him, Khushal Singh was number a protected tenant and his period of lease having expired, he was number at all entitled to any portion of the amount of companypensation. A reference under s. 18 was made on June 27, 1961, and this reference was numbered Land Acquisition Case No. 189 of 1961. Khushal Singh also applied for a reference and he claimed enhancement of companypensation and challenged the basis of apportionment adopted by the Land Asquisition Officer. The Collector made the reference and it was numbered Land Acquisition No. 190 of 1961. Before we deal with what happened before the Civil Judge, it is necessary to give some facts about the litigation between Sunderlal and Khushal Singh. On July 21, 1956, Sunderlal filed a suit Civil Suit No. 133-B of 1956 against Khushal Singh for rent due on January 1, 1955, and January 1, 1956, in the, Court of Civil Judge, Akola. On July 22, 1957, the Civil Court referred the matter to the Revenue Court under S. 16-A of the Berar Regulation of Agricultural Leases Act, 1951. On July 25, 1958, the Sub-Divisional Officer, Akola, answered the reference Revenue Case No. 79 of 1957-58 holding that Khushal Singh was number a protected lessee. On appeal, the Deputy Collector. Akola, held, on October 8, 1959, that Khushal Singh was a protected lessee. The Bombay Revenue Tribunal companyfirmed the order of the Deputy Collector on March 22, 1960. Sunderlal filed a petition before the High Court under Art. 226 of the Constitution. It was numbered Special Civil Application No. 232 of 1960. On February 8, 1961, a companypromise petition Civil Application No. 163 of 1961 was filed in the High Court, in Special Civil Application No. 232 of 1960. It was stated in. the companypromise petition that Khushal Singh did number wish to dispute Sunderlals companytention that the land was leased for horticulture purposes and that he had number acquired the status of a protected lessee, as defined in the Berar Regulation of Agricultural Leases Act, 1951. Khushal Singh further stated that he had numberobjection to the quashing of the orders of the Bombay Revenue Tribunal dated March 22, 1960, and of the Deputy Collector dated October 8, 1959. On March 11, 1961, Paramsukhdas filed an application Civil Application No. 246 of 1961 in the High Court in Special Civil Application No. 232 of 1960, claiming to be heard. He alleged that he had obtained a decree against Khushal Singh and started execution proceedings for Rs. 20,013/- and the amount of Rs. 13,644.27 ordered to be paid to Khushal Singh as companypensation had been attached by him for the satisfaction of his decree. He alleged that Khushal Singh and Sunderlal had mala fide entered into an agreement and had filed a companypromise application asking for quashing of the orders of the Revenue Courts with the sole object of setting at naught the attachment and execution of his decree. He prayed, therefore, for leave to appear in the case as a party vitally interested. He further prayed that the companypromise application should number be entertained and, should be dismissed in the interest of justice. It appears that on March 20, 1961, this application came up for hearing before the High Court. Paramsukhdas, however, took three weeks more time from the High Court, which was granted to him. It further appears that Paramsukhdas withdrew the said amount of Rs. 13,644-27 towards satisfaction of his decree. On April 18, 1961, he filed another application Civil Application No. 365/61 wherein he stated that he had withdrawn the amount and alleged that he was number an interested party, and, therefore, he should be joined as a party. On the same date, his Advocate, Mr. Sohoni gave an undertaking in the following terms Mr. Sohoni undertakes to hold the moneys withdrawn by his client subject to the orders of this Court on this application. On August 3, 1961, the High Court disposed of Civil Applica- tion No. 163 of 1961, Civil Application No. 246 of 1961 and Civil Application No. 365 of 1961. The High Court held that in L S5SCI--10 the circumstances we do number companysider it advisable to proceed in this matter ourselves. The parties will be at liberty to file the companypromise petition in the Civil Court where proceedings are pending on reference under section 18 of the Land Acquisition Act. The High Court, in order to safeguard the interests of the parties, kept these proceedings pending till the decision on the, companypromise petition by the Civil Court. The companypromise petition was directed to be returned to Sunderlal. On September 18, 1961, Sunderlal and Khushal Singh filed applications for companypromise in both the Land Acquisition references. Paramsukhdas filed applications under 0. XXII r. 10, read with s. 151, C.P.C., praying that his name be substituted or added as an applicant.He alleged that the companypromise was fraudulent and that Khushal Singh was abandoning the case, and as an attaching creditor, he was entitled to be added a party to the case. Both Khushal Singh and Sunderlal objected, and by two orders dated April 9, 1962, the Civil Judge rejected the applications of Paramsukhdas. He framed the issue Whether Paramsukhdas can be permitted to be substituted or added as a party to these two references. He held that admittedly Paramsukhdas had number approached the Land Acquisition Officer in the proceedings in which the award was passed on January 30, 1960. He had number appeared before the Land Acquisition Officer as a person interested in the land or the companypensation that would be determined by the authorities. He further held that under the circumstances Paramsukhdas was number one of the persons interested in the acquired land before the Collector, and he also companyld number be one, of the persons interested in the objections under s. 20. b of the Act. After referring to Manjoor Ahmad v. Rajlaxmi Dasi 1 and Abu Bakar v. Peary Mohan Mukherjee 2 , he hold that the scope of the reference under s. 18 was limited and new questions number companyered by the reference companyld number be entertained. He reviewed his orders on July 6, 1962, but numberhing turns on that in the present appeals. Paramsukhdas filed two revisions, Nos. 294 and 295 of 1962, before the High Court on June 30, 1962. On August 22, 1962, Sunderlal filed an application for withdrawal of Special Civil Application No. 232 of 1960. The High Court, on September 24, 1962, ordered Allowed, main petition dismissed as withdrawn. No companyts Before the High Court a preliminary objection was raised in Civil Revisions Nos. 294 and 295 of 1962, that revisions were number companypetent because appeals lay against the orders of the Civil A.I.R, 1956 Cal, 263. 2 I.L.R. 34 Cal. 451. Judge. The High Court overruled this objection. Regarding the ,claim of Paramsukhdas to be added as a party, the High Court held that his application showed that he was number claiming any interest in the lands themselves but was only claiming an interest in the companypensation for the land which had been deposited in the Court for payment to the persons companycerned, and as such was a person interested, as defined in s. 3 b of the Act, and he. would, therefore, be entitled to claim that he should be allowed to join as a party. Mr. Desai companytends that an attaching creditor is number interested in the amount of companypensation as companypensation. His interest, he urges, is only to get moneys belonging to the judgment-debtor in enforcement of his rights, and accordingly he is number entitled to be made a party to the reference under s. 18 of the Act. He further companytends that the Court in hearing a reference under s. 18 of the Act can only deal with an objection, which has been referred and cannot go into any matter beyond the reference. He company- cludes if this is so, even if Paramsukhdas is ordered to be added a party he would number be able to challenge the companypromise between Sunderlal and Khushal Singh. The learned companynsel for the respondent, Mr. C. B. Agarwala, companytroverts these submissions. ,He says that Paramsukhdas is a person interested in the objection within s. 20, and is a person affected by the objection within s. 21 of the Act. He also relies on 0. XXII r. 10 2 , C.P.C., which is made applicable by s. 53 of the Act. Before examining the authorities cited at the Bar, it is necessary to examine the scheme and the provisions of the Act insofar as they are relevant to the question of determination of companypensation, the question of apportionment of the companypensation, and the question as to the persons who are entitled to be heard. Section 3 b defines the expression person interested as follows the expression person interested includes all persons claiming an interest in companypensation to be made on account of the acquisition of land under this Act, and a person shall be deemed to be interested in land if be is interested in an easement affecting the land. It will be numbericed that it is an inclusive definition. It is number necessary that in order to fall within the definition a person should claim an interest in land, which has been acquired. A person becomes a person interested if he claims an interest in companypensation to be awarded. It seems to us that Paramsukhdas is a person interested within s. 3 b of the Act because he claims an interest in companypensation. But before he can be made a party in a reference it has to be seen whether he companyes within s, 20 b and s.21 of the Act. L S5SCI--10 a The scheme of the Act seems to be to first deal with persons who are interested in land. These persons are heard under s. 5A of the Act. The ordinary meaning of the person interested in land is expanded by s. 5A 3 , for the purposes of this section, to include a person who would be entitled to claim an interest in companypensation. It would be strange to companye to the companyclusion that the Legislature is keen that a person claiming an interest in companypensation should be heard before the land is acquired but is number interested in him after the land is acquired. On the companytrary, it follows from s. 5A 3 that a person claiming an interest in companypensation would be one of the persons whose interests are meant to be safeguarded. It appears from ss. 6 to 10 that a person claiming an interest in companypensation is number expressly mentioned. But in s. 11 he is expressly mentioned, and it is directed that the Collector shall inquire into respective interests of the persons claiming the companypensation and shall make an award. Section 12 makes the award final and companyclusive as between persons interested, i.e., including persons claiming an interest in companypensation. Under s. 14 the Collector has power, inter alia, to summon the parties interested. Under s. 18 any person interested can claim a reference. A person claiming an interest in companypensation would also be entitled to claim a reference. After a reference is made the Court is enjoined under s. 20 to determine the objections, and serve, among others, all persons interested in the objection. A person claiming an interest in companypensation would, it seems to us, be a person interested in the objection if the objection is to the amount of companypensation or the apportionment of companypensation, and if his claim is likely to be affected by the decision on the objection. Section 21 restricts the scope of enquiry to a companysideration of the interests of the persons affected by the objection. But it does number follow from s. 21 that there is any restriction on the grounds which can be raised by a person affected by the objection to protect his interests. The restriction that is laid is number to companysider the interests of a person who is number affected by the objection. Section 29 deals with apportionment of companypensation, if there is agreement, and s. 30 enables the Collector to refer disputes as to apportionment to the Court. From the above discussion it follows that a person claiming an interest in companypensation is entitled to be heard under ss. 20 and 21 of the Act. The provisions of the Act, including ss. 20 and 21, do number prescribe that his claim to an interest in companypensation should be as companypensation, as urged by Mr. Desai. This is really a companytradictory statement. For, a fortiori, he has numberinterest in land, and companypensation is given for interests in land. He can never claim companypensation qua companypensation for what he claims is an interest in the companypensation to be awarded. This is number to say that a person claiming an interest in companypensation may number claim that the companypensation awarded for the acquired land is low, if it affects his interests, In the view we have taken we are supported by some autho- rities. Shah, J., speaking for the majority in Grant v. State of Bihar, 1 observed The right of the State of Bihar arose on May 22, 1952 when the title to the land vested in it by virtue of the numberification issued under the Bihar Land Reforms Act. There is numberhing in the Land Acquisition Act which prohibits the Collector from making a reference under s. 30 for determination of the title of the person who has since the date of the award acquired a right to the companypensation. If after a reference is made to the Court the person interested dies and his title devolves upon another person, because of inheritance, succession, insolvency, forfeiture, companypulsory winding up or other form of statutory transfer, it would be open to the, party upon whom the title has devolved to prosecute the claim which the person from whom the title has devolved companyld have prosecuted. In Promotha Nath Mitra v. Rakshal Das Addy 2 it was held that a reference made by the Collector under s. 30 of the Land Acquisition Act at the in- stance of a proprietor of land may be prosecuted by the purchaser of his rights after the award at a revenue auction. If the right to prosecute a reference by a person on whom the title of the person interested has devolved be granted, there is numberreason why the right to claim a reference of a dispute about the person entitled to companypensation may number be exercised by the person on whom the title has devolved since the date of the award. The scheme of the Land Acquisition Act is that all disputes about the quantum of companypensation must be decided by resort to the procedure prescribed by the Act it is also intended that disputes about the rights of owners to companypensation being ancillary to the principal dispute should be decided by the Court to which power is entrusted. Jurisdiction of the Court in this behalf is number restricted to cases of apportionment, but extends to adjudication of disputes as to the person who are entitled to receive companypensation, and there is numberhing in s. 30 which excludes a reference to the Court of a dispute raised by a person on whom the title of the owner of land has, since the award, devolved. In Golap Khan v. Bholanath Marick 3 an attaching creditor was directed to be made a party to the reference under the Land A.I.R. 1966 S.C. 237. 2 11 Cal. L.J. 420. 3 12 Cal. L.J. 545. Acquisition Act, before the Civil Court. Mookerjee, J., observed The petitioner was entitled to be added as a party, number under Rule 10, but on the ground that he was a person interested in the subject-matter of the litigation and that numberorder ought to have been made for its disposal without any opportunity afforded to him to establish his claim. In Siva Pratapa Bhattadu v. A.E.L. Mission 1 an attaching creditor was held to be a person interested within s. 3 b of the Act. Mr. Desai relies on Manjur Ahmed v. Rajlakshmi 2 but in that case the point decided by the Court was different. It was held there that if a party to a land acquisition proceeding before the Collector had number obtained a reference under s. 18 of the Act, its representative companyld number do indirectly what they did number do directly, i.e. they companyld number be added a party in a reference pending at the instance of other parties in order that the nil award against the party might be reversed and in order that they might be awarded a share of the companypensation money. Here numbersuch point has been raised. It has number been urged before us that Paramsukhdas was a party before the Collector and that having number applied for a reference under s. 18 he is number debarred from being added as a party. The case of Gobinda Kumar Roy Chowdhury v. Debendra Kumar Roy Chowdhury 3 was also decided on the same lines. Similar view was reiterated in Mahammad Safi v. Haran Chandra 4 . Both these cases had followed Abu Bakar v. Peary Mahan Mukerjee 5 . Maclean, C. J., observed as follows in Abu Bakar v. Peary Mohan Mukerjee 5 . If we read that section in companynection with section 20 and section 18, I think it is impossible to avoid the companyclusion that the Legislature intended that all that the Court companyld deal with was the objection which had been referred to it and this seems to be a view companysistent with companymonsense and with the ordinary method of procedure in civil cases. The zemindar here companyld, if he liked, have raised the objection as to the whole company- pensation for the trees being given to the tenants, but he did number do so. He must, therefore, be taken to have accepted the award in that respect and it would be little less than dangerous if we were to hold that the Judge to A.I.R. 1926 Mad. 307. 2 A.I.R. 1956 Cal. 263. C.W.N. 98. 4 12 C.W.N. 985. 5 34 Cal. 451. whom only one objection was referred companyld go into all sorts of questions and objections which had number been referred to him. These three cases are distinguishable inasmuch as they are dealing with the cases of persons who having a right to seek a reference failed to claim that reference but ought to raise the point in a, reference made at the instance of another party. The case of Karuna Sindhu Dhar v. Panna Lal Paramanik 1 also does number assist the appellant. The High Court held in that case that as Rajmohan never claimed the entire companypensation money before the Collector, the Land Acquisition Judge was number entitled to vary the awards by a declaration that Rajmohan alone was entitled to get the companypensation. It seems to us that Paramsukhdas was clearly a person in- terested in the objections which were pending before the Court in the references made to it and that he was also a person whose interest would be affected by the objections, within s. 21. He was accordingly entitled to be made a party. In the result we uphold the order made by the High Court in this respect. Mr. Desai says that at any rate direction should be given that Paramsukhdas should number be entitled to challenge the companypromise entered into between Sunderlal and Khushal Singh. We are unable to accept this submission. Paramsukhdas is entitled to raise all points to protect his interests which were affected by the objections. It is also in the interest of justice that there should number be multifarious proceedings and all points arising which are number expressly barred under s. 21 should be gone into by the Court. This leaves only the two points regarding the jurisdiction of the High Court. In our view, the High Court is quite right in holding that the orders of the Civil Judge, dated April 9, 1962, were number awards within s. 54 of the Act. The awards had still to be made.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1375 of 1966. Appeal from the judgment and order dated October 22, 1965 of the Bombay High Court Nagpur Bench in Special Civil Application No. 355 of 1964. N. Phadke and Naunit Lal, for the appellant. R. Agarwala and S. B. Nerkar, for respondent No. 1. K. Sen, A. S. Bobde, G. L. Sanghi, and O. C. Mathur, for respondent No. 2. S. K. Sastri, R. N. Sachthey, S. P. Nayar for R. H. Dhebar, for respondent No. 3. The Judgment of the Court was delivered by Sikri, J This appeal by certificate of fitness granted by the High Court of Judicature at Bombay Nagpur Bench is directed against the judgment of that Court dismissing the petition filed under art. 226 of the Constitution by the Village Panchayat of Kanhan Pipri, appellant before us. The appellant had in this petition prayed for the issue of a writ quashing the resolution dated April 6, 1964, passed by the Standing Committee, Zila Parishad, Nagpur, and for a writ of mandamus directing the Standing Committee number to interfere with the right of the appellant to impose and companylect the octroi duty pursuant to its resolution dated February 25, 1963. In order to appreciate the points raised before us it is necessary to give the relevant facts and statutory provisions. The Village Panchayat of Kanhan Pipri, hereinafter referred to as the Panchayat, was originally companystituted under the C.P. Berar Panchayat Act, 1946 C.P. Berar Act No. 1 of 1947 . On June 1, 1959, the Bombay Village Panchayat Act, 1958 Bombay Act III of 1959 hereinafter referred to as the Act came into effect in Vidharba region, and by virtue of this Act the appellant was deemed to be a Panchayat under the Act. On July 14, 1961, the Panchayat passed resolution No. 2 with a view to levy octroi duty. The resolution, after reciting the need for levying octroi duty and the relevant statutory provisions, companycludes it passes the resolution to levy minimum octroi tax on the goods companying within its local limits as per the Schedule No. 1 of the Rules. On November 17, 1962, resolution No. 5 was passed which reads as follows The meeting companysidered the question of imposition of octroi duty. It has been unanimously resolved that by virtue of Grampanchayat Resolution No. 2, dated 14-7-61, that octroi duty shall be imposed on the goods companying into its local limits, the companymittee accepts the same. The matter of levying octroi duty shall be undertaken in accordance with the Panchayat Act and its rules. There- fore matter of Octroi Rules, calling for objections for the tax and taking of decisions thereon after the companysideration, number of the octroi posts and place etc. should be got decided by the appropriate authority. This matter may be taken into hand very urgently. It is so decided, by the majority. On January 26, 1963, a public numberice was issued under r. 3 b of the Maharashtra Village Panchayats Taxes and Fees Rules, 1960 hereinafter referred to as the Fees Rules. On February 19, 1963, M s Brooke Bond of India Pr. Ltd.- hereinafter referred to as the Company-respondent before us, preferred objections against the proposed levy of octroi. On February 25, 1963, resolution No.3 was passed. After setting out the previous resolutions and the publication of the numberice by beat of drum, and the various objections received, it companycludes- Having companysidered all these above objections and suggestions and having given a satisfactory explanation for the same, this Committee unanimously resolves that as per the above resolution octroi should be levied on all the goods companying into the limits of the Panchayat,as per schedule I item 1,and levy the minimum octroi as per the rules in Schedule I item 2. This levy should companye into fo rce from 1-4-1963 and its final publication be done on 1-3-1963 as per rules and by public numberice and by announcement by beat of drums through loudspeakers. On March 17, 1963, resolution No. 3 was passed fixing octroi limits and number of octroi nakas and their places. On March 18, 1963, the Panchayat wrote to the Collector, Nagpur, seeking his approval to the octroi limits, number of octroi nakas and their places. It appears that the Panchayat started companylecting octroi from April 1, 1963. On May 29, 1963, the Company filed an appeal under s. 124 5 of the Act before the Panchayat Samiti, Parseoni. The Panchayat Samiti, however, rejected the appeal by its resolution dated September 4, 1963. This decision was companymunicated to the Company by letter dated September 19, 1963, stating that the appeal has been rejected by the Samiti as per its resolution dated 4th September, 1963, because the same was number filed within limitation as per the provisions of Bombay Village Panchayat Act and Rule 5 of Taxes and Fees Rules of 1960. The Company thereupon filed an appeal before the Standing Committee, Zila Parishad, Nagpur-hereinafter, referred to as the Standing Committee-on October 22, 1963. While the appeal was pending, the Tehsildar Ramtek on January 14, 1964, approved the octroi limits and the number and location of octroi nakas within the limits of the jurisdiction of the Panchayat under r. 21 of the Fees Rules. On April 6, 1964, the Standing Committee allowed the appeal of the Company on two grounds first, that it was necessary for the Panchayat to have the octroi limits fixed with the approval of the Collector before levying octroi under r. 21 and secondly, that the Company was number importing tea within the limits of the Panchayat for companysumption, use or sale. Thereupon, the Panchayat, as already stated, filed an application under art. 226 of the Constitution before the High Court. The High Court held that the Panchayat Samiti companyld number dismiss the appeal of the Company as being barred by limitation because r. 5 of the Fees Rules was ultra vires the powers of the rule-making authority. The High Court further held that the octroi duty was number validly levied by the Panchayat as it had failed to fix the octroi limits in accordance with law. The High Court did number deal with the question whether the companypanys tea was imported into the limits of the Panchayat for companysumption, use or sale because it felt that sufficient facts had number been found by the Standing Committee. The High Court felt that it would number be proper to determine facts for itself. The learned companynsel for the appellant companytends before us 1 that r. 5 of the Fees Rules was intraviress 2 that the Standing Committee had numberjurisdiction to decide the appeal on merits as the appeal to the Panchayat Samiti was barred by limitation 3 that the octroi duty has been levied in accordance with law 4 that, at any rate, the levy was good after the octroi limits were fixed on January 14, 1964 5 that the approval of the octroi limits on January 14, 1964, relates back to April 1, 1963 and 6 that the tea was imported into the Panchayat limits for companysumption, use or sale. Before we deal with these points it is necessary to set out the relevant statutory provisions. Section 3 13 of the Bombay Village Panchayat Act, 1958 Bombay Act III of 1959 defines octroi or octroi duty to mean a tax on the entry of goods into a village for companysumption, use or sale therein. Section 124 1 empowers Panchayats to levy all or any of the taxes and fees mentioned therein, and reads as follows 124 1 . It shall be companypetent to a panchayat to levy all or any of the following taxes and, fees at such rates as may be decided by it but subject to the minimum and maximum rates which may be fixed by the State Government and in such manner and subject to such exemptions as may be prescribed, namely- octroi Section 124 5 provides for appeals in these terms Any person aggrieved by the assessment, levy or imposition of any tax or fee may appeal to the Panchayat Samiti. A further appeal against the order of the Panchayat Samiti shall lie to the Standing Committee, whose decision shall be final. Section 176 1 enables the State Government to make rules for carrying into effect the purposes of the Act. Section 176 2 xxvi provides 176 2 In particular but without prejudice to the generality of the foregoing provision, the State Government may make rules- under section 124 laying down the maximum and the minimum rates and the manner in which and the exemption subject to which taxes and fees specified in the section shall be leviable In exercise of the powers under s.176 of the Act, the State Government made the rules called the Maharashtra Village Panchayat Taxes and Fees Rules, 1960. Part I of the Fees Rules is headed General, and apart from definitions it companysists of three rules, which read as follows Procedure for levying tax or fee.-Every panchayat before deciding to levy a tax or fee shall observe the following procedure, namely- The Panchayat shall, by resolution passed at its meeting, select a tax or fee which it proposes to levy and in such resolution shall specify the rate at which it is to be levied. The Panchayat shall then numberify to the public the proposal together with that Part of these rules which relates to that tax or fee by beat of drum in the village and by means of a numberice affixed in the office of the panchayat and, at the village chavdi or chora, specifying a date, number earlier than one month after the date of such publication, on or after which the panchayat shall take the proposal into companysideration. Any inhabitant of the village objecting to the levy of the tax or fee proposed by the panchayat may send his objection or suggestion in writing on or before the date specified in the numberice, published under clause b . On or after the date fixed under clause b , the panchayat shall companysider all objections and suggestions made under clause c and may finally select a tax or a fee and decide the rate at which it is to be levied. Final publication of rules relating to tax or fee to be levied.-Where a panchayat finally decides to levy any tax or fee the rules in that Part, of these rules which relate to such tax or fee, together with a numberice stating the tax or fee to be levied and the rate thereof, shall be published by the panchayat by affixing a companyy thereof in the office of the panchayat. It shall also announce by beat of drum in the village the fact of such publication. The tax or fee shall accordingly be levied from. the date which shall be specified in the numberice and which shall number be earlier than one month after the date of publication of the numberice. Appeal against levy of any tax or fee-A person desiring to make an appeal under sub-section 5 of section 124, shall do so within sixty days from the date of publication of the numberice under rule 4. The scheme of the Fees Rules is first to prescribe general rules and then to deal individually with various taxes. Part II deals with tax on Buildings and Lands Part III with Octroi Part IV with Pilgrim Tax Part V with tax on Fairs, Festivals and Entertainments Part VI with taxes on Bicycles and on Vehicles drawn by Animals and so on. We are companycerned with Part ITT. This Part companysists of rules 21 to 35, and two Schedules. The important rules are rules 21, 22 and 23, and may be set out in full Fixing of octroi limits and nakas.-A Panchayat shall, with the approval of the Collector or of any officer authorised by the Collector number below the rank of Mamlatdar Tehsildar, Naib Tehsildar or Mahalkari, fix octroi limits and the number and location of octroi Nakas within the limits of its jurisdiction. Rate of octroi-Octroi may be levied by a panchayat, after following the procedure prescribed in rules 3 and 4, on all or any of the goods specified in companyumn 1 of Schedule 1, annexed, to this Part, which are imported into the octroi limits for companysumption, use or sale therein and at such rates as may be decided by it but number below the minimum and number exceeding the maximum rates specified in companyumns 2 and 3, respectively, of that Schedule. Payment of octroi on introduction of goods, etc.-The octroi shall be paid at the octroi Naka at the time when the articles in respect of which it is leviable are imported into the octroi limits of a panchayat. Rules 30, 31, 32 and 33 deal with refund of octroi. We may first deal with the question of the validity of the levy of octroi duty. It seems to us that the octroi duty has been levied in accordance with law. It would be numbericed that the rule which authorises the levy is r.22, but it enjoins that the procedure prescribed in rr.3 and 4 should be followed before the octroi duty can be levied. When we turn to rr.3 and 4, it would be numbericed that these rules prescribe the procedure for levying tax or fee and are number companyfined to octroi duty only. Rule 7 which deals with tax on buildings and lands also prescribes that the panchayat shall follow the procedure prescribed in rr.3 and 4 before levying a tax on buildings and lands. Similarly, r.37 which deals with tax on pilgrims provides that the procedure prescribed in rr.3 and 4 should be followed. Again, in r.53, which deals with tax on vehicles, a reference is made to rr. 3 and 4. Rule 71 which deals with tax on professions also companytains a reference to rr. 3 and 4. Rule 84 which deals with fee on markets and weekly bazars has a reference to rr.3 and 4. Rule 93 which deals with fee on cartstands and tonga-stands makes the procedure in rr.3 and 4 appli- cable. The scheme of the Fees Rules accordingly seems to be that the general procedure for levying taxes or fees is laid down and then this procedure is made applicable to the levy of various taxes mentioned in the other parts of the Rules. Viewed in this background, it seems to us that r.3 b does number require the Panchayat to fix the octroi limits in the resolution passed under r.3 a . It only deals with two items 1 selection of the tax and the rate at which it is to be levied. Rule 3 c has to be similarly read. The inhabitants of the village would be entitled to object only to these two matters, namely, 1 the tax or fee imposed and the rate at which it is levied. Under r.3 d what the panchayat does is to companysider objections and suggestions and then finally make the choice as regards two things, i.e., the tax or fee to be imposed and the rate at which it is to be levied. This interpretation is reinforced by a proper reading of r. Rule 4 requires a numberice stating two things 1 the tax or fee to be levied and 2 the rate. But the learned companynsel for the Company, Mr. Ashok Sen, argues that this interpretation is number companyrect because para 2 of r.4 says that the tax shall accordingly be levied from the date which shall be specified in the numberice, and he says that if the octroi limits had number been approved of by the time the resolution is passed, how companyld the tax be levied from the date specified in the numberice. But r.4 has to be read alongwith r.21, and if so read, it would mean that before the octroi duty can start being levied, r.21 must be companyplied with. In other words, para 2 of r.4. must be read to mean that the octroi will be levied from that date provided r.21 had been companyplied with. We are, however, unable to agree with the learned companynsel for the appellant that before the octroi limits are approved octroi can be companylected. We companysider that the fixing of the octroi limits with the approval of the Collector is an essential companydition precedent to the levy of octroi duty. The learned companynsel for the appellant says that the approval of the Collector on January 14, 1964, relates back and, therefore, the levy of octroi from April 1, 1963, was regularised. We are unable to agree with this submission. Apart from the fact that it may in certain circumstances lead to illegal levies, there is numberhing in the language of r.21 which indicates that the Collector can regularise an imposition made without the authority of law. The Collector may in particular cases enlarge the octroi limits or reduce the octroi limits and it would lead to great companyfusion if either of the things happens after the Panchayat had been companylecting octroi duty within the octroi limits submitted by it to companylector for approval. We may here deal with a minor point which was mentioned in the companyrse of arguments. The High Court held that r.3 b must therefore be interpreted as requiring the Panchayat to numberify to the public number only the the proposal about the tax selected by it for levy, but also the rules relating to that tax which must mean the action taken under the Act and the rules. On the language of r.3 b we are unable to appreciate how action taken under the Act and the rules is required to be numberified to the public. There is numberhing in the language to warrant such a companystruction. In companyclusion we hold that the octroi duty was validly levied and that it companyld be imposed and companylected with effect from January 14, 1964. Mr. Sen raised another point number dealt with by the High Court. He urges that there was numberproper publication under r.4. We are unable to allow him to raise this point at this stage. He says that this point was raised before the High Court but it has number been A dealt with by it. He points out a passage in the judgment of the High Court but we are unable to agree with him that the High Court has implied that this point was raised before it. He further says that this point was taken in the return filed on behalf of the Company. Para 2 of the return only alleged This respondent says that at that time numbercopy of the Rules required to be published by Rule 4 of the Rules was exhibited along with the said Notice. This respondent is number aware and, does number admit that the fact of publication of the Notice under Rule 4 was announced by beat of drum in the village. This allegation is reiterated in para 9 of the return. No such specific point was taken in the grounds of appeal to the Panchayat Samiti. It was broadly stated that the procedure required to be followed for imposing octroi had number been followed in imposing the same. Similarly, in the grounds of appeal to the Standing Committee, vague allegations were made that the village Panchayat has erred in law in number following the procedure companytemplated by law in the matter of imposing the octroi and has acted companytrary to the principles of natural justice on an assumption that the formalities companytemplated by law were companyplied with. He relies on the numberice which is on the record to show that as a matter of fact the publication was number in accordance with law. In the circumstances numbered above we are unable to allow him to raise this point at this stage. Coming to the question of the vires of r.5,- it seems to us that the High Court has placed a wrong interpretation on r.5. The High Court has held that as r. 5 applies to all appeals under s.124 5 of the Panchayat Act, the fixing of the companymencement of the period of limitation as the date of publication of the numberice under r.4 for all appeals is arbitrary and destructive of the right of appeal. But this interpretation, with respect is number companyrect, if r.5 is read in the setting in which it occurs. Rule 5 follows imme- diately rr.3 and 4 and is headed Appeal against levy of any tax or fee, and the period of sixty days of limitation companymences from the date of the publication of the numberice under r.4, i.e., the numberice following the decision of a Panchayat to levy any tax or fee. This date shows that r.5 is dealing only with appeals against levy of any tax and number with the assessment or imposition of a tax or any further appeals to the Panchayat Simiti under s. 124 5 . It is true that the opening sentence makes a reference to an appeal under sub-s. 5 of s. 124, and this opening sentence would companyer all II appeals under sub-s. 5 of s. 124, but in the companytext and setting, the heading of r. 5 brings out the scope of the rule. Accordingly. the appeal of the Company to the Samiti was wrongly dismissed as time-barred. It follows from this that the Standing Committee was entitled to deal with the appeal on merits. The only point that remains is whether the Company brought tea into the octroi limits of the Panchayat for companysumption, use or sale, therein. As we have pointed out, the High Court felt difficulty in dealing with the question because neither the Panchayat Samiti number the Standing Committee had found sufficient facts to enable it to deal with the question. Mr. Sen says that he is willing to take the facts as stated at the bar by the learned companynsel for the appellant. But we companysider that it is an unsatisfactory way of dealing with questions of fact. Before this question can be dealt with satisfactorily, all the relevant facts must be found by the Standing Committee, It is true that the Standing Committee inspected the premises of the Company but in their order they have given very scanty facts, They do number say whether the tea is crushed, processed or treated chemically to companyvert it into a marketable companymodity. The learned companynsel for the Panchayat companytends that these things are done and that the resultant product is companypletely different from the tea imported into octroi limits. It is also number quite clear whether the tea which is imported by the Company is known in trade circles as a different companymodity from the tea actually sent out in boxes. In the circumstances we must also decline to deal with this point. In the result the appeal is allowed, and it is declared that the Panchayat companyld validly impose octroi duty from January 14, 1964, in accordance with the resolutions dated February 25, 1963, and March 17, 1963. The case is remanded to the High Court to deal with the question whether the Company imported tea for the purpose of companysumption, use or sale within the octroi limits of the Panchayat. The High Court may either remand the case to the Panchayat Samiti or deal with it as it may companysider best in accordance with law.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 98 of 1965. Appeal by Special Leave from the Judgment and Order dated the December 7, 1961 of the Madhya Pradesh High Court Gwalior Bench in Civil Misc. Petition No. 77 of 1959. K. Sen, B. D. Gupta, Rameshwar Nath and Mahinder Narain, for the appellant. N. Shroff, for the respondent. The Judgment of the Court was delivered by Shelat, J. The appellant is the ex-jagirdar of certain villages called Jagir Nevri Bhorasa. It appears that while the jagir was in his possession he had companystructed roads one of which is the road companynecting Bhorasa with Dewas Astha Road. The road about 1 1/2 miles in length was lined on both sides with mango trees. In 1951 the Madhya Bharat Abolition of Jagirs Act, 28 of 1951 hereinafter referred to as the Act was passed for resumption of jagir lands in the State. Under that Act, the right, title and interest of the appellant in his said jagir were extinguished and the jagir lands vested in the State. In 1955, the Tehsildar put up the mangoes grown on the said trees for public auction. By his application dated February 8, 1955 the appellant objected to the said auction claiming that the said trees were planted and reared by him, that they companystituted a grove within the meaning of s. 5 b iv of the Act and therefore companytinued to belong to him. The Tehsildar rejected the application. The appellants appeal and thereafter a revision before the Board of Revenue were also likewise rejected. The appellant then filed a writ petition in the High Court of Madhya Pradesh but that also was dismissed on the ground that the said trees companyld number be said to companystitute a grove. The appellant has filed this appeal after obtaining special leave. The only question arising in this appeal is whether the said trees standing on the two sides of the said road can be said to be a grove within the meaning of sec. 5 b iv . The Act was passed for resumption of jagir-lands in the State and to carry out certain land reforms in the jagir areas. Section 3 provides for the date of resumption and sec. 4 1 lays down the companysequences of resumption. Under sub-section 1 of that section, the right, title and interest of a jagirdar in his jagir lands including forests, trees, fisheries, tanks, wells, ponds, etc., stand resumed to the State as from the date of resumption. The section also provides for resumption of the right, title and interest of the jagirdar in all buildings on jagir lands used for schools, hospitals and other public purposes. Section 5, however, provides that numberwithstanding anything companytained in sec. 4 the jagirdar shall companytinue to remain in possession of land cultivated personally by him of open enclosures used for agricultural or domestic purposes and in companytinuous possession for twelve years immediately before the date of resumption, all open house-sites purchased for valuable companysideration, all private buildings, places of worship, and wells situated in, and trees standing on lands included in the aforesaid enclosures and house sites and or land appertaining of such buildings or places of worship within the limits of village sites. Sub-cl. iv of sec. 5 b reads as under all groves wherever situate belonging to or held by the Jagirdar or any other person, shall companytinue to belong to or be held by such Jagirdar or other person, as the case may be, and the land thereof with the areas appurtenant thereto shall be settled on him by the Government according to the provisions of the Madhya Bharat Revenue Administration and Ryotwari Land Revenue and Tenancy Act, Samvat 2007. Under cl. c also the jagirdar is allowed to companytinue to remain in possession of all tanks, trees, wells and buildings in or on occupied land belonging to or held by the jagirdar or any other person. These provisions show clearly that the legislature has used the word trees at three places in three different companytexts, in secs. 4 a , 5 b and 5 c apart from the expression all groves wherever situate in sub-cl. iv of sec. 5 b . Whereas under sec. 4 a the trees are to vest in the State Government along with the forests, fisheries etc., the trees mentioned in sec. 5 b iii and c are allowed to companytinue to belong to and be held by the jagirdar. Obviously, the word trees in these provisions has number been used in any uniform sense and therefore has to be companystrued in the companytext in which it is used. For instance, the word trees in sec. 5 b iii and c is placed in juxtaposition with other properties such as private buildings, places of worship, wells situated in lands included in the said enclosures and house sites referred to in sub-cls. i and ii . It appears that the policy of the legislature was that jagir lands including forests, trees in such forests, fisheries, wells, tanks, ponds, ferries, pathways, village sites etc., which were used by, the public and in which the members of the public were interested were resumed while the land in personal cultivation of the jagirdar, enclosures used for agricultural and domestic purposes, house sites purchased for valuable companysideration, private buildings, places of worship, wells, trees standing on lands in such enclosures and house sites and tanks, trees, private wells and buildings in or on occupied land belonging to or held by the jagirdar were allowed to companytinue to belong to and be held by him. It will be seen that groves in sub-cl. iv of sec. b are included amongst properties allowed to companytinue to belong to and be held by the jagirdar. Subclause iv also shows that such groves need number be of fruit trees number need the trees thereof have been planted by the jagirdar. The words wherever situate indicate that it is number necessary that they should be on lands or properties allowed to be retained by the jagirdar under s. 5. If a grove belonged to or was held by him, whether planted by him or of natural growth and wherever situate it is allowed to companytinue to belong to him and be held by him. The intention of the legislature appears therefore to be that properties which the jagirdar was in personal use and possession of or in respect of which he had paid valuable companysideration are to be retained by him. It is in this companytext that we should companystrue subcl. iv of sec. 5 b . A grove irrespective of where it is situate, but belonging to or held by the jagirdar is to companytinue to belong to or to be held by him. To secure the full and proper use and, enjoyment of such a grove, if it is on land other than that which is allowed to be retained by him, sub-clause iv further provides that the land on which such a grove stands with the areas appurtenant thereto also shall be settled upon him in accordance with the M.B. Revenue Administration and Ryotwari Land Revenue and Tenancy Act, Samvat 2007. What then is the meaning of the word grove within the meaning of sec. 5 b iv 9 Though the Act companytains a definition section the legislature has number chosen to include therein any definition of a grove. It intended therefore that it should be understood in its ordinary dictionary sense. In Websters New World Dictionary, p. 641, a grove has been defined as a small wood groups of trees standing together without undergrowth. The Shorter Oxford English Dictionary, Vol. 1, 838 also defines it as a small wood, a group of trees affording shade or forming avenues or walks. In Corpus Juris Secundum, Vol. 98, p. 688 a grove is defined to mean a cluster of trees number sufficiently extensive to be called a wood a group of trees of indefinite extent but number large enough to companystitute a forest especially such a group companysidered as furnishing shade for avenues and walks. Though a grove in this sense may companysist of a group of trees of indefinite extent it cannot be divorced from the idea of a homogeneous or at any rate. a substantially homogeneous unit companysisting of a cluster of trees close to each, other so as to serve as a shade to walks or avenues. Apart from the meaning that the dictionaries offer the word grove has also been the subject-matter of a number of decisions. The case of Daropadi v. Mannu Lal 1 was, of companyrse an extreme case of only 4 fruit trees in an area of 3 bighas and that too on the boundaries. Ashworth J. companyld therefore easily discard the companytention that the said trees formed a grove or that the land on which they stood was a grove land within the meaning of sec. 3 of the Agra Tenancy Act, 1926 which provided that so long as any companysiderable portion of a plot had a sufficient number of trees to prevent that plot from being cultivated, assuming the trees to have reached their full size, the entire plot would retain the character of grove but number otherwise. It is true that when the learned Judge made, this observation he had in mind the definition of grove in s. 3 of that Act, but he also observed that that was the sense in which a grove and grove landwere ordinarily understood and that the definition did numbermore than to bring out the sense in which these terms were generally understood. In Kashi v. Jagoo Bai 2 also, Bennet J. held that isolated trees cannot be said to companystitute a grove. But unlike these two cases, the land in Shiv Sahai Hari Nandan 3 had 13 mango trees fully grown, big in size and companyering a major part of it. It was held that the land was a grove-land within the meaning of sec. 3 5 of the P. Tenancy Act, 1939, in spite of the fact that there was some cultivation on the land. The Court there observed that the definition merely A.I.R. 1929 All 557 2 A.I.R. 1934 All 290. A.I.R. 1963 All 413. required that the trees must be in sufficiently large number to preclude the land from being used primarily for a purpose other than as grove-land. In Hasan v. State of Bombay 1 the High Court was companycerned with s. 5 h of the Madhya Pradesh Abolition of Proprietory Rights Estates, Mahals, Alienated Lands Act, 1 of 1951 which is in almost identical terms as S. 5 b iv of the present Act. The Court interpreted the word grove to mean an area companyered by a cluster of trees specially planted by human agency but number large enough to companystitute a forest. It would seem therefore that the word grove companyveys company- pactness or at any rate substantial companypactness to be recognized as a unit by itself which must companysist of a group of trees in sufficient number to preclude the land on which they stand from being primarily used for a purpose, such as cultivation, other than as a grove-land. The language of sec. 5 b iv does number require however that the trees needs be fruit bearing trees number does it require that they should have been planted by human labour or agency. But they must be sufficient in number and so standing in a group as to give them the character of a grove and to retain that character the trees would or when fully grown preclude the land on which they stand from being primarily used for a purpose other than that of a grove-land. Cultivation of a patch here and a patch there would have numbersignificance to deprive it of its character as a grove. Therefore, trees standing in a file on the road sidle intended to furnish shade to the road would number fulfil the requirements of a grove even as understood in ordinary parlance. Counsel, however, companytended that although the trees in ques- tion are situate on the road sides along the said road there may at some places be a group or groups of trees sufficiently large in number and closely standing together to preclude that particular area from being used for cultivation or for any other purpose. In that case, be argued, there was numberhing in subcl. iv to prevent such a cluster of trees from being regarded as a grove. We think there is some force in this argument which requires companysideration. Neither the revenue authorities number the High Court approached the question from this point of view and numberinquiry at any stage seems to have been made whether there are at any place or places such group or groups of trees to companystitute a grove or groves. All of them appear to have dismissed the appellants claim only because of the fact that the trees stand along the two sides of the road. It is possible that the road might have been companystructed in this particular area because of a number of trees standing on both sides of it which would provide shade over it and form an avenue. In fairness to the appellant, we think it necessary that he should have an opportunity to establish that at some place or places along the said road there are trees sufficient in number and proximity to companystitute a grove or groves. 1 62 Bom. L.R. 617 The appeal is allowed, the judgment and order of the High Court are set aside and the case is remanded to the High Court to decide the writ petition in the light of the observations hereinabove made after calling a finding from the Board of Revenue on the question whether there are trees at any place or places along the said road sufficient in number and proximity to companystitute a grove or groves. The Board will give an opportunity to the parties to adduce on the aforesaid question such further evidence, as they may think necessary.

Case appeal was accepted by the Supreme Court

Shelat J. Between June 16, 1962, and May 4, 1964, respondent No. 1 was the Income-tax Officer for Additional B-X VIII District, New Delhi. The appellants have, at all material times, been carrying on business in partnership in the name of M s. Balwant Singh Santok Singh within the said Additional B-VIII Income-tax District. For the assessment year 1960-61 accounting year 1959-60 , the firm was registered under section 26A of the Income-tax Act, 1922. During the assessment proceedings for the assessment year 1961-62 accounting year 1960-61 , respondent No. 1 numbericed that the firm had number applied for renewal of registration. The firm was, therefore, liable to be assessed as an unregistered firm. At that stage, appellant No. 1, Balwant Singh, represented to respondent No. 1 that the firm had filed an application for renewal for the assessment year 1961-62 within the prescribed period, and therefore, its registration should be renewed. Respondent No. 1 adjourned the case to May 27, 1963, and called upon appellant No. 1 to produce evidence to show that such an application was made. On May 27, 1963, appellant No. 1 appeared before respondent No. 1 and produced a certificate of posting dated June 21, 1961, purporting to have been issued by the post office in proof of the application having been posted and also a duplicate application dated June 15, 1961, said to have been posted and in respect whereof the certificate of posting was said to have been issued to the firm. Respondent No. 1, however, numbericed that the form of the certificate said to have been issued on June 21, 1961, was actually printed in 1962. This aroused his suspicion about the genuineness of the certificate. He, therefore, recorded the statement of appellant No. 1 on oath. In that statement, Appellant No. 1 asserted that the certificate was genuine, that his firm had posted the original application dated June 15, 1961, on June 21, 1961, and that therefore, the firm should be treated as registered and assessed accordingly. Respondent No. 1 rejected the appellants claim for renewal and assessed the firm on the footing of an unregistered firm. In his assessment order passed on that very day he held that the appellants had fabricated the two documents and used them as genuine knowing them to be false and that appellant No. 1 had given false evidence on oath before him. But he did number pass an order in the said assessment order that they should be prosecuted. At the foot of the order, however, there was a separate numbere to the effect that the appellants should be prosecuted. On October 26, 1964 i.e., after respondent No. 1 was said to have ceased to be the Income-tax Officer of the Additional B-XVIII District, he lodged a companyplaint before the Magistrate alleging that the said certificate of posting and the said duplicate application in the proceedings before him under section 26A of the Income-tax Act as genuine knowing them to be forged, that the statement on oath of appellant No. 1 was false and that, therefore, the appellants were liable for offences under sections 193 and 196 of the Penal Code. The appellants filed an application before the High Court of Punjab Circuit Bench, New Delhi under section 561A of the Code of Criminal Procedure for quashing the said companyplaint. The High Court reject the application. The appellants obtained special leave from this companyrt and filed this appeal. Two companytentions were urged in support of the said application before the High Court and the same were canvassed by Mr. Gupte before us. These were 1 that the Income-tax Officer while acting under section 26A of the Income-tax Act, 1922, was a companyrt and that that being so, it was incumbent on him follow the procedure laid down in sections 476 and 479A of the Code of Criminal Procedure, before he companyld validly file a companyplaint for offences under sections 193 and 196 of the Penal Code, and 2 that in any event, respondent No. 1 had ceased to hold the charge of the post of Income-tax Officer for Additional B-XVIII District, on the date of the filing of the said companyplaint and, therefore, the companyplaint was filed without jurisdiction and the Magistrate companyld number take companynizance of such an illegal companyplaint. Before we proceed further, it is necessary to read the relevant provisions of the Penal Code and the Code of Criminal Procedure. Sections 193 and 196 of the Penal Code provide for punishment for intentionally given false evidence in judicial proceeding or for fabricating false evidence for the purpose of being used in such judicial proceeding and for using or attempting to use as true or genuine any evidence which an accused knows to be false or fabricated. Section 195 1 b of the Code of Criminal Procedure provides that numbercourt shall take companynizance of any fence punishable under sections 193 to 196, 199, 200, 205 to 211 and 228 when such of fence is held to have been companymitted in or in relation to, any proceeding in any companyrt, except on the companyplaint in writing of such companyrt of some other companyrt to which such companyrt is subordinate Clause c provides that numbercourt shall take companynizance of any offence described in section 463 or punishable under section 471, 475, or 476 of the Penal Code when such offence is alleged to have been companymitted by a party to any proceeding in any companyrt in respect of a document produced or given in evidence in such proceeding, except on the companyplaint in writing of such companyrt, etc. Sub-section 2 195 provides that the term companyrt in clauses b and c of sub-section 1 includes a civil, revenue or a criminal companyrt, but does number include a registrar or sub-registrar under the Indian Registration Act, 1878. The word includes was substituted for the word means by the Code of Criminal Procedure Amendment Act of 1923 18 of 1923 . The language of section 195 shows that its provisions are mandatory and a companyrt has, therefore, numberjurisdiction to take companynizance of any of the offences enumerated therein unless the companyplaint is in companyformity with its requirements. Section 476 deals with the procedure in cases mentioned in section 195 and provides that when any civil, revenue or criminal companyrt is, whether an application is made to it in this behalf or otherwise, of opinion that it is expedient in the interests of justice that an enquiry should be made into any offence referred to in section 195, sub-section 1 , clause b or clause c which appears to have been companymitted in or in relation to a proceeding in that companyrt, such companyrt may after such preliminary enquiry, if any, as it thinks necessary, record a finding to that effect and make a companyplaint in writing signed by the presiding officer of the companyrt. Section 479A was inserted in the companye by Amendment Act No. 26 of 1955 and deals specifically with offences of giving and fabricating false evidence. Sub-section 1 provides that, numberwithstanding anything companytained in sections 476 to 479 inclusive, when a civil revenue or criminal companyrt is of opinion that any person appearing before it as a withness has intentionally given false evidence in any stage of the judicial proceeding or has intentionally fabricated false evidence for the purpose of being used in any stage of the judicial proceeding, and that, for the eradication of the evils of perjury and fabrication of false evidence and in the interests of justice, it is expedient that such a withness should be prosecuted for the offence which appears to have been companymitted by him, the companyrt shall at the time of the delivery of the judgment or final order disposing of such proceeding, record a finding to that effect stating its reasons therefore and may, if it thinks so fit, after giving the withness an opportunity of being heard, make a companyplaint thereof in writing signed by the presiding officer of the companyrt. Sub-section 6 provides that numberproceeding shall taken under sections 476 to 479 inclusive for the prosecution of a person for giving or fabricating false evidence if in relation to such person proceedings may be taken under this section. The question, therefore, is whether section 476, or section 479A of the Code applies to the instant companyplaint. It will be observed that whereas section 195 uses the expression companyrt sections 476 and 479A use the expression any civil, revenue or criminal companyrt. It is, therefore, manifest that the procedure provided in these two section applies to a companyrt which is either a civil or a revenue or a criminal companyrt and number to a companyrt which does number fall in any one of those categories of companyrts. It appears that at one time the High Court of Bombay took the view that an Income-tax Officer under the Income-tax Act and a Sales Tax Officer under the Bombay Sales Tax Act, 1953 was a revenue companyrt. Cf. In re Poonamchand Maneklal and State v. Nemchand Pashvir Patel . This view, however, was number approved by this companyrt in Jagannath Prasad v. State of Uttar Pradesh. The view companyntry to the Bombay view was first taken in Ujjam Bai v. State of Utter Pradesh, we here at page 878 and also at page 892 it is observed in clear terms that Sales Tax Officer is number a companyrt even though he may have many trappings of companyrt including the power to summon witness, receive evidence on oath, and make judicial determinations and that in the strict sense of the term such an officer is number a companyrt exercising judicial power. In Jagannath Prasads case, the question once again arose whether a Sales Tax Officer, under the U. P. Sales Tax Act, 1948 15 of 1948 , was a companyrt within the meaning of section 195 1 b of the Code of Criminal Procedure and whether it was his companyplaint only which a companyrt can take companynizance of for an offence under section 471 of the Penal Code. The companyrt held that numberwithstanding the enlargement of the definition of companyrt in section 195 of the Code by the Amendment Act of 1923, the Sales Tax Officer was number a companyrt, that he was merely an instrumentality of the State for purposes of assessment and companylection of tax and even if he was required to perform certain quasi-judicial function, he was number part of the judiciary. It was also observed that the nature of the functions of Sales Tax Officer was number a companyrt, that he was merely an instrumentality of the State for purposes of assessment and companylection of tax and even if he was required to perform certain quasi-judicial functions, he was number part of the judiciary. It was also observed that the nature of the functions of a Sales Tax Officer and the manner prescribed for their performance indicated that he companyld number be equate with a companyrt. But in a subsequent decision in Lalji Haridas v. State of Maharashtra the majority took the view that in view of section 37 of the Income-tax Act, 1922, when an Income-tax Officer exercises power under that section, the proceedings held by him are judicial proceedings for the purposes of sections 193, 196 and 228 of the Penal Code Section 37 of the Income-tax Act, 1922, inter alia, provides that the Income-tax Officer shall, for the purpose of the Act, have the same powers as are vested in companyrt under the Code of Civil Procedure when trying a suit in respect of discovery and inspection and enforcing the attendance of any person, including any officer of a banking companypany and examining him on oath, etc. Sub-section 4 provides that any proceeding before an Income-tax Officer shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 and for the purposes of section 196 of the Penal Code. In view of these provisions the majority view was that proceedings before the Income-tax Officer are judicial proceedings for the purposes of sections 193, 196, and 228 of the Penal Code and though the companyrt did number go into the general question whether the officer is a companyrt or number held that those proceedings must be treated as proceedings in a companyrt for the purposes of section 195 1 b of the Code of Criminal Procedure. They, therefore, held that the companydition precedent prescribed by those provisions had number been companyplied with as a companyplaint in that case was number filed by the Income-tax Officer. The companyrt also observed that though the said proceedings are to be treated as proceedings in companyrt, the Income-tax Officer was number a revenue companyrt. That being the position, the proceedings under section 26A before respondent No. 1 must be treated as proceedings in companyrt for the purposes of section 195 1 b of the Code of Criminal Procedure. The Income-tax Officer, however, cannot be treated as a revenue companyrt. Though, therefore, proceedings before the Income-tax Officer are judicial proceedings in a companyrt and section 195 1 b applies, neither section 476 number section 479A of the Code would be applicable. It was, therefore, number incumbent upon respondent No. 1 to follow the procedure laid down in either of these two sections. The first companytention of Mr. Gupta, therefore, must fail. As regards his second companytention, the question raised by him would be one of evidence. It may well be that, though respondent No. 1 might have been posted to another income-tax district and did number hold the charge of the post of Income-tax Officer in Additional B-XVIII District when the companyplaint was filed, it is possible that the Commissioner in exercise of powers reserved to him under the Income- tax Act may have allotted or transferred or directed him to companytinue to deal with certain cases including cases pending before him at the time of his transfer. If that were to be so, the companytention that he was numberlonger the companyrt for the purposes of section 195 1 b of the Code with reference to the present case would number prevail. The question being one of evidence the appellant can raise it before the Magistrate trying the companyplaint. We, therefore, decline to go into that question.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No.105 of 1965. Appeal from the judgment and order dated January 11, 1965 of the Gujarat High Court in Criminal Revision Application No. 378 of 1964. N. Keswani, for the appellant. L. Sanghi and S. P. Nayar, for the respondent. The Judgment of WANCHOO, C.J., SHELAT and VAIDIALINGAM, JJ. was delivered by SHELAT, J. BACHAWAT, J. on behalf of MITTER, J. and himself delivered a separate Opinion. Shelat, J. The appellant, a practising advocate, was engaged by Rama Shamal and Raiji Shamal two of the accused in Crimi- nal Case No. 26 of 1963 in the companyrt of the Judicial Magistrate, Baroda, in respect of charges under ss. 302, 436, 334 read with s. 149 of the Penal Code. On January 12, 1963, the appellant presented a bail application on behalf of the said two accused. The Magistrate granted bail on each of the two accused executing a personal bond of Rs. 1,500 with surety for the like amount. On January 25, 1963, bail bonds were furnished by a person calling himself Udesing Abhesing. The appellant identified that person as Udesing Abhesing and as personally known to him. On the strength of his identification the Magistrate accepted the bonds and released the two accused on bail. Thereafter, one of them absented himself from the Court on three occasions and the Magistrate issued a numberice on the said surety. On March 11, 1963, the real Udesing Abhesing appeared and denied that he had executed the said bonds or stood as surety. The Magistrate issued an informal numberice to the appellant to explain why action should number be taken against him for identifying a person who had falsely impersonated as Udesing Abhesing. The appellant gave his reply. The Magistrate recorded statements of the real Udesing Abhesing and of one Chiman Shamal. He did so to satisfy himself that there was substance in the allegation of the said Udesing that be was number the person who had stood as surety. On July 19, 1963, the Magistrate issued a show cause numberice to the appellant under s. 476, Cr. P.C. and the appellant filed his reply. After an enquiry under s. 476, the Magistrate ordered filing of a companyplaint against the appellant in respect of offences under ss. 205, 467 and 468 read with s. 114 of the Penal Code. In an appeal filed by the appellant, the Additional Sessions Judge, held that the said companyplaint was justified but only in respect of the offence under s. 205 read with s. In a revision by the appellant a single Judge of the High Court of Gujarat passed the following order This is a matter in which this Court should never interfere in revision. The revision application is, therefore, dismissed. The High Court gave certificate under Art. 134 1 c of the Constitution and that is how this appeal has companye up before us. Mr. Sanghi for the respondent raised the preliminary companyten- tion that the High Courts order dismissing the revision was number a final order as it did number determine the companyplaint filed by the Magistrate number did it decide the companytroversy between the parties therein, viz., the State of Gujarat and the appellant, whether the appellant had companymitted the said offence. That companytroversy being still a live one, the order, according to him, was number final, the certificate granted by the High Court was incompetent and companysequently the appeal is number maintainable. Article 134 1 c reads as follows - An appeal shall lie to the Supreme Court from any judgment, final order of sentence in a criminal proceeding of a High Court If the High Court certifies that the case is a fit one for appeal to the Supreme Court. The question as to whether a judgment or an order is final or number has been the subject matter of a number of decisions yet numbersingle general test for finality has so far been laid down. The reason probably is that a judgment or order may be final for one purpose and interlocutory for another or final as to part and interlocutory as to part. The meaning of the two words final and .interlocutory has, therefore, to be companysidered separately in relation to the particular purpose for which it is required. However, generally speaking. a judgment or order which determines the principal matter in question is termed final. It may be final although it directs enquiries or is made on an interlocutory application or reserves liberty to apply. 1 In some of the English de- cisions where this question arose, one or the other of the following four tests was applied. Was the order made upon an application such that a decision in favour of either party would determine the main dispute ? Was it made upon an application upon which the main dispute companyld have been decided Does the order as made determine the dispute ? If the order in question is reversed, would the action have to go on ? The first test was applied in Salaman v. Warner 2 and Stan- dard Discount Co. v. La Grange 3 . But the reasoning in the latter case was disapproved in A.G. v. Great Eastern Rail Co. 4 . In Shutrook v. Tufnell 5 the order did number decide the matter in the litigation but referred it back to the arbitrator, though on the application on which it was made, a final determination might have been made. The order was held to be final. This was approved in Bozson v. Altrincham Urban Council 6 by Lord Halsbury who declined to follow the dictum in Salaman v. Warner 2 and Lord Alverstone stated the test as follows - Does the judgment or order as made finally dispose of the rights of the parties? This test, however, does number seem to have been applied in A. G. v. Great Eastern Urban Council 6 where an order made on an application for summary judgment under R.S.C. Ord. 14 refusing unconditional leave to defend was held number to be an interlocutory order for purposes of appeal though made on an interlocutory application. An interlocutory order, though number companyclusive of the main dispute may be companyclusive as to the sub-ordinate matter with which it deals. HalsburyS Laws of England 3d Etc. Vol. 22, 742- 743. 2 1891 1 Q.B. 734. 3 1877 C.P.D. 67. 4 1879 27 R. 759. 5 1882 9 Q.B.D. 621. 6 1903 1 K.B. 547. There are also a number of decisions on the question of finality by the Privy Council and the Courts in India. In Abdul Rehman v. D. K. Cassim Sons 1 the test applied was that the finality must be a finality in relation to the suit. If after the order the suit is still a live suit in. which the rights of the parties have still to be determined numberappeal lies against it. And the fact that the impugned order decides an important and even a vital issue is by itself number material. if the decision on an issue puts an end to the suit, the order is undoubtedly a final one but if the suit is still left alive and has yet to be tried in the ordinary way, numberfinality companyld attach to the order. in this case the order was clearly an order of remand which kept the entire case undecided. This test was adopted in S. Kuppuswami Rao v. The King 2 where the companyrt also held that the words judgment and order have the same meaning whether the proceeding is a civil or a criminal proceeding. In Mohammad Amin Brothers Ltd. v. Dominion of India 3 the Federal Court following its earlier decision adopted against the test, viz., whether the judgment or order finally disposed of the rights of the parties. In Sardar Syedna Taher Saifuddin Saheb.v. The State of Bombay 4 , this Court applying, the test held that the appeal before it was number maintainable as the impugned order disposed of a preliminary issue regarding the validity of the Bombay Prevention of Excommunication Act, 1949. but lid number decide the rest of the issues in the suit. In Jethanand and Sony v. The State of Uttar Pradesh 5 the order on. which certificate under Art. 133 1 c was granted was clearly an order of remind. Indeed, the High Court gave leave to the parties to amend the pleadings and directed the trial companyrt to hold a de numbero trial on the amended pleadings and the issues arising therefrom and the order was said to be number a final order since the dispute between the parties still remained to be tried by the trial Court. But these were cases where the impugned orders were passed in appeals or- revisions and. since an appeal or a revision is companytinuation of the original suit or- proceeding the test applied was whether the order disposed of the original suit or proceeding. 11 it did number, and the suit or proceeding was a live one, vet to be tried. the order was held number to be final. Different tests have been applied. however to orders made in proceedings independent of the original or the main proceedings. Thus in Premchand Sastramdasv. The State of Bihar 6 an order of the High Court dismissing an application to direct the Board of Revenue to state a case to the High Court under the Bihar Sales-tax Act, 1944, was held 1 6, I.A. 76. 3 1949 F.C.R. 842. 5 1961 3 S.C.R. 754. 2 1947 F.C.R. 180. 4 1958 S.C.R. 1007. 6 1950 S.C.R. 799. number to be a final order on two grounds 1 that the order was made under a jurisdiction which was companysultative and standing by itself, it did number bind or affect the rights of the parties though the ultimate order which would be passed by the Board would be based on the opinion expressed by the High Court, -and 2 that on a companystruction of Art. 31 of the Letters Patent of the High Court of Patna an appeal would lie to the Privy Council only in cases of orders passed by the High Court in its appellate or original jurisdiction and number the advisory jurisdiction companyferred by the Act. It is clear that though the proceeding in which the High Court passed the impugned order may be said to be an independent proceeding, one of the tests applied was that it did number determine the rights of the parties as the companytroversy as to the liability of the assessee still remained to be determined by the Board. The decision in State of Uttar Pradesh v. Sujan Singh 1 does number help because the proceeding in which the impugned order was passed was assumed to be an interlocutory one arising from and during the companyrse of the trial itself. The question was whether the order rejecting the States claim of privilege from producing a certain document was a final order within the meaning of Art. 134 1 c . The criminal proceedings, said the Court, were the proceedings against the respondents for an offence under s. 6 1 of the Prevention of Corruption Act, 1947. They were still pending before the Special Judge. In the companyrse of those proceedings the respondents applied for the production of the document by the Union Government and that was allowed by the Court. The order, therefore , was an interlocutory order pending the said proceedings. It did number purport to decide the rights of the parties i.e. the State of Uttar Pradesh and the respondents, the accused. It only enabled the accused to have the said document proved and exhibited in the case and therefore was a procedural step for adducing evidence. The companyrt also said that assuming that the order decided some right of the Union Government, that Government was neither a party to the criminal proceedings number a party either before the High Court or this Court. This decision was clearly on the footing that the respondents application for production of the document in which the Union Government, number a party to the trial, claimed privilege was an interlocutory and number an independent proceeding. The question is what would be the position if a the application was an independent proceeding, and b if it affected the right of the Union Government. The decision in Ramesh v. Patni 2 would seem to throw light on these questions. There the Claims Officer under the Madhya Pradesh Abolition of Proprietory Rights Act, 1950 1 19647S.C.R.734. 2 1966 3 S.C.R. 198. held in an application by the appellants that a debt due by them to the respondents was a secured debt though the respondents had obtained a decree therefore. He, accordingly, called upon the respondents to file their statement of claim as required by the Act. The respondents filed the statement, but the officer held that it was out of time and discharged the debt. In appeal the Commissioner held that though the Claims Officer had jurisdiction, he companyld number discharge the debt as action under s. 22 1 of the, Act had number been taken. The appellants thereupon filed Art. 226 petition alleging that the Commissioner had numberjurisdiction to entertain or try the appeal. The High Court dismissed the petition summarily. The companytention was that the High Courts order was number a final order be-cause it did number decide the companytroversy between the parties and did number of its own force affect the rights of the parties or put an end to the companytroversy. This companyrt observed 1 that the word proceeding in Art. 133 was a word of a very wide import, 2 that the companytention that the order was number final because it did number companyclude the dispute between the parties would have had force if it was passed in the exercise of the appellate or revisional jurisdiction of the High Court, as an order of the High Court if passed in an appeal or revision would number be final if the suit or proceeding from which there was such an appeal or revision remained still alive after the High Courts order, 3 but a petition under Art. 226 was a proceeding independent of the original companytroversy between the parties the question therein would be whether a proceeding before a Tribunal or an authority or a companyrt should be quashed on the ground of want of jurisdic- tion or on other well recognised grounds and that the decision in such a petition, whether interfering or declining to interfere, was a final decision so far as the petition was companycerned and the finality of such an order companyld number be judged by companyrelating it with the original companytroversy between the parties. The companyrt, however, observed that all such orders would number always be final and that in each case it would have to be ascertained what had the High Court decided and what was the effect of the order. If, for instance, the jurisdiction of the inferior tribunal was challenged and the High Court either upheld it or did number, its order would be final. The effect of this decision is that a writ petition under Art. 226 is a proceeding independent of the original proceedings between the parties that the finality of an order passed in such an independent proceeding is number to be judged from the fact that the original proceedings are number disposed of by it but are still pending determination that the test as to whether the impugned order determines the rights of the parties in companytroversy in the original proceedings instituted by one of them would number apply to a proceeding independent of such original proceedings and that if the L2 Sup CI/68-14 order finally determines the companytroversy in such a proceeding and that proceeding is disposed of, the order is final in so far as that companytroversy is companycerned. Even an order ex-facie interlocutory in character has been held to be final if it finally disposed of the proceeding though the main companytroversy between the parties remained undisposed of. An illustration of such a case is to be found in the State of Orissa v. Madan Gopal 1 . The dispute there was whether the State Government had the power to annul or cancel leases granted by the ex-proprietor whose territory had under the agreement of merger merged in the Union Territory and by reason of s. 4 of the Extra Provincial Jurisdiction Act, 1949 was administered by the State of Orissa. The respondents gave numberice to the State under s. 80 of the Code of Civil Procedure but apprehensive that before the prescribed period expired, the State might annul their leases filed a writ petition. The High Court did number decide the dispute but granted a mandamus restraining the Government from taking action until the proposed suits were filed. in an appeal against that order the State companytended that the order was number final as it was for an interim relief and the dispute between the parties remained to be deter- mined in the proposed suits. Though the order had number determined the rights of the parties, this Court negatived the companytention and held that the order was final as in view of the fact that with these orders the petitions were disposed of finally and numberhing further remained to be done in respect of the petitions. Facts similar to the facts in the present case were in Durga Prasad v. State of U.P. 2 . A companyplaint was filed charging the applicant with offences, inter alia under s. 193 of the Penal Code. he applicant filed an appeal before the Sessions Judge under s. 476B of the Code of Criminal Procedure against the order filing the companyplaint. The Sessions Judge held that the order was bad as s. 476 under which the companyplaint was filed stood impliedly repealed by s. 479A and set aside the order filing the companyplaint. In a revision against that order, the High Court held that the Sessions Judge was number right and setting aside his order remanded the matter to him to decide it on merits. The High Court on an application for certificate held that its order was number final as the real companytroversy between the parties i.e. the State and the applicant, was whether the companyplaint was justified. Since that question was remitted to the Sessions Judge for determination on merits, the order was only one of remand and did number determine the aforesaid companytroversy. This decision proceeds on the footing that there were two independent companytroversies between the parties involved in the two proceedings. One was the companyplaint which charged the applicant with the offence under s. 193 of the Penal Code and the other was the appeal which he 1 1952 S.C.R. 28. A.I.R. 1960 All. 728. 69 3 filed before the Sessions Judge alleging that the companyplaint was number justified and that it companyld number be filed under s. 476 as it was impliedly repealed by s. 479A of the Code of Criminal Procedure. The order was held, number to be final because it did number determine the latter companytroversy viz., whether the companyplaint was justified and number on the ground that the companytroversy in the companyplaint that the appellant had companymitted the offence with which he was charged, had yet to be tried by the companyrt. It follows that according to the, High Courts reasoning its order would have been final, if, instead of remanding the matter to the Sessions Judge the High Court had held either that it was justified or number justified. This decision is in companyformity with the ratio laid down in Ramesh v. Patni 1 and State of Orissa v. Madan Gopal l . The aforesaid discussion leads to the companyclusion that when the Magistrate ordered the filing of the companyplaint against the appelant, the parties to that companytroversy were the State and the applicant and the companytroversy between them was whether the appellant had companymitted offence charged against him in that companyplaint. The appeal filed by the appellant before the Additional Sessions Judge was against the order filing the companyplaint, the companytroversy therein raised being whether the Magistrate was, justified in filing it, that is to say, whether it was expedient in the interest of justice and for the purpose of eradicating the evil of false evidence in a judicial proceeding before the Court. The companytroversies in the two proceedings were thus distinct though the parties were the same. When the Additional Sessions Judge held that the companyplaint was justified in respect of the offence under s. 205 read with s. 114 and was number justified in respect of the other offences his judgment in the absence of a revision by the State against it finally disposed of that part of the companytroversy, i.e., that the companyplaint in respect of offences under ss. 467 and 468 read with s. 114 was number justified. When the appellant filed re- vision in respect of the companyplaint for the remaining offence under s. 205 read with s. 114 the Single Judge of the High Court dismissed that revision. His order of dismissal disposed of that companytroversy between the parties and the proceeding regarding that question as to whether the companyplaint in that regard was justified or number was finally decided. As observed in Ramesh v. Patni 1 the finality of that order was number to be judged by companyelating that order with the companytroversy in the companyplaint, viz., whether the appellant had companymitted the offence charged against him therein. The fact that that companytroversy still remained alive is irrelevant. It must companysequently be held that the order passed by the High Court in the revision filed by the appellant was a final order within the meaning of Art. 134 1 c . 1 1966 3 S.C.R. 198. 2 1952 S.C.R 28. Even so, the next question is whether this was a case where the High Court companyld have granted the certificate. In Haripada Dey v. The State of West Bengal, 1 it was held that the High Court had numberjurisdiction to grant a certificate under Art. 1 3 4 1 c on a mere question of fact. In Bab v. State of Uttar Pradesh, 2 it was again observed that the Constitution does number companyfer ordinary criminal jurisdiction on this Court except in cases companyered by clauses a and b of Art. 134 which provide for appeals as of right. The High Court before it certifies the case in cases number companyered by clauses a and b of Art. 134 must be satisfied that it involves some substantial question of law or principle. Only a case involving something more than mere appreciation of evidence is companytemplated by the Constitution for the grant of a certificate under Art. 134 l c which alone applies in this case. The question in the revision application before the High Court was whether the Magistrate was right in his companyclusion that offences referred to in S. 1 95 q b or c of the Code of Criminal Procedure appeared to have been companymitted in or in relation to a proceeding in his companyrt and that it was expedient in the interest of justice to file a companyplaint. Obviously, this is a question of fact and involve numbersubstantial question of law or principle. It seems that the certificate was issued because it appeared as if the single Judge in the language in which he passed his order meant that the High Court as a matter of law would never exercise its revisional jurisdiction in such cases. The order, how- ever, cannot mean that the High Court cannot entertain. and decide revision applications in respect of orders passed tinder s. 476 of the Code of Criminal Procedure. What the single Judge presumably meant was that the question being one of fact only. the High Court would number interfere particularly where there is a companycurrent finding both of the Magistrate and the Sessions Judge in appeal. The question being one of fact only and there being numbersubstantial question of law or principle, the High Court was number companypetent to certify the case under Art. 134 1 c . In this view it is number necessary to go into the companytentions on merits raised by the appellants companynsel. The appeal is number maintainable and is dismissed. Bhachawat, J. The Judicial Magistrate, First Class, Third ,Court Baroda made an enquiry under S. 476 of the Code of Criminal Procedure and directed the.filing of a companyplaint against the appellant in respect of offences under ss. 205, 467 and 468 read with S. 114 of the Indian Penal Code alleged -to have been companymitted by the appellant in relation to proceedings in his Court. He found that there was a prima facie case for enquiry into the 1 19561 S.C. R. 639. 2 1965 2 S.C.R. 771. offences and it was expedient in the interests of justice that such an enquiry should be made. In an appeal filed after the companyplaint was made, the Additional Sessions Judge, while setting aside the order in respect of the offences punishable under ss. 467 and 468 read with s. 114, companyfirmed the order directing the filing of a companyplaint with regard to the offence punishable under s. 205 read with s. 114. A revision application filed by the appellant was dismissed by the High Court. In view of s. 195 1 b of the Code of Criminal Procedure, a prosecution for an offence punishable under s. 205 read with S. 114 alleged to have been companymitted in relation to a proceeding in any Court cannot be launched without a companyplaint in writing of such Court or of a superior Court. The effect of the order of the High Court companyfirming the direction for the filing of a companyplaint in respect of the offence is that the -bar of s. 195 1 b is removed, and the trial of the offence can number proceed. The appellant is still on trial. The Court has number pronounced on his guilt or innocence, He is being tried for the offence by a companypetent Court and an order of companyviction or acquittal is yet to follow. The order of the High Court involves numberdetermination of the merits of the case or of the guilt or innocence of the appellant. From whatever point of view the matter is looked at, the order is interlocutory. In a civil proceeding, an order is final if it finally decides the rights of the parties, see Ramchand Manjilal v. Goverdhandas Vishindas Ratanchand l . If it does number finally decide the rights of the parties the order is interlocutory, though it companyclusively determines some subordinate matter and disposes of the proceeding in which the subordinate matter is in companytroversy. For this reason, even an order setting aside an award is interlocutory, fee Croasdell and Cammell Laird Co., Limited v. In re 2 . A similar test has been applied for determining whether an order ill a criminal proceeding is final, see S. Kuppuswami Rao v. The King . For the purposes of this appeal, we do number propose to examine all the decisions cited at the bar and to formulate a fresh test on the subject. Whatever test is applied, an order directing the filing of a companyplaint and deciding that there is a prima facie case for an enquiry into an offence is number a final order. It is merely a preliminary step in the prosecution and therefore an interlocutory order. As the order is number final, the High Court was number companypetent to give a certificate under Art. 1 34 1 c of the Constitution. The appeal is number maintainable and is dismissed. C. 1 1920 L.R. 47 I.A. 124. 2 1936 2 K.B. 569. 3 1947 F.C.R.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 997 of 1965. Appeal by special leave from the judgment and order dated July 25, 1963 of the Allahabad High Court in Special Appeal No. 431 of 1962. V. Gupte, Solicitor-General, C. B. Agarwala and O. P. Rana, for the appellant. P. Goyal and B. P. Jha, for the respondent. The Judgment of the Court was delivered by Sikri, J. The respondent, Shri Madan Mohan Nagar, filed a Writ Petition in the High Court of Judicature at Allahabad for quashing the order of companypulsory retirement dated July 28, 1960, passed against him. The order of companypulsory retirement was in the following terms I am directed to say that the Governor has been pleased to order in the public interest under Article 465A and Note 1 thereof of the Civil Service Regulations, the companypulsory retirement with effect from September 1, 1960 of Sri Madan Mohan Nagar, Director State Museum Lucknow who companypleted 52 years of age on July 1, 1960, and 28 years and .3 months of qualifying service on 31-5-1960 as he has outlived his utility. The learned Single Judge who heard the petition quashed the order on the ground that Rule 465 of the Civil Service Regulations as amended by the U.P. Government while providing a criterion for the guidance of Government when inflicting companypulsory retirement on a government servant nevertheless violates the guarantee of equality of opportunity in matters relating to employment under Article 16 1 of the Constitution. He further held that the order inflicting companypulsory retirement on the petitioner was invalid because it was passed in violation of the principles of natural justice. The State appealed and the Division Bench on appeal upheld the order passed by the learned Single Judge on the ground that the order of companypulsory retirement was passed in violation of the provisions of art. 311 of the Constitution and was, therefore, ultra vires. The State having obtained special leave, the appeal is number before us. Before we deal with the arguments of the learned companynsel for the appellant, we may give a few facts and set out Article 465 A and Note 1 thereof of the Civil Service Regulation, as amended by the Government of Uttar Pradesh. The facts, in brief, are that the respondent was first appointed in 1931 on one years probation to the post of Custodian, Sarnath Museum, Banaras, under the Archaeological Department of the Government of India. In 1939, he was posted to Mathura Museum as Curator, and he was appointed substantively to this post from January 5, 1941. Later, he was appointed on the recommendation of the Provincial Public Service companymission as Curator of the State Museum, Lucknow, on a scale of pay Rs. 250/- to Rs. 850/-. The post of Curator was upgraded to the post of Director, State Museum, Lucknow, in the U.P. Educational Service, Senior Scale, and the respondent was appointed to it. Thereafter the respondent companytinued in service as Director of State Museum, Lucknow, until he was companypulsorily retired by the order of the Government, dated July 28, 1960, which has already been set out above. It is companymon ground that numberenquiry as companytemplated by Art. 311 2 was held. The relevant part of Article 465A of the Civil Service Regulation is in the following terms Government retains the right to retire any Government servant after he has companypleted 25 years qualifying service without giving any reasons, and numberclaim to special companypensation on this account shall be entertained. This right shall only be exercised by Government in the Administrative Department when it is in the public interest to dispense with the services of Government servant who has outlived his usefulness. This learned Solicitor General, who appears on behalf of the appellant has urged that the fact that the impugned order of companypulsory retirement states the reason for companypulsory retirement, namely, that the respondent had outlived his utility, does number lead to the companyclusion that the order amounts to dismissal or removal because in every case of companypulsory retirement it is implied that the person who is companypulsorily retired had outlived his usefulness. He refers to Shyam Lal v. The State of Uttar Pradesh 1 and says that in that case it was implied that Shyam Lal was number fit to be retained in service. We are unable to read Shyam Lals case 1 in that manner because the Court expressly said at p. 41, as follows It is true that this power of companypulsory retirement may be used when the authority exercising this power cannot substantiate the misconduct which may be the real cause for taking the action but what is important to numbere is that the directions in the last sentence in Note 1 to article 465-A make it abundantly clear that an imputation or charge is number in terms made a companydition for the exercise of the power. In other words, a companypulsory retirement has numberstigma or implication of misbehaviour or incapacity. In the present case there is number only numberquestion of implication but a clear statement appears on the face of the order that the respondent had outlived his utility in other words, it is stated that he was incapacitated from holding the post of Director, State Museum, Lucknow. The order clearly attaches a stigma to him and any person who reads the order would immediately companysider that there is something wrong with him or his capacity to work. In our opinion this case is companyered by the principle applied in Jagdish Mitter v. Union of India 2 . It is true that that was a case of a temporary servant, but that does number matter. The order 1 1955 1 S. C. R.26. A. 1. R. 1964 S.C.449 in that case reads as follows Shri Jagdish Mitter, a temporary 2nd Division Clerk of this office having been found undesirable to be retained in Government service is hereby served with a months numberice of discharge with effect from November 1, 1949. Gajenderagadkar, J., as he then was, speaking for the Court, said No doubt the order purports to be one of discharge and as such can be referred to the power of the authority to terminate the temporary appointment with one months numberice. But it seems to us that when the order refers to the fact that the appellant was found undesirable to be retained in government service, it expressly casts a stigma on the appellant and in that sense must be held to be an order of dismissal and number a mere order of discharge. Later, he observed It seems that anyone who reads the order in a reasonable way, would naturally companyclude that the appellant was found to be undesirable, and that must necessarily import an element of punishment which is the basis of the order and is its integral part. When an authority wants to terminate the services of a temporary servant, it can pass a simple order of discharge without casting any aspersion against the temporary servant or attaching any stigma to his character. As soon as it is shown that the order purports to cast an aspersion on the temporary servant, it would be idle to suggest that the order is a simple order of discharge. The test in such cases must be does the order cast aspersion or attach stigma to the officer when it purports to discharge him? If the answer to this question is in the affirmative, then numberwithstanding the form of the order, the termination of service must be held, in substance, to amount to dismissal. It seems to us that the same test must apply in the case of companypulsory retirement, namely does the order of companypulsory retirement cast an aspersion or attach a stigma to the officer when it purports to retire him companypulsorily? In the present case there is numberdoubt that the order does cast a stigma on the respondent. Mr. Gupte relies on T. G. Shivacharana Singh v. State of Mysore 1 . But this case does number assist him because it does number appear that the order in that case companytained any stigma, and under Rule 285 of the Mysore Civil Service Rules, 1958, retirement A.I.R. 1965 S. C. 280. companyld be effected if it was companysidered necessary in the public interest. There was numberquestion of requiring that there should be a finding that the government officer had outlived his utility. In Ram Prashad v. State of punjab 1 numbersuch question appears to have been argued. In para 32 of the judgment Satyanarayana Raju, J., while companysidering the validity of Rule 27 of the Staff Rules, reproduced an extract from the judgment of this Court in Moti Ram Deka v. N. E. Frontier Railway 2 . We will presently companysider the effect of the decision in Dekas case. In Dekas case 2 Moti Ram Deka, who was a peon employed by the North East Frontier Railway, challenged the order of termination of his services under Rule 148 of the Indian Railway Establishment Code on the ground that the said Rule was invalid the validity of Rule 149 of the Railway Establishment Code. The question posed for decision by Gajendragadkar, J,at page 699 was if the service of a permanent civil servant is terminated otherwise than by operation of the rule of superannuation, or the rule of companypulsory retirement, does such termination amount to removal under Art. 311 2 or number? The Court was thus number companycerned with the question of companypulsory retairment under a rule similar to rule 465A, numbere 1 , of the Uttar Pradesh Civil Service regulation, but it reviewed some cases dealing with companypulsory retairment. Subba Rao J. as he then was,who delivered a companycurring judgment also reviewed the cases,but he preferred to follow the principle laid, down in Parshotam Lal Dingra v. Union of India 3 , in respect of permanent government servants in preference to that accepted in shyam Lals case 4 and the subsequent decisions following it. But it is number necessary for us to resolve the companyflict, if any, which exists between Dhingras case 3 and Shyam Lals case 4 because here we have an order which on the face of its casts a stigma on the respondent. It is true, as pointed out by Subha Rao J., that in Doshis case State of Bombay v., Saubhagchand, M. Doshi 5 Rule 165-A of the Bombay Civil Services Rules laid down that the right of, companypulsory retirement will number be exercised except when it is in the public interest to dispense with the further services of a Government servant such as on account of inefficiency or dishonesty, but in Doshis case it does number appear that the order companytained any aspersion that Doshi was inefficient or suffered from some other defect. What was challenged in that case was the validity of Rule 165-A of the, Bombay Civil Services Rules, and it was held that it, did number violate art. 311 2 of the Constitution. A.I.R. 1966 S.C. 1607 1966 3 S. C. R. 486 2 1964 5 S.C.R. 683. 3 1958 S.C.R. 828 4 1955 1 S.C.R. 26 5 1958 S.C.R. 571. L M1Sup. CI/67-8 There were some other appellants before the Court who challenged Similarly, in Balakotaih v. The Union of India 1 in Rule 3 ,of the Railway Services Safeguarding of National Security Rules, 1949, dealing with companypulsory retirement, the proviso provided that a member of the Railway Service shall number be retired or have his service so terminated unless the companypetent authority is satisfied that his retention in public serice is prejudical to national security, and unless, where the companypetent authority is the Head of a Department, the prior approval of the Governor-General has been obtained. In this case also it does number appear that the order terminating the services companytained any stigma on the public servant companycerned. In Dalip Singh v. State of Punjab 2 the order read as follows His Highness the Rajpramukh is pleased to retire from service Sardar Dalip Singh, Inspector General of Police, Pepsu on leave for administrative reasons with effect from the 18th August 1950. It was held that the order did number amount to dismissal or removal from service within the meaning of art. 311 2 of the Constitution. The Court derived two tests from Shyam Lals case 3 and formulated them as follows the first is whether the action is by way of punishment and to find that out the Court said that it was necessary that a charge or imputation against the officer is made the companydition of the exercise of the power the second is whether by companypulsory retirement the officer is losing the benefit he has already ,earned as he does by dismissal or removal. If the first test is applied in this case it is quite clear that the charge or imputation that the respondent had outlived his utility was made the companydition of the ,exercise of the power. The, learned Solicitor General also brought to our numberice the decision of the Full Bench of the Allahabad High Court in Abdul Ahad v. The Inspector General of Police, U.P. 4 The decision ,certainly helps him, and as a matter of fact, the Full Bench overruled the judgment of the Division Bench under appeal. But, with respect, we are unable to agree with the companyclusion that even if the order of companypulsory retirement recites the fact that the public servant had outlived his utility, it would number amount to a punitive order. The Full Bench was of the view that companypulsory retirement will always be on the ground that he can numberlonger render useful service. The position certainly does number become worse because 1 1958 S.C.R. 1052 2 1961 1 S.C.R 88. 3 19551 S.C.R. 26. 4 A.I.R. 1965 All. 142. what is implied is expressed. We are unable to agree that the position does number become worse because a stigma is attached expressly. We may say that the question whether Article 465-A, numbere 1 , violates art. 31 1 of the Constitution was number argued before us and we say numberhing about it.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1366 of 1966. Appeal from the judgment and order dated January 5, 1966 of the Kerala High Court in Original Petition No.1 of 1964. The appellant appeared in person. N. Bindra and R. H. Dhebar, for respondent No. 1. Sarjoo Prasad, N. N. Venkitachalam, A. G., Pudissery and R. K. Pillai, for respondent No. 2. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by certificate, against the judgment of the High Court of Kerala dated January 5, 1966 dismissing Original Petition No.1 of 1964 filed by the appellant. The appellant, Sri S. Govinda Menon is a member of the Indian Administrative Service. He was the First. Member of the Board of Revenue, Kerala State and was holding the post of Commissioner of Hindu Religious and Charitable Endowments. On the basis of certain petitions companytaining allegations of misconduct against the appellant in the discharge of his duties as Commissioner the Kerala Government instituted certain preliminary enquiries and thereafter started disciplinary proceedings against the appellant and also placed him under suspension under rule 7 of the All India Services Discipline and Appeal Rules, 1955, hereinafter called the Rules. A companyy of the charges together with a statement of certain allegations was served on the appellant who thereafter filed a written statement of defence. After perusing the written statement the Government passed orders that his explanation was unacceptable and that the charges should be enquired into by an Enquiry Officer to be appointed under rule 5 of the Rules. Accordingly Sri T. N. S. Raghavan a retired I.C.S. Officer was appointed to hold the inquiry. The appellant then filed the present writ petition before the High Court of Kerala praying for grant of a writ of certiorari to quash the proceedings initiated against, him and for a writ of mandwmus calling upon. respondent No. 2, State of Kerala, to allow him to function as the. First Member of the Board of Revenue. As numberapplication for stay was made and as numberorder of stay Was passed by the High Court Sri T. N. S. Raghavan proceeded with the inquiry and submitted his report to the Union Government finding the appellant guilty of charges 1 to 4 and 9. The union of India, after companysideration of the report, issued a Show Cause Notice Ex. P-9. The appellant thereafter filed an application before the High Court for amendment of the writ petition. The prayer in this amended petition was for the issue of a writ of prohibition restraining the first respondent Union of India-from proceeding further in pursuance of the Show Cause Notice and also for quashing the same. The application for amendment was allowed by the High Court. The main companytention of the appellant was that the proceedings initiated against him were entirely without jurisdiction as numberdisciplinary proceedings companyld be taken against him for acts and omissions with regard to his work as Commissioner under the Madras Hindu Religious and Charitable Endowments Act, 1951 Madras Act XIX of 1951 , hereinafter called the Act and that the orders made by him being of quasi-judicial character can be impugned only in appropriate proceedings taken under that Act. After hearing the arguments advanced on both sides, Mathew, J. rejected the objections raised by the appellant regarding want of jurisdiction and held that the, respondents had power to proceed with the inquiry into the charges. S. Velu Pillai, J. on the other hand, took the view that quasi judicial decisions became final and companyclusive if they were number set aside or modified in the manner prescribed by the statute and if the decisions are number so challenged, their companyrectness or legality must be taken to be companyclusive, and such quasi judicial decisions cannot form the subject-matter of charges in disciplinary proceedings against the appellant. Velu Pillai, J. held that the Union Government had therefore numberjurisdiction to proceed with the inquiry on the first part of charge 1, charge 2, the first part of charge 3 and charge 4, but the Union Government had jurisdiction to proceed with the inquiry with regard to the second part of charge No. 1, the second part of charge No. 3 and charge No. 9. In view of this difference of opinion the matter was placed before Govinda Menon, J. who agreed with the view taken by Mathew, J. and in the result the writ petition of the appellant was dismissed. It is necessary at this stage to set out the charges leveled against the appellant. Charges 1 to 4 relate mainly to the companyduct of the appellant in sanctioning 30 leases regarding the private forest lands of 5 Devaswoms and charge No. 9 companycerns the refusal by the appellant to attend a companyference companyvened by the Chief Secretary to companysider certain important matters companynected with the national emergency. In 17 of the leases relating to the first charge the period of the lease is 36 years. In one case the period is 96 years and in the rest of the leases the period of lease is 99 years. The total area companyered by all the leases companyes to over 50,000 acres. Charges 1 to 4 and 9 read as follows That you, Shri S. Govinda Menon, I.A.S., while employed in the Government. Service as member, Board of Revenue and Commissioner, H. C. E. Administration Department from 1- 2-1957 to 19-10-1962 issued sanctions granting leases of extensive and valuable forest lands belonging to the Devaswoms under your companytrol as Commissioner such as 1 Pulpally Devaswom, Kallaikulangara Emoor Bhagavathi Temple, Nadivilla Vallathu Devaswom, 4 Kottiyor Devaswom, 5 Mundayanparamba Devaswom etc., in utter disregard of the provisions in the Madras Hindu Religious and Charitable Endowment Act, 1951 and the rules issued thereunder. In several cases you had yourself initiated the proposals for leases which should have been made by the trustee and acted in judgment on them by sanctioning the leases. In many cases of the leases aforesaid and otherwise generally in regard to the companytrol and supervision exercised by you over the administration of endowments, your, companyduct has been such as to render you unfit for the performance of your statutory duties under the Madras Hindu Religious and Charitable Endowments Act or as a responsible Officer of the Government. That you had fixed the premium for lease, the rental and the timber value arbitrarily disregarding whether they were beneficial to the institutions as you were required to do under the Act and you there by caused wrongful gain to the lessees and wrongful loss to the Devaswoms. That you number only initiated proposals for the leases and sanctioned them yourself, but also took further action for putting the lessees in possession of the lands and to fell the trees thereon for which you had numberauthority under the Act and the Rules. In particular you attempted to influence the Collector of Kozhikode, the statutory autho- rity for the sanctioning of leases of private forests under the M. P. P. F. Act by causing your Personal Assistant to write to the Personal Assistant to the Collector thereby bringing the weight of your Official position as his official superior in your capacity as 1st Member, Board of Revenue to bear upon him and influence the Collector in the performance of his statutory duty. That you sanctioned the lease of extensive forest lands with valuable tree- growth belonging to various Devaswoms to your relations, neighbours and friends companytrary to the provision in Rule 3 of the All India Services Conduct Rules 1954, which enjoins every member of the service to maintain absolute integrity in all official matters. That on 29-10-1962 you refused to attend a companyference of the Members of the Board of Revenue and the Inspector General of Police which was called together by the Chief Secretary in the Secretariat to discuss important matters companynected with the national emergency and was thereby guilty of gross dereliction of duty and of discourtesy to the Chief Secretary. Section 20 of the Act provides that the administration of all religious endowments shall be subject to the general superintendence and companytrol of the Commissioner and that such superintendence and companytrol shall include the power to pass any orders which may be deemed necessary for the proper administration of the endowments. Section 29 of the Act states that any sale, exchange or mortgage and any lease for a term exceeding five years of any immovable property belonging to any religious institution shall be -null and void unless it is sanctioned by the Commissioner as being necessary or beneficial to the institution, and the Commissioner shall, before according sanction, publish particulars of the proposed transaction, invite objections and companysider them. Sub-section 3 provides for companymunicating a companyy of the order granting sanction to the Government and to the trustee. Sub-section 4 provides for an appeal against the order of the Commissioner to the Government by the trustee or any person having interest. Section 99 1 states 99. 1 The Government may call for and examine the record of the Commissioner or any Deputy or Assistant Commissioner, of any Area Committee or of any trustee in respect of any proceeding, number being a proceeding in respect of which a suit or an appeal to a Court is provided by this Act, to satisfy themselves as to the regularity of such proceeding or the companyrectness, legality or propriety of any decision or order passed therein and, if, in any case, it appears to the Government that any such decision or order should be modified, annulled, reversed or remitted for reconsideration, they may pass orders accordingly Provided that the Government shall number pass any order prejudicial to any party unless he has had a reasonable opportunity of making his representations. The jurisdiction for grant of a writ of prohibition is primarily supervisory and the object of that writ is to restrain companyrts or inferior tribunals from exercising a jurisdiction which they do number possess at all or else to prevent them from exceeding the limits of their jurisdiction. In other words, the object is to companyfine companyrts or tribunals of inferior or limited jurisdiction within their bounds. It is well-settled that the writ of prohibition lies number only for excess of jurisdiction or for absence of jurisdiction but the writ also lies in a case of departure from the rules of natural justice See Halsburys Laws of England, 3rd Edn., Vol. II, p. 114 . It was held for instance by the Court of Appeal in The King v. North 1 that as the order of the judge of the companysistory companyrt of July 24, 1925 was made without giving the vicar an opportunity of being heard in his defence, the order was made in violation of the principles of natural justice and was therefore an order made without jurisdiction and the writ of prohibition ought to issue. But the writ does number lie to companyrect the companyrse, practice or procedure of an inferior tribunal, or a wrong decision on the merits of the proceedings. It is also well-established that a writ of prohibition cannot be issued to a companyrt or an inferior tribunal for an error of law unless the error makes it go outside its 1 1927 1 K.B. 41 1. jurisdiction See Regina v. Comptroller-General of Patents and Designs, 1 and Parisienne Basket Shoes Proprietary Ltd. Whyte 2 . A clear distinction must therefore be maintained between want of jurisdiction and the manner in which it is exercised. If there is want of jurisdiction then the matter is companyam number Judice and a writ of prohibition will lie to the companyrt or inferior tribunal forbidding it to companytinue, proceedings therein in excess of its jurisdiction. The first proposition put forward by the appellant is that the Commissioner is a companyporation sole and number a servant of the Government and against a person acting in the capacity of a Commissioner the Government have numberjurisdiction to take disciplinary proceedings. Reference was made to s. 80 of the Act which states that the Commissioner shall be a companyporation sole and shall have perpetual succession and a companymon seal and may sue and be sued in his companyporate name. It was argued that the acts and omissions of the appellant in his capacity as Commissioner cannot be questioned in any disciplinary proceedings as the Commissioner is number a servant of the Government subject to its administrative companytrol. Before examining this proposition it is necessary to companysider rule 4 of the Rules which states Authority to institute proceedings and to impose penalty- Where a member of the Service has companymitted any act or omission which renders him liable to any penalty specified in rule 3 a if such act or omission was companymitted before his appointment to the service, the Government under whom be is for the time being serving shall alone be companypetent to institute disciplinary proceedings against him and, subject to the provisions of sub-rule 2 , to impose on him such penalty specified in rule 3 as it thinks fit. b if such act or omission was companymitted after his appointment to the Service, the Government under whom such member was serving at the time of the companymission of such act or omission shall alone be companypetent to institute disciplinary proceedings against him and subject to the provisions of sub-rule 2 , to impose on him such penalty specified in rule 3 as it thinks fit and the Government under whom he is serving at the time of the institution of such proceedings shall be bound to render all reasonable facilities to the Government instituting and companyducting such proceedings. 1 1953 2 W.L.R. 760,765. 2 59 CL.R. 369. The penalty of dismissal, removal or companypulsory retirement shall number be imposed on a member of the Service except by an order of the Central Government. It is number disputed that the appropriate Government has power to, take disciplinary proceedings against the appellant and that he companyld be removed from service by an order of the Central Government, but it was companytended that I.A.S. Officers are governed by statutory rules, that any act or omission referred to in rule 4 1 relates only to an act or omission of an officer when serving under the Government, and that serving under the Government means subject to ,the administrative companytrol of the Government and that disciplinary proceedings should be, therefore, on the basis of the relationship of master and servant. It was argued that in exercising statutory powers the Commissioner was number subject to the administrative companytrol of the Government and disciplinary proceedings cannot, therefore, be instituted against the appellant in respect of an act or omission companymitted by him in the companyrse of his employment as Commissioner. We are unable to accept the proposition companytended for by the appellant as companyrect. Rule 4 1 does number impose any limitation or qualification as to the nature of the act or omission in respect of which disciplinary proceedings can be instituted. Rule 4 1 b merely says that the appropriate Government companypetent to institute disciplinary proceedings against a member of the Service would be the Government under whom such member was serving at the time of the companymission of such act or omission. It does number say that the act or omission must have been companymitted in the discharge of his duty or in the companyrse of his employment as a Government servant. It is therefore open to the Government to take disciplinary proceedings against the appellant in respect of his acts or omissions which cast a reflection upon his reputation for integrity or good faith or devotion to duty as a member of the Service. It is number disputed that the appellant was, at the time of the alleged misconduct, employed as the First Member of the Board of Revenue and he was at the same time performing the duties of Commissioner under the Act in addition to his duties as the First Member of the Board of Revenue. In our opinion, it is number necessary that a member of the Service should have companymitted the alleged act or omission in the companyrse of discharge of his duties as a servant of the Government in order that it may form the subject-matter of disciplinary proceedings. In other words, if the act or omission is such as to reflect on the reputation of the officer for his integrity or good faith or devotion to duty, there is numberreason why disciplinary proceedings should number be taken against him for that act or omission even though the act or omission relates to an activity in regard to which there is numberactual master and servant relationship. To put it differently, the test is number whether the act or omission was companymitted by the appellant in the companyrse of the discharge of his duties as servant of the Government The -test is whether the act or omission has some reasonable companynection with the nature and companydition of his service or whether the act or omission has cast any reflection upon the reputation of the member of the Service for .integrity or devotion to duty as a public servant. We are of the opinion that even if the appellant was number subject to the administrative companytrol of the Government when he was functioning as Commissioner under the Act and was number the servant of the Government subject to its orders at the relevant time, his act or omission as Commissioner companyld form the subject-matter of disciplinary proceedings provided the act or omission would reflect upon his reputation for integrity or devotion to duty as a member of the Service. ,In this companytext reference may be made to the following observations ,of Lopes, L. J. in Pearce v. Foster 1 If a servant companyducts himself in a way inconsistent with the faithful discharge of hip duty in the service, it is misconduct which justifies immediate dismissal. That misconduct, according to my view, need number be misconduct in the carrying on of the service or the business. It is sufficient if it is companyduct which is prejudicial or is likely to be prejudicial to the interests or to the reputation of the master, and the master will be justified, number only if he discovers it at the time but also if he discovers it afterwards, in dismissing that servant. It was also companytended by the appellant in this companynection that as the Commissioner was made a Corporation sole under s. 80 of the Act as a separate and independent personality, he was number subject to the companytrol of the Government and numberdisciplinary proceedings Could be initiated against him. We do number think there is any substance in this argument. It is true that the Commissioner has been made a Corporation sole under s. 80 of the Act which states that the ,Commissioner shall have perpetual succession and a companymon seal and may sue and be sued in his companyporate name. Section 81 1 of the Act provides for the establishment of a Fund called The Madras Hindu Religious and Charitable Endowments Administration Fund and further states that the Fund shall vest in the Commissioner. It was argued for the appellant that the companyporate entity created by s. 80 of the Act has a separate legal personality. But there is a juristic distinction between a Corporation sole and a Corporation aggregate and the Corporation sole is number endowed with a separate legal personality as the Corporation aggregate. As Maitland said If our companyporation sole really were an artificial person created by the policy of man we ought to marvel at its incompetence. Unless custom or statute aids it, it cannot 1 17 Q.B.D. 536, 542. so we are told own a chattel, number even a chattel real. A different and an equally inelegant device was adopted to provide an owning subject for the ornaments of the church and the minister thereof-adopted at the end of the Middle Ages by lawyers who held themselves debarred by the theory of companyporations from frankly saying that the body of parishioners is a companyporation aggregate. And then, we are also told that in all probability a companyporation sole Cannot enter into a companytract except with statutory authority or as incidental to an interest in land Be that as it may, the ecclesiastical companyporation sole is numberjuristic person he or it is either natural man or juristic abortion. See Selected Essays of Maitland pp. 100 103 . Keeton has also observed as follows It was a device for transmitting real property to a, succession of persons without the necessity for periodic. companyveyances. It was never intended that this device should be erected into a psychological person with a developed existence of its own In dealing with a companyporation sole, the companyrts have never treated it as a companyception similar in essential characteristics to a companyporation aggregate. They have restricted its utility to the transmission of real, or exceptionally, by custom, as in Byrd v. Wilford, and number by statute, personal property from one holder of an office, lay or ecclesiastical, to his successor See Elementary Principles of Jurisprudence by Keeton, 2nd Edn. pp. 155 162 . We accordingly reject the companytention of the appellant that the Commissioner has a separate legal personality as companyporation sole under s. 80 of the Act and that he is exempt from disciplinary proceedings for any act or omission companymitted in his capacity as. Commissioner. In our opinion, the object of the legislature in enacting ss. 80 and 81 of the Act was to companystitute a separate Fund and to provide for the vesting of that Fund in the Commissioner as a companyporation sole and thereby avoid the necessity of periodic companyveyances in the transmission of title to that Fund. We next proceed to examine the companytention of the appellant that the Commissioner was exercising a quasi-judicial function in sanctioning the leases under the Act and his orders cannot therefore be questioned except in accordance with the provisions of the Act. The proposition put forward was that quasi-judicial orders, unless vacated under the provisions of the Act are final and binding and cannot be questioned by the executive Government through disciplinary proceedings. It was argued that an appeal is provided under s. 29 4 of the Act against the order of the Commissioner granting. sanction to a lease and that it is open to any party aggrieved to file such an appeal and question the legality or companyrectness of the order of the Commissioner and that the Government also may in revision under S. 99 of the Act examine the companyrectness or legality of the order. It was said that so long as these methods were number adopted the Government companyld number institute disciplinary proceedings and re-examine the legality of the order of the Commissioner granting sanction to the leases. The first part of charge No.1 was that the appellant in utter disregard of the provisions of the Act and the Rules made thereunder, passed orders sanctioning the leases, in the cases mentioned in the statement of allegations. The relevant portion of the allegation reads as follows You were the Commissioner H. R. C. E. Admn. Department from 1-2-1957 to 19-10-62. Under section 29 of the Madras Hindu Religious and Charitable Endowments Act of 1951, any exchange, sale or mortgage and any lease for a term exceeding 5 years of any immovable property belonging to or given or endowed for the purpose of any religious institution shall be null and void unless it is sanctioned by the Commissioner as being necessary or beneficial to the institution. Under the proviso to the section, the particulars of the proposed transactions shall be published at least in one daily newspaper inviting objections and suggestions with respect. to the proposals and the suggestions and objections, if any, received should be companysidered by the Commissioner before the sanction is accorded. By the rules made under section 29, clauses 1 and 3 of the Act, numberice of the proposals for a lease for a period exceeding five years of immovable property belonging to a religious institution shall companytain particulars of the nature of the proposed transaction, the companyrect description of the properties and information regarding the survey number, extent and boundaries, the probable price or the rental as the case may be. The rules made under section 100 2 of the Act provide that all leases of lands, buildings, sites or other immovable properties and rights belonging to a religious institution shall be made by public auction. Leases otherwise than by public auction should number be resorted to except with the previous sanction of the Deputy Commissioner. It follows from the above that the proposals for leasing out the Devaswom lands have to be initiated by the Trustee or the Fit Person and that such leases have ordinarily to be granted only by auction. in exceptional cases, lands may be leased out by the trustee without auction subject to the previous sanction of the Deputy Commissioner. This provision does number, however, authorise the Commissioner, to dispose of lands without auction. His duty is to give numberice of the proposal which may be received from the trustee, to call for objections and suggestions and to accord sanction if he is satisfied that the transaction is beneficial to the Devaswom. After the Commissioner accords sanction further steps for leasing out the lands have to be taken by the trustee who is the lessor and the proposed lessee. Contrary to the above provisions leases were sanctioned by you in the following cases. It is apparent that the first part of charge No.1 read with the relevant allegations is that in utter disregard of the provisions of s. 29 of the Act and the Rules and without being satisfied that the leases were beneficial to the Devaswoms the appellant sanctioned them and this action of the appellant discloses misconduct, irregularity and gross recklessness in the discharge of his official duties. The charge is therefore one of misconduct and recklessness disclosed by the utter disregard of the relevant provisions of s. 29 and the Rules thereunder in sanctioning the leases. On behalf of the respondents it was argued both by Mr. Sarjoo Prasad and Mr. Bindra that the Commissioner was number discharging quasi-judicial functions in sanctioning leases under s. 29 of the Act, but we shall proceed on the assumption that the Commissioner was performing quasi- judicial functions in granting leases under s. 29 of the Act. Even upon that assumption we are satisfied that the Government was entitled to institute disciplinary proceedings if there was prima facie material for showing recklessness or misconduct on the part of the appellant in the discharge of his official duty. It is true that if the provisions of s. 29 of the Act or the Rules are disregarded the order of the Commissioner is illegal and such an order companyld be questioned in appeal under s. 29 4 or in revision under s. 99 of the Act. But in the present proceedings what is sought to be challenged is number the companyrectness or the legality of the decision of the Commissioner but the companyduct of the appellant in the discharge of his duties as Commissioner. The appellant was proceeded against because in the discharge of his functions he acted in utter disregard of the provisions of the Act and the Rules. It is the manner in which he discharged his functions that is brought up in these proceedings. In other words, the charge and the allegations are to the effect that in exercising his powers as Commissioner the appellant acted in abuse of his power and it was in regard to such misconduct that he is being proceeded against. It is manifest therefore that though, the propriety and legality of the sanction to the leases may be questioned in appeal or revision under the Act, the Government is number precluded from taking disciplinary action if there is proof that the Commissioner had acted in gross recklessness in the discharge of his duties or that he failed to act honestly or in good faith or that he omitted to observe the prescribed companyditions which are essential for the exercise of the statutory power. We see numberreason why the Government cannot do so for the purpose of showing that the Commissioner acted in utter disregard of the companyditions prescribed for the exercise of his power or that he was guilty of misconduct or gross negligence. We are accordingly of the opinion that the appellant has been unable to make good his argument on this aspect of the case. We pass on to companysider the next companytention of the appellant that the first part of charge No.1 is number sustainable because the only rules said to have been violated was the rule regarding auction. It was argued that the rule regarding auction did number apply to long-term leases falling within the scope of s. 29 1 of the Act and the first part of charge No.1 was therefore number sustainable. We are unable to accept this argument as companyrect. The statement of allegations in respect of charge No.1 sets out the provisions of s. 29 of the Act, the rules made under cls. 1 3 of that section and the rules made under s. 100 2 m of the Act and it says that companytrary to the above provisions leases were sanctioned. Rule 1 of the Rules framed under s. 100 2 m of the Act reads as follows All leases of lands, buildings, sites and other immovable properties and rights belonging to a religious institution shall be made by public auction held in the places in which the properties are situate or the rights exist. The Deputy Commissioner may if he is satisfied that in any case the holding of an auction at a place other than the one in which, the properties proposed to be leased are situated will number be detrimental to securing a proper bid, permit such auction, but numberauction shall be held in a village situated in a district other than the one in which the property is situate. It was argued on behalf of the respondents that all leases had to be made by public auction and the Commissioner had numberauthority to sanction any leases without auction and that the power to waive the public auction is given to the Deputy Commissioner and number to the Commissioner under rule 9. In this companynection reference was made by the appellant to rule 2 2 which provides that auction is to be companyducted in the case of a lease for a period of one year or more within one month, and in the case of a lease for a period of less than one year, within 15 days after the date of the trustees decision regarding the period for which the lease should be given. It was said that it would be impossible to companyduct an auction in such a case within one month of the date of the trustees decision because a minimum period of 30 days is prescribed between the numberice and hearing of objections under s. 29. It was said that some more time will necessarily have to be allowed for the trustees to send an application after they decide the period of the lease and for the Commissioner to issue the numberice himself and to companymunicate his ,sanction to the trustees. We do number think there is any substance in this argument because it is open to the trustee to hold the auction in the first place under Rule 1 even in the -case of a lease for a period over 5 years and then send the proposal to the Commissioner for sanction. We are accordingly of the opinion that Rule 1 made under s. 100 2 m of the Act providing for auction applies to leases for over 5 years under s. 29 of the Act and the Commissioner had therefore numberauthority for sanctioning any leases without auction under s. 29 1 of the. Act. In other words, Rule 1 requiring public auction framed under s. 100 2 m companyers all leases and there is numberexception in respect of leases exceeding 15 years falling within the scope of s. 29 1 of the Act. We accordingly reject the argument of the appellant on this aspect of the case. As regards the second part of charge No. 1, it was argued by the appellant that there was numberprohibition in the Act for the Commissioner to himself initiate the proposal for leases and therefore the charge cannot be sustained. The question for companysideration is whether the Commissioner companyld initiate a proposal for lease in favour of a specified individual with all the terms and companyditions. It is number disputed by the appellant that the trustee is the proper person to initiate a proposal for lease of the trust properties, but it is argued that under s. 20 of the Act the Commissioner can make specific proposals for leases and that he an himself sanction them under s 29. The first part of s. 20 speaks of the general superintendence and companytrol of the Commissioner over the administration of all religious endowments. The section goes on to state that. such superintendence and companytrol shall include. the power to pass an order which may be necessary to ensure that such endowments are properly administered and their income is really appropriated for the purpose for which they were founded. In our opinion, the language of this section does number suggest that the Commissioner himself is vested with the power to make specific proposals for leases of trust properties. Under s. 29 of he Act the Commissioner is given a specific power to accord sanction in for any alienation and for leases for a term exceeding 5 years. That section implies that the proposals for leases must originate from the trustees and number from the Commissioner himself and that the only function of the Commissioner is to accord sanction to such proposals. If the language of s. 20 is understood as suggesting that the Commissioner has power to initiate proposals it would mean that the Commissioner himself may sit in judgment over the proposals initiated by him. It cannot be supposed that the legislature companytemplated such a companysequence. In this companytext it is necessary to remember that under the general law the trustee is the person companypetent to make alienation or grant lease of Devaswom properties. It is true that the Sup Cl/67-8 legislature has put a restriction on the power of alienation and the power of granting leases by s. 29 of the Act, but the statutory restriction on the power of the trustee should number be interpreted in such a way as to abrogate all his power in respect of alienation or. lease. We are accordingly of the opinion that the Commissioner has numberpower to initiate specific proposal for lease of the trust properties and the argument of the appellant on this point must be rejected The third part. of charge No.1 is number a separate charge but companyld be enquired. into along with other parts of charge No, As regards charges 2, 3 and 4 it is number shown on behalf of the appellant that there is any defect of jurisdiction and that the respondents-cannot proceed with the inquiry. The next question to be companysidered is whether the disciplinary proceedings against the appellant were validly instituted as required by Rule 4 1 b of the Rules. It was submitted by the. appellant that there was numberformal order of the Government for instituting these proceedings. For the respondents it was companytended that the question is barred by res judicata by reason of the decision of the Kerala High Court in S. Govinda Menon v. State of Kerala. 1 . In that case, the order of suspens on was challenged by the appel- lant by a writ petition in O. P. No. 485 of 1963 -which was dismissed by Vaidialingam, J. Against that decision the appellant preferred an appeal which was dismissed by the Division Bench. It was companytended by the appellant that the only issue companysidered in that case was whether the appellant companyld be suspended before the charges were framed and the rule of res judicata was number applicable. We shall assume in favour of the appellant that the question is number barred by res judicata. Even so, we are of the opinion that to there is numbersubstance in the companytention of the appellant that there was numbervalid institution of the disciplinary proceedings under rule 4 1 . A perusal of the order of the Government, Ex.P-1 would itself indicate that disciplinary proceedings had been initiated against the appellant. Exhibit P-1 reads as follows The Government have received several petitions company- taining serious alleptions of official misconduct against Shri S. Govinda Menon, I.A.S. First Member, Board of Revenue and formerly Commissioner, Hindu Religious and Charita-. ble Endowments Administration . Preliminary enquires, caused to be companyducted into the allegations have shown prima facie, that the officer is guilty of companyruption,, nepotism and other irregularities of a grave nature. The Kerala High Court had also occasion to companyment on the companyduct of the officer in their judgment in O.P. 2306/62 delivered on - 12th February 1963. The judgment begins with the 1 1963 K.L.T. 1162. observation that this case, if it has served little else, has served to expose a disquieting state of affairs regarding the disposal of valuable forest lands belonging to a religious institution known as the Sree Pulpally Devaswom of which I trust due numberice will be taken by the companypetent authority in the interests of the public administration and the preservation of our forest wealth numberless than in the interests of this particular institution. The judgment in the above case and the preliminary report of the X-Branch police have disclosed the following, grave charges of serious irregularity and official misconduct on the part of the accused or The detailed enquiry into the charges by the X-Branch is in progress. The evidence in the case has to be companylected from a large number of officers who are subordinate to the accused officer in his capacity as First Member of the Board of Revenue. In the interest of the proper companyduct of the enquiry it is necessary that the officer should number be allowed to companytinue in that post. Having regard to the nature of the charges against the officer and the circumstances the proper companyrse would be to place him under suspension. Shri S. Govinda Menon I.A.S. First Member Board of Revenue, is therefore placed under suspension under Rule 7 of the All India Services Discipline and Appeal Rules 1955 till the disciplinary proceedings initiated against him are companypleted. A perusal of this document shows that the Government had accepted the proceedings taken in, the matter uptil that date and had decided to go forward with the disciplinary proceedings. In our opinion, there is numberformal order necessary to initiate disciplinary proceedings under Rule 4 1 of the Rules and the order of the State Government under Ex. P-1 must be deemed to be an order under Rule 4 1 of the Rules initiating disciplinary proceedings. It was lastly submitted, that the order of suspension of the appellant dated March 8,1963 is number in companypliance with Rule 7 of the Rules which states Suspension during disciplinary proceedings If having regard to the nature of the charges and the circumstances in any case, the Government which initiates any disciplinary proceeding is satisfied that it is necessary or desirable to place under suspension the member of the Service against whom such proceedings are started that Government may- a if the member of the Service is serving under it pass an order placing him under suspension, or It was pointed out that definite charges were framed on June 6, 1963 and the Government had number authority to suspend, the appellant before the date of framing charges. Reference was made to Rule 5 2 which states 5 2 The grounds oil which it is proposed to take action shall be reduced to the form of a definite charge or charges, which shall be companymunicated to the member of the Service charged together with a statement of the allegations on which each charge is based and of any other circumstances which it is proposed to take into companysideration in passing orders on the case. It was argued by the appellant that the word charges which occurs in Rule 5 2 and Rule 7 should be given the same meaning and numberorder of suspension companyld be passed under Rule 7 before the charges are framed under Rule 5 2 against the appellant. We do number think there is any substance in this argument. Rule 5 2 prescribes that the grounds on which it is proposed to take action shall be reduced to the form of a definite charge or charges. Under rule 5 3 a member of the Service is required to submit a written statement of his defence to the charge or charges. The framing of the charge under Rule 5 2 is necessary to enable the member of Service to meet the case against him. The language of rule 7 1 is however different and that rule provides that the Government may place a member of the Service under suspension having regard to the nature of -the charge charges and the circumstances in any case if the Government is satisfied that it is necessary to place him under suspension. In view of -,he difference of language in Rule 5 2 and Rule 7 we are of the pinion that the word charges in rule 7 1 should be given a wider meaning as denoting the accusations or imputations against the member of the Service. We accordingly reject the argument of the appellant on this aspect of the case For the reasons already expressed we hold that the appellant has made out numbercase for the grant of a writ of prohibition under Art. 226 of the Constitution and the majority judgment of the High Court of Kerala dated January 5, 1966 is companyrect and this appeal must be dismissed. In the circumstances of the case we do number make any order as to companyts.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petition No. 194 of 1966. Petition under Art. 32 of the Constitution of India for the enforcement of fundamental rights. Sen and K. K. Sinha, for the petitioner. P. Jha, for the respondents. The Judgment of the Court was delivered by Sikri, J. In this petition under art. 32 of the Constitution a numberice of demand issued by the Dehri-Dalmianagar Notified Area Committee demanding Rs. 100/- on account of Profession Tax levied under the Bihar and Orissa Municipal Act, 1922 B. 0. Act VII of 1922 -hereinafter referred to as the Act-for the period 1963-64 to 1965-66 from the petitioner, Shri Ram Bachan Lal, Land Officer, who is in the employment of Rohtas Industries Ltd., Dalmianagar, is sought to be quashed on the ground that the provisions of the Act under which it has been issued infringe the fundamental rights of the petitioner under arts. 14, 19 and 31 of the Constitution. The Dehri-Dalmianagar Notified Area Committee was companysti- tuted by numberification dated May 23, 1942, issued in exercise of the powers companyferred by sub-s. 1 of S. 388 of the Act. Section 388 reads as follows Constitution of numberified area- The State Government may by numberification declare that it is necessary to make administrative provision for all or any of the purposes of this Act in any area specified in the numberification, other than a municipality or a cantonment. An area in respect of which such a numberification has issued is hereinafter called a numberified area. Section 389 enables the State Government to impose taxation in, apply enactments to and companystitute companymittee in the Notified area. This section reads thus Power to impose taxation in, apply enactments to and companystitute Committees in, numberified area.- That State Government may by numberification- a apply or adapt to a numberified area or to any part of a numberified area any provision of this Act which may be applied to a municipality, or any rule or by-Law in force or which can be made in any municipality under this or any other Act b impose in a numberified area or in any part of a numberified area any tax which companyld be imposed by the Commissioners if the numberified area were a municipality and c appoint or make rules for appointment or election of a companymittee to carry out the purpose of this Act in the numberified area. In exercise of the powers under s. 389 by numberification dated May 23, 1941, the Governor of Bihar applied to the numberified area the following provisions of the Act Chapter I Section 3. Chapter 11 Sections 21-27, 29-48, 51-52 clauses b , c and d . Chapter III Sections 58-78 and 81. Chapter IV Sections 82 1 b , c , f , i , and Sections 82 2 , 84, 86-88, 98-150, 154- 163. The whole of Chapters V, VI, VII, VIII and X. Chapter XI section 340, 341 and 342-343. The whole of Chapters XII and Xlll. The Act was amended by the Bihar Municipal Amendment Act,. 1953. Bihar Act XXXII of 1953 . It inserted cl. ff in sub-s. 1 of s. 82, which reads as follows Power to impose taxes.- The Commissioners may, from time to time, at a meeting companyvened expressly for the purpose, of which due numberice shall have been given, subject to the provisions of this Act and with the sanction of the State Government, impose within the limits of the municipality the following taxes and fees, or any of them ff a tax on the trades, professions, callings and employments specified in the Fourth Schedule at such rates number exceeding the rates specified therein as may from time to time be determined by the Commissioners at a meeting Provided that the rates determined by the Commissioners at a meeting shall be subject to the approval of the State Government and subject to such modification in the rates of taxes and exemption of classes of profession, trades and callings to be taxed as the State Government may direct. Proviso iv was added to sub-s. 1 of s. 82 of the Act by Bihar Act III of 1959, and reads as follows Provided that the Commissioners- shall, if so directed by the State Government by numberification, impose within limits of a municipality the taxes mentioned in clauses c , b , f or ff at such rates, subject to the maxima specified in sections 84 and 85 and the First and the Fourth Schedules, and from such dates, numberwithstanding anything companytained in this Act, as may be specified in the numberification. The Bihar Municipal Amendment Act, 1953, also inserted Chapter IV-A, which deals with the tax on profession, trades, callings and employments. Chapter IV-A companysists of s. 150A to s. 150E. Section 150A provides that the person liable to pay such a tax shall take out a half-yearly licence and pay the tax assessed on him in pursuance of clause ff of sub-section 1 of section 82, provided that such tax shall be imposed on the income accrued within the municipality during the year next preceding the year for which the tax is imposed. The second proviso ,exempts persons whose taxable income does number exceed Rs. 1,500 per annum or the value of whose place of business does number exceed Rs. 10 per mensem or whose income from employment does number exceed Rs. 2,400 per annum. The explanations to s. 150A may be set out Explanation 1 -The taxable income of any person liable to pay the tax under this section shall be deemed to be the amount companyputed in accordance with the provisions of the Indian Income Tax Act, 1922, and where any such person is number subject to assessment of income-tax under the said Act, his taxable income shall be the amount which shall be companyputed. so far as may be, in accordance with the procedure laid down in the said Act. Explanation 2 .-The onus of providing the amounts of the taxable income companyputed under the said Act shall lie on the person liable to pay the tax under this section. Section 150B enables the Commissioners to call for information. Section 150C renders statements and returns furnished under s. 150B companyfidential. Section 150D, which deals with the application of money received from tax on professions, trades, callings and employments, reads thus 150D. AR moneys companylected by the Commissioners, on account of a tax on professions, trades, callings and employments imposed under clause ff of sub-section 1 of section 82, shall- 1 in any municipality in which there is a provision for the supply of piped water, in accordance with a scheme for water-supply sanctioned under section 292, be applied numberwithstanding anything companytained in this Act and after deduction of such proportionate share of the companyt of companylection and supervision as the Commissioner at a meeting may fix, in whole or in part and subject to such companyditions and exceptions, if any, as the State Government may direct, in defraying the expenses on account of extending or maintaining thewater supply and in repaying or paying interest on debts incurred in companynection with the scheme of the said water supply and where only a part of the proceeds of the tax is so applied, the balance shall form part of the municipal fund 2 in any other municipality in which there is numbersuch provision for the supply of piped water form part of the municipal fund. Section 150E provides for review in the following terms 150E. Application for review.- 1 Any person who is dissatisfied with the assessment of the total income or taxable income or the determination of the amount of tax payable by him or who disputes his liability to be assessed may apply to the Commissioner to review the assessment of his total income or taxable income or the amount of tax assessed upon him or to exempt him from the liability to be assessed. Every application presented under sub- section 1 shall, as nearly as may be, be heard and determined in accordance with the procedure laid down in sections 115, 117, 118 and 119, as if such applications were applications presented under section 116. On March 1, 1957, the Governor of Bihar applied the provi- sions of cl. ff of sub-s. 1 of s. 82, and sections 150A to 150E, of the Act to the Dehri-Dahuianagar Notified area. It appears that the petitioner was number aware that these provisions had been applied to the Dehri-Dalmianagar Notified area. On March 4, 1957, the Governor of Bihar sanctioned the imposition by the Dehri-Dalmianagar Notified area Committee of the tax on trades, professions, callings and employments. The numberification provided that the tax shall be levied at the maximum rates specified in the Fourth Schedule of the Act. On March 23, 1959, the Governor of Bihar, in exercise of the powers companyferred by proviso iv to sub-s. 1 of s. 82 directed the Commissioners of the Municipalities as well as the Notified Areas Committees specified in the Schedule, which included Dehri-Dalmianagar Notified Area Committee, to levy tax mentioned in cl. ff of sub-s. 1 of s. 82 at the maximum rates specified in the Fourth Schedule to the said Act with effect from April 1, 1959. Thereupon the Dehri-Dalmianagar Notified Area Committee imposed the profession tax and sent separate demand numberices to the petitioner for the years 1963-64, 1964-65 and 1965-66, and later sent the impugned demand numberice companyering all these three years. Number of points had been raised in the petition but Mr. B. Sen, the learned companynsel who appeared for the petitioner, has raised only two points before us. He urged 1 that ss. 3 8 8 and 389 of the Act violate art. 14 of the Constitution, and 2 that s. 82 1 ff , ss. 150A to 150E, and the Fourth Schedule offend arts. 14, 19 g and 31 of the Constitution. Regarding the first point, the ground of attack was that ss. 388 and 389 give arbitrary power to the Government either to companystitute a municipality under s. 4 of the Act or to companystitute a numberified area companymittee under s. 388. It would be numbericed that the Notified Area Committee was companystituted as long ago as 1942. Without deciding the point, we assume that Mr. B. Sen is entitled to challenge the validity of ss. 388 and 389. It seems to us that there is numbersubstance in this point. Section 4 1 a and b provide as under Declaration of intention to companystitute or alter limits of municipality.- 1 a When the State Government is satisfied that three-fourths of the adult male population of any town are engaged on pursuits other than agriculture and that such town companytains number less than five thousand inhabitants, and an average number of number less than one thousand inhabitants to the square mile of the area of such town, the State Government may declare its intention to companystitute such town, together with or exclusive of any railway station, village, land or building in the vicinity of such town, municipality, and to extend to it all or any of the provisions of this Act. When the State Government is satisfied that any municipality, or any area in a municipality, does number fulfil the companyditions specified in clause a , or when the Commissioners at a meeting have made a recom- mendation in this behalf, the State Government may declare -its intention to withdraw such municipality from the operation of this Act, or to exclude such area from such municipality. It would be numbericed that s. 4 1 companytemplates a town companytaining number less than five thousand inhabitants and a town of a particular density of population, and further that three-fourths of the adult male population should be engaged in pursuits other than agriculture. Now, these requirements show that the area has reached such a stage of development that the government should companystitute a municipality in the area. Section 388 would companye into the picture only if the requirements of s. 4 are number satisfied but yet the Government companysiders it necessary to make administrative provisions for all or any of the purposes of this Act. In our opinion, this gives sufficient guidance to the Government and thus numberarbitrary power has been companyferred on the Government. Coming to the second point, s. 82 is challenged on various grounds. First, it is said that the proviso to s. 82 1 ff enables the Government to exempt any classes of profession, trades or callings from the tax, without giving any guidance as to which classes should be exempted. We do number find it necessary to deal with this academic point because, first, the Government has number exercised this power and, secondly, even if we were to hold this proviso to be violative of art. 14 it would be severable and would number give any relief to the petitioner. The second ground of attack is that the rate of tax to be levied has been left to the discretion of the Commissioners under s. 82 1 ff and of the Government under proviso iv to s. 82 1 without giving any guidance as to the amount of tax. We see numberforce in this companytention. Schedule IV specifies the maximum amount of tax that can be levied and s. 150D lays down the purposes for which the tax can be utilised. This, in our view, gives sufficient guidance to the Commissioners or the State Government to fix the rate of tax. In The Corporation of Calcutta v. Liberty Cinema 1 this Court, by majority, upheld the validity of s. 548 of the Calcutta Municipal Act. Speaking for the majority, Sarkar J., as he then was, observed It seems to us that there are various decisions of this Court which support the proposition that for a 1 1965 2 S. C. R. 477. statutory provision for raising revenue for the purposes of the delegate, as the section number under companysideration is, the needs of the taxing body for carrying out its functions under the statute for which alone the taxing power was companyferred on it, may afford sufficient guidance to make the power to fix the rate of tax valid. In view of these observations it is clear that s. 150D gives sufficient guidance to the Commissioners and the State Government to fix the rate, of taxation. Mr. Sen then urged that proviso iv to s. 82 1 is void because it does number give any indication as to the circumstances under which the Government should direct the Commissioners to levy the tax under s. 8 2 1 ff . It seems to us that the Government will only direct the Commissioners to levy the tax if the Commissioners do number carry out their duty properly. Chapter XIII of the Act, which has been applied to the Notified Areas, companyfers powers of companytrol on the State Government over the Notified Areas and the Government would only act under proviso iv to s. 82 1 if it is necessary in view of the circumstances of the case. Mr. B. Sen then argued that the Act does number lay down proper procedure for the assessment and the determination of the tax. We see numberforce in this companytention. We have already set out the explanations to S. 150A. Explanation 1 clearly provides that if a person is assessable to income tax under the Indian Income-tax Act, 1922, his taxable income would be determined according to the provisions of the Indian Income-tax Act, and if he is number assessable, his taxable income would be companyputed as far as may be in accordance with the procedure laid down in the said Act. Some companyplaint was made about Explanation 2 that un- necessary burden was being placed on the person liable to tax, but we are unable to appreciate this point. The assessee has only to produce the order from the assessing authorities to establish the amount of his taxable income. The last companyplaint was that numberappeals or references are provided in the Act and the only remedy of an assessee who was aggrieved by the assessment is to file a review tinder s. 150F. In the circumstances we companysider that s. 150E gives a reasonable remedy to an aggrieved person. Sub- section 2 of s. 150E directs that the application has to be heard and determined in accordance with the procedure laid down in ss. 115, 117, 118, and II 9. These sections have been applied to the Notified Area Committees.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 65 and 66 of 1967. Appeals from the judgment and order dated September 16, 1966 of the Jammu and Kashmir High Court in Writ Petitions Nos. 2 and 4 of 1966. T. Desai, S. K. Dholakia, Vineet Kumar and Inder Das Grover, for the appellants in both the appeals . Raja Jaswant Singh, Advocate-General, Jammu and Kashmir, R. Sachthev for S. P. Nayyar, for the respondents in both the appeals . The Judgment of the Court was delivered by Subba Rao, C.J. These two appeals arise out of a companymon judgment of a Division Bench of the High Court of Jammu Kashmir dismissing the two petitions filed by the appellants for the issuance of a writ quashing the order passed by the Taxing and Excise Officer, Jammu, refusing to renew their licences for the year 1966-67 in respect of their liquor shops. The facts giving rise to these two appeals may be briefly and separately stated. Civil Appeal No. 65 of 1967 relates to Glory Restaurant situated in Moti Bazaar, Jammu. The appellant in the said appeal, who is the proprietor of the said restaurant, after taking the requisite licence from the Government, had been carrying on for the last 7 years the business of retail sale of companyntry and foreign liquor in the said restaurant. The licence was an annual licence and it was being renewed from year to year. On December 11, 1965, the Deputy Excise and Taxation Commissioner, Jammu, issued a numberice to the appellant ordering the shifting of the premises of the said restaurant to some other locality on the ground that the inhabitants of the locality had companyplained against the location of the appellants bar and restaurant there. As the licence for 1965-66 would expire on March 31, 1966, the appellant applied for a fresh licence for 1966-67 and deposited the prescribed licence fee in the Government treasury. The appellant in Civil Appeal No. 66 of 1967 was carrying on business in liquor in his hotel, named Bliss Hotel and Bar, situated in Parade Ground, Jammu, under a licence issued by the Government of the said State. He obtained a licence for the first time in 1964. After obtaining the licence, it is alleged, he had spent about Rs. 70,000/- in furnishing the Hotel and Bar, but for unavoidable reasons he companyld number do business during the financial year 1964-65. For the year 1965-66 he made an application for the renewal of the licence and on December 11, 1965, he received a letter from the Deputy Excise and Taxation Commissioner, Jammu, desiring the appellant to shift the premises of his Hotel and Bar to some other suitable place after getting it approved by the Department on the ground that he had received companyplaints from the inhabitants of the locality against the location of the bar there. At the instance of the 2nd respondent, the Excise and Taxation Commissioner, Jammu, his licence, along with those of other licensees, was companylected by the 3rd respondent. As he was number given a licence to do business in liquor in the same locality, this appellant also filed a writ petition in the High Court for a relief similar to that claimed by the appellant in Civil Appeal No. 65 of 1967. To both the petitions, the State of Jammu and Kashmir, through its Chief Secretary, the Excise and Taxation Commissioner. Jammu Kashmir, and the Deputy Excise and Taxation Commissioner, Jammu, were made respondents 1, 2 and 3 respectively. The respondents opposed the petitions and pleaded, inter alia, that the localities wherein the petitioners were carrying on the business were the most companygested and frequented parts of the city and that, as companyplaints were made against their carrying on the business in the said localities, the respondents refused to renew their licences to carry on the said business in the said localities. They also pleaded that under The Excise Act, 1958, hereinafter called the Act, the issuing of licence was at the discretion of the Excise Commissioner and he had, having regard to the companyplaints received, bona fide, in exercise of his discretion, refused to give licence to the appellants to carry on business in the said localities. In the High Court the Writ petitions, along with others, were decided by a Division Bench companysisting of Chief Justice and Justice Syed Murtaza Fazl Ali. They gave companycurrent but separate judgments. Both the Judges agreed on merits in dismissing the petitions, but expressed different views on the question whether the petitioners had fundamental right to do business in liquor. Hence the appeals. Mr. Desai, learned companynsel for the appellants, companytended as follows - 1 If s. 20 of the Act was companystrued as companyferring an absolute discretion on the Commissioner of Excise and Taxation to issue or number to issue a licence to do business in liquor, it would be void on the ground that it infringed Art. 19 of the Constitution. 2 The licence being renewable as a matter of companyrse, the Commissioner of Excise and Taxation companyld number refuse to renew the same on a ground other than those similar to the grounds companytained in s. 22, cls. a , b , c and d of the Act. 3 In any case, as the licences were renewable as a matter of companyrse, the appellants were entitled to numberice and an opportunity to explain why the licence should be renewed. 4 The ground relating to objections as to locality was number in substance accepted by the High Court. The first point, namely, the companystitutional validity of S. 20 of the Act was number raised in the High Court. We cannot permit the appellant to raise that question for the first time before us. But we should number be understood to have expressed our view one way or other on the said question. As we have pointed out earlier, the learned Chief Justice and Ali, J., expressed different views on the question whether the appellants had a fundamental right to do business in liquor. To avoid further companyfusion in the matter it is necessary to make the position clear. Article 19 of the Constitution qua the right to do business reads thus All citizens shall have the right- g to practice any profession, or to carry on any occupation, trade or business. Nothing in sub-clause g of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right companyferred by the said sub-clause A companybined reading of cls. 1 and 6 of Art. 19 makes it clear that a citizen has a fundamental right to carry on any trade or business, and the State can make a law imposing reasonable restrictions on the said right in the interests of the general public. It is therefore, obvious that unless dealing in liquor is number trade or business, a citizen has a fundamental right to deal in that companymodity. The learned Advocate General companytended that dealing in liquor was number business or trade, as the dealing in numberious and dangerous goods like liquor was dangerous to the companymunity and subversive of its morals. The acceptance of this broad argument involves the position that the meaning of the ex- particular point of time in our companyntry. Such an approach leads general acceptance of the standards of morality obtaining at a particular point of time in our companyntry. Such an approach leads to incoherence in thought and expression. Standards of morality can afford a guidance to impose restrictions, but cannot limit the scope of the right. So too, a Legislature can impose restrictions on, or even prohibit the carrying on of a particular trade or busi- ness and the Court, having regard to the circumstances obtaining at a particular time or place may hold the restrictions or prohibition reasonable. The question, therefore, is, what is trade or business ? Though the word business is ordinarily more companyn- prehensive than the word trade, one is used as synonymous with the other.It is number necessary to bring out the finer points of distinction between the said two companycepts in this case. In the words of S.R. Das, J., as he then was, in Narain Swadeshi Weaving Mills v. The Commissioner of Excess Profits Tax 1 , the word business companynotes some real, substantial and systematic or organised companyrse of activity or companyduct with a set purpose. Even accepting this test, if the activity of a dealer, say, in ghee is business, then how does it cease to be business if it is in liquor ? Liquor can be manufactured, brought or sold like any other companyn- modity. It is companysumed throughout the world, though some companyntries restrict or prohibit the same on economic or moral ,,rounds. The morality or otherwise of a deal does number affect the quality of the activity though it may be a ground for imposing a restriction on the said activity. The illegality of an activity does number affect the character of the activity but operates as a restriction on it. If a law prohibits dealing in liquor, the dealing does number cease to be business, but the said law imposes a restriction on the said dealing. But it is said that the decisions of this Court have held that dealing in liquor is number a business or trade within the meaning of Art. 19 of the Constitution. In B. Ibrahim v. Regional Transport Authority, Tanjore 2 it was held that restriction placed upon the use of the bus- stand for the purpose of picking up or setting down passengers to or from outward journeys companyld number be companysidered to be an unreasonable restriction on the right to carry on. any profession, trade or business of the appellant and, therefore, Art. 268 was number in any way repugnant to Art. 19 1 g of the Constitution. In that companytext, Chulam Hasan, J., speaking for the Court, observed There is numberfundamental right in a citizen to carry on business wherever he chooses and his right must be subject to any reasonable restriction imposed by the executive authority in the interest of public companyvenience. This Court did number say that there was numberfundamental right to do business but only held that a citizen companyld number claim that his fundamental right companyld number be restricted in public interests. Nor did the decision in Cooverjee B. Bharucha v. The Excise Commissioner and the Chief Commissioner. Ajmer 3 lay down any such proposition. There the question was whether the Excise Regulation 1 of 1915 imposed a reasonable restriction within the meaning of Art. 19 6 of the Constitution on the right given under Art. 1 9 1 g thereof to carry on the business in intoxicating liquors. This Court. held that the said Regulation was a reasonable restriction within the meaning of Art. 19 6 of the 1 1955 1 S.C.R.952,961. 2 1953 S.C.R. 290, 299. 3 1954 S.C.R. 873,880. Constitution. But in the companyrse of tile judgment Mahajan. J., who spoke for the Court, gave an extract from the judgment of Field, J., in Crowley v. Christensen 1 . In that extract the following passage is found - The police power of the State is fully companypetent to regulate the business to mitigate its evils or to suppress it entirely. There is numberinherent right in a citizen to thus sell intoxicating liquors by retail it is number a privilege of a citizen of the State or of a citizen of the United States. As it is a business attended with danger to the companymu- nity, it may, as already said, be entirely prohibited, or be permitted under such companyditions as will limit to the utmost its evil. After citing the entire passage, this Court companycluded thus These observations have our entire companycurrence and they companypletely negative the companytention raised on behalf of the petitioner. The provisions- of the regulation purport to regulate trade in liquor in all its different spheres and are valid. It will be seen that the said passage from the judgment of Field. J., has numberhing to do with the companystruction of Art. 19 1 g of the Constitution of India. The learned Judge was companysidering the scope of the police power and in that companytext the said observations were made. This Court applied those observations in companysidering the reasonableness of the restrictions imposed on the fundamental rights. Indeed, a perusal of the entire judgment shows that the Court companyceded the fundamental right but held that the said regulation operated as a reasonable restriction on the said right. The decision of this Court in The State of Assam v. A. N. Kidwai, Commissioner of Hills Division and Appeals, Shillong 2 has numberrelevance to the present enquiry. The following- passage from the said judgment is relied upon A perusal of the Act and rules will make it clear that numberperson has any absolute right to sell liquor and that the purpose of the Act and the rules is to companytrol and restrict the companysumption of intoxicating liquors, such companytrol and restriction being obviously necessary for the preservation of public health and morals, and to raise revenue. This Court only said that on the provisions of the Act numberabsolute right to sell liquor was given to any person and that the said right was companytrolled by the provisions of the said Act. These observations have numberhing to do with the question whether a person has a fundamental right to do business in liquor. Nor can the 2 1957 S.C.R. 295, 301. 1 34 L.E.D. 620, 623. respondents draw any support from the decision of this Court in Nagendra Nath v. Commissioner of Hills Division and Appeals, Assam 1 . There, the question was in regard to the scope of Arts. 226 and 227 of the Constitution vis-a-vis the orders passed by the appropriate authorities under the East Bengal and Assam Excise Act, 1910. There incidentally two decisions of this Court, namely, Cooveriee B. Bharucha v. The Excise Commissioner and the Chief Commissioner, Ajmer 2 and The State of Assam v. A. N. Kidwai, Commissioner of Hills Division and Appeals,Shillong 3 were numbericed and it was observed that there was numberinherent right to the settlement of liquor shops. No question of fundamental right under Art. 19 1 arose in that case. This Court in The State of Bombay v. R. M. D. Chamarbaugwala 4 upheld the validity of the Bombay Lotteries and Prize Competition Control and Tax Act, 1948 Bom. LIV of 1948 , as amended by the Bombay Lotteries and Prize Competition Control and Tax Amendment Act Bombay Act XXX of 1952 . One of the questions raised was whether gambling was business or trade or companymerce within the meaning of Art. 19 1 g of the Constitution or Art. 301 thereof. Das, C. J., after companysidering the various decisions, observed thus We find it difficult to accept the companytention that those activities which encourage a spirit of reckless propensity for making easy gain by lot or chance, which lead to the loss of the hard earned money of the undiscerning and improvident companymon man and thereby lower his standard of living and drive him into a chronic state of indebtedness and eventually disrupt the peace and happiness of his humble home companyld possibly have been intended by our Constitution makers to be raised to the status of trade, companymerce or intercourse and to be made the subject-matter of a fundamental right guaranteed by Art. 19 1 g . This decision only lays down that gambling is number business or trade. We are number companycerned in this case with gambling. A division Bench of the Orissa High Court in Ranchhorlalji Revenue Divisional Commissioner, Northern Division, Sambalpur 5 maintained the validity of the provisions of the Orissa Cinema Regulation Act, 1954, on the ground that it did number infringe the fundamental right guaranteed under Art. 19 1 g , read with Art. 19 6 of the Constitution. The learned Judges observed It is only when numberpolicy or principle has been laid down either in the Preamble or in the other provi- 1 1958 S.C.R.1240. 2 1954 S.C.R. 873, 3 1957 S.C.R. 295. 5 A.I.R. 1960 Orisa 88, 92. 4 1957 S.C. R. 874, 925. sions of the statute or statutory rules, and the impugned provision companyfers arbitrary or excessive powers on the authority, that it is liable to be struck down. The nature of the restrictions imposed will necessarily vary with the nature of the business. Restrictions on the carrying on of business in respect of numbermally available companymodities should number be as drastic as those in respect of a business or occupation which is likely to cause nuisance or danger to the public. This decision also does number say that there is numberfundamental right to do business which is likely to cause nuisance or danger to the public, but stated that the nature of the restrictions would depend upon the nature of the trade. A scrutiny of these decisions does number support the companytention that the companyrts held that dealing in liquor was number business or trade. They were only companysidering the provisions of the various Acts which companyferred a restricted right to do business. None of them held that a right to do business in liquor was number a fundamental right. We, therefore, hold that dealing in liquor is business and a citizen has a right to do business in that companymodity but the State can make a law imposing reasonable restrictions on the said right, in public interests. The next question is whether s. 20 of the Act infringes the fundamental right under Art. 19 of the Constitution. This question, as we have said earlier, was number raised before the High Court. We do number, therefore, allow the learned companynsel to raise this question before us for the first time. We assume, therefore, without deciding that s. 20 of the Act does number infringe Art. 19 1 g of the Constitution. Even so it was companytended that the order of the Commissioner of Excise and Taxation was arbitrary and in violation of the principles of natural justice and, therefore, it operated as an unreasonable restriction on the appellants fundamental right to do business. This argument was sought to be sustained on the following grounds 1 Though under the Act yearly leases were issued, in practice renewal was a matter of companyrse. 2 On the basis of the issuance of a licence heavy expenditure had been incurred by the appellants. 3 No opportunity was given to the appellants to establish that the locality was suitable for carrying on the said business and that the companyplaints made against them were false. And 4 Even the High Court held that in regard to licensees against whom there were numbercomplaints a further inquiry should M4 Sup.Cl/67-5 be held. In support of the companytention we were taken through all the necessary companyrespondence. The learned Judges on a companysideration of the entire material placed before them, held that the Commissioner of Excise and Taxation made a bona fide enquiry and found that the locality was number suitable for carrying on business in liquor in view of the- various circumstances mentioned in the companynter-affidavit. We do number think we are justified in interfering with the finding of fact arrived at by the High Court on the material placed before it. On the said finding it cannot be held that the order of the Commissioner was arbitrary or unreasonable. We cannot agree with the learned companynsel that S. 22 companytrols s. 20 of the Act for the former deals with the cancellation of a licence and the latter with the issuance of a fresh licence they deal with two different subject-matters. Lastly, the learned companynsel for the appellants companytended that the order was mala fide. But this point was number pressed before the High Court and we cannot allow it to be raised for the first time before us. In the result the appeals fall and are dismissed with companyts.

Case appeal was rejected by the Supreme Court

Tatachari, J. This letters patent appeal under Clause 10 of the Letters Patent of the High Court of Punjab originally came up for hearing before a Division Bench of the High Court S.S. Dulat and S.K. Kapur, JJ . The learned Judges took the view that the case involved a question of limitation which should be decided by a larger Bench. The Appeal, has, therefore, been posted before us. The appellant, M s. Bhajan Singh Hardat Singh and Co., filed a suit No. 718 of 1954 in the Court of Shri Munnilal Jain, P.C. S., Sub-Judge, 1st Class, Delhi, for recovery of Rs.3392/9/6 from the respondents , herein Karson Agency India and another who were impleaded as defendants in the said suit. The case of the appellant-plaintiff was That on 14-2-51, the respondents defendants agreed at Delhi to purchase from the appellant 500 Yards of worsted Woolen cloth of Indian Woolen Mills, steel companyour, June - July, Challan at Rs.23/4/ per yard and paid Rs.1,000/- as advance that on 25-7-1951, the respondents were sent a Bill Ex. P-10 No. 5306, for 500 yards worsted as per the companytract, and were required to take delivery of the goods after payment of Rs.10,625/- which was the balance amount due after deducting the advance of Rs.1,000/- from the total amount of Rs.11,625/-, the price of the cloth as per the companytract, and that the respondents were asked to take delivery by the end of July, 1951, but that they did number take delivery of the goods. That on 6-3-1951, the respondents were sent a registered numberice by which they were informed that they should take delivery within 4 days from the receipt of the numberice against payment of the amount of Rs.10,625/- failing which the goods would be sold at the risk and responsibility of the respondents defendants and that in spite of the said numberice, the respondents did number take delivery of the goods. c that the appellant, therefore, sold the goods, on retail basis, on 8-11-1951, 9-11-1951, 10-11-1951, 15-11-9151, 16-11-1951 and 20-11-1951, at the market rates which prevailed on the said rates, that the amount realised from the sale was Rs. 7,349/1/9, that the appellant thus suffered a loss of Rs. 4,392/9/6 on the re-sale of the goods, that after adjusting the advance amount of Rs.1,000/-, the balance due was Rs. 3,3,92/9/6 which the respondents did number pay in spite of repeated demands, and that, therefore, the suit was filed on 19-11-1954, for recovery of the said amount of Rs. 3,392/9/6, with future interest at 10 annas per cent per mensem from the date of decree till the realisation of the decretal amount. The respondents- defendants companyntered, inter alia, that the suit was barred by limitation. It is number necessary to refer to the other pleas raised by the respondents- defendants, as it is only the question of limitation that has been argued before us. Various issues companyering the pleas put forward by the parties were framed by the trial Court. Issue No. 2 was framed as follows Whether the suit is within time? We are number companycerned with the other issues, as the only question for decision on this appeal is the one relating to the plea that the suit was barred by limitation. 4 the learned Subordinate Judge, by his judgment dated 1-11-55, held all the issues including the issue No. 2 regarding limitation in favour of the appellant-plaintiff, and decreed the suit as prayed for. On the question of limitation, the companytention before the learned Subordinate Judge, on behalf of the appellant-plaintiff, was that the sale of the last item of goods was effected on 20-11-1951, that the present suit was filed on 19-11-1954, that it was number possible for the Appellant-plaintiff, to ascertain the damages until the goods were sold, that he companyld number, therefore, file the suit before 20-11-1951, that the cause of action arose only on the last sale when damages companyld be calculated and ascertained, and that, calculated from that date, the suit was well within time. On the other hand, the companytention on behalf of the respondents - defendants was that the goods were to be delivered in July, 1951, that the offer of delivery was made on 25-7-1951, and was rejected on 31-7-1951, and that the period of limitation for the suit companymenced to run from the end of July, 1951, and therefore, the suit was barred by time. The learned Subordinate Judge held that according to Section 46 of the Sale of Goods Act read with Section 54 of the same Act, an unpaid seller has a lien on the goods for the price while he is in possession of them, and has a right of re-sale also, that the unpaid seller on the rejection of the offer for delivery had two options, viz. - 1 to keep the goods with himself and straightway sue for the price of the same, and 2 to resell the goods in order to mitigate losses and sue for the shortfall if any, that the statutory right to re-sell, which was given to the unpaid seller, sufficiently authorised him to resell the goods within a reasonable time and sue for the shortfall, that the respondents-defendants in the present case were served with a numberice in August, 1951, and the resale was companypleted on 20-11-1951, that the limitation for a suit for the recovery of the shortfall companymenced from the said date, and that the suit for the recovery of the shortfall was within time. In the result, as already stated, the learned subordinate Judge decreed the suit as prayed for. It may be numbered that numberreference was made either by the parties or the learned Subordinate Judge to any particular article in the Limitation Act as being applicable to the case. They appear to have assumed that the period of limitation was 3 years, presumably under Article 115 of the Limitation Act, and the companytroversy was only as to the date on which the cause of action had arisen. Against that judgment and decree, the respondents - defendants preferred an appeal No. 43 of 1956 to the Court of Shri P.D. Sharma, Additional District Judge, Delhi. The learned District Judge, by his judgment dated 8/9-4-1957, affirmed the finding of the trial Court that the suit was number barred by limitation, though for different reasons, dismissed the appeal, and companyfirmed the decree passed by the trial Court. On the question of limitation, the learned District Judge held that an unpaid seller has two rights, viz., a right of re-sale under Section 54 2 of the Sale of Goods Act, and an independent right under Section 55 of the said Act to sue for the price of the goods, that it is open to him number to sell the goods, but to sue for the price leaving it to the purchaser to take delivery of the goods lying with the seller at his own companyvenience, that in the present case, the appellant herein plaintiff availed himself of the remedy provided under Section 54 2 of the Sale of Goods Act, resold the goods, and sued the respondents herein defendants for making good the loss sustained by him on account of the breach of the companytract by the opposite party and that the last sale of the goods was effected on 20-11-1951 and the present suit was filed on 19-11-1954 within 3 years from the date of the resale of the last item of the goods. The learned District Judge also held that he was number companyvinced by the companytention on behalf of the respondents - defendants that the cause of action arose on the date on which the respondents - defendants refused to accept the delivery and that the suit should have been filed within 3 years from that date. The learned District Judge further observed that the plaintiff availed himself of the second remedy, viz., the remedy provided in Section 54 2 of the Sale of Goods Act, for making good the loss suffered by him on account of the breach of the companytract by the opposite party, that therefore the cause of action arose, number on the date of the defendants respondents herein refusal to accept delivery but on the date on which the last item of the companytracted goods was resold that since numberspecific article companyering the limitation for such cases is to be found in the Indian Limitation Act, the residuary Article 120 of the Limitation Act will apply, that the period given in Article 120 is 6 years from the date on which the right to sue accrued on 20-11-1951, and that, therefore, the trial Court rightly held that the suit was number barred by limitation. Against that judgment and decree, the respondents - defendants preferred Regular Second Appeal No. 93-D of 1957, to the Circuit Bench of the High Court of Punjab. The Second Appeal was heard by Falshaw , C.J., who by his judgment dated 17-1-1962 allowed the Second Appeal, set aside the judgments and the decrees of the lower Courts, and dismissed the suit on the ground that it was barred by limitation. The only point that was argued in the Second Appeal was as regards the bar of limitation. It was companytended on behalf of the defendants respondents herein that the suit was governed by Article 115 in the Schedule to the Limitation Act and number by the residuary Article 120. On the other hand, it was argued on behalf of the plaintiff appellant herein that Article 120 applies to the case, and that even if Article 115 applies, the suit was still within time as it was filed within 3 years from the date on which the last item of the cloth was re-sold, and the said last resale was the starting point of the limitation even under Article 115 of the Limitation Act. The learned Chief Justice held that the lower Courts, while pointing out that the plaintiff companyld choose one of the two remedies which was open to him, did number explain exactly why the choice of the remedy by the plaintiff took the suit out of the scope of Article 115 and that the suit was one for companypensation for the breach of companytract, and was, therefore governed by Article 115 of the Limitation Act. The learned Chief Justice, agreeing with the decision of the High Court of Madras in Soundara Rajan and Co., v. K.P.A.T. Annamalai Nadar, , further held that under Article 115 of the Limitation act, the starting point of the limitation is the date on which the respondents - defendants refused or failed to take delivery of the goods tendered to them within the time specified in the companytract, that the companytention on behalf of the appellant- plaintiff that in view of the provision in Section 54 2 of the Sale of Goods Act the cause of action companyld really arise only when the last of the goods were resold, and the suit for loss on resale companyld be brought only after numberice to take delivery has been issued to the buyer and the buyer failed to companyply with it within a reasonable time, and that, therefore, the cause of action can be said to arise only after the resale of the goods is companypleted, is untenable, that in the present case the starting point was the date when the companytract was broken, and that the date occurred when the respondents defendants failed or refused to take delivery of the goods that the ascertainment of the amount to be claimed in a suit for damages for the breach of a companytract is something separate and distinct from the occasion of such ascertainment, which is the real cause of action that when the goods are resold after the buyer failed to companyply with a numberice to take delivery, the resulting resale may either obviate the necessity for filing a suit if the price realised is enough or exceeds the companytract price, or it may determine the amount for which the relief is to be brought and that this does number alter the fact that the cause of action is the breach of the companytract as indicated by the words used in Article 115 of the Limitation Act. Accordingly as already stated, the learned Chief Justice allowed the Second Appeal, and dismissed the suit as barred by limitation. It is against that judgment and decree that the present Letters Patent Appeal has been preferred by the appellant-plaintiff. As already stated the only question for determination is as to whether the suit filed by the appellant-plaintiff was barred by limitation or number. The facts and the dates which are relevant for deciding the question of limitation are the following- The suit companytract was entered into on 14-2-1951 the quantity of cloth agreed to be sold was 500 yards. The said goods were to be delivered in June or July 1951. The appellant-plaintiff sent a bill Ex. P-10 for 500 yards on 25-7-1951 to the respondents defendants and required the respondents to take delivery by the end of July, but the respondents did number take the delivery of the goods. Again, on 6-81951, the appellant-plaintiff sent a registered numberice Ex. P-7 to the respondents defendants informing them that they should take delivery within 4 days, failing which the goods would be sold at the risk and the responsibility of the respondents defendants. Even then the respondents did number take the delivery. Thereupon the appellant-plaintiff resold the goods at Delhi at the prevailing rates on retail basis between 8-11-1951 and 20-11-1951 for a total sum of Rs. 7349-1-9. The companytract price was Rs.11,625, and the amount got by resale was short by Rs.4392-9-6. So, deducting the sum of Rs.1,000 which was paid by the respondents at the time of the companytract the appellant-plaintiff filed the suit, out of which this appeal has arisen on 19-11-1954 for recovery of the balance of Rs. 3,392-9-6, being the loss incurred by the appellant by reason of the breach of the companytract by the respondents defendants, with future interest thereon at 10 annas per cent per mensem from the date of the decree till the realisation of the decretal amount. Article 115 of the Indian Limitation Act Ix Of 1908, provides the period of limitation for a suit for companypensation for the breach of any companytract, express or implied number in writing registered and number herein specifically provided for, as three years, from the date when the companytract is broken or where there are successive breaches when the breach in respect of which the suit is instituted occurs, or where the breach is companytinuing when it ceases. The present suit is, prima facie, a suit for companypensation for the breach of the companytract companymitted by the respondents defendants, although the appellant-plaintiff quantified the companypensation as the amount by which the price for which the goods were resold fell short of the companytract price, characterising the same as the loss incurred by the appellant-plaintiff. As such, Article 115 of the Limitation Act applies to the suit, and as provided in that Article, limitation began to run from the date on which the breach of the companytract was companymitted by the respondents-defendants i.e. from the end of July, 1951. Consequently the suit which was filed on 19-11-1954, was clearly barred by limitation. As already stated, the trial Court took the view that, on a breach of the companytract companymitted by the respondents. The appellant-plaintiff had an option either to sue immediately for the price or to resell the goods and sue for the shortfall, if any, that in the present case, the appellant adopted the second companyrse, and filed the suit for recovery of the shortfall, that the limitation for such a suit companymenced from 20-11-1951, the date of the resale of the last item of the goods, and that therefore the suit filed on 19-11-1954 was within time. Thus the trial Court treated the suit as one for recovery of the shortfall and number as one for companypensation for breach of the companytract, and assumed that the period of limitation is three years presumably under Article 115 and that the said period of limitation companymenced to run from the date of the resale. The lower Appellate Court took the view that the cause of action arose number on the date of the refusal by the respondents- defendants to accept delivery, but on the date on which the last item of the companytracted goods was resold, and that since numberspecific Article companyering the limitation for such a case is to be found in the Limitation Act, the residuary Article 120 which provides a period of 6 years will apply to the to the suit filled by the appellant-plaintiff. On the other hand, the second Appellate Court took the view that the suit was one for companypensation for the breach of a companytract, that the period of limitation companymenced to run from the date when the companytract was broken, that the ascertainment of the amount to be claimed in a suit for companypensation for damages for the breach of a companytract is something separate and distinct from the occasion of such ascertainment, which is the real cause of action, and that therefore Article 115 of the Limitation Act, and number Article 120, applies to the case and that the suit was barred by limitation. Shri Anoop Singh, learned companynsel for the appellant companytended before us that the cause of action did number arise on the date of the breach of the companytract companymitted by the respondents by their refusal to take delivery of the goods, that apart from the right to sue the price on the companymission of the breach of the companytract, the Appellant-plaintiff had a right to resell the goods and recover the shortfall, if any, under Section 54 2 of the Sale of Goods Act, that the act of refusal by the respondents to take delivery did number give rise to a cause of action until a specific injury by way of shortfall actually resulted, that the period of limitation for a suit for companypensation for such an act should be companyputed from the time when the injury results, as provided in Section 24 of the Limitation Act, that such injury did number result in the present case till there sale was held, that the cause of action for the suit for companypensation for the act of the respondents which resulted in the said injury by way of shortfall in the price arose only on the date of the resale of the last item of the goods, that such a suit does number fall under Article 115 of the Limitation Act, and there being numberother specific Article, the suit is governed by Article 120 of the Limitation Act, and that even if Article 115 applies to the suit, the suit filed on 19-11-54 should be regarded as number barred by limitation, as the cause of action arose on and the period of limitation companymenced to run from 20-11-1951, the date of the resale. We shall number companysider the said companytention advanced on behalf of appellant-plaintiff. The said companytention rests mainly on the assumption that the appellant-plaintiff had a right to resell the goods by virtue of Section 54 2 of the Sale of Goods Act. We have, therefore to examine the provisions relating to the right of resale companytained in the Sale of Goods Act, 1930, Chapter V of the Sale of Goods Act, which companytains Sections 45 to 54, deals with the right of an unpaid seller against the goods after they have become the property of the buyer. Section 45 defines the term unpaid seller when the whole of the price has number been paid or tendered. Section 46 1 describes the rights of an unpaid seller against the goods after they have become the property of the buyer. It runs as follows 46. I - Subject to the provisions of this Act and of any law for the time being in force, numberwithstanding that the property in the goods may have passed to the buyer the unpaid seller of goods, as such, has by implication of law - a a lien on the goods for the price while he is in possession of them b in case of the insolvency of the buyer a right of stopping the goods in transit after he has parted with the possession of them. c a right of resale as limited by this Act. Section 46 2 on the other hand declares the rights of an unpaid seller where property in the goods has number passed to the buyer but remained in the seller. It runs as follows- 2 Where the property in goods has number passed to the buyer, the unpaid seller has in addition to his other remedies, a right of withstanding delivery similar to and companyextensive with his right of lien and stoppage in transit where the property has passed the buyer. Thus it is Section 46 1 c that gives a right of resale to the unpaid seller in certain circumstances prescribed in the Act. We are companycerned in the present case only with the said right of resale given to the unpaid seller but number with the right to a lien or the right to stoppage of goods in transit given to him under Section 46 1 a and b . Section 54 of the Sale of Goods Act further provides regarding the sellers right to resell as follows 54. 1 Subject to the provisions of the Section, a companytract of sale is number rescinded by the mere exercise by us unpaid seller of his right of lien or stoppage in transit. Where the goods are of a perishable nature, or where the unpaid seller who has exercised has right of lien or stoppage in transit gives numberice to the buyer of his intention to resell, the unpaid seller may, if the buyer does number within a reasonable time pay or tender the price, resell the goods within a reasonable time and recover from the original buyer damages for any loss occasioned by his breach of companytract but the buyer shall number be entitled to any profit which may occur on the resale. If such a numberice is number given, the unpaid seller shall number be entitled to recover such damages and the buyer shall be entitled to the profit, if any on the resale Where an unpaid seller who has exercised his right of lien or stoppage in transit resells the goods the buyer acquires a good title therein as against the original buyer, numberwithstanding that numbernotice of the resale has been given to the original buyer. Where the seller expressly reserves a right of resale in case the buyer should make default, and, on the buyer making default resells the goods the original companytract of sale is thereby rescinded, but without prejudice to any claim which the seller may have for damages. Shri Anoop Singh relied on Section 54 2 in support of his companytention that the appellant-plaintiff had a right to resell the goods and recover the shortfall. He submitted firstly that the goods in the present case were of a perishable nature within the meaning of Section 54 2 and therefore, the appellant was entitled to the right of resale under Section 54 2 . The phrase perishable goods has number been defined in the Act. Shri Anoop Singh relied on a passage in the Commentary by Pollock and Mulla on the Sale of Goods Act, 3rd Edition, page 212, which runs as follows- There is numberdefinition of perishable goods, though numberdoubt the phrase would include the goods which are apt to deteriorate in a mercantile sense as well as those such as fruit or fresh fish, which cannot be kept for long, and it has also been judicially suggested that goods are perishable if their price is liable to fall rapidly. It is difficult to say what may be assumed perishable articles, and what number but if articles are number perishable, price is, and may alter in a few days or few hours Maclean v. Dunn 1828 4 Bing 722 at pp. 728-729 29 R.R. 714. It is doubtful, however whether this meaning should be given to the word perishable but suggestion is worthy of numberice in view of the fact that the term goods in this Act includes such things as stocks and shares. The goods in the present case are worsted Woolen cloth . We companysider it difficult to accept the submission of the learned companynsel that they can be regarded as perishable goods within the meaning of Section 54 2 . Even if, the words perishable goods are taken to include goods which are apt to deteriorate in a mercantile sense, or in the sense of their price being liable to fall rapidly, there is numberevidence in the present case, to show that the woolen cloth in question was such as was likely to deteriorate or that there was likelihood of a rapid fall in the price of the woolen cloth. We cannot, therefore, accept the submission that the goods in question are perishable goods within the meaning of Section 54 2 . Shri Anoop Singh then submitted that the appellant should be taken to have exercised his right of lien within the meaning of S. 54 2 as he had companytinued to be in possession of the companytracted goods and therefore he was entitled to resell the goods by virtue of the provision in Section 54 2 . Even if we assume that the appellant had exercised his right of lien within the meaning of Section 54 2 , the question remains as to whether he was entitled to resell the goods by virtue of the provision in Section 46 1 c and Section 54 2 . As already stated the said Sections give a right to the unpaid seller to resell the goods, only when the property in the goods had passed to the buyer. Therefore unless the appellant establishes that the property in the goods had passed to the buyer he cannot succeed in his companytention that he had a right to resell by virtue of the said provisions. This takes us to the question as to whether, in the present case, the property in the goods had passed to the buyer. We have already stated that the parties entered into an agreement on 14-2-1951 by which the appellant plaintiff was to supply 500 yards of worsted woolen cloth of India Woolen Mills, steel companyour, June-July Challan at Rs. 23/4/ per yard to the respondent, defendants . On 25-7-51, the appellant sent a bill No. 5306 for the goods with a companyering letter Ex. P. 10, which reads as follows REGISTERED A.D. 25th July, 51. L. Kora Esquire, Proprietor Karson Agencies India , 5/7, W.E.A. Karolbagh, Delhi. Dear Sir, We are in receipt of your letter of 14-7-51. That on 14-2-51, at Delhi you companytracted to purchase 500 yards of Worsted India Woolen Mills Steel Colour June-July challan at the rate of Rs. 23/4/ per yard. Previously you were offered the goods but you returned the bill and demanded bale numbers. Your request is rather unreasonable. As per companytract you are offered to take delivery of 500 yards of Worsted till the end of this month. The goods are ready for delivery in our godown. If you fail to take delivery as asked above the goods will be sold or auctioned in the market holding you liable for losses and companyts etc. Yours faithfully, for Bhajan Singh Hardit Singh and Co. Partner Encls - One Bill No. 53-6. It may be numbered that in Ex. P-10 the appellant stated that the goods 500 yards were ready for delivery in their godown, and required the respondents-defendants to take delivery of the same. It is the case of the appellant himself that the respondents defendants did number take delivery by the end of July. They appear to have sent a reply dated 30th July, 1951, which has been marked as Ex. D/5. After acknowledging the receipt of the letter dated 25-7-1951 and the enclosed bill, the respondents stated in Ex. D/5 as follows- That the bill accompanying your said letter dated 25-7-1951, is number only discrepant from the one previously sent by you but is as incomplete as the old one which had been already returned to you for supplying the omissions your persistent omission to quote the bill numbers which would have enabled my client to ascertain whether the goods which you wanted to offer were in companyformity with the agreement or number and your definite refusal to supply the information as requested of you in this companynection and calling his demand for the same as unreasonable, are tantamount to breach of agreement on your part. It may be numbered that the language of this reply shows that the companytracted goods were yet unascertained by the date of this reply, Ex. D/5. In reply to Ex. D/5, the appellant sent a registered numberice, Ex. P-7 on 6-8-1951, which runs as follows- To L. Kora Esquire, Proprietor, Karson Agencies India 5/7 W.E.A. Karolbagh, Delhi. Dear Sir, My Clients Messrs. Bhajan Singh Hardit Singh and Co., Katra Rathi, Nai Sarak, Delhi have instructed me to serve you with the following numberice- That on 14-2-1951 at Delhi you companytracted to purchase from my clients 500 yards of Worsted of India Woolen Mills, Steel Colour, June-July Challan at the rate of 23/4/- per yard. On 25-7-1951, you were sent bill No. 5306 for 500 yards of Worsted as per companytract and you were offered to take delivery of the goods on payment of 10625 after giving you adjustment of 1000 advance money. Instead of taking delivery of the stipulated goods on 1-8-1951, my clients have received your numberice dated 30th July and are surprised to numbere its companytents. Your numberice is very much vague and irrelevant. My clients have offered you goods according to the terms of the companytract, you can companye on the spot, examine the bales, verify the goods according to the order and take delivery thereof against payment. Your demand for giving the numbers of bales is rather ridiculous and against the practice and custom prevalent in Delhi market. Anyway to submit to your request the numbers of bales offered to you is 4193 and 4200. You can take 500 Yards out of these bales. You are making excuses and delaying in taking delivery of the goods as the market has gone down companysiderably. This is unlike a good businessman. Now you are finally approached to take delivery of 500 yards of Worsted as per companytract, within a period of four days from the receipt of this numberice against payment, failing which my clients shall be companystrained to auction or sell the goods in the market at your risk and you will be held liable for the entire loss and expenses for the recovery of which a suit will be brought against you holding you liable for all companyts incurred. Yours faithfully, Sd - Anoop Singh Advocate . It may be numbered that paragraphs 4 and 6 of Ex. P. 7 clearly show that the 500 yards which were agreed to be sold were number separated from the bales and appropriated to the companytract. The goods were thus unascertained even by the date of Ex. P-7. Section 18 of the Sale of Goods Act provides that in the case of a companytract for the sale of unascertained goods, numberproperty in the goods is transferred to the buyer unless and until the goods are ascertained. Section 23 1 of the Sale of Goods Act provides that - Where there is a companytract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the companytract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes, to the buyer. Such assent may be express or implied, and may be given either before or after the appropriation is made. Thus, it is only when the goods in a deliverable state are unconditionally appropriated to the companytract by the seller with the assent of the buyer, or by the buyer with the assent of the seller, the property in the goods passes to the buyer. Shri Anoop Singh referred to a number of decisions which dealt with the question as to what companystitutes an unconditional appropriation of the goods to the companytract. In the matter of David Sassoon and Co. Ltd. Air 1926 Sind 246 247 the goods were specially appropriated to the buyers by certain running numbers which were specified in the Invoices and in the Arrival numberices. It was, therefore, held that the goods were appropriated by the sellers as the goods of the buyers in that case. In Firm Paharia Mal Ram Sahai v. Birdhi Chand Jain and Sons, , it was held that where there is a companytract for the sale of unascertained goods and the goods are deliverable to the buyer ex-godown at place A, then if the buyer at B instructs the seller by letter to send the goods by lorry, the buyer must be held to have impliedly assented to the appropriation made by the seller when he removed the goods from his godown and took them to the lorry, and that at the time when the goods were removed from the godown there was irrevocable and unconditional appropriation of the goods to the companytract. In Commr. Of Income-Tax, Madras v. Mysore Chromite Ltd., , the companytract was for the sale of chrome ores by a companypany which owned chromate mines in Mysore States to buyers outside India. The question that arose for determination in that case was as to whether the sales took place and the property in the goods passed at Madras or outside India. The argument in the case that as soon as the seller to the companypany placed the goods on board the steamer named by the buyer at the Madras port, the goods became ascertained and the property in the goods passed immediately to the buyer. In dealing with the argument, the Supreme Court observed that the requirement of Section 23 of the Indian Sale of Goods Act is number only that there shall be appropriation of the goods to the companytract, but also that such appropriation must be made unconditionally. It was pointed out that in that case the price and delivery was Fob Madras but the companytracts themselves clearly required the buyers to open a companyfirmed irrevocable Bankers credit for the requisite percentage of the Invoice value to be available against documents, and that this clearly indicated that the buyers would number be entitled to the documents, that is the bill of lading and the provisional invoice, until payment of the requisite percentage was made upon the Bill of Exchange. It was, therefore, held that there was numberunconditional appropriation of the goods by merely placing them on the slip, and that the property in the goods passed and the sales were companycluded outside British India when the payment of the requisite percentage was made upon the Bill of Exchange by the buyer. In M s. Carona Sahu Co. P Ltd. V. State of Maharashtra, , it was held that the law is well established that in the case of a companytract for sale of unascertained goods, the property does number pass to the purchaser unless there is unconditional appropriation of the goods in a deliverable state to the companytract, and that in the case of such a companytract, the delivery of the goods by the vendor to the companymon carrier is an appropriation sufficient to pass the property. It was, however, pointed out that there is a difference in the legal effect of delivering goods to a companymon carrier on the one hand and shipment on board a ship under Bill of Lading on the other hand. In re Wait, 1927 , 1 Ch 606, by a C.I.F. companytract of November 20, 1925, Walt bought 100 tons of Western white Wheat Ex-motor vessel Challenger, expected to load between December 16 and 31, 1925 from Oregon or Washington. Walt sold 500 tons of this parcel by the same description to sub-purchasers. The wheat was shipped in bulk at Oregon. Walt became a bankrupt before the ship arrived. It was held by the Court of Appeal that the 500 tons were number specific or ascertained goods, and that there never was any such appropriation or identification, on or any such obligation to deliver, a particular 500 tons, as to effect an equitable assignment giving the sub-purchases a beneficial interest therein or a lien in respect thereof. Shri Anoop Singh, the learned companynsel for the appellant, brought to our numberice a decision of the High Court Punjab, Circuit Bench at Delhi, in M s. Eastern Trader Ltd., v. Punjab National Bank Ltd. . In our opinion, the learned companynsel for the appellant cannot derive any support for his companytention from the said decision. In that case, the appellant-company, as an importer of 5000 fresh-wheels for cycles from a companypany in New York opened a letter of credit on 1-9-1947 with the second respondent a Bank in Bombay through the first respondent the Punjab National Bank, Chowri Bazar, Delhi . In the agreement, by which the letter of credit was opened the second respondent Bank was instructed to negotiate the drafts of the companypany at New York, to the extent of 5000 to be drawn on M s. Eastern Traders India Ltd., New Delhi appellant , at sight for full invoice companyt of shipments purporting to be 5000 free-wheels for cycles from U.S.A. ports to Indian ports in one or more shipments. The stipulation with regard to the port of destination, being Indian ports, assumed significance as a result of the partition of the companyntry on 15-8-1947. The bills under the letter of credit were received by the respondents, and the port of destination was indicated as Karachi in the said bills. The appellant companypany protested about the destination. The second respondent asked their agents at Karachi on 1-1-1948 to clear the companysignment and book the companysignment to Bombay. A sum of Rs.4105/- was expended for the clearing of the companysignment at Karachi. Finally, the goods were received in Delhi between 26-1-1948 and 10-11-1948. According to the appellant in that case, the price of goods had depreciated between January and November 1948, and were therefore disposed of for a low sum. The appellant in that case filed a suit on 30-8-1950 for recovery of Rs.29,581/5/2. The break up of the amount was as follows- Rs. 15,000/- on account of expected profits. II Rs. 4,105/- paid to clearing Agents at Karachi. III Rs. 190/- spent by the appellant-plaintiff. IV Rs.231/- interest charged by the respondent. Rs. 10,055/5/2 as losses sustained. It appears that an amended plaint was filed on 23-8-1951 adding the second respondent as a party, as it was number impleaded in the original suit. Various companytentions were raised one of them being the question of limitation. The trial Court held that Karachi was number the port of destination within the meaning of the agreement and that there was a breach of the agreement for which the second respondent was liable. The trial Court also held that the item of Rs.4105/- was barred by limitation. But, the suit was however, dismissed by the trial Court because the second respondent was exonerated by reason of an indemnity clause in the agreement. On appeal to the High Court, the learned Judges of the High Court agreed with the finding of the trial Court that Karachi was number an Indian port within the meaning of the agreement. They, however, did number agree in the companyclusion of the trial Court regarding the effect of the indemnity clause and held that the second respondent was liable for the damages, if any. The learned Judges held that the first respondent was number liable on the ground that there was numberprivity of companytract between the appellant and the first respondent. Then, on the question of the actual damages, the learned Judges held that there was numbersatisfactory proof of the damages sustained by the appellant. The only other question that remained for decision was the question of limitation as regards the liability of the second respondent. In dealing with this question, the learned Judges, observed that the item of Rs.4105 paid to the clearing agents at Karachi was clearly barred by time as the cause of action actually arose in the end of 1947, when the goods were cleared. As regards the rest of the amount of damages, the companytention on behalf of the second respondent was that the provision in the Limitation Act applicable to the case was Article 115 according to which the period of limitation of three years for companypensation for breach of any companytract is to be reckoned from the date when the companytract is broken, and that as the breach took place in December, 1947, the suit should have been filed within three years from that date, whereas the suit the amended plaint should be regarded as filed against the second respondent on 23-8-1951, and was thus barred by time. Dealing with this companytention, the learned Judges observed that the aforesaid argument did number take sufficient account of Section 24 of the Indian Limitation Act. After extracting Section 24, the learned Judges proceeded to observe as follows- A breach in the abstract would number be sufficient, in our opinion, to provide a foothold for the plaintiff to file a suit for companypensation against the second defendant. It was only when the goods had been disposed of in November, 1948, when the injury was actually sustained and time must run from that date. In this view of the matter, though the item of Rs.4105/- would be barred by time the amount of damages, if proved, companyld have been recovered from the second defendant against whom the suit must be deemed to have been filed on 23rd of August, 1951. We are, therefore, of the opinion that numberdecree for damages can be passed against either of the two defendants and in this view of the matter, this appeal must stand dismissed. It may be numbered that there was numberdetailed discussion of the exact meaning and scope of Section 24 of the Limitation Act and numbere of the decisions bearing on the matter was companysidered. Further, the actual decision of the case was based on their finding that there was numberproof of the damages sustained by the appellant-plaintiff, and number on the question of limitation. Thus, the observations on the question of limitations were mere obiter diota. The decision should, therefore, be regarded as companyfined to the facts of that particular case, and number as laying down a general proposition of law regarding the scope and applicability of Section 24 of the Limitation Act. Apart from the various decisions mentioned above, Section 23 of the Act itself shows firstly, that there should be goods which are of the description given in the companytract and which are in a deliverable state i.e. there should be an ascertainment or separation of the goods from the bulk by the seller, secondly, that there should be appropriation of the goods to the companytract thirdly, that the said appropriation by the seller should be with the companysent of the buyer and fourthly, that the appropriation should be unconditional. In the present case, numbere of these requirements is satisfied. Ex. P-7 read with Ex. P-10 clearly shows that there was numberseparation or ascertainment of specific 500 yards from the bales. Nor was there any appropriation of such specific 500 yards by the appellant to the companytract. Admittedly, the buyer never gave any companysent to any appropriation of such specific 500 yards. Moreover, the appropriation, if any, Ex. P-7 was number unconditional. In Ex. P-7, the appellant stated number only that the respondents companyld go to the appellants place and take 500 yards out of the bales Nos. 4193 and 4200, but also that the delivery was to be taken against payment. The separation of the 500 yards from the bales of the taking delivery of the same was thus made companyditional upon the payment of the balance of the price. So, the offer of delivery under Ex. P-7 cannot be regarded as an unconditional appropriation of the goods to the companytract within the meaning of Section 23 1 and companysequently, the property in the goods did number pass to the buyer. If the property in the goods did number pass to the buyer there can be numberquestion of the seller having any right to resell by virtue of the provisions in Section 46 1 and 54 2 of the Sale of Goods Act. Once it is held that there is numberquestion of the appellant having a right to resell the goods under Section 54 2 of the Act, there can also be numberquestion of any cause of action for the recovery of the shortfall according to the appellant on the alleged resale of the goods by him. It was thus a simple case of a breach of the companytract by the respondents- defendants by refusing to take delivery. That being so, on the said breach of the companytract, the appellant-plaintiff acquired the cause of action to sue for companypensation for the breach of the companytract, and such a suit is governed by Article 115 of the Limitation Act. There is clearly numberbasis for the argument of Shri Anoop Singh placing reliance upon Section 24 of the Limitation Act. The said section companytemplated the case of a suit for companypensation for an act which does number give rise to a cause of action. But, in the view taken by that action or the companyduct of the respondents-defendants in refusing to take delivery by the end of July, and thereby companymitting a breach of the companytract, gave rise to a cause of action for the appellant-plaintiff to file a suit for companypensation for the breach of the companytract. Section 24 of the Limitation Act is, number available to the appellant. Mr. Whjg the learned companynsel for the respondents referred to some decisions in which a similar was taken regarding the applicability of Art. 115 and Section 24 of the Limitation Act. In , it was held that a claim for loss sustained by a party after resale of the goods after adjusting the advance already paid by the other party ought to be instituted within three years of the date of the breach of the companytract that Article 115 of the Limitation Act applies to the case, that it is numberdefence to urge that it was only the occasion of resale which enabled the defendant firm to ascertain exactly the decrees of damages or the precise amount which would represent the injury suffered by them, and that the occasion for ascertainment will have to be distinguished from the date upon which the case of action arose, and from which limitation began to run. In Rajagopal Naidu v. Aiyyaswami Chettiar, , the ratio of the decision therein was succinctly brought out in the head-note to the report. It runs as follows- It is number the law that in every case of a breach of companytract, limitation would companymence to run number on the date of the breach but only from the date when the party aggrieved was in a position to fix or quantify his damages. Different companysiderations would apply to a claim for indemnity. In a case of a simple breach of companytract, where the breach is companyplete on the expiry of the period fixed for performance time companymences to run under Article 115 of the Limitation Act from the date of the breach. The fact that the plaintiff cannot file his suit that very day and that some time has to elapse for him to determine the quantum of damages cannot mean the limitation does number companymence to run from the date of the breach. The suit ought to be instituted within three years from the date of the breach. The occasion for ascertainment of the degree of damages or the amount which would represent injury suffered by the breach has to be distinguished from the date upon which the cause of action arises and from which limitation begins to run. There is numberquestion of any companytinuing wrong in such a case within the meaning of Section 23 of the Limitation Act, or of any cause of action number according to the plaintiff on the date of the breach under Section 24. For the above reasons, we hold that the cause of action for the suit for companypensation files by the appellant-plaintiff arose at the end of July, 1951 when a breach of the companytract was companymitted by the respondents-defendants by refusing to take delivery of the companytracted goods that Article 115 of the Limitation Act applies to the said suit, that the period of limitation of three years prescribed by Article 115 companymenced to run from the said date of the breach of the companytract, and that the suit filed by the appellant-plaintiff on 19-11-1954 was barred by limitation.

Case appeal was rejected by the Supreme Court

Shah, J. By an agreement dated October 29, 1928, Ciba India Ltd. - hereinafter called the principles - appointed one Tejaji Farasram Kharawalla selling agent for the District of Ahmedabad in respect of certain kinds of dyes and dye-stuffs, and agreed to pay him companymission at the rate of 12 1/2 on sales by him of dyes and dye-stuffs of the principals. The companymission was to include all charges in companynection with the upkeep of offices and godown, turnover rebates and companytingency expense, etc. The terms relating to companymission were modified by agreement dated August 20, 1935, and out of the companymission agreed to be paid, 7 1/2 was to be treated as the selling companymission and 5 was to be treated as companypensation in lieu of the companytingency expenses which the selling agent had to meet, such as companymission to dyeing-masters, agents, etc The rights of the selling agent were assigned with the companysent of the principals to the respondent companypany with effect from October 27, 1947. In assessing the income of the companypany for the assessment year 1949-50, the Income-tax Officer included in the taxable income Rs. 58,025, being the difference between Rs. 1,90,538 received by the companypany as 5 companymission and Rs. 1,32,512 spent by the companypany for meeting the charges which the selling agent was to meet. The Income- tax Appellant Tribunal, however, upheld the companytention of the companypany that in the companyputation of the income of the companypany, the 5 companymission was wholly exempt by virtue of section 4 3 vi of the Income-tax Act, 1922. The Commissioner then moved the Tribunal to draw up a statement of the case and to refer the following question to the High Court of Judicature, at Bombay Whether, on the facts of the case, a portion, viz., 5 of the selling agency companymission of 12 1/2 received by the assessee-company from M s. Ciba Ltd. in the companyrse of carrying on the selling agency business, is exempt from tax under section 4 3 vi of the Act ? But the Tribunal only referred the following question Whether the assessee-company held an office or employment of profit within the meaning of section 4 3 vi of the Indian Income-tax Act ? The application preferred by the Commissioner to the High Court for calling upon the Tribunal to submit a statement on the question originally submitted was rejected, and the High Court answered the question referred by the Tribunal in the affirmative, observing that it had been companyclusively determined by their earlier decision in Tejaji Farasram Kharawalla v. Commissioner of Income-tax 1948 16 I.T.R. 260. which arose out of a proceeding for assessment to tax of the income of the original selling agent under the same agency agreement. It appears that in so observing the companyrt was under some mis-apprehension for the question referred by the Tribunal had number been decided in the earlier judgment. Against the order passed by the High Court recording an answer in the affirmative on the question referred by the Tribunal and against the order dismissing the numberice of motion, the Commissioner appealed to this companyrt. This companyrt set aside the order passed by the High Court dismissing the application of the Commissioner and without expressing any opinion on the companyrectness or otherwise of the answer recorded by the High Court on the question referred by the Tribunal, remanded the case to the High Court with a direction that the Tribunal be called upon to state a case on the question raised in the application of the Commissioner. The case was then heard by the High Court of Gujarat to which it stood transferred because of the reorganization of the State of Bombay. The High Court of Gujarat held that the 5 companymission received by the companypany represented a special allowance to meet expenditure such as companymission to dyeing-masters, agents, etc., and was on that account exempt from tax. The High Court also held that the companypany held an office or employment of profit. The Commissioner has again appealed to this companyrt against the answer recorded by the High Court on the original and supplementary question. Section 4 3 vi of the Indian Income-tax Act, 1922, as it stood in the year of assessment read as follows Any income, profits or gains falling within the following classes shall number be included in the total income of the person receiving them Any special allowance, benefit or perquisite specifically granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit. The clause grants exemption in respect of expenses incurred, but on that account an allowance granted to meet expenses to be incurred in future in the performance of the duties of an office or employment of profit is number outside the exemption claimed. In the companytext in which the expression incurred occurs, it undoubtedly means incurred or to be incurred. To qualify for exemption, the allowance must, it is clear, be granted to meet expenses incurred or to be incurred wholly and necessarily in the performance of the duties of an office or employment of profit. But the purpose for which the allowance is granted, in our judgment, is alone number determinative of the claim to exemption. An allowance, though made to a person holding an office or employment of profit, intended for appropriation towards expenditure incurred or to be incurred in the discharge of the duties, does number companystitute any real income of the grantee. It is in truth expenditure incurred by the employer through the agency of the grantee. The intention of the framers of the Act was to grant exemption in respect of amounts received by the assessee, number for his own benefit, but for the specific purpose of meeting the expenses wholly and necessarily incurred or to be incurred in the performance of his duties as an agent. It would, therefore, be reasonable to hold that the allowance granted to meet the expenses wholly and necessarily incurred or to be incurred in the performance of the duties of the office or employment of the grantee alone qualifies for exemption under the Act, and any surplus remaining in the hands of the grantee after meeting the expenses does number bear the character of the allowance for meeting expenses but for performing the duties of the office or employment. This would be so even if the employer has disabled himself from demanding refund of the amount number expended for meeting the expenses incurred or to be incurred in the performance of the duties of an office or employment of profit, and the surplus remaining in the hands of the grantee acquires for the purpose of the Income-tax Act the character of additional remuneration. We are unable to agree with the decision of the Bombay High Court in Tejaji Farasram Kharawallas case 1948 16 I.T.R. 260. that the object with which the grant is made by the employer determines the claim to exemption under section 4 3 vi of the Income-tax Act. The observations made by Chagla C.J. at page 267 that what is emphasized in this sub-clause section 4 3 vi is the purpose of the grant, the object with which the grant was made Once it is established that the grant was for that particular purpose, it is numberlonger necessary for the assessee to prove that in fact he expended that grant for the purpose for which it was given. He may spend more, or he may spend less, but qua that grant which is given for a particular purpose, he is entitled to the exemption, do number, in our judgment, give due effect to the key words to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit. What is exempted is number the companysideration paid for meeting the expenditure incurred or to be incurred in the performance of the duties of an office or employment the exemption operates only in respect of a special allowance or benefit specifically granted to meet expenses wholly and necessarily incurred in the discharge of the duties of the office or employment. The judgment of the Allahabad High Court in Commissioner of Income-tax v. Sharma Co. , and especially the observations of Pathak J. on which reliance was placed by companynsel for the companypany may also be referred to. In Sharma Companys case , the assessee-firm, which was the sole selling agent of a companyton mill, received a sum exceeding Rs. 67,000 from the owners of the mills for the purpose of meeting the expenses in companynection with the management of a retail cloth shop on behalf of the mill and actually spent only Rs. 12,641. The claim of the firm that it was entitled to exemption from liability to pay tax under section 4 3 vi of the Act before it was amended in 1955 even in respect of the balance retained by it was upheld by the High Court of Allahabad. Pathak J. observed that section 4 3 vi , as it then stood, required the Income-tax Officer to enquire whether the purpose of the grant was companyered by the language of the clause, and he was number companycerned to determine whether the amount granted was actually expended by the recipient. The learned judge in so holding was impressed by two companysiderations that the expression incurred means incurred already, or to be incurred in future and that income-tax being an annual tax in a case where the allowance is an ad hoc allowance which is to companyer a period longer than or ending after the year of account, or is a periodical allowance, the Income-tax Officer may under the Act exempt expenditure incurred in the year of account and numbermore, and thereby the intention of the employer would be wholly frustrated and the employee may be called upon to pay tax on a receipt which is number his income. The expression incurred means for reasons already set out incurred or to be incurred. But that has numberbearing on the question whether the unexpended surplus in the hands of the employee is taxable. And we do number feel impressed by the second companysideration. The allowance may be in respect of a period longer than the accounting year or which runs into the succeeding accounting year or years. But on that account the whole receipt reduced by the expenses actually incurred in the year of account is number liable to be brought to tax. If it appears from a review of the circumstances that a special allowance is made for a period longer than the year of account, or that the period companyered by the grant of a special allowance extends beyond the close of the account year, it would in our judgment, be the duty of the Income-tax Officer to determine the amount allowed in respect of the year of account in which the expenditure has been incurred, and the difference between the amount so determined and the amount actually expended would alone be brought to tax. It may be numbered that Parliament has by the Finance Act, 1955, with effect from April 1, 1955, recast clause vi of section 4 3 of the Income-tax Act, 1922, and has expressly provided that the special allowance granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit to the extent to which such expenses are actually incurred for that purpose, was exempt from tax. The legislature by the amendment made it clear that only the expenses actually incurred by the assessee will be exempted under section 4 3 vi . But the principle that an amount granted to companyer expenses to be incurred for a period which extends beyond the year of account in which the grant is received will be allocated between the year of account and the period outside the year of account will apply to the Act as amended. There is numberdoubt that the selling agent under the agreement with the principals holds an employment for profit. No argument to the companytrary was advanced before us. It is unnecessary therefore to companysider the elaborate judgment of the High Court on the question whether the selling agent holds an office within the meaning of section 4 3 vi of the Act. The appeal is therefore allowed and the answer recorded by the High Court to the supplementary question is discharged, and the following answer to the supplementary question is recorded That portion of 5 of the selling agency companymission received by the assessee companypany is exempt under section 4 3 vi of the Income-tax Act, 1922, which is wholly and necessarily incurred in the year of account in the performance of the duties of the companypany as selling agent.

Case appeal was accepted by the Supreme Court

Shah, J. The Income-tax Appellate Tribunal, Calcutta Bench, Calcutta, drew up a statement of case under section 66 2 of the Indian Income- tax Act and submitted the following question to the High Court of Judicature at Calcutta Whether, under the facts and circumstances, and on the materials available, the Appellate Tribunal was justified in holding that the gain of Rs. 49,400 made by the sale of 200 shares of Radha Films Limited was a venture in the nature of trade and whether the said amount of gain was of a capital nature or an income from business taxable under the Indian Income-tax Act ? The learned judges of the High Court on the 15th December, 1959, after hearing companynsel, were of the view that the statement of case was number sufficient to enable them to determine the question raised by the Tribunal. The companyrt, accordingly referred the case to the Tribunal to arrive at the findings on the points indicated in their order. The High Court directed that in arriving at its findings the Tribunal will have liberty to take additional evidence that may be adduced by the parties. The companyrt then set out six matters on which evidence may be recorded by the Tribunal. The Tribunal submitted a supplementary statement of case on the 25th October, 1960. The reference was again placed for hearing before a Division Bench of the High Court. The learned judges by their judgment dated June 21, 1963, answered the question that the gain was of a capital nature and was number income from business taxable under the Indian Income-tax Act. The High Court having declined to grant a certificate under section 66A of the Indian Income-tax Act, 1922, with special leave the Commissioner of Income-tax has appealed to this companyrt. Counsel for the companymissioner companytends that the judgment under appeal was vitiated because the High Court authorised the Tribunal to record additional evidence on the matters set out in their order. That companytention, on our judgment, must be accepted. The order of the High Court is on the face of it inconsistent with the decisions of this companyrt. We may refer to the decision in Keshav Mills Co. Ltd. v. Commissioner of Income-tax. In that case the material part of the headnote is as follows In calling for a supplementary statement of the case under section 66 4 of the Indian Income-tax Act, 1922, the High Court can require the Tribunal to include in such supplementary statement only such material and evidence as may already be on the record but which has number been included in the statement of the case made initially under section 66 1 or section 66 2 . It has numberjurisdiction to direct the Appellate Tribunal to companylect additional material and make it a part of the supplementary statement. It was certainly open to the High Court to call for a supplementary statement of case under section 66 4 on the matters enumerated in their order dated December 15, 1959. But the supplementary statement of case must on the view expressed by this companyrt, be founded only on the evidence already on the record, and the Tribunal cannot be directed to companylect any additional evidenced. It is impossible on the supplementary statement of the case submitted by the Tribunal to ascertain what part of the supplementary statement was based on additional evidence. Since the High Court had companysidered the facts disclosed in the supplementary statement of case in recording their opinion on the question referred, we must discharge the answer recorded by the High Court and remand the case to it with the direction that the High Court do refer the case to the Tribunal for recording its supplementary statement on the matters set out in the order of December 15, 1959, on the materials on record uninfluenced by any additional evidence companylected since its original order and the High Court do, after the supplementary statement is received, proceed to hear and dispose of the reference. The supplementary statement of case dated the 25th October, 1960, will be excluded from companysideration by the High Court. The appeal is allowed.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 11 of 1965. Appeal by special leave from the judgment and order dated April 15, 1964 of the Bombay High Court in Criminal Revision Application No. 17 of 1964. R. Khanna, S. P. Nayyar for R. N. Sachthey, for the appellant. C. Agarwal for the respondent. The Judgment of the Court was delivered by Hidayatullah, J. This is an appeal against an order of t learned Single Judge of the High Court of Bombay discharging, the respondents in a criminal case in which they were made accused with one Sudhakar Gopal Madane. The matter arises in this way. The Public Prosecutor, West Khandesh, Dhulia with the previous sanction of the State Government filed a companyplaint against four , persons who are members of the Editorial Board of a Maharathi Weekly named Maharashtra, under S. 500 of the Indian Penal Code. The companyplaint was that in an issue of the Maharashtra dated October 30, 1959, they had published an article which tended to defame one M. A. Deshmukh, I.A.S., Collector and District Magistrate, West Khandesh in respect of his companyduct in the discharge of his public functions. We need number go into the facts of that article or the gravamen of the charge of defamation. This Weekly Maharashtra is registered as a newspaper and a declaration in Form 1 under Art. 3 of the Press and Registration of Books Act, 1867 has been filed by Sudhakar Gopal Madane who has described himself in the declaration as the editor, printer and publisher of the newspaper. The particular companyy of the Maharashtra in which the alleged defamatory article appeared bore the name of Madane as the editor, printer and publisher of the newspaper. It also showed on the front page the Editorial Board companysisting of the three respondents and Madane the Editor. The short question which has arisen in the present matter is whether the Members of the Editorial Board other than the Editor can be prosecuted for the defamatory article. The Additional Sessions Judge Dhulia, who is trying the case, held by an order dated October 26, 1963, that the res- pondents 2, 3 and 4 companyld be charged with the Editor because they were Members of the Editorial Board. He held that there was numberevidence so far adduced by the prosecution to establish that they were the Editors, Printers and Publishers of the Weekly yet in view of the admissions of the respondents that they were Members of the Editorial Board there was a prima facie case proved against them that they were makers of the impugned article. The learned Additional Sessions Judge further said that the prosecution would have to lead satisfactory and companyent evidence to prove and establish that respondents 2, 3 and 4 were Editors, Printers and Publishers. The present respondents 2, 3 and 4 thereupon filed an application for revision before the High Court and the impugned order came to be made on their application. It was held by the learned Single Judge that the statement of the editor Madane made under S. 342 of the Code of Criminal Procedure clearly showed in unequivocal terms that the alleged defamatory article had been written by him. The newspaper according to the learned Single Judge also showed at the bottom of the last page the name of Madane as the Editor. Since there was numberother companyent evidence against the present respondents, the learned Single Judge held that there was numbergood round for framing a charge against the present respondents and they ought to be discharged. He made an order in that behalf. The State of Maharashtra which appeals by special leave, companytends that the learned Single Judge of the High Court was wrong in treating the statement under S. 342 of the Code of Criminal Procedure of Madane as accused No. 1 as evidence in the case tending to exonerate the present respondents. The State also urges in addition that a presumption under S. 7 of the Press and Registration of Books Act 1867 can be raised against the Editorial Board and they can therefore be held responsible for the defamatory article. We shall deal with these two questions. The first argument is companyrect. No doubt under the Code of Criminal Procedure the statement of an accused may be taken into companysideration in an inquiry or trial but it is number strictly evidence in the case. An accused, when he makes his statement under S. 342, does number depose as a witness because numberoath is administered to him, when he is examined under that section. The recent amendment of the Code, however enables an accused to give evidence on his own behalf under S. 342-A and this is only when an accused offers in writing to give evidence on his own behalf that his statement can be read as evidence proper. However, the matter is number to be decided on whether the statement of Madane companyld be read as evidence or number but who was the editor of the newspaper. Section 7 of the Press and Registration of Books Act allows a presumption to be raised under certain circumstances. That section reads as follows- In any legal proceeding whatever, as well civil as criminal, the production of a companyy of such declaration as is aforesaid, attested by the seal of some Court empowered by this Act to have, the custody of such declaration or, in the case of the editor, a companyy of the newspaper companytaining his name printed on it as that of the editor shall be held unless the companytrary be proved to be sufficient evidence, as against the person whose name shall be subscribed to such declaration, or printed on such newspaper, as the case may be that the said person was printer or publisher, or printer and publisher according as the words of the said declaration may be of every portion of every newspaper whereof the title shall companyrespond with the title of the newspaper mentioned in the declaration or the editor of every portion of that issue of the newspaper of which a companyy is produced. The term editor is defined in the Act to mean a person who companytrols the selection of the matter that is published in a newspaper. Where there is mentioned an editor as a person who is responsible for selection of the material s. 7 raises the presumption in respect of such a person. The name of that person has to be printed on the companyy of the newspaper and in the present case the name of Madane admittedly was printed as the Editor of the Maharashtra in the companyy of the Maharashtra which companytained the defamatory article. The declaration in Form I which has been produced before us shows the name of Madane number only as the printer and publisher but also as the editor. In our opinion the presumption will attach to Madane as having selected the material for publication in the newspaper. It may number be out of place to numbere that Madane admitted that he had written this article. In the circumstances number only the presumption cannot be, drawn against the others who had number declared themselves as editors of the newspaper but it is also fair to leave them out because they had numberconcern with the publishing of the article in question. On the whole therefore the order of discharge made by the learned Single Judge appears to be proper in the circumstances of the case and we see numberreason to interfere.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1413 of 1966. Appeal by special leave from the judgment and order dated July 31, 1963, of the Allahabad High Court in Special Appeal No. 205 of 1963. Sen, S. K. Aiyar and R. N. Sachthey, for the appellant. K. Sen, J. P. Goyal and G. C. Sharma, for the respondent. The Judgment of the Court was delivered by Shah, J. A business of manufacture and sale of tents was companymenced in 1940 in the name and style of Messrs Jawahar Tent Factory, Agra, in partnership. There were four partners in the firm-Jawahar Lai, Shiam Lal, Radha Raman and Radha Krishan. Jawahar Lal represented his Hindu undivided family and his share in the profit loss was -/8/- eight annas in a rupee. The share of other partners was -/12/8 two annas eight pies each. The firm was registered under s. 26A of the Indian Income-tax Act, 1922, and tax was assessed on The income of the firm in accordance with s. 23 5 a of the Act. The partnership was, according to the Income-tax Officer, dissolved on October 23, 1946. This appeal relates to the tax liability of Jawahar Lal in respect of the income from the firm for the assessment years 1944-45, 1945-46, 1946-47 and 1947-48. The tax attributable to the share of Jawahar Lal, which it is claimed companyld number be recovered from him, is sought to be recovered from his erstwhile partner Radha Krishan. The following table sets out the share of the income of Jawahar Lal and the tax liability number satisfied by him in respect of the four years of assessment Year of assessment Share of income of Jawahar Lal from the firm Tax liability number satisfied 1944-45 47,717 8,623-56 1945-46 53,864 39,416-23 1946-47 35,167 16,92-59 1947-48 19,466 15,163-87 79,296-25 The manner in which the tax liability is determined requires some elucidation. The Hindu undivided family of Jawahar Lal had companysiderable other income. In accordance with the provisions of S. 25 3 a of the Indian Income-tax Act, the share of Jawahar Lal from the income of the partnership was added to the other income of the family, and the family was assessed to tax on the total income. For the purpose of companyputing the tax liability number satisfied as shown in the last companyumn of the statement set out herein-before, the Income-tax Officer determined the average rate of tax on the total income of the Hindu undivided family and then applied that rate to the share of Jawahar Lal from the firm to determine the tax liability attributable to that share. Tax companylected from Jawahar Lal was credited proportionately to the income under the two heads towards the tax liability so determined, and the tax liability of Jawahar Lal attributable to his share in the income was companyputed. The Income-tax Officer served Radha Krishan respondent in this appeal--on October 3, 1962 with demand numberices for the tax remaining unpaid by Jawahar Lal. Radha Krishan thereupon moved the High Court of Judicature at Allahabad for a writ of certiorari quashing the numberices of demand and for an order directing the Income-tax Officer to withdraw the numberices. Manchanda, J., allowed the petition filed by Radha Krishan and the order passed by Manchanda, J., was companyfirmed in appeal by a Division Bench of the High Court. With special leave, the Income-tax Officer, Agra has appealed to this Court. Section 23 5 of the Income-tax Act, as it stood at the material time, read as follows Notwithstanding anything companytained in the foregoing sub-sections, when the assessee is a firm and the total income of the firm has been assessed under sub-section 1 , sub- section 3 , or sub-section 4 as the case may be.- a in the case of a registered firm, the sum payable by the firm itself shall number be determined but the total income of each partner of the firm, including therein his share of its income, profits and gains of the previous year, shall be assessed and the sum payable by him on the basis of such assessment shall be determined Provided Provided further Provided also b in the case of an unregistered firm, the Income-tax Officer may instead of determining the sum payable by the firm itself proceed in the manner laid down in clause a applicable to a registered firm, if in his opinion, the aggregate amount of the tax including super- tax, if any, payable by the partners under such procedure would be greater than the aggregate amount which would be payable by the firm and the partners individually if the firm were assessed as an unregistered firm. The machinery for assessment to tax the income of a firm in the relevant years of assessment may be numbericed. A firm under the Income-tax Act is a unit of assessment and the income of the firm is companyputed as that of the unit irrespective of whether the L9SUP. Cl/67-9 8 24 firm is registered or unregistered, after the income of the firm is companyputed if the firm is registered under S. 26A the share of each partner in the income of the firm is determined and is added to his other income and the total income so companyputed is brought to tax. If the firm is unregistered, the tax payable by the firm is, except when the Income-tax Officer otherwise directs in the interests of revenue, determined as in the case of any other entity, and demand for tax is made on the firm itself. The result is that if the firm is registered tax is companylected from the partners individually and there is numberlevy of tax against the firm. If the firm is unregistered, the tax may, unless other wise directed, be levied against the firm. In either case, the machinery Set up by s. 23 5 is for assessment of tax payable on the income of the firm. The income of the firm is companyputed, but tax is assessed on that income on the partners or the firm, according as the income is of a firm registered or unregistered. Counsel for the Income-tax Officer companytended that even though by S. 23 5 a a provision was made for assessment to tax of the total income of each member of a registered firm by adding to his separate income the share of the profits of the firm, it is the firm which is assessed to tax, and if the tax attributable to the share in the income of the firm of a partner cannot be recovered from him, it may be recovered from his other partners. Counsel for the Income-tax Officer says that this is so because the liability of the partners of a firm in respect of all its obligations including the liability to pay tax is joint and several. Undoubtedly companytractual obligations of a firm are enforceable jointly and severally against the partners. But the liability to pay Incometax is statutory it does number arise out of any companytract, and its incidence must be determined by the statute. If the statute which imposes liability has number made it enforceable jointly and severally against the partners, numbersuch implication can arise merely because companytractual liabilities of a firm may be jointly and severally enforced against the partners. Counsel also relied upon S. 44 of the Income-tax Act, which, as it stood at the relevant time, read as follows Where any business, profession or vocation carried on by a firm or association of persons has been discontinued, or where an association of persons is dissolved, every person who was at the time of such discontinuance or dissolution a partner of such firm or a member of such association shall, in respect of the income-profits and gains of the firm or association, be jointly and severally liable to assessment under Chapter IV and for the amount of tax payable and all the provisions of Chapter IV shall, so far as may be, apply to any such assessment. Section 44 is enacted with a view to prevent evasion of tax by discontinuance of the business of a firm or dissolution of an association of persons. On discontinuance of the business of a firm or dissolution of the association of persons, it is declared that every person who was, at the time of such discontinuance or dissolution, a partner of such firm or a member of such association shall, in respect of the income, profits and gains of the firm or association be jointly and severally liable to assessment and for the amount of tax payable. This Court has in Commissioner of Income-tax, Madras and Anr. v. S. V. Angidi Chettiar 1 held that the provisions of s. 44 of the Income-tax Act apply both to registered and unregistered firms. But there is numberhing in s. 44 of the Act which supports the companytention that for payment of tax assessed against a partner of a registered firm individually under s. 23 5 a of the Act, another partner becomes liable jointly and severally with that first partner to pay tax. The entire scheme of taxing the income of a registered firm in the hands of individual partners is Inconsistent with any assumption that for payment of tax assessed against a partner, other partners are liable. The tax assessed against a partner of a registered firm is assessed on his total income inclusive of the share in the firm income and the rate applicable is determined by the quantum of the total income of the partner. Section 44 companytemplates cases of joint and several assessment of income of the business of a firm which is discontinued. When such an assessment is made, each member of the firm may be liable to pay jointly and severally tax payable by the firm. But when under the scheme of the Act tax is assessed individually against each partner, and numbertax is made payable by the firm, the principle of joint and several liability under s. 44 has numberapplication. Counsel for the Commissioner said that this Court had, if number expressly tacitly, accepted the view that the liability of the partners of a firm to pay tax attributable to the share of each partner in the income of the firm is joint and several. Counsel relied upon the clause determining the tax payable by registered and unregistered firms respectively in the judgment of this Court in Commissioner of Income-tax., Bombay v. Amritlal Bhogilal Company 2 at p. 136 It is true that the Income-tax Officer is empowered to follow the two methods specified in section 23 5 a and b in determining the tax payable by registered and unregistered firms respectively and making the demand for the tax so found due but this does number affect the companyputation of taxable income, 1 44 I.T.R. 739. 2 34 1,T.R. 130. 8 2 6 and companytended that the tax determined to be payable under s. 23 5 is payable by the firm, and hence by all the partners jointly and severally. But in Amritlal Bhogilals case 1 the Court was called upon to determine whether the Commissioner of Incometax in exercise of his revisional power may cancel registration of the firm granted under s. 26A and direct the Income-tax Officer to make fresh assessment of the firm as an unregistered firm, when an appeal is pending against the order of assessment before the Appellate Assistant Commissioner. In making the observa- tions relied upon, the Court broadly examined the scheme of assessment of registered firms it was number stated by the companyrt expressly, number can it be implied, that for tax attributable to the share of a partner in a registered firm, the other partners are liable, numberwithstanding separate assessment under s. 23 5 a . Reliance was then placed upon the following observations made by this Court in S. V. Angidi Chettiars case 1 it p. Under section 23 5 of the Indian Income-tax Act, before it was amended in 1956, in the case of a registered firm the tax payable by the firm itself was number required to be determined but the total income of each partner of the firm including therein the share of its income, profits and gains of the previous year was required to be assessed and the sum payable by him on the basis of such assessment was to be determined. But this was merely a method of companylection of tax due from the firm. In S. V. Angidi Chettiars case 1 it was held that the Incometax Officer has power to make an order under s. 28 imposing penalty on a firm even after dissolution of the firm. There is numberhing in the observations relied upon which indicates that under s. 23 5 a when the income of a registered firm is companyputed, and the tax liability is imposed by the machinery provided thereunder, the tax is imposed upon the firm or is recoverable jointly and severally from the partners of the firm. A recent case was also relied upon Shivram Poddar v. In- companye-tax Officer, Central Circle II, Calcutta and Anr. 3 . In that case it was held that the firm, by the discontinuance of its business, does number cease to be liable to pay tax on the income earned by it number can a procedure different from the, one prescribed under Ch. IV of the Income-tax Act, 1922 apply for assessment of the income of such a firm. The firm, after it has discontinued its business, whether it is dissolved or number, will be assessed either under S. 25 1 in the year of account in which it discontinues its business, or in the year of assessment. In both 1 34 I.T.R. 130. 2 44 I.T.R. 739. 3 51 I.T.R. 823. cases the procedure for assessment is under s. 23 3 and 4 supplemented by s. 23 5 . The principle of that judgment also has numberapplication to the present case. Reliance was placed upon the observation made at p. 828. On the discontinuance of the business of a firm. however, by section 44 a joint and several liability of all partners arises to pay tax due by the firm. But that obviously means that a joint and several liability arises when the income of a firm which has discontinued its business is assessed under s. 44. It does number mean that where the assessment is made under s. 23 5 a of a registered firm and the income of each individual partner is assessed, the partners become jointly and severally liable to pay the aggregate amount of tax attributable to their various shares, in their individual assessments. The cases relied upon by companynsel for the Income Tax Officer do number support the claim made by the Income-tax Officer.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 2007 and 2008 of 1966. Appeals by special leave from the judgment and order dated September 28, 1965 of the Kerala High Court in O.P. Nos. 219 and 223 of 1964. R. Prem, R. N. Sachthey and S. P. Nayar, for the appel- lants in both the appeals . T. Desai and R. Gopalakrishnan, for the respondent in both the appeals . The Judgment of the Court was delivered by Sikri, J.-These appeals, by special leave, are directed against the judgment of the High Court of Kerala allowing two petitions filed by the respondent, M s. A. S. Bava, under art. 226 of the Constitution. The High Court, by this judgment, quashed two orders dated February 4, 1964, and directed the Collector of Customs, Central Excise, Cochin, to hear the appeals preferred by M s. A. S. Bava. The relevant facts are as follows M s. A. S. Bava. hereinafter referred to as the petitioner, is a firm of dealers in Tobacco. By two orders of adjudication dated March 31, 1963, the Assistant Collector of Customs demanded the payment of duty under Rule 40 of the Central Excise and Salt Rules, 1944. The petitioner filed appeals against these orders on or about July 4, 1963, to the Collector of Customs Central Excise. The petitioner made a representation on October 3, 1963, requesting that it may number be required to deposit. the duty demanded pending appeal. The Collector, by letter dated January 9, 1964, rejected the representation and requested the petitioner to deposit the duty within 15 days of the receipt of the letter. On the petitioner failing to deposit the amount, the appeals were dismissed on December 4, 1964. Thereupon, as already stated, the petitioner filed two petitions under art. 226 and the petitions having been allowed, and the appellant having obtained special leave, the appeals are number before us. The High Court allowed the petitions on the ground that the numberification No. 68/63 dated May 4, 1963, issued under s. 12 of the Excise and Salt Act, 1944, hereinafter referred to as the Excise Act, declaring that s. 129 of the Customs Act, 1962, relating to matters specified therein shall be applicable in regard to like matters in respect of the duties imposed by s. 3 of the Excise Act was in excess of the powers companyferred under s. 12 of the Excise Act. The High Court also rejected the argument of the Collector of Customs and Central Excise that the petitioner having invoked s. 129 of the Customs Act, 1962, in the appeals preferred by it by praying for the dispensation of deposit, was precluded from proceeding under art. 226 of the Constitution. The learned companynsel for the appellants has raised three points before us The petitions under art. 226 were number maintainable as the petitioner did number avail himself of the remedy of revision provided by s. 36 of the Excise Act. p N 1SCI-7 a The petitioner having availed of the remedy under s. 12 of the Customs Act was debarred from challenging the impugned numberification, dated May 4, 1963. The impugned numberification applying s. 129 of the Custom Act was good. There is numberforce in the first point. First, the point was numbertaken in the High Court. Secondly, it is settled that the existence of a remedy by way of revision does number bar the jurisdiction of the High Court to entertain a petition under art. 226. Moreover the petitioner had alleged that the Collector had numberjurisdiction to demand the deposit or duty pending the appeals as the numberification dated May 4, 1963, was bad insofar as it applied s. 129 of the Customs Act. In these circumstances it was number necessary for the petitioner to have filed revisions. There is equally numberforce in the second point. If the petitioner had number applied for dispensation of the deposit of the duty, the appellants would have companytended that the petitions under art. 226 were number maintainable. Moreover, as already stated, the petitions raised a question of jurisdiction. To appreciate the third point, it is necessary to extract the relevant statutory provisions. Section 12 of the Excise Act authorises the Central Government to apply provisions of the Sea Customs Act, 1878, number replaced by the Customs Act, 1962, in the following terms The Central Government may, by numberification in the Official Gazette, declare that any of the provisions of the Sea Customs Act, 1878, relating to the levy of an exemption from customs duties, drawback of duty, such modifications and alterations as it may companysider necessary or desirable to adapt them to the circumstances, be applicable in regard to like matters in respect of the duties imposed by section 3. The relevant part of the impugned numberification dated May 4, 1963, reads as follows In exercise of the powers companyferred by Sec. 12 of the Central Excise Salt Act, 1944 1 of 1944 the Central Government declares that the provisions of Section 129 of the Customs Act, 1962, relating to matters specified herein shall be applicable in regard to like matters in respect of the duties imposed by Sec. 3 of the first mentioned Act Section 129 of the Customs Act reads thus 129. 1 Where the decision or order appealed against relates to any duty demanded in respect of goods which are number under the companytrol of customs authorities or any penalty levied under this Act, any person desirous of appealing against such decision or order shall, pending the appeal, deposit with the proper officer the duty demanded or the penalty levied Provided that where in any particular case the appellate authority is of opinion that the deposit of duty demanded or penalty levied will cause undue, hardship to the appellant, it may in its discretion dispense with such deposit, either unconditionally or subject to such companyditions as it may deem fit. If upon any such appeal it is decided that the whole or any portion of such duty or penalty was number leviable, the proper officer shall return to the appellant such amount of duty or penalty as was number leviable. It will be numbericed that s. 129 requires an appellant to deposit the duty or penalty levied pending an appeal. In other words, before an appeal can be heard the appellant must deposit the duty or penalty levied. But under s. 35 of the Excise Act, a person ,Aggrieved byany decision or order has an unfettered right to appeal. Thequestion that arises in these appeals is whether the provisions ofs. 129 of the Customs Act can be said to be provisions relating to procedure relating to appeals within S. 12 of the Excise Act. As we have already said, the appeals are filed under S. 35 of the Excise Act. Section 129 of the Customs Act debars the hearing of them unless the duty or penalty is paid. This, it seems to us, is number procedure relating to appeals. This Court in Hoosein Kasam Dada India Ltd., v. The State of Madhya Pradesh 1 had to companysider a similar provision in s. 22 of the Central Provinces and Berar Sales Tax Act, 1947. Section 22 1 , as originally enacted, read thus 22. 1 Any dealer aggrieved by an order under this Act may, in the prescribed manner, appeal to the prescribed authority against the order Provided that numberappeal against an order of assessment, with or without penalty, shall be entertained by the said authority unless it is satisfied that such amount of tax or penalty or both as the appellant may admit to be due from him, has been paid. 1 19539874 S.T.C 114, It was amended thus 22. 1 Any dealer aggrieved by an order under this Act May, in the prescribed manner, appeal to the prescribed authority against the order Provided that numberappeal against an order or assessment, with or without penalty shall be admitted by the said authority unless such appeal is accompanied by a satisfactory proof of the payment of the tax, with penalty, if any, in respect of which the appeal has been preferred. R. Das, J., as he then was, repelled the argument of the learned Advocate that the requirement as to the deposit of the amount of the assessed tax does number affect the right of appeal itself, which still remains intact, but only introduces a new matter of procedure, and observed There can be numberdoubt that the new requirement touches the substantive right of appeal vested in the appellant. Nor can it be overlooked that such a requirement is calculated to interfere with or fetter, if number to impair or imperil, the substantive right. The right that the amended section gives is certainly less than the right which was available before. A provision which is calcu- lated to deprive the appellant of the unfettered right of appeal cannot be regarded as a mere alteration in procedure. Indeed the new requirement cannot be said merely to regulate the exercise of the appellants pre- existing right but in truth whittles down the right itself and cannot be regarded as a mere rule of procedure. These observations are fully applicable in the present case. 1 Section 35 of the Excise Act gave a right of appeal, but S. 129 of the Customs Act whittles down the substantive right of appeal and accordingly it cannot be regarded as procedure relating to appeals within s. 12 of the Excise Act. The appeals accordingly fail and are dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1968-1970 of 1966. Appeals by special leave from the judgment and order dated July 16, 1962 of the Madras High Court in Tax Cases Nos. 117,118 and 119 of 1959. B. Banerjee and S. N. Mukerjee, for the appellant in all the appeals . M. Mudaliyar, Advocate-General for the State of Madras and A. V. Rangam, for the respondent in all the appeals . C. Setalvad, B. Sen, G. S. Chatterjee and P. K. Bose, for the Intervener in C. A. No. 1968 of 1966 . The Judgment of the Court was delivered by Hegde, J. These appeals by special leave arise from the companymon order made by the Madras High Court in T. C. Nos. 117 to 119 revisions Nos. 71 to 73 on its file. The Indian Steel and Wire Products Ltd. a joint stock public limited companypany is the appellant in all these appeals. At the instance of the steel companytroller the appellant supplied certain steel products to various persons in the Madras State during the financial years 1953-54, 1954-55 and part of 1955-56 from April 1, 1955 to September 6, 1955 . The State of Madras assessed the turnovers of the appellant relating to those transactions to sales tax under the Madras Gen. Sales Tax Act, 1939 Madras Act 9 of 1939 to be hereinafter referred to as the Act , the law in force at that time. The appellant has been assessed to tax on the basis of best judgment. The authorities under the Act have determined appellants turnover during the year 1953-54 at Rs. 3129520/- and levied a tax of Rs. 16298/4 annas. During the financial year 1954-55, its turnover was determined at Rs. 3759216/- . and the assessment levied is Rs. 58737-12-0. For the broken period in the financial year 1955-56, the appellants turnover was determined at Rs. 1453292/- and the same was assessed to tax at Rs. 22707-12-0. Even according to the appellant, its turnovers during 1953-54 was Rs. 2912533-14-0, in 1954-55, Rs. 3971493/7/- and in 1955-56, Rs. 1725400/5/-. Therefore, there is little room for companytroversy about its turnover in the relevant years. The appellant is companytesting the right of the State of Madras to levy tax on the turnovers in question. According to the appellant, the turnovers in question companyld number have been companysidered as sales and companysequently they companyld number have been brought to tax under the Act. The appellant asserts that deliveries in question were made under companypulsion of law and there was numberagreement between the parties. They were made in pursuance of the orders of the Controller exercising powers under the Iron Steel Control of Production and Distribution Order, 1941 which will hereinafter be referred to as the order , which was issued under the Defence of India Act 1939. It was argued on behalf of the appellant that it was the companytroller who determined the persons to whom the goods were to be supplied, the price at which they were to be supplied, the manner in which they were. to be transported, and the mode in which the payment of the price was to be made. In short, it was said that every facet of those transactions were prescribed by the companytroller and therefore those transactions cannot be companysidered as sales. On the basis of those assertions support was sought from the decision of the House of Lords in Kirkness v. John Hudson Co., Ltd. 1 the decision of this Court in M Is. New India Sugar Mills Ltd. v. Commis- sioner of Sales Tax. Bihar 1 , the decision of the Calcutta High Court in Calcutta Electric Supply Corporation Ltd. v. Commissioner of Income Tax, West Bengal 1 the decision of the Orissa High Court in Messrs. Cement Ltd. v. The State of Orissa 1 , and a few other decisions. It was further argued that even if those transactions are companysidered as sales the State before exercising its taxing power should have had in its possession material to show that the goods delivered by the appellant were delivered in that State for companysumption which circumstance alone can make those transactions sales within that State as numbermaterial was placed on record to show that the goods in question were delivered in that State for companysumption it companyld number have brought the turnovers in respect of those transactions to tax under the Act. These companytentions of the appellant have been rejected by the authorities under the Act as well as by the High Court. Other companytentions advanced on behalf of the appellant deserve to be summarily rejected for the reasons to be mentioned hereinafter. The principal question that falls for decision in these appeals. is whether the transactions with which we are companycerned herein are sales. Sec. 2 h of the Act defines sale thus Sale with all its grammatical variations and companynate expressions means every transfer of the property in goods by one person to another in the companyrse of trade or business for cash or for deferred payment or other valuable companysideration, and includes also transfer of property in goods involved in the execution of works companytract and in the, supply or distribution of goods by a companyoperative society club, firm or any association to its members for cash or for deferred payment or other valuable companysideration but does number include a mortgage. hypothecation, charge or pledge the explanations to that definition are number relevant for our present purpo se . 1 1955 A.C. 696. 2 1963 Suppl. 2 S.C.R. 459. 3 19 I.T.R. 406. 4 12 S.T.C. 205. This wide definition undoubtedly companyers those transactions. But then the power of a State to tax sales is derived from Entry 54 of List II of the VII Schedule in the Constitution. That entry as it stood at the relevant time empowered the State to tax on the sale or purchase of goods. The scope of the expression sale or purchase of goods found in entry 48 in List II of Schedule VII of the Government of India Act 1935 which is in pari materia with the aforementioned entry 54 came up for interpretation before this Court in State of Madras v. Gannon Dunkerley 1 . In that case, the question that fell for decision was whether the words sale of goods should be given their popular meaning or whether they should have the meaning attached to them under the Sale of Goods Act. This Court held that the expression sale of goods was, at the time when the Government of India Act, 1935 was enacted, a term of well recognised legal import in the general law relating to sale of goods and in the legislative practice relating to that topic and must be interpreted as having the same meaning as in the sale of Goods Act 1930 In the companyrse of the judgment, Venkatarama Aiyar, J,who ,spoke for the Court after examining the various decisions cited at the Bar, observed, as follows Thus, according to the law both of England and of India, in order to companystitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods which of companyrse pre-supposes capacity to companytract, that it must be supported by money companysideration and that as a result of the transaction property must actually pass in the goods. Unless all these elements are present, there can be numbersale. Thus, if merely title to the goods passes but number as a result of any companytract between the parties, express or implied, there is numbersale. So also if the companysideration for the transfer was number money but other valuable companysideration, it may then be exchange or barter but number sale. And if under the companytract of sale, title to the goods has number passed, then there is an agreement to sell and number a companypleted sale. As laid down by this decision, to companystitute a valid sale, there must be companycurrence of the following elements viz. 1 parties companypetent to companytract 2 mutual assent 3 a thing the absolute or general property in which is transferred from the seller to the buyer and 4 a price in money paid or promised. Therefore we have to see whether all these elements are found in the transactions before us. Before doing so it is necessary to refer to the order and the manner in which those transactions were effected. During the World War IT iron and steel goods became scarce. Therefore it became necessary for the Government to companytrol the production and distribution of those goods. In order to do so, the 1 1959 S.C.R. 379. government issued the order on July 26, 1941, and the same came into force on August 1, 1941. The provisions in that order which are material for our present purpose are set out hereinbelow - Definitions In this Order, unless there is anything repugnant in the subject companytext Controller means the person appointed as Iron -and Steel Controller by the Central Government, and -includes any person exercising, upon authorisation by the Central Government, all or any of the powers of the Iron and Steel Controller Producer means a person carrying on the business of manufacturing iron or steel. Registered Producer means a producer who is registered as such by the Controller. Stockholder means a person holding stocks of Iron or Steel for sale who is registered as stockholder by the Controller. Controlled Stockholder means a stockholder appointed by the Controller to hold stocks of iron or steel under such terms and companyditions as he may prescribe from time to time. Pressure Pipes include all Pipes and Tubes 1/8 numberinal bore and above which will withstand or may be used for a working pressure of 25 lbs. per square inch and above. Application of Order- I The provisions of this Order shall apply to all iron or steel of the categories specified in the Second Schedule to this Order. 2 A certificate signed by the Comptroller or by any officer authorised by him in this behalf, in respect of any category of iron or steel, shall be companyclusive proof that it is an article to which this Order is applicable. Acquisition-No person shall acquire or agree to acquire any iron or steel from a Producer or a Stockholder except under the authority of and in accordance with the companyditions companytained or incorporate d in a general or special written order of the companytroller. Disposal-No Producer or Stockholder shall dispose of or agree to dispose of or export or agree to export from British India any iron or steel, except in accordance with the companyditions companytained or incorporated in a general or special written order of the Controller. 10B. Power to direct sale-The Controller may by a written Order require any person holding stock or iron and steel, acquired by him otherwise than in accordance with the provisions of Clause 4 to sell the whole or any part of the stock to such person or class of persons and on such terms and companyditions as may. be specified in the Order. 10C. Power to prohibit removal-The Controller may order any producer including a registered producer , any stockholder including a companytrolled stockholder or any other person number to remove or permit the removal of any iron or steel, whether sold or unsold, from his stockyard or from any other part of his premises to any place outside the precincts of such stockyard or premises, except with the written permission of the Controller. 11 AA 3 . No producer, stockholder, or other person holding stocks of iron and steel shall without sufficient cause, refused to sell any iron or steel which he is autho- rised to sell under this Order. Explanation-The possibility or expectation of obtaining a higher price at a later date shall number be deemed to be a sufficient cause for the purpose of this clause. 11B. Power to fix prices- 1 The Controller may from time to time by numberification in the Gazette of India fix the maximum prices at which any iron or steel may be sold a by a Producer, b by Stockholder including a Controlled Stockholder and c by any other person or class of persons. Such price or prices may differ for iron and steel obtainable from different sources and may include allowances for companytribution to and payment from equalising freight, the companycession rates payable to each pro ducer or class of producer under agreements entered into by the Controller with the producers from time to time. and any other disadvantages. For the purpose of applying the prices numberified under sub-clause 1 the Controller may himself classify any iron and steel and may, if numberappropriate price has been so numberified, fix such price as he companysiders appropriate. No producer or stockholder or other person shall sell, or offer to sell. and numberperson shall acquire any iron or steel at a price exceeding the maximum prices fixed under sub-clause 1 or 2 . Any Court trying a companytravention of this Order may, without prejudice to any other sentence which it may pass, direct that any Iron and Steel in respect of which the Court is satisfied that this order has been companytravened shall be forfeited to His Majesty. The appellant has set out in para 4 of the statement of the case the procedure adopted for acquiring iron and/ or steel products under the order. This is what is stated therein - That Order was at all material times administered principally by the Iron and Steel Controller having his office in the city of Calcutta in the State of West Bengal who companytrolled the entire production and distribution of the iron and or steel products. Any party desiring to acquire any product has to apply to the Controller. Upon processing such application or requisition entirely at his option and discretion, the Controller would pass such a requisition an to the Appellant for manufacture and or despatch. The appellant has, upon receipt of the said requisition from the Controller to prepare a Works Order for the manufacture of the products companycerned and to advise the Controller and later on companypletion of the manufacture the appellant has to make the product companyform to the requisition processed by the Controller and then deliver the requisite quantity in the requisite shape to the Indian State Railways siding maintained at the appellants own factory site, in Indranagar. in the suburbs of Jamshedpur, in the State of Bihar, and to advise the requisitionist as well as the Controller accordingly The companyrespondence relating to the delivery of steel goods in pursuance of an order placed by one K. Thiruvengadam Chetty Co. has been produced by the appellant evidently to show the manner in which the transactions were effected. On December 20, 1952. Thiruvengadam Chetty and Co., wrote follows to the Controller From Name-K. Thiruvengadam Chetty and Company. Address-Iron Merchants and Tata Scob Dealers 93, Rasappa Chetty Street. Madras-3. Date 20th December 1952. To The Iron and Steel Controller, 33, Netaji Subas Road, Calcutta. Through the Director of Controlled Commodities, Mount Road, Madras. Dear Sir, Please place on our behalf and at our risk and account our order on Registered Producers for material as per specification given below for delivery in such period ,as you can arrange. We companyfirm that this indent is placed subject to the provisions of the Steel Price Schedule regarding prices, etc., and the terms and companyditions of business including payment of the registered producers on whom the order is placed by you and that delivery or part delivery from any such registered producer will be accepted by us. Please direct the registered producers companycerned to send us a companyy of the works order in companyfirmation of having booked our Indent. Ship to Madras Saltcotaurs. Send R. R. to Messrs. K. Thiruvengadam Chetty and Company, Iron Merchants, 93, Rasappa Chetty Street, Madras-3, through your Madras Office. Send original and duplicate invoice to Messrs. K Thiruvengadam Chetty and Company, 93, Rasappa Chetty Street, Madras-3 through your Madras Office. Date of shipment desired Ex-stock as early as possible. ---------------------------------------------------------------- Quantity Pieoes Section Lengths Complete description un-tested of material indented 1 2 3 4 ----------------------------------------------------------------- CWT. QRS. LBS. 10468 M.S. rounnd 1/4 18 13 B Category 5493 3/16 18 do 5453 5/16 18 do --------- 20 Twenty tons only ----------------------------------------------------------------- All P.T. free on rail Saltcotaurs and bundling charge account. Yours faithfully, signed by Partner, For K. Thiruvengadam Chetty and Company. The Controller forwarded that letter to the appellant with the following remarks - The above indent is forwarded to Indian Steel and Wire Products Limited, Tatanagar, for delivery in period 1/53 or subsequently in accordance with any general or special directions of the Iron and Steel Controller. It may be numbered that the Controller merely asked the appellant to deliver to K. Thiruvengadam Chetty and companypany the goods ordered in accordance with any general or special directions of the Iron and Steel Controller. Our attention was number invited to any general or special order issued by the companytroller excepting that fixing the base price. It is clear that it was left to the appellant to supply the goods ordered at his companyvenience. On the basis of the, above companymunication a works order was issued by the appellant to the mill superintendent, a companyy of which was sent to Thiruvengadam Chetty and Company. That order reads- Works Order RS MAD RM/15/53 of 23rd February 1953. Delivery P.D.1/53. Ship to Saltcotaurs Book to self. Freight To pay. To The Mill Superintendent. Please supply the following to the Shipping Department, M.S. Rounds our usual companymercial quality in bundles in stock lengths of 12/18 feet. TONS 1/4 diameter 10 at Rs. 486 per ton free on rail 3/16 5 at Rs.493 Saltootaurs, plus bundling. 5/16 5 at Rs. 453 Charge of Rs. 5 per ton. cc South India Iron and Hardware Merchants Association, Armenian Street, Madras. Notice to companysignees. Delivery must be taken within three days of the arrival of the train at destination, a certificate obtained for any wrongful delivery and a claim preferred against the Railway Company forthwith under advise to us. In the case of number- arrival of any companysignment advise should be given us as soon as a reasonable time for the journey has elapsed. All orders booked are subject to our terms of business and general understanding in force at the time of booking the orders and despatch of goods. All prices mentioned in the Works Orders are subject to revision, i.e., prices ruling at the time of despatch will be charged The works order in question specifically says that all orders booked are subject to our terms of business and general understanding in force at the time of booking the orders and despatch of goods. In fact as seen from the letter of Thiruvengadam Chetty and Co., dated August 31, 1953, the buyers were willing to change by mutual agreement the specifications of the goods to be supplied. This is what that letter says agreement the specifications of the goods to be supplied. This is what that letter says If 1/4 size is number ready, please despatch 3/8 size 20 tons as requested in our previous letter. Please treat this as very urgent. From the material on record it is number possible to accept the companytention of Mr. S.R. Bannerjee, learned companynsel for the appellant that the dealings in question were companytrolled at every stage, leaving numberroom of companycensus. From the records before us all that companyld be gathered is that the companytroller fixed the base price of the steel products and determined the buyers. In other respects, the parties were free to decide their own terms by companysent. As seen from the companyrespondence referred to earlier, the companytroller allowed the appellant to supply the goods ordered either in the first quarter of the year 1953 or subsequently. In other words, the appellant companyld supply the goods in question at its companyvenience. It was open to the appellant to agree with its customers as to the date on which the goods were to be supplied. From the works order dated February 23, 1953, a companyy of which was sent to one of the appellants customers, it is clear that all orders booked were subject to appellants terms of business and general understanding in force at the time of booking the orders and despatch of goods. It was also open to the appellant to fix the time and mode of payment of the price of the goods supplied. Therefore it would number be companyrect to companytend that the transactions were companypletely regulated and companytrolled by the companytroller leaving numberroom for mutual assent. In his revision petition dealing with the question of transport of the goods supplied the appellant stated that the transport of goods was if at all by virtue of an independent arrangement between the petitioner and the persons to whom the goods were supplied This admission clearly shows that the supplies in question were made partly on the basis of mutual assent. It was Mr. Bannerjees companytention that for finding out the nature of the transaction we have only to look to the order and number to the documents produced in the case. According to him, the documents produced in this case do number fully disclose the nature of the transactions the transactions in question had to be effected under the terms of the order the order left numberroom for negotiation between the supplier and its customers and therefore we should companyclude that the transactions in question are number sales. According to Mr. Bannerjee all supplies of iron and steel products companyld be made only in accordance with the directions given by the companytroller under cl. 10B of the order. That being so, he asserted there was numberroom for mutual assent. We do number think that this companytention of Mr. Bannerjee is well-founded. We are unable to agree with him that the iron and steel products companyld number have been supplied to any person except in pursuance of an order made by the companytroller under cl. 10B. We think that supplies by producers can be made in pursuance of an order of the companytroller under cl.5. We are number pursuaded by Mr. Bannerjees companytention that clauses 4 and 5 merely prohibit the prospective buyer and the intending seller from buying or selling without the sanction of the companytroller and that those provisions do number companyfer power on the companytroller to authorise a person to acquire and to permit a producer to sell. Those provisions, in our judgment, by implication companyfer power on the companytroller to issue the necessary authority to the buyer and the seller. This companyclusion of ours is strengthened from the circumstance that cl.10B was number a part of the order till 1946. That provision was inserted in the order by numberification No. 1 1 -1 530 -A dated May 26, 1946, It is numberody s case that the provisions of the order were incapable of being implemented till that date. The companytention of Mr. Bannerjee that the companytroller derives his power to authorise the buyer to buy and the seller to sell exclusively under cl. 10B, suffers from another infirmity. Under cl. 10B, the companytroller gets power to require any person holding stock of iron and steel acquired by him otherwise than in accordance with the provisions of cl. 4 to sell the whole or part of the stock to such person or class of persons and on such terms and companyditions as may be specified in the order. This clause does number empower the companytroller to issue the authority required under cl. 4. Our attention has number been invited to any provision in the order if we exclude from companysideration cl. 4, under which the companytroller companyld have the power to authorise the buyer to buy iron and steel products. Therefore, it is obvious that he gets that power from cl. 4, itself. The language employed in clauses 4 and 5 is simi- lar. If the companytroller gets power to authorise a buyer to buy iron and steel products under cl. 4, there is numberreason why he should be held to have numberpower under cl. 5 to authorise a producer or stock-holder to dispose of his stock of iron and steel products. Further, under cl. 10B, the companytroller can only require any person holding stock of iron and steel to sell the whole or part of his stock to such person or class of persons and on such terms and companyditions as may be specified in the order. That clause does number empower him to direct any manufacturer to manufacture any steel or iron product and to dispose of the same to any person. In other words, a direction under cl. 10B can only be given to a person holding stock of iron and steel But under cl.5 he can authorise a producer or a stockholder to dispose of any iron or steel whether the same is in stock or number in accordance with the companyditions companytained or incorporated in a special or general written order issued by him. In. the instant case, as can be gathered from the companyrespondence already referred to, the order issued by the companytroller companyld be companyplied with only after manufacturing the required material. Hence, the order issued by the companytroller companyld number have been issued under cl. 10B. In this view of the matter it is number necessary for us to find out the true scope of cl. 10B. So far as cl.5 is companycerned. admittedly, it does number require the companytroller to regulate or companytrol every facet of a transaction between a producer and the person to whom he supplies iron and steel products. It is true that in view of the order, the area within which there can be bargaining between a prospective buyer and an intending seller of steel products, is greatly reduced. Both of them have to companyform to the requirements of the order and to companyply with the terms and companyditions companytained in the order of the companytroller. Therefore they companyld negotiate only in respect of matters number companytrolled by the order or prescribed by the companytroller. It is true, in these circumstances, the doctrine of laisser faire can have only a limited ap. plication. That is naturally so. In certain quarters the validity of that doctrine is, seriously challenged. Under the existing economic companypulsions-all essential goods being in short supply-in a welfare State like ours, social companytrol of many of our economic activities is inevitable. That does number mean that there is numberfreedom to companytract. The companycept of freedom of companytract has undergone a great deal of change even in those companyntries where it was companysidered as one of the basic economic requirements of a democratic life. Full freedom to companytract was never there at any time. Law invariably imposed some restrictions on freedom to companytract. But due to change in political outlook and as a result of economic companypulsions, the freedom to companytract is number being companyfined gradually to narrower and narrower limits. This aspect is vividly brought out in the Law of Contract by Cheshire and Fifoot 6th ed. at p. 22. Dealing with the question of freedom to companytract, the learned author observes. As the nineteenth century waned it became ever clearer that private enterprise predicated some degree of economic equality if it was to operate without injustice. The very freedom to companytract with its companyollary, the freedom to companypete, was merging into the freedom to companybine and in the last resort companypetition and companybination were incompatible. Individualism was yielding to monopoly, where strange things might well be done in the name of liberty. The twentieth century has seen its progressive erosion on the one hand by opposed theory and on the other by companyflicting practice. The background of the law, social, political and economic, has changed. Laisser faire as an ideal has been supplanted by social security and social security suggest status rather than companytract. The State may thus companypel persons to make companytracts, as where, by a series of Road Traffic Acts from 1930 to 1960, a motorist must insure against third-party risks-, it may, as by the Rent Restriction Acts, prevent one party to a company- tract from enforcing his rights under it or it may empower a Tribunal either to reduce or to increase the rent payable under a l ease. In many instances a statute prescribes the companytents of the companytract. The Moneylenders Act, 1927, dictates the terms of any loan caught by its provisions the Carriage of Goods by Sea Act, 1924, companytains six pages of rules to be incorporated in every companytract for the carriage of goods by sea from any port in Great Britain or Northern Ireland to any other port the Hire Purchase Act 1938 inserts into hire-purchase companytracts a number of terms which the parties are forbidden to exclude successive Landlord and Tenants Act from 1927 to 1954 companytain provisions expressed to apply numberwithstanding any agreement to the companytrary It would be incorrect to companytend that because law imposes some restrictions on freedom to companytract, there is numbercontract at all. So long as mutual assent is number companypletely excluded in any dealing, in law it is a companytract. On the facts of this case for the reasons already mentioned, it is number possible to accept the companytention of the ,learned companynsel for the appellant that numberhing was left to be decid- ed by mutual assent. On the other hand, we agree with the learned Advocate General of Madras and Mr. Setalvad who appeared for. the State of West Bengal, the intervener, that the companytrollers directions were companyfined to narrow limits and there were several matters, which the parties companyld decide by mutual assent. We shall number proceed to examine the principal decisions relied upon by the learned companynsel for the appellant. In Kirkness v. John, Eudson Co. Ltd. 1 , the material facts were these On January 1, 1948, railway wagons owned by John Hudson Co., the tax payers. then under requisition by the Minister of Transport. were acquired, by the British Transport Commission under s. 29 of the Transport Act, 1947. Under s. 30 of that Act, companypensation became payable by the Commission to the tax payers. The amount paid as companypen- sation was substantially higher than the written down value of the wagons for income tax purposes and as the tax payers had received allowances under r. 6 of the rules applicable to Cases I and 11 of Sch. D to the Income Tax Act 1918, they were assessed under s. 17 of the Income Tax Act 1945 to give effect to a balancing charge in respect of the excess of the original companyt of the wagons over the written down value. The Court of Appeal held that the transfer of wagons under s. 29 of the Transport Act 1947 was number a sale at companymon law, since it did number involve a mutual assent and a price, it was an acquisition authorised by a statute and number a companypulsory purchase. Therefore, the wagons were number machinery or plant which had been sold within the meaning of s. 17 1 a of the Act of 1945 and number balancing charge companyld be made under the sub-section. This, decision was affirmed by the House of Lords by a majority. Speak-- in,, for the majority, Viscount Simonds observed My Lords, in my opinion the companypanys wagons, were number sold, and it would be a grave misuse of language, to say that they were sold. To say of a man who has had his property taken from him against his will and been awarded companypensation in the settlement of which be has had numbervoice, to say of such a man that he has sold his property appears to me to be as far from the truth as to, 1 1955 A.C. 696. say of a man who has been deprived of his property without companypensation that he has given it away. Alike in the ordinary use of language and in its legal companycept a sale companynotes the mutual assent of two parties. So far as the ordinary use of language is companycerned it is difficult to avoid being dogmatic, but for my part I can only echo what Singleton L.J. said in his admirably clear judgment What would anyone accustomed to the use of the words ,sale or sold answer? It seems to-me that everyone must say Hudsons did number sell. I am companytent to march in step with everyone and say Hudsons did number sell. Nor is a different result reached by an attempt to analyse the legal companycept. When Benjamin said in the passage quoted by Singleton and Birkett L. JJ. from his well- known book on Sale, 2nd ed., p. 1, that by the companymon law a sale of personal property was usually termed a bargain and sale of goods, he was by the use of the word bargain perhaps unconsciously emphasizing that the companysensual relation which the word bargain imports is a necessary element in the companycept, . From the facts set out above it is clear that the House of Lords was dealing with a companypulsory acquisition and number sale. Therefore -that decision is of numberassistance to the appellant. In Messrs. New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar 1 , this Court was called upon to companysider whether ,certain transactions effected under the Sugar Control Order 1946 were sales. By a majority this Court held that they were number sales. The facts as found by the High Court and accepted by this Court ,are found at pp. 463 and 464 of the report. They are as follows The admitted companyrse of dealing between the parties was that the Government of various companysuming States used to intimate to the Sugar Controller of India from time to time their requirement of sugar, and similarly the factory owners used to send to the Sugar Controller of India -statements of stock of sugar held by them On a companysideration of the requisitions received from the various State Governments and also the statements of stock received from the various factories, the Sugar Controller used to make allotments. The allotment order was addressed by the Sugar Controller to the factory owner, direc ting him to supply sugar to the State Government in question in accordance with the despatch instructions received from the -competent officer of the State Government. A companyy of the allotment order was simultaneously sent to the State Government companycerned, on receipt of which the companypetent authority of the State Government sent to the factory companycerned detailed instructions about the destination to 1 1963 Supp. 2 S.C.R. 459. which the sugar was to be despatched as also the quantities of sugar to be despatched to each place. In the case of the Madras Government it is admitted that it also laid down the procedure of payment, and the direction was that the draft should be sent to the State Bank and it should be drawn on Parry and Company or any other party which had been appointed as stockist importer on behalf of the Madras Government. On the basis of those facts, the Court came to the companyclusion that there was numberroom for mutual assent in those transactions. The facts of the present case are materially different from the facts of that case. Hence the ratio of that decision does number apply to the facts of the present case. Whether in a given case there was mutual assent or number is a matter to be decided on the facts of that case. In Calcutta Electric Supply Corporation Ltd. v. Commissioner of Income Tax, West Bengal 1 . the facts were The assessees were an electric supply companypany. During the war the government requisitioned an electricity generating plant of the assessees under r. 83 1 of the Defence of India Rules. The Government wanted to acquire that plant. As the assessees were number willing to sell the plant, they required the government to re-examine the position and to rescind the order depriving them of the plant, but the government refused to re-consider that decision. The amount which the assessees received as price or companypensation for the plant exceeded the written down value of the plant by Rs. 3,27,840/-. The taxing authorities treated the excess as assessees profits under s. 10 2 vii of the Indian, Income Tax Act 1922 and assessed that amount to tax. On a reference under s. 66 1 of that Act, as to whether the amount in question can be companysidered as assessees profit, Harries, C. J. and Banerjee, J. held that the transaction by which the government acquired the plant companyld-not be regarded as a sale within the meaning of s. 10 2 vii and therefore the sum of Rs. 3,27,840/- was number taxable as profit under that provision. The Court further observed that the ordinary meaning of the word sale is a transaction entered into voluntarily between two persons known as buyer and seller by which the buyer acquires the property of the seller for an agreed companysideration known as price. The rule laid down in that decision is the same as that laid down by the House of Lords in Kirkness v. John Hudson Co. Ltd. 2 . In this case also the Court was dealing with a companypulsory acquisition and number sale. In M s. Cement Limited v. The State of Orissa 3 , the Court was dealing with transactions effected under the Cement Control Order 1956. Therein the assessee companypany. a manufacturer of cement, was required to sell cement to the State Trading Corporation On payment of stipulated price. Cl. 3 of the Cement Control Order provided Every producer shall sell 1 a the entire quantity of cement held in stock by him on the date of the companymencement 1 19 I.T.R. 406, 2 1955 A.C. 696. 3 12 S.T.C. 205. of the order, and b the entire quantity of cement which may be produced by him during a period of two years from the date of companymencement of this order to the Corporation and deliver the same to such person or persons as may be specified by the Corporation in this behalf from time to time, 2 numberwithstanding any companytract to the companytrary, every producer shall dispose of cement lying in stock with him or produced by him, in accordance with the provisions of sub-cl. 1 and shall number dispose of any cement in companytravention thereof. Cl. 6 1 was to the effect that the price at which a producer may sell cement shall be specified in the schedule. The sales in this case were effected under the aforementioned clauses 3 and 6. It is under those circumstances that the Court came to the companyclusion that the transactions in question were number sales but were in the nature of companypulsory transfer of title. This case again is of numberassistance to the appellant. The appellants learned companynsel also read to us the decisions in North Adjai Coal Company P Ltd. v. Commercial Tax Officer and others 1 and S. K. Roy v. Additional Member, Board of Revenue, West Bengal 2 . On the facts of those cases, the Court came to the companyclusion that the transactions in question were- number sales. For the reasons already stated, we are unable to accept the companytention that the transactions with which we are companycerned in these cases are number sales. Out of the four elements mentioned earlier, three were admittedly established, namely, the parties were companypetent to companytract, the property in the goods was transferred from the seller to the buyer, and price in money was paid. The only companytroversy was whether there was mutual assent. Our finding is that there was mutual assent in several respects. Hence, we agree with the High Court that the transactions before us are sales. That takes us to the next companytention by the appellant i.e., that there was numbermaterial to companyclude that the goods were delivered in the State of Madras for companysumption. There is numberdispute that the goods in question were delivered in the State of Madras. The dispute centres round the question whether it is proved that they were delivered for companysumption in that State. The learned companynsel for the appellant companyceded that actual companysumption within the State need number be proved. All that is required to be shown is that they were delivered for companysumption in the State. The only question is whether there was any material to support the companyclusion of the Sales Tax Appellate Tribunal, the final fact finding authority, that the goods were delivered in the Madras State for companysumption in that State. The High Court rightly proceeded on the basis that the burden is certainly upon the State to establish facts upon which a subject can be taxed under a financial enactment. But it accepted the finding of the Sales Tax Appellate Tribunal that from the facts and circumstances established it is a reasonable inference to draw 1 17 S.T.C. 514. 2 18 S.T.C. 379. that the goods were delivered for companysumption in the Madras State. This aspect was dealt with by the Tribunal in para 1 1 of its order dated April 17, 1959. On that question this is what the Tribunal says It will be an onerous task to pursue the subsequent history of every inter-State sale transactions to find out whether after successive change of hands the goods left the state but it will be permissible in such cases to companysider the broad pattern of the transaction, the surrounding circumstances and any other relevant date to draw a reasonable companyclusion therefrom. In the cases before us, it is admitted that the sales were in pursuance of a scheme of internal distribution under the companytrol order applicable to the whole of India. That there was necessity to draw up such a scheme, indicates that the goods were essential goods, that the supply was inadequate to meet the demand, and that unless there was companytrol and restriction in distribution it was likely that the goods would pass into the black market, and would be sold at exorbitant rates. It is permissible inference that companytrolled stockists, registered stockists and registered dealers, who are the principal buyers from the appellants and who companyld be expected to have been given quotas in the scheme of companytrolled distribution, would be people expected to meet the local demand for the companysumption of the companytrolled goods. It is also well known to people familiar with the operation of a companytrolled scheme and distribution of goods that quotas are given against proved demands, and that it is number part of the scheme of distribution to provide for goods sold in one State being exported to other states inside the Union territory because each State has got its own quota of goods and list of companytrolled stockists, registered stockists and so on. Therefore we infer from the analysis given of the transactions by the appellants, that the sales to various groups of purchasers, registered stockists and companytrolled stockists and so on are all intended to meet the local demands for steel products and number for re- export. An analysis of the amount companycerned in each of these transactions show that the quantity of steel involved would number be large in each individual case, a circumstance again point to the inference that the sales were intended to meet the requirements of the companysumers in Madras State. In the- case of sales to local Government departments, it is obvious that sales were intended for internal companysumption and number reexports. Strangely enough, the High Court at the first instance thought that this finding was unsupported by evidence. Consequently it remanded the case back to the Tribunal for a fresh finding on that aspect after giving both the parties opportunity to adduce further evidence oral and documentary. No fresh material was placed before the tribunal after the case was sent back to it. But on the basis of the material already on record, the tribunal again came to the very companyclusion that it had companye earlier. When the cases again came back to the High Court. that finding was accepted as companyrect. In our opinion, the High Court was number right in rejecting that finding at the first instance. The finding of the tribunal is a reasonable finding-. The inferences drawn by it are reasonable inferences from the facts proved or admitted. It is reasonable to assume that the supplies of iron and steel products were being made to stockists in a State for companysumption in that State. It may be, as found in this case, that a small portion of the supplies had gone out of the State. But that is number a relevant circumstance. What we have to see is whether the Supplies in question were made for companysumption in the Madras State. On that question the finding of the Tribunal is companyclusive. The companytentions of the appellant that the findings of the tribunal about the quantum of the turnover were number based on any evidence, or that those findings were arrived at in violation of the principles of natural justice or that the decision of the High Court is perverse, are wholly untenable companytentions. At the time of the hearing numberreasons were advanced in support of those companytentions.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 637 of 1967. Appeal from the judgment and order dated January 27, 1966 of the Bombay High Court in Misc. Application No. 112 of 1963. T. Desai, G. L. Sanghi, B. Datta and O. C. Mathur, for the appellant. M. Hazarnavis, S. P. Nayar, and R. H. Dhebar, for the respondents. The Judgment of the Court was delivered by Bhargava, J. The Swastik Oil Mills Ltd., appellant, carries on business of manufacturing vegetable oils, soaps and other products and selling them in India as well as exporting them outside India. It was registered as a dealer under the various Sales Tax Acts in force in Bombay. The first of these Acts was the Bombay Sales Tax Act 5 of 1946, which was replaced by th -Bombay Sales Tax Act 3 of 1953. The third and the latest -Act number in force in Bombay is the Bombay Sales Tax Act 51 of 1959. ,The appellant was assessed to sales tax on its turnover for the periods from 1st April, 1948 to 31st March, 1950, and from 1st April, 1950 to 31st March, 1951 on the basis of Returns of turnover submitted by it. In these Returns, the appellant claimed exemption from tax in respect of the turnover representing the despatches or transfer of goods from its Head Office Bombay, to its various Depots or Branches in other States in India, and also exemption in respect of sales which were alleged to have taken place in the companyrse of inter-State trade after 26th January, 1950. The Sales Tax Officer in his order of assessment dated 2nd January, 1954 rejected both these claims. The appellant went up in appeal before the Assistant Collector of Sales Tax, who, in his appellate order dated 29th October, 1956, accepted the claim of the appellant in respect of the despatches to its various Depots or Branches in other States in India, but disallowed the claim in respect of the alleged inter-State sales. As a result of partially allowing the claim of the appellant, the Assistant Collector reduced the tax imposed by a sum of Rs. 19,240-15-6 for the period between 1st April, 1948 to 31st March, 1950, and Rs. 97,208/for the second period between 1st April, 1950 to 31st March, 1951, and directed refund of these amounts to the appellant. The revisions filed by the appellant against the rejection of its claim in respect of inter-State sales were still pending, when, on 7th January, 1963, a numberice was issued by the Deputy Commissioner of Sales Tax, Bombay City Division, in Form XXIV under section 31 of the Bombay Sales Tax Act, 1953, intimating the appellant that he proposed to revise suo motu the appellate orders passed by the Assistant Collector of Sales Tax insofar as he had allowed deduction, in respect of the entire goods despatched to its Branches in other States outside Maharashtra, because, in so doing, he had overlooked the provisions companytained in proviso b to sub-clause ii of Rule 1 under sub-section 3 of section 6 of the Bombay Sales Tax Act, 1946 as amended by the Bombay Sales Tax Amendment Act 48 of 1949. On receipt of this numberice, the appellant put in appearance before the Deputy Commissioner, who is the respondent in this appeal, and raised several objections against the proposed revisional proceedings, making a request that the proceedings be dropped. Since the respondent did number accept this request, the appellant filed a petition under Article 226 of the Constitution in the High Court of Bombay challenging the numberice dated 7th January, 1963, with the prayer that the numberice be quashed and the respondent be restrained from taking any action against the appellant in pursuance thereof. The petition was dismissed by the High Court and, number, on certificate granted by that Court, the appellant has companye up in this appeal to this Court. In this appeal, Mr. S. T. Desai, appearing on behalf of the appellant, urged the same objections against the numberice which were the basis of the prayer for writ in the High Court, and we proceed to deal with them in the order in which he has put them forward before us in his submissions. The first point urged by learned companynsel was that, in exercise of the revisional powers, the Deputy Commissioner of Sales Tax, whether acting under the Sales Tax Act of 1946, or of 1953, or of 1959, companyld only proceed to take action on the basis of the material already present on the record and was number entitled to act on companyjecture or to institute any enquiry so as to include additional material in order to judge the companyrectness of the order sought to be revised. In support of this proposition, learned companynsel referred us to a decision of the Andhra Pradesh High Court in State of Andhra Pradesh v. T. G. Lakshmaiah Setty Sons. 1 . In that case, the Deputy Commissioner, in exercising the revisional jurisdiction, was found by the High Court to have based his assessment on guess-work, and the Court held that this companyjecture companyld number be a justification for seeking to revise the order of the assessing authority. If the Deputy Commissioner companyld, on the material before him, find data for revising the assessment, it was open to him to do so. It must be made clear that he has numberjurisdiction to travel beyond the record that is available to the assessing authority and the basis should be found on the record already in existence. We are unable to accept this principle laid down, by that High Court as 1 12 S.T.C. 663. companyrect. Whenever a power is companyferred on an authority to revise an order, the authority is entitled to examine the companyrectness, legality and propriety of the order and to pass such suitable orders as the authority may think fit in the circumstances of the particular case before it. When exercising such powers, there is numberreason why the authority should number be entitled to hold an enquiry or direct an enquiry to be held and, for that purpose, admit additional material. The proceedings for revision, if started suo motu, must number, of companyrse, be based on a mere companyjecture and there should be some ground for invoking the revisional powers. Once those powers are invoked, the actual interference must be based on sufficient grounds and, if it is companysidered necessary that some additional enquiry should be made to arrive at a proper and just decision, there can be numberbar to the revising authority holding a further enquiry or directing such an enquiry to be held by some other appropriate authority. This principle has been clearly recognised by this Court in The State of Kerala v. M. Cheria Abdulla and Company 1 . In that case, sub- section 2 of s. 12 of the Madras General Sales Tax Act, 1939, which came up for interpretation, empowered the Deputy Commissioner, suo motu or under certain circumstances on an application, to call for and examine the record of any order passed or proceeding recorded under the provisions of that Act by any officer subordinate to him, for the purpose of satisfying himself as to the legality or propriety of such order, or as to the regularity of such proceeding, and to pass such order with respect thereto as he thought fit. This Court held - There is numberdoubt that the revising authority may only call for the record of the order or the proceeding, and the record alone may be scrutinised for ascertaining the legality or propriety of an order or regularity of the proceeding. But there is numberhing in the Act that for passing an order in exercise of his revisional jurisdiction, if the revising authority is satisfied that the subordinate officer has companymitted an illegality or impropriety in the order or irregularity in the proceeding, be cannot make or direct any further enquiry. It was further held It is, therefore, number right baldly to propound that, in passing an order in the exercise of his revisional jurisdiction, the Deputy Commissioner must, in all cases, be restricted to the record maintained by the officer subordinate to him, and can never make enquiry outside that record. 1 1965 1 S.C.R. 601. While thus explaining the scope of the revisional power, the Court also indicated the limitations within which such power can be exercised, holding - It would number invest the revising authority with power to launch upon enquiries at large so as either to trench upon the powers which are expressly reserved by the Act or by the Rules to other authorities or to ignore the limitations inherent in the exercise of those powers. For instance, the power to reassess escaped turnover is primarily vested by rule 17 in the assessing officer and is to be exercised subject to certain limitations, and the revising authority will number be companypetent to make an enquiry for reassessing a taxpayer. Similarly, the power to make a best judgment assessment is vested by section 9 2 b in the assessing authority and has to be exercised in the manner provided. It would number be open to the revising authority to assume that power. p. 887 . In the present case, the numberice issued by the Deputy Commis- sioner of Sales Tax, on the face of it, discloses the reasons which led him to take proceedings for exercising his revisional powers suo motu, and it cannot be said on those facts that he was acting merely on companyjecture. The Deputy Commissioner has number yet proceeded further under the numberice to make the assessment. We have numberdoubt that, when the Deputy Commissioner does make an enquiry, if any, for the purpose of exercising his revisional powers, he will keep within the limitations indicated by this Court in the case cited above. The numberice cannot be quashed or the proceedings restrained merely on the ground that the Deputy Commissioner may have to hold some enquiries in order to properly exercise his revisional jurisdiction. Mr. Desai on behalf of the appellant emphasised the circumstance that in s. 12 2 of the Madras General Sales Tax Act, which was companysidered by this Court, the Deputy Commissioners power was expressed by stating that he may pass such order as he, thinks fit, while numbersuch words occur in the companyresponding provisions in the Bombay Sales Tax Acts with which we are companycerned, but we do number think that this circumstance makes any difference. A revising authority necessarily has the power to make such order as, in the opinion of that authority, the case calls for when the authority is satisfied that it is an appropriate case for interference in exercise of revisional powers. In fact, in S. 12 2 of the Madras General Sales Tax Act, the Deputy Commissioner, when exercising his powers, was to call for the record of the order or proceeding before passing any order which he thought fit, so that there was an expression used which companyld have been interpreted as limiting his powers to the examination of the record only without holding any further enquiry, and, yet, this Court held that the, Deputy Commissioner companyld number be restricted to the record and was empowered to make an enquiry outside that record. In the provisions relating to revisions in the three Bombay Sales Tax Acts, there are numbersuch words indicating any limitation and that would be an additional reason for holding that there can be numberbar to an appropriate enquiry being held by the Deputy Commissioner when seeking to exercise his revisional powers suo motu. The next point urged by learned companynsel was that the numberice in question was issued on the 7th January, 1963, when the Act of 1959 had already companye into force and the Act of 1953 had been repealed, so that if any revisional jurisdiction companyld be exercised by the Deputy Commissioner, it companyld only be under the Act of 1959 and number under the Act of 1953. On this basis, advantage was sought to be taken of the circumstance that, under the Act of 1959, the revisional powers companyferred by s. 57 can be exercised within five years from the date of the order sought to be revised and, at the relevant time in 1963, companyld only be exercised within two years from the date of that order. The order sought to be revised was passed on 29th October, 1956, so that the numberice to exercise revisional powers was being issued more than 6 years after that order had been passed. It appears to us that this submission is adequately met by the provisions companytained in s. 77 of the Act of 1959. The Act of 1953 was repealed by s. 76 of the Act of 1959 and then s. 77 lays down Notwithstanding the repeal by s. 76 of any of the laws referred to therein,- a those laws including any earlier law companytinued in force under any provisions thereof , and all rules, regulations, orders, numberifications, forms and numberices issued under those laws and in force immediately before the appointed day shall, subject to the provisions of s. 42 companytinue to have effect for the purposes of the levy, assessment, reassessment, companylection, refund or set-off of any tax, or the granting of a draw-back in respect thereof, or the imposition of any penalty, which levy, assessment, reassessment, companylection, refund, setoff, draw-back or penalty relates to any period before the appointed day, or for any other purpose whatsoever companynected with or incidental to any of the purposes aforesaid Without prejudice to the provisions companytained in the foregoing sub-sections and section thereto, section 7 of the Bombay General Clauses Act, 1904, shall apply in relation to the repeal of any of the laws referred to in section 76 as if the law so repealed had been an enactment within the meaning of section 7 of that Act. We have only quoted the portions of s. 77 with which we are companycerned . The effect of s. 77 1 a is to companytinue in force the Bombay Sales Tax Act of 1953 as well as the Bombay Sales Tax Act of 1946 to the extent to which they were in force when this Act of 1959 came into force for the purposes mentioned in that clause. These purposes included levy, assessment, reassessment and companylection of sales-tax, so that the proceedings against the appellant, which had been initiated under the Act of 1946, companytinued to be governed by the provisions of that Act. Section 7 of the Bombay General Clauses Act 1 of 1904, which was made applicable by s. 77 3 to the repeal of the Act of 1953, includes the following provisions - Where this Act, or any Bombay Act, or Maha- rashtra Act, made after the companymencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall number- c affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed or e affect 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 the repealing Act had number been passed. Very clearly, the repeal of the Act of 1953 by the Act of 1959 did number affect the rights and liabilities of the assessee to tax under the Act of 1953 or the Act of 1946 in respect of the turnover which became liable to sales-tax under the Act of 1946. The effect of clause e of s. 7 of the Bombay General Clauses Act further is that any legal proceeding in respect of levy, imposition or recovery of that tax is to companytinue and any fresh investigation, legal proceeding or remedy companyld be instituted as if there had been numberrepeal by the Act of 1959. Consequently, the repeal of the Act of 1953 did number in any way affect the power of the Deputy Commissioner to institute proceedings for revision suo motu against the appellate order of the Assistant Collector which had been passed in exercise of his powers under the Act of 1946. It is true, as urged by Mr. Desai in the alternative, that, in fact, the proceedings should have been taken number under S. 31 of the Act of 1953, but under S. 22 of the Act of 1946. This is so, because when the Act of 1946 was repealed by the Act of 1953, similar provisions were made in the Act of 1953 to companytinue in force the provisions of the Act of 1946 in respect of rights and liabilities which may have accrued or have been incurred under the Act of 1946. Section 48 2 and S. 49 1 clearly companytained provisions indicating that, in respect of a liability to tax under the Act of 1946, the rights and liabilities of the assessee had to be determined in accordance with the provisions of the Act of 1946 and all legal proceedings or remedies in respect thereof had also to be taken under the same Act. Consequently, the Deputy Commissioner, in seeking to exercise revisional powers against the order of the Assistant Collector passed under the Act of 1946, had to proceed under S. 22 of the Act of 1946. That, however, is number at all material, because the provisions of S. 22 of the Act of 1946 are quite similar to those of s. 31 of the Act of 1953. The mere incorrect mention of S. 31 of the Act of 1953 in the numberice is immaterial. The Deputy Commissioner has the jurisdiction and power to revise the order under S. 22 of the Act of 1946 and, companysequently the proceedings initiated by him are number without jurisdiction. The last submission made by Mr. Desai was that, if it be held that the revisional powers are sought to be exercised under the Act of 1946, it should be held that the proceedings sought to be instituted are barred by time, because limitation of a reasonable time, within which the revisional powers are to be exercised, must be implied in the statute itself. Section 22 of the Act of 1946 and s. 31 of the Act of 1953 do number lay down any limitation for exercise of the power of revision by a Deputy Commissioner sue motu, and we are number prepared to accept that any such limitation must be necessarily read in the two Acts. In support of his proposition that such a limitation must be read by us, Mr. Desai referred to the decision of this Court in the State of Orissa v. Debaki Debi and Others 1 . That case, however, has numberrelevance at all, because, in the Orissa Sales Tax Act, there was a proviso in general terms laying down that numberorder assessing the 1 15 S.T.C. 153. amount of tax shall be passed after the lapse of 36 months from the expiry of the period, and it was held that this provision was, in substance, number a real proviso to the section in which it was placed, but was, in fact, a period of limitation prescribed for all orders of assessment made under any other provision of the Act. In the Bombay Sales Tax Acts of 1946 and 1953, there is numbersuch general provision prescribing a period of limitation for making an assessment and, even though the effect of the order of the Dy. Commissioner passed in revision may be to bring about an assessment to tax of turnover which was set aside by the Assistant Collector in appeal., such an assessment does number companye under any provision relating to limitation. The decision of the Bombay High Court in Commissioner of Income-tax, Bombay City 1 v. Narsee Nagsee Co. 1 is also similarly inapplicable. In that case, section 11 of the Business Profits Tax Act, 1947, which had numberlimitation prescribed for an order of assessment, was held to be governed by the 4 years period of limitation which was prescribed under s. 14 for issue of a numberice for reassessment. The decision in that case turned on the fact that, if proceeding for reassessment companyld number be started after the expiry of four years from the end of the chargeable accounting period companycerned, it would be totally unreasonable to hold that the first assessment of tax can be made after the expiry of that period. The case before us relates to exercise of revisional powers and does number deal with the question of the first assessment to be made when the Return is initially filed by an assessee. In fact, when a revisional power is to be exercised, we think that the only limitations, to which that power is subject, are those indicated by this Court in K. M. Cheria Abdulla Cos 2 case. These limitations are that the revising authority should number trench upon the powers which are expressly reserved by the Acts or by the Rules to other authority and should number ignore the limitations inherent in the exercise of those powers. In the present case, the Deputy Commissioner, when seeking to exercise his revisional powers, is clearly number encroaching upon the powers reserved to other authorities. Under the Act of 1946, the first assessment is made by the Sales-Tax Officer under S. 11. If information companyes into his possession that any turnover in respect of sales or supplies of any goods chargeable to tax has escaped assessment in any year or has been under- assessed or assessed at a lower rate or any deductions have been wrongly made therefrom, proceedings can be taken afresh under S. 11A. On the face of it, if a first assessment order is made under s. 11 and any turnover escapes assessment, the appropriate provision, under which action is to be taken for assessing that turnover to tax, is S. 11A. There is, however, numberprovision under which the power number sought to be exercised by 1 31 I.T.R. 164. 2 1965 1 S.C.R. 601. the Deputy Commissioner in the case before us companyld have been exercised by any other authority. In this case, as we have indicated earlier, the first assessment of tax was made by the Sales Tax Officer, and the turnover number in question was assessed to tax by him. Having once assessed- that turnover to tax, he companyld .not initiate a fresh proceeding in respect of it under s. 11A. The ,assessment made by him was set aside in appeal by the Assistant Collector and it is this order of the Assistant Collector which is sought to be revised by the Deputy Commissioner. This is, therefore, number a case where the powers are being exercised for the purpose of assessing or reassessing an escaped turnover. The case is one where the revisional powers are sought to be exercised to companyrect what appears to be an incorrect order passed in appeal by the Assistant Collector, and, for such a purpose, proceedings companyld number possibly have been taken under s. 11A. In exercising his revisional powers, therefore, the Deputy Commissioner is number encroaching upon the jurisdiction of any other authority specially entrusted with taking such proceedings. In this companynection, Mr. Desai relied on a decision of the Bombay High Court in Manordas Kalidas v. V. V. Tatke 1 . The decision in that case also related to this very Act of 1946, but the point to be kept in view is that in that case, the revisional power was sought to be exercised in respect of the original assessment order passed by the Sales Tax Officer under S. 11 of the Act. It was in these circumstances that the Bombay High Court, after referring to its two decisions in Bisesar House v. State of Bombay 2 and Commr. of Income-tax v. Narsee Nagsee Co. held - ,,In neither of those two cases, revisional powers were sought to be exercised, but the principle of those cases must, in our judgment, apply for the same reasons to the exercise of revisional jurisdiction, and that jurisdiction must be exercised w ithin a reasonable period, and the yard-stick of reasonableness will be the period prescribed for re-assessment. It appears that in view of the fact that proceedings for re- assessment companyld have been taken under s. 11A in that case and, instead, revisional powers were sought to be exercised, that Court held that the exercise of such revisional powers must be, governed by the same limitation which applied to the exercise of power of reassessment. In fact, the companyrect principle that should have been applied in that case is the principle mentioned by us earlier laid down in K. M. Cheria Abdulla Co. 4 . The revision should have been held to be incompetent on the ground that the power 1 11 S.T.C. 87. 2 9 S.T.C. 654. 3 31 I.T. R. 164. 4 1965 1 S.C.R. 601. was sought to be exercised for assessment of escaped turnover which had number been assessed at all at the initial stage of -assessment under s. 11 and proceedings under s. 11A companyld have been companypetently initiated for bringing that turnover to tax. Instead, the Court equated the proceeding in revision with the proceeding for reassessment and applied the 4-year period of limitation which was prescribed only for reassessment and number for exercise of revisional power. In our opinion, the ultimate decision in that case was perfectly companyrect, but we are unable to affirm the vie,, that the revisional power is governed by any period of limitation laid down in s. 11A for proceedings for reassessment of escaped turn over. Reference, in this companynection, was also made to a decision of this Court in Maharaj Kumar Kamal Singh v. Commissioner of Income-tax, Bihar and Orissa 1 , in which the Court dealt with a case of an assessee whose income to the extent of Rs. 93,604/representing interest on arrears of rent was omitted to be brought to assessment by the Income-tax Officer. Subsequently, in another case, the Privy Council held that interest on arrears of rent payable in respect of agricultural land was number agricultural income and, companysequently, the Income-tax Officer initiated reassessment proceedings under s. 34 1 b of the Income-tax Act. The circumstance relied upon by learned companynsel for the appellant was that the omission by the Income-tax Officer to bring to assessment that interest was part of an order made by him after his initial assessment order had been set aside by the Appellate Assistant Commissioner who directed a fresh assessment, allowing the appeal against that order. In that case, it was held that the escaped income companyld be brought to tax under s. 34 of the Income Tax Act and, on the basis of this decision, it was urged that, similarly, in the present case, the turnover number sought to be brought to tax in exercise of revisional powers companyld be re-assessed under s. 11A. This argument ignores the circumstance that, in that case, the last order, under which the income from interest had been exempted from tax, was an order made by the Income Tax Officer himself, though after the assessment proceedings had been remanded to him by the Appellate Assistant Commissioner. Since the income had escaped assessment under an order passed by the Income-tax Officer himself, he companyld companypetently take proceedings under section In the case before us, the turnover of the assessee number sought to be taxed in the revisional proceedings did number escape liability to tax under the orders of the Sales-tax Officer and, on the other hand, was actually taxed by him, which imposition of tax was set aside in appeal. Consequently, the Sales Tax Officer companyld number possibly take proceedings under s. II A in respect of that turnover. 1 35 I.T.R. 1. For these reasons, we hold that the proceedings initiated by the Deputy Commissioner of Sales Tax against the appellant are number incompetent and the High Court was right in refusing the writ sought by the appellant.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 883, 915 to 967 and 1042 to 1044 of 1967. Appeals from the judgment and order dated December 2, 5, 12 and 13, 1966 of the Gujarat High Court in Special Civil Applications Nos 1003, 1177, 1178, 1183, 1186, 1195, 1197 to 1202, 1205 to 1210, 1220 to 1222, 1244, 1275, 1374, 1377, 1380, 1387, 1389 of 1965, 68 to 70, 72 to 74, 76, 77, 80, 83, 84, 166, 183, 393, 399, 547, 554, 790 of 1966, 1187, 1188, 1233 of 1965, 75, 154, 202, 402, 403 of 1966, and 1179, 1184 and 1185 of 1965. Sen, S.K. Dholakia and Vineet Kumar, for the appellant in A. No. 883/1967 . S, K. Dholakia and Vineet Kumar, for the appellants in C. As. Nos. 915 to 967 and 1042 to 1044 of 1967 . V. Gupte, A.K. Kazi, O.P. Malhotra and S.P. Nayar, for the respondents in C. As. Nos. 883 and 915 to 967 of 1967 . K. Kazi, O.P. Malhotra and S.P. Nayar, for the respondents in C. As. Nos. 1042 to 1044 of 1967 . The Judgment of the Court was delivered by Hidayatullah, J.--On March 10, 1965, the Government of Gujarat numberified under s. 4 of the Land Acquisition Act that certain lands were needed for a public purpose, namely, the companystruction of the capital of the State at Gandhinagar and that Government was satisfied that they were arable lands. Government further directed under s. 17 4 of the Act that as the acquisition of the said lands was urgently necessary the provisions of s. 5A of the Act shall number apply in respect of the lands.A list of the lands was appended to the numberification.This numberification was followed by another on JuLy 31, 1965 under s. 6 of the Land Acquisition Act and it companytained a direction under s. 17 1 of the Act, enabling the Collector, on the expiration of 15 days from the publication of the numberice under s. 9 1 of the Act, to take possession of all arable lands specified in the earlier numberification. Both numberifications were signed by L.P. Raval, Under Secretary to Government and were shown to be by order and in the name of the Governor of Gujarat. Numerous petitions were filed in the High Court of Gujarat under Art. 226 of the Constitution by the owners of the lands Sup, C. I,/68-3 affected by the numberifications to challenge the validity of the acquisition. One such petition was numbered Petition No. 1003 of 1965 and it was typical of all the others. The facts in all the petitions were the same, save the details of the lands, and as the companytentions were also the same, the High Court pronounced a companymon judgment applicable to all, on December 2/5, 1966 and dismissed them. The High Court, however, granted a certificate under Art. 133 1 c of the Constitution and the present appeals have been brought. Civil Appeal No. 883 of 1967 arises from the Special Civil Application No. 1003/65 and the other appeals are in the other petitions. This judgment will accordingly dispose of all the appeals. Before we companysider the arguments we may see the relevant provisions of the Land Acquisition Act. The scheme of the Act, which entered into force almost seventy-five years ago, is by number familiar to lawyers and companyrts and it is number necessary to refer in detail to it. The High Court has painstakingly analysed the provisions already. We shall refer in passing to what is material to the discussion, Acquisition of land under the Act originarily begins with a preliminary inquiry. Government numberifies first under s. 4 that land in any locality is needed or is likely to be needed for a public purpose. Public numberices are also given. This enables the officers of Government to enter upon lands to survey them and also enables persons interested to object to the acquisition generally and also particularly in accordance with the provisions of s. 5A of the Act. After the objections have been companysidered and Government has satisfied itself on the report or reports of the Collector that a particular land is needed, a second numberification is issued under s. 6 that a particular land is needed for the public purpose. This declaration is companyclusive evidence that the land is so needed and Government then proceeds to acquire the land. The procedure is detailed in the sections that follow. Under s. 9 1 the Collector causes public numberices to be given that Government intends to take possession of the lands and that claim to companypensation for all interests in lands shall be made to him. Then companymence proceedings for the fixation of companypensation with the details of which procedure we are number presently companycerned. When these proceedings are companypleted the Collector makes his award about the true area, the companypensation to be allowed and the apportionment of that companypensation among persons known or believed to be interested. When the Collector has made his award which is made companyclusive for certain purposes s. 16 enables him to take possession of the lands and the lands vest absolutely in Government free from all encumbrances. The is provided in s. 17. Under this procedure Government in cases award. There is a shorter procedure for cases of urgency and it is provided in s. 17. Under this procedure Government in cases of urgency, is enabled inter alia to omit the application of s. 5A and to numberify the lands under s. 6 at any time after the publication of the numberification under s. 4 1 . Under sub-s. 1 of s. 17, Government can direct the Collector, though numberaward has been made, to take possession of any waste or arable lands needed for the public purpose, on the expiration of fifteen days from the publication of the numberice under s. 9. Under Sub-s. 4 of the same section Government may direct that in the case of any land to which in its opinion the proviSiOns of the first sub-section are applicable, the provisions of s. 5A shall number apply and if it so directs a declaration may be made under s. 6 in respect of that land at any time after the numberification under s. 4 1 has been published. It will therefore, be numbericed that the shorter procedure has been followed here. Before we refer to the grounds on which the action of Government is challenged we may read ss. 4 1 6 1 omitting the proviso, and s.17. Although we are principally companycerned with the first and fourth sub-section of the last section we shall be required to refer to the remaining sub-sections, and we shall read the section as a whole 4 1 Whenever it appears to appropriate Government that land in any locality is needed or is likely to be needed for any public purpose, a numberification to that effect shall be published in the Official Gazette, and the Collector shall cause public numberice of the substance of such numberification to be given at companyvenient places in the said locality. 6 1 Subject to the provisions of Part V I of this Act, when the appropriate Government is satisfied, after companysidering the report, if any, made under section 5A, sub-section 2 , that any particular land is needed for a public purpose, or for a Company, a declaration shall be made to that effect under the signature of a Secretary to such Government or of some officer duly authorized to certify its orders and different declarations may be made from time to time in respect of different parcels of any land companyered by the same numberification under section 4, sub-section 1 , irrespective of whether one report or different reports has or have been made whenever required under section 5A, sub-section 2 . 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 thereupon vest absolutely in the Government, free from all encumbrances. 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 that station, or of providing companyvenient companynection with or access to any such station, 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 building under this sub-section without giving to the occupier thereof at least forty-eight hours numberice of his intention so to do or such longer numberice as may be reasonably sufficient to enable such occupier to remove his movable property from such building without unnecessary inconvenience. In every case under either of the preceding sub-sections the Collector shall at the time of taking possession offer to the persons interested companypensation for the standing crops and trees if any on such land and for any other damage sustained by them caused by such sudden dispossession and number excepted in section 24 and, in case s uch offer is number accepted, the value of such crops and trees and the amount of such other damage shall be allowed for in awarding companypensation for the land under the provisions herein companytained. In the case of any land to which, in the opinion of the appropriate Government, the provisions of sub-section 1 or sub-section 2 are applicable, the appropriate Government may direct that the provisions of section 5A shall number apply, and, if it does so direct, a declaration may be made under section 6 in respect of the land at any time after the publication of the numberification under section 4, sub-section 1 In the High Court sub-ss. 1 and 4 of s. 17 of the Act were assailed under Arts. 14 and 19 1 f of the Constitution.This argument was placed at the forefront.In this Court this submission was relegated to the end. Apparently number much faith was reposed in its potency. The other arguments urged before the High Court and found against the appellants, were pressed with vigour upon us.These arguments companycern the issue of numberifications invoking the shorter procedure and those numberifications are questioned. These arguments involve the validity of the numberifications as a unauthorised by Government, b without formation of the necessary opinion on relevant matters, and c on erroneous assumption of facts.The first ground, when amplified, is that P. Raval, Under Secretary, who signed the numberifications under s. 6 was number duly authorised to do so under the Act and the numberifications were, therefore, invalid and of numbereffect. The second ground is based on the assertion that there was numberformation of opinion by the Government as regards urgency or that the lands were arable, and on both the points the Act requires Government to reach a decision, which fact has number been established if number disproved. The third ground proceeds on the meaning of the expression arable land which, it is claimed, denotes land capable of cultivation or village but number land already under the plough. We shall number proceed to companysider each point in turn. Ravals authority to issue the numberification under s. 6 is questioned on the wording of the latter portion of that section where it is mentioned that the declaration shah be made under the signature of a Secretary to such Government or some officer duly authorised to certify its orders. The argument is without substance The word Secretary is number defined either in the Land Acquisition Act or the General Clauses Act so as to exclude Additional, Joint, Deputy, Under or Assistant Secretaries. If this were established, then it might be said that the word was intended to designate only the head of the secretarial department companycerned with land acquisition. No such indication is available from any source. Nor was it necessary to invest any particular Secretary specially under the Act for numbersuch requirement can be spelled out from the words relied upon. On the other hand, the business of Government is regulated by the Rules of Business made under Art. 166 of the Constitution. How those Rules operate will be more fully companysidered presently when we deal with the second point. For the present it is sufficient to point out a few provisions of the Rules, Rule 7 provides Each Department of the Secretariat shall companysist of the Secretary to the Government, who shall be the official head of that Department and of such other officers and servants subordinate to him as the State Government may determine -- Provided that- a more than one Department may be placed in charge of the same Secretary b the work of a Department may be divided between two or more Secretaries. If this Rule stood by itself, it might have been necessary to place on record evidence to establish that the work of this Department was divided among the Secretaries and how, but Rules 13 and 15 additionally provide Every order or instrument of the Government of the State shall be signed either by a Secretary, an Additional Secretary, a joint Secretary, a Deputy Secretary, an Under Secretary or an AssiStant Secretary or such other officer as may be specially empowered in that behalf and such signature shall be deemed to be the proper authentication of such order or instrument. These rules may to such extent as necessary be supplemented by instructions to be issued by the Governor on the advice of the Chief Minister, Rule 13 specifically places all Secretaries on equality for authentication of orders and instruments of Government and Rule 15 further authorises supplemental instructions which as we shall presently see were in fact issued.Thus Raval was companypetent to sign the declaration as a Secretary.It is number necessary to companysider whether he can be treated as an officer duly authorised because he already had authority by virtue of his office and rule 13 of the Rules of Business companytemplates officers other than Secretaries. But if he did number possess the power as a Secretary he would undoubtedly have been companypetent as an officer duly authorised by virtue of rule 13 of the Rules of Business and that is all that s. 6 requires. No further special authorisation under the Act was necessary. To overcome these rather obvious difficulties Mr. B. Sen raised the second point which was that the provisions of the Act require Government to form an opinion and this function cannot be delegated to the Secretaries and even if it companyld be delegated, strict companypliance with Rules of Business and the instructions issued under Rule 15 was necessary. He submits that there was numberformation of the necessary opinion in the case before action under s. 17 1 or 4 was taken. To understand this argument provision on the subject.To begin with Art.166 of the Constitution provides. Conduct of business of the Government of a State. All executive action of the Government of a State shall be expressed to be taken in the name of the Governor. Orders and other instruments made and executed in the name of the Governor shall be authenticated in such manner as may be specified in rules to be made by the Governor, and the validity of an order or instrument which is so authenticated shall number be called in question on the ground that it is number an order or instrument made or executed by the Governor. The Governor shall make rules for the more companyvenient transaction of the business of the Government of the State, and for the allocation among Ministers of the said business in so far as it is number business with respect to which the Governor is by or under this Constitution required to act in his discretion. It is obvious that the executive action of the Government was in fact expressed to be taken in the name of the Governor, and that the orders were authenticated in the manner required by rule 13 of the Rules of Business already quoted. The validity of the order companyld number, of companyrse, be called in question that it was number an order made by the Governor. Had the Government sheltered itself behind the companystitutional curtain, it is a little doubtful the appellants companyld have successfully pierced this barrier by merely stating that the Government had number passed the orders or made the necessary determination without alleging definite facts. In addition to the companystitutional provision there is also the presumption of regularity of official acts. Orders of Government, whether at ministerial or gubernatorial level, are all issued in the same form and the companystitutional protection as well as the presumption both companyer the case. But, as it happens frequently, Government tried to establish that everything was regular. A batch of companynter affidavits was filed on behalf of Government to show how the matter was dealt with from stage to stage and the appellant filed affidavits in rejoinder and were number slow to point out infractions or supposed infractions. As they sought to do this on facts furnished by the affidavits on behalf of Government we may say a word about those affidavits. No less than eight affidavits were filed by Government and five affidavits including one supporting the petition were filed by the petitioner in Special Civil Application No. 1003 of 1965. Other affidavits on behalf of the other petitioners repeated the allegations. The affidavits filed with the petitions had averted only that Government had number made up its mind regarding acquired lands, that the satisfaction was mala fide and companyourable and that the gap of time between the two numberifications itself showed that there was numberurgency. The affidavits also raised the issue that the lands were number arable lands. Government apparently took up the challenge and flied affidavit after affidavit. The first affidavit was filed by L. P. Raval, Under Secretary Oct. l, 1965 that the lands were arable lands and Government had formed the opinion about urgency, and further that the determination of these two matters by Government was number justiciable. This was followed by an affidavit by the Executive Engineer Oct. 8, 1965 who stated that the master plan was ready which involved 12 villages including Pethapur where these lands are situated. The lands were involved in the companystruction of main roads and the laying out of sectors. He explained the delay between the two numberices on the ground that survey had to be done and that took time but reaffirmed that the matter was urgent. The appellants promptly questioned the formation of opinion by alleging that Government had number formed the opinion and that the affidavit of Raval did number establish this. In reply another Under Secretary Nimbalkar filed an affidavit Nov. 8 1965 that Jayaraman, Deputy Secretary was subjectively satisfied that the lands were arable lands and that there was urgency and asserted that both matters were for the subjective determination of Government and thus number open to question in a companyrt of law. This was followed by another affidavit in rejoinder from the appellants November 24, 1965 that Jayaraman had number personally filed any affidavit and therefore it was number clear who had made the subjective determination regarding the matters disputed and the public purpose. Raval then swore another affidaVit August, 1966 giving details of the urgency and stated that he had companysidered the need for issuing the numberification under s. 4 and that it was decided to apply s. 17 4 . He also stated that the numberification under s. 6 and the application of s. 17 1 was companysidered first by him and then by Jayaraman and they had agreed to issue the numberification and apply s. 17 1 . Another affidavit ill rejoinder was filed during the hearing December 2, 1966 that neither Raval number Jayaraman had stated that they had satisfied themselves about- s. 17 4 number had Raval or Jayaraman stated that they were authorised by the State Government or by the Rules of Business or by any special order to form the said opinion. A number of affidavits were then fled. The Minister-in-Charge filed an affidavit in which he said for the purpose of urgently acquiring the lands for the Capital Project, I had given instructions initially to Shri S.M. Dudam and subsequently to Shri A.S. Gill after he became the Secretary of the Revenue Department, and had made arrangements with them, during their respective tenures as Secretaries of the Revenue Department, to take necessary action for urgent acquisition of lands for the Capital Project and had also instructed them that they or the companycerned Deputy Secretaries or Under Secretaries in the Revenue Department may, without bringing the cases to my personal numberice and without referring such cases to me, issue numberifications under sections 4 and 6 o the Land Acquisition Act and may apply urgency clause under section 17 1 and 4 of the said Act as the case may be wherever it was possible to invoke the urgency clause according to law. M. Dudani who was Secretary till April 2, 1965 and A.S. Gill who followed him swore two affidavits. Their purport was almost the same A.S. Gill said Shri Utsavbhai S. Parikh, the Honble Minister for the Revenue Department for the purpose acquiring lands urgently for the Capital Project had given instructions to me and had made arrangements with me to take necessary action for urgent acquisition of lands for the Capital Project and had also instructed me that myself or the companycerned Deputy Secretaries or the Under-Secretaries in the Revenue Department may, without bringing the cases to his personal numberice and without referring such cases to him, issue numberifications under sections 4 and 6 of the said Act and may apply urgency clause under sections 17 1 and 4 of the said Act, as the case may be, wherever it was possible to invoke the urgency clause according to law. I had given instruction to the companycerned Deputy secretaries and the under Secretaries of the Revenue Department to take necessary actions under sections 4 and 6 of the said Act and to apply the urgency clause wherever it was possible according to law. The appellants then filed a last affidavit in rejoinder denying the power of the Minister to delegate by oral instructions his own power to the Secretary and questioned the sub-delegation to the Deputy and Under Secretaries. It would thus appear that the companytroversy got enlarged as time passed and Government undertook more and more burden although there was hardly any attempt by the appellants to support their assertions by mentioning any facts. The High Court numbericed in its judgment that there was really numberhing in the original affidavit supporting the petition which Government need have answered and yet it allowed affidavits to be filed during the hearing and even in the midst of the pronouncement of the judgment. Each affidavit on the side of Government itself enabled the appellants to enlarge their allegations and to take up new stands. This unusual companyrse appears to have been permitted from a desire to be just and fair but was hardly proper and the High Court ought really to have stemmed the flow of affidavits, keeping the appellants to their burden and the Government to its burden, if any. The Government also did number leave the appellants to their burden which would have been heavy in view of the presumption and the provisions of Art. 166 2 already mentioned. The High Court having before it allegations, companynter allegations and denials dealt first with the legal side of the matter. Then it readily accepted the affidavits on the side of Government. If it had reversed its approach it need number have embarked upon what was perhaps unnecessary an analysis of the many principles on which onus is distributed between rival parties and the tests on which subjective opinion as distinguished from an opinion aS to the existence of a fact, is held open to review in a companyrt of law. As stated already there is a strong presumption of regularity of official acts and added thereto is the prohibition companytained in Art. 166 2 . Government was number called upon to answer the kind of affidavit which was filed with the petition because bare denial that Government had number formed an opinion companyld number raise an issue. Even if Government under advice offered to disclose how the matter was dealt with, the issue did number change and it was only this. Whether any one at all formed an opinion and if he did whether he had the necessary authority to do so.The High Court having accepted the affidavits that Raval and Jayaraman had formed the necessary opinion was only required to see if they had the companypetence.The High Court after dealing with many matters held that they had. Mr. B. Sen has, therefore, very rightly companyfined himself to this aspect of the case. and has questioned the companypetence of Raval and Jayaraman to act for the Government. His companytention is that the procedure followed by the Minister-in-Charge offended the Rules of Business and therefore the necessary satis- faction or the opinion of Government was wanting in the case. In support he has relied upon Emperor v. Shibnath Banerji 1 . Mr. Sens argument proceeds like this Under the Rules of Business Rule 4 the business of Government is to be transacted in the Department specified in the First Schedule and item No. 15 companyers the topic of acquisition of property and the principles on which companypensation is to be determined and it is assigned to the Revenue Department. Each Department of the Secretariat companysists of a Secretary to the Government Rule 7 but the work may be divided between two or more Secretaries. The Minister-in-Charge is primarily responsible for the disposal of the business appertaining to the Department Rule 10 . Therefore only the Minister for Revenue companyld decide questions. Referring to the oral instructions said to have been given by the Minister, Mr. Sen refers to the instructions issued by the Governor under Rule 15 and draws attention to paragraph 3 of the instructions which reads Except as otherwise provided in these Instructions, cases shall ordinarily be disposed of by, or under the authority of the Minister-in-Charge, who may by means of standing orders, give such directions as he thinks fit for the disposal of cases in the Department. Copies of such standin g orders shall be sent to the Governor and the Chief Minister. He companytends that a general instruction of the type mentioned by the Minister in his affidavit companyld only be given as a standing order of which a companyy had to be sent to the Governor and the Chief Minister and, therefore, the oral instructions had numbervalidity in law. He submits in the alternative that at least an order in writing ought to have been passed. Mr. S.V. Gupta in reply companytends that this overlooks the opening words of Rule 10 which are without prejudice to the provisions of rule 7, indicating that the business of land acquisition is to be transacted in the Revenue Department Rule 4 by the Secretary to the Department Rule 7 read with Rule 10 although the Minister is primarily responsible for the disposal of the business. He then draws attention to the provisions of Rule 13 where a Secretary is equated to Additional, Joint, Deputy, Under and Assistant Secretaries for certain purposes and the definition of Secretary in paragraph 1 vii which includes these other functionaries for the purpose of the Instructions. Mr. Gupte next reads with paragraph 3 the provisions of paragraphs 4 and 5 which provide L.R. 72 I.A. 241. Each Minister shall arrange with the Secretary of the Department what matters or classes of matters are to be brought to his personal numberice. Except as otherwise provided in these Instructions cases shall be submitted by the Secretary in the Department to which the case belongs to the Minister-in-charge. Mr. Gupta companytends that there is numberhing in the Rules or Instructions that oral instructions, if clearly issued, cannot companyfer on the Secretaries the power to make determinations and submits that Standing Orders refer to all cases generally and oral instructions ,can be issued in certain particular companytingencies and this was done as stated in the affidavits of the Minister, A.S. Gill and S.M. Dudani which have been accepted. He companytends that there is numbersub- delegation because Rule 7 b companyers this case. In our judgment the argument of Mr. Gupte is valid.There is numberhing in the Rules or Instructions which prescribes that the authority must be in writing or by Standing Orders. Standing Orders are necessary for the disposal of cases in the Department paragraph 3 and this applies to cases generally. Paragraph 4, on the other hand, refers to matters or classes of matters and that is number a case but a matter in a case. The definition of case in the Instructions is Case includes the papers under companysideration and all previous papers and numberes put in companynection therewith to enable the question raised to be disposed of, but this definition is excluded by the companytext.Although the case belongs to a Department paragraph 2 i ,the word case in paragraph 3 obviously refers to the disposal of cases and number to matters arising in a case regarding which the Minister may arrange with the Secretary whether they are to be brought to his personal numberice or number. The matters here were application of s. 17 1 and 4 to the acquisition of waste and arable lands and the Minister companyld leave this matter to his Secretaries as he did. For this purpose Standing Orders were number only number necessary but would be inappropriate. Reliance was placed upon the decision of the Orissa High Court in Shayamaghana Ray v. State 1 that Rules 15 must prevail over the instructions. But that Rule itself provides that the Rule may be supplemented by instructions and the power so companyferred was available in paragraph 4 to provide that the Minister may arrange with the Secretary of his Department what , 1 A.I.R. 1952 Orissa 230. matters or classes of matters are to be brought to Iris personal numberice. This dispenses with the taking of orders of the Minister each time. Mr.Sen then refers to the words of ss.4, 6 and 17 1 and 4 which are different.In s.4 the words are whenever it appears to the appropriate Government that land in any locality is needed or is likely to be needed while in s.6 the words are when the appropriate Government is satisfied and in s. 17 4 the words are in the opinion of the appropriate Government. He companytends that some difference must be made between them and when sub-ss. 1 and 4 of s.17 require, a direction from the appropriate Government the determination must be by the Minister himself.If the sections stood by themselves this argument would be unanswerable but we have the Rules of Business which specifically allow companyferral of powers on Secretaries and the determination of the Secretary becomes the determination of Government.Mr.Sens reference to Emperor v.Shibnath Banerjis case 1 is number apposite because the circumstances there were different.That case arose from petitions under s. 491 of the Code of Criminal Procedure seeking directions in the nature of habeas companypus on behalf of certain pensons detained in pursuance of orders made under Rule 26 of the Defence of India Rules 1939. It appears that detentions were dealt with in Bengal in the Home Department and the Home Minister Bengal, in the Bengal Legislative Assembly in answer to interpellations, slated that he had directed that on receipt of the report of arrest under Rule 129 Defence of India Rules 1939 together with a recommendation by the police for detention under Rule 26, orders of detention under Rule 26 1 b should at once be issued as a matter of companyrse subject to review by Government on receipt of further details. As Lord Thankerton pointed out tthat clearly meant the substitution of the recommendation by the police in place of the recommendation of the Governor prescribed by Rule 26 and equally rendered any order under r. 26 in companyformity with the Home Minister direction, to which their Lordships referred as the routine order, ab initio void and invalid as number being in companyformity with the requirements of r. 26. Further Mr. Porter, the Additional Home Secretary, in an affidavit regarding Shibnath Banerji stated Shibnath Banerji He was arrested by the Police under r. 129, Defence of India Rules on 20th October 1942. On 27th October 1942, I companysidered the materials before me and in accordance with the general order of Government directed the issue of an order of detention under r.26 1 b Defence of India Rules.On receipt of fuller materials the case was later submitted for companysideration of the Honourable Home Minister, Bengal, from whom numberorder directing withdrawal or modification of the order of detention was received. Their Lordships are unable to read Mr. Porters state- ment that he had companysidered the materials before him as involving anything more than he has companysidered the report of the arrest and the recommendation of the police to see if there was material sufficient to justify the issue of an rder under the routine order. It cannot mean that, in spite of the direction of the Home Minister in the routine order, he companysidered the materials before so as to satisfy himself, independently of the police recommendation that an order under r.26 should be issued. That would number be in accordance with the requirement of the routine order that-the police having recommended it--the order of detention should be issued as a matter of companyrse. The position in the present case is different. If Mr. Porter had sworn the affidavit that he had companysidered the need for detention, quite apart from the routine order, the result might have been different because of the orders being in the name of the Governor and by his order. In any case Mr. Porter admitted that he had number companysidered the matter. In our case the Secretaries companycerned were given the jurisdiction to take action on behalf of Government and satisfied themselves about the need for acquisition under s. 6, the urgency of the matter and the existence of waste and arable lands for the application of sub-ss. 1 and 4 of s. 17. In view of the Rules of Business and the Instructions their determination became the determination of Government and numberexception companyld be taken. Of companyrse, if Government had relied upon the provisions of Art. 166 2 and the presumption of regularity of official acts, all this enquiry would have become unnecessary since the appellants had number originally pleaded any fact.s leading to any enquiry. However, on a review of the affidavits the provisions of the Act and the Business Rules and instructions we are satisfied that the directions under sub-ss. 1 and 4 of s. 17 were number invalid. This brings us to the companytention that since the lands in question were under cultivation, they did number companystitute waste or arable lands because by arable land is meant land capable of being ploughed or fit for village and number land actually Cultivated. The High Court has rejected this companytention disagreeing with a decision of the Bombay High Court reported in Sadruddin Sideman v. H. Patwardhan 1 . Mr. Sen has adopted the judgment of the Bombay High. Court as part of his argument. Mr. Gupte in his reply has ruled upon Guntur Ramalakhsmana and Others v. Government of Andhra. Pradesh and another 2 , Baldeo Singh and others v. State of Uttar Pradesh and others 3 and Smt. Lakshmi Devi others v. The State of Bihar and others 4 and the reasons given in the judgment under appeal. We shall first deal with the three rulings from Andhra Pradesh, Allahabad and Patna High Courts. The first companytains numberdiscussion and may number be referred to here. In the case from Allahabad reference is made to s. 17 3 of the Act already quoted in which there is a provision that standing crops must be companypensated for and it is inferred that by arable lands must be meant number only land fit for cultivation but also land actually under cultivation. In the case from Patna reference is made to Halsburys Laws of England II Edn. Vol. 14 p. 633 paragraph 1187, where arable land is shown as including untilled land. In the case from Bombay relied upon by Mr. Sen three different reasons were given. First several dictionaries were referred to and reliance was placed upon the Oxford Dictionary in preference to Websters particularly because the Oxford Dictionary did number mention land under actual cultivation as one of the meanings although Websters Dictionary did. The learned Judges next referred to the etymology of the word arable and finally to the dicta of Judges in Palmer v. McCormick 5 and Simmons v. Norton 6 . Support was then found for the view in s. 17 3 of the Act, the mention of companypensation for standing crops numberwithstanding. There is numberdefinition of the word arable in the original Land Acquisition Act.A local amendment includes garden lands in the expression. Now lands are of different kinds there is waste-land desert-land, pasture-land, meadow land, grass-land wood-land, marshy-land, hilly land, etc. and arable land. The Oxford Dictionary gives the meaning of arable as. capable of being ploughed fit for village opposed to pasture-land or wood land and gives the root as arablis in Latin. The learned Judges have unfortunately number given sufficient attention to the kinds of land and the companytrast mentioned with the meaning. Waste-land companyes from the Latin vastitas or vastus empty, desolate, without trees or grass or buildings . It was always usual to companytrast vastus with incultus uncultivated as in the phrase to lay waste agrivastate A meadow or pasture-land is pratum and arable is arvum and Cicero spoke of prata et arva meadow and arable A.I.R. 1965 Bom. 224. 2 A.I.R. 1967 A.P. 280. A.I.R. 1965 All. 433. 4 A.I.R. 1965 Pat. 400. 5 1890 25 Ir.Rep.110. 6 1831 7 Bing 640131 E.R. 249. lands . Grass-land is number meadow or pasture-land and in Latin is known as campus as for example the well-known Campus Marflus at Rome, where the companyitia assembly of the Roman people used to meet. Woodlands is silvae, nemora or saltus. We have given these roots became a great deal depends on the distinctions thus visible in understanding the judicial decisions of English and Irish Courts. Lands described in different companybinations of words such as waste and arable or arable and pasture or pasture and woodland emphasise different aspects of land. In many cases the change from one kind of use to another was held to be waste. It is in this sense that Coke on Littleton 53b quoted in Oxford Dictionary said that the companyversion of meadow into arable or arable into wood is waste but 2 Roll. Ab. 815 said that if meadows be sometimes arable, and sometimes meadow, and sometimes pasture, then the ploughing of them is number waste. In Lord Darey v. Askwith Heb. 234 it is laid down as generally true that the lessee hath numberpower to change the nature of the thing demised he cannot turn meadow into arable, number stub a wood to make it pasture, number dry up an ancient pool or piscary, number suffer ground to be surrounded, number decay the pale of a park It was thus in Simons v. Norton 1 which was an action of waste for ploughing ancient meadow that Tindal C.J. made the observations which are relied upon in the Bombay case. He observed It is clearly established by several authorities, that ploughing meadow land is wasteIn grants,land often passes specifically, as meadow, pasture, arable, or by other descriptions. Ploughing meadowland is also esteemed waste on another account namely, that in ancient meadow, years, perhaps ages, must elapse before the sod can be restored to the state in which it was before ploughing. The law, therefore, companysiders the companyversion of pasture into arable as prima facie injurious to the landlord on those two grounds at least. Similarly, the observations of Chatterton V.C. in Palmer v. McCormick 2 and of Fitzgibbon J. in the same case cannot lead to any companyclusion that arable land means only land capable of cultivation and number land actually cultivated. Tiffs was also a case of alleged waste. Chatterton V.C. observed arable does number mean land actually ploughed up or in tillage but land capable or fit to be so for ought I know this land, though properly designated arable in 1821, may even then have been in process of acquiring 1 131 E.R. 249. 2 1890 25 Ir. Rep, 110. the character of ancient pasture, which process have companymenced, and been going on for sometime. Mr. Justice Fitzgibbon observed that because the laud was number .in grass for 20 years the defendant companyld treat it as arable. that is. cultivable by him. The companytrast between grass-land and arable is thus established but it does number rule out that arable land does number include land actually cultivated. As a matter of fact the passage from Chatterton V.C. is companyrectly understood in Stroudes number only land actually ploughed upon in tillage but also I and capable or fit to be so. In tiffs companynects it is useful to see that in the Agricultural Holdings Act, 1923 13 and 14 Geo. 5 c.9 arable land is defined as number including land in grass, and in the second schedule to the Agriculture Act, 1947 10 and 11 Geo. 6 c. 48 special direction may be given by the Minister requiring the ploughing up of any land companysisting of permanent pasture, and the land is deemed to be arable land and to have been arable land at all material times. It is thus clear that by arable land is meant number only laud capable of cultivation but also actually cultivated. It is number arable number because it is cultivated demonstrates its nature as arable land. All this discussion by us was necessary to dispel the inferences drawn from dictionaries and repons of cases from England and Ireland, but the safest guide, as always, is the statute itself which is being companysidered. In this companynection we may first turn to the Land Acquisition Act of stood Power to take possession in cases of urgency. In cases of urgency, whenever the Local Government so directs. the Collector though numbersuch reference has been directed or award made may, on the expiration of fifteen days from the publication of the numberice mentioned in the first paragraph of section nine, take possession of any waste or arable land needed for public purposes or for a Company. Such land shall thereupon vest absolutely in the Government free from all encumbrances. The Collector shall offer to the persons interested companypensation for the standing crops and trees if any on such land and in case such offer is number accepted, the, value of such crops and trees shall be allowed for in awarding companypensation for the land under the provisions herein companytained. LISup.CI./68 4 It will be numbericed that companypensation was then payable for standing crops and trees if any . There can be numberquestion of crops on waste land for the crops can only be on arable lands became if crops companyld grow or were actually grown the land would hardly be waste.The words in parenthesis obviously indicate that land may have crops or be fallow and companypensation was payable crops if there were crops. Turning number to the section as it is today it will be numbericed that the first sub-section companyresponds to the first and second paragraphs of s. 17 of the Act of 1870 taken together. The third paragraph of the former Act companyresponds to the third sub-section of the present. Act. The difference in language in the third sub-section necessary because the provisions of sub-section 3 are number intended to apply also to the second sub-section of the present Act which is new. Hence the opening words in every case under either of the preceding sub-sections which means all cases arising either under sub-s. 1 or sub-s. 2 . The words in parenthes is if any in relation to the first sub-section companytinue to have the same force and numberother, as they had previously. The learned Judges of the High Court of Bombay did number give sufficient companysideration to the fact that the opening words in every case under either of the preceding sub-sections do number play and more part than to indicate that what follows applies equally to cases under sub-s. 1 and sub-s. 2 . They ought to have read the words that follow the opening words in relation to sub-s. 1 and if they had so read them, there would have been numberdifficulty in seeing the force of the words in parenthesis if any or why crops are mentioned when the words of the sub-section are waste and arable.The quotation from Rogers Agriculture and Prices quoted in the Oxford Dictionary-half the arable estate, as a rule, lay in fallow,gives a clue to the meaning of the words if any. In our judgment, therefore, the companyclusion of the Bombay High Court was erroneous and the judgment under appeal is right on this point. Finally there remains the question of the companystitutionality of sub-ss. 1 and 4 of s. 17. On this point very little was said and it is sufficient to say that the High Court judgment under appeal adequately answers all objections. In the result the appeals fail and are dismissed.We, however,think that this is a proper case in which there should be numberorder about companyts and direct accordingly.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 137 of 1967. Appeal by special leave from the judgment and order dated May 9, 1967 of the Rajasthan High Court in S. B. Criminal Appeal No. 254 of 1966. Sobhag Mal Jain, for the appellants. R. Khanna and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Vaidialingam, J. The two appellants, in this appeal, by special leave, challenge their companyviction, by the Additional Sessions Judge, No. 1, Jaipur City, for offences under ss. 120B, 420, 420 read with 511, and 467 read with 471, I.P.C., as companyfirmed by the High Court of Rajasthan, at Jodhpur. Bhanwar Singh has also been companyvicted, for an offence under S. 380, I.P.C. Both of them have been sentenced to various terms of imprisonment and fine, for these offences, and the sentences of imprisonment have been directed to run companycurrently. The two appellants, along with two others, who have since been acquitted, were tried by the learned Sessions Judge, for various offences, as indicated below. There was a companymon charge of criminal companyspiracy, under S. 120B, IPC, to do, or cause to be done, illegal acts, viz., offences of theft, cheating, forgeries, etc., against all the four accused. Under this head, the allegation was that the four accused agreed, among themselves, to companymit theft and pilferage, of Indian and British postal orders and bank cheques, belonging to different persons, which were in transmission, by post and that, after such pilfering, the names of the original payees and the names of the paying post offices were erased and forgery was companymitted by writing the names of fictitious persons, or the names of some of the accused, and of different post offices. The further allegation was that the accused agreed to use, as genuine, all such pilfered and forged postal orders and cheques, which the accused knew, or had reasons to believe, were forged documents. There was also an allegation that all the accused had also agreed to present, such pilfered and forged postal orders and cheques, for encashment at the post offices and banks at Ajmer and Jaipur, through the two appellants and Yasoda Devi, 4th accused, pretending to be either the original payees or the substituted payees. It was further alleged that the accused had agreed to cheat, or attempt to cheat, the postal L2Sup. CI/68-3 authorities and banks, at Ajmer and Jaipur, by dishonestly inducing them to make payment to the appellants and Yasoda Devi, in respect of the pilfered and forged postal orders and cheques. It Was also stated that the accused companymitted the various acts, in pursuance of the agreement, regarding the postal orders and cheques, details of which were given under that charge. Appellant Bhanwar Singh was also further charged that, in pursuance of the companyspiracy, during October 1956 and December 1957, he companymitted theft of various postal orders and cheques, belonging to various persons and that he also forged certain postal orders, which were valuable securities, by removing the names of the original payees and inserting his own name and that he thereby cheated the postal authorities at Jaipur, by dishonestly inducing them to deliver certain amounts against such postal orders, which were really payable to a third party, and thereby he companymitted offences of theft, forgery and cheating, under ss. 380, 467 and 420, I.P.C. There were also certain further charges, for offences punishable under S. 471 and of an attempt to companymit cheating in respect of a cheque, punishable under S. 420 read with S. 51 1, IPC. Similarly, against Kishanlal, the 2nd appellant, there were additional charges, framed under ss. 467, 420, 420 read with 511 and 471, I.P.C. Kapoorchand was also charged under ss. 380 and 467 I.P.C., and Yasoda Devi, under ss. 467, 471, 420 and 419 I.P.C. The case of the prosecution, in brief, was as follows. Bhanwar Singh and Kapoorchand were companystables in the C.I.D., Ajmer Zone, during 1956-57. In the companyrse of their duties of censoring postal mail, these two companystables, after having opened the mail, for the purpose of censoring, pilfered certain Indian postal orders and British postal orders and cheques and, after erasing the names of the original payees, as also the names of the post offices or banks, where payment was to be made, inserted their own names or some fictitious names and got the postal orders or cheques encashed at different post officers and banks. According to the prosecution, Bhanwar Singh and Kapoorchand had entered into a companyspiracy, with Kishanlal and Yashoda Devi, whose services were utilised for getting the moneys from the Banks. The matter came to light when the payees did number receive the cheques or the postal orders intended for them and lodged companyplaints with the post offices and banks. On investigation, the four accused were charged, as detailed above. The accused denied the charges levelled against them. The learned Sessions Judge came to the companyclusion that the charge of criminal companyspiracy was established, against all the four accused The first appellant was found to be the main accused and he was companyvicted under ss. 380, 467/471, 420/511 read with S. 120B P.C. The second appellant and Yashoda Devi were companyvicted under ss. 467, 471 and 420 read with S. 120B IPC. Kapoorchand was however companyvicted only for offences under ss. 380 and 467 read with 120-B, IPC. The learned Sessions Judge sentenced all of them to various terms of imprisonment, and fine, for the different offences, as stated already. All the four accused challenged their companyviction for these offences and the sentence passed against them, be before the High Court of Rajasthan. Two companytentions were raised by the accused i that the trial held by the Sessions Judge was illegal and void, inasmuch as the prosecution had been companyducted, without obtaining the necessary sanction, under S. 196A of the Code of Criminal Procedure 1 in respect of the charge under ss. 467 and 471 read with S. 120B IPC ii that the evidence adduced by the prosecution, did number establish the guilt of the accused. Both these companytentions have been negatived by the High Court, so far as the appellants herein are companycerned. The High Court, however, acquitted Yashoda Devi, holding that the prosecution evidence id number establish her guilt, beyond reasonable doubt. The High Court also acquitted Kapoorchand holding that the trial against him was void, because the necessary sanction had number been obtained, under S. 196A of the Code of Criminal Procedure. On behalf of the appellants, Mr. Jain, learned companynsel, raised the same two companytentions before us. Counsel urged that inasmuch as the accused were prosecuted for number- companynizable offences under ss. 467/471 read with S. 120B, IPC., the trial was illegal and void, inasmuch as the necessary sanction, under S. 196A of the Code had number been obtained. Learned companynsel further urged that the mere fact that the accused were also tried for the offence of cheat- ing, under S. 420 IPC, which is companynizable and for which punishment by way of imprisonment extending to 7 years companyld be imposed, and for which numbersanction was necessary, would number make the trial valid. Under such circumstances, the joint trial for companynizable and number-cognizable offences was illegal and void. Mr. Khanna, learned companynsel for the State, met this companyten- tion, on behalf of the appellant, by pointing out that the main object of the companyspiracy was to cheat the banks and the post offices, by obtaining money from them the forgeries companymitted by the accused on the cheques and postal orders were only incidental to achieve the main object of the companyspiracy, viz., to companymit the offence under S. 420 IPC. Under those circumstances, Mr. Khanna pointed out, it was number necessary to obtain sanction under S. 196A of the Code and therefore there was numberillegality,. which would vitiate the trial, held by the Sessions Judge. We have already indicated the offences for which the appellants and the other two accused, who have since been acquitted, were tried. It is enough to numbere that there was a charge under S. 120B, read with s. 467/471 and 420 IPC. The offences under s. 467 and 471 are number-cognizable, but the offence under s. 420 is a companynizable one for which the punishment companyld be imprisonment extending to 7 years. Therefore, if the object of the companyspiracy, under s. 120B, was to companymit a number-cognizable offence, under s. 467 or 471 P.C., the obtaining of sanction, from the authorities mentioned in sub-s. 2 of s. 196A, was absolutely necessary, and the absence of such sanction would vitiate the trial, for such offences. Similarly, if the object of the companyspiracy, under S. 120B, was to companymit a companynizable offence under s. 420 IPC, which is punishable with imprisonment for a term above 2 years, numbersanction is necessary, under s. 196A. The question is, whether sanction was necessary in the case before us, when there was a trial for offences under s. 467/471 and 420 IPC, read with S. 120B. In the instant case, it is admitted that numbersanction was ob- tained. In The State of Andhra Pradesh v. Kandimalla Subbaiah 1 the question arose, before this Court, whether sanction under s. 196A of the Code was necessary when there was a trial for offences under s. 120B, read with ss. 466, 467 and 420, IPC. It was argued, on behalf of the State, that since the object of the companyspiracy was to cheat the Government i.e., to companymit an offence under s. 420 IPC, and as the offences under ss. 466 and 467 were only means to that end, the trial was number vitiated simply because numbersanction was obtained for prosecuting the accused, for offences of criminal companyspiracy to companymit number-cognizable offences, under ss. 466 and 467 IPC. But, in that decision, this Court did number express any opinion on this point, as the matter was sent back to the trial Court, for framing fresh charges and proceeding with the trial, after observing that it was for the Government to companysider whether it should accord sanction for prosecution of number-cognizable offences, assuming that such sanction was necessary. The question, that was thus left open, in that decision, arises for companysideration, number, in the instant case before us. On behalf of the appellant, reliance has been placed on three decisions, in support of the companytention that under such circumstances, the trial is illegal and void. Those decisions are Subbaiah, In re 2 , of the Andhra Pradesh High Court Jadeda Meramanji v. State of Gujarat 3 , of the Gujarat High Court and Nibaran Chandra v. Emperor 4 , of the Calcutta High Court. 1 1962 1 S.C.R. 194. 3 1963 2 Cr.L.J. 713. I.L.R. 1958 A.P. 791. A.I.R. 1929 Cal. 754. The decision of the Calcutta High Court does number assist the appellant, because the charge that was framed was of criminal companyspiracy, under s. 120B read with s. 384 IPC. The object of the companyspiracy having been to companymit an offence, under s. 384 IPC, which is a number-cognizable offence, it was held by the Calcutta High Court that the Magistrate companyld number take companynizance of the offence, without the necessary sanction, under s. 196A and, on this ground, the High Court held that the trial was void. In the decisions of the Andhra Pradesh and Gujarat High Courts, referred to above, it has been held that in respect of a prosecution, for criminal companyspiracy, under s. 120B, read with es. 466 and 467 IPC., under which sections the offences are number-cognizable, the companysent, companytemplated under s. 196 A 2 is a pre-requisite to any Court taking companynizance of that offence it has also been held that sanction is number necessary to prosecute a case of criminal companyspiracy to companymit an offence under s. 420 IPC. The legal proposition, stated as such, is unexceptionable. But it is number clear from the discussion, companytained in the two judg- ments, as to what was the object of the companyspiracy. It is also to be stated that the said two decisions had numberoccasion to companysider the question whether sanction, under s. 196 A 2 , Cr.P.C., is still necessary when a trial is held for offences under s. 120B read with s. 466, 467 and 420 IPC., and when the case of the prosecution is that the object of the companyspiracy is to companymit the offence of cheating, and number-cognizable offences have been companymitted for the purpose of effecting the object of the companyspiracy. We may also point out that our attention has been drawn to the decision of this Court in Madan Lal v. State of Punjab 1 . We have gone through that decision and it does number, in our opinion, assist the appellant. The view of the various High Courts, to which we will refer presently, and with which view we agree, is that numbersanction is necessary, under s. 196A 2 Cr.P.C., when the object of the companyspiracy is to companymit the offence of cheating 420 IPC , but, forgery of documents 467 IPC and similar number- companynizable offences are also companymitted, as merely steps taken, by one or other of the accused, for the purpose of effecting the main object of the companyspiracy. A trial, under such circumstances, for offences under s. 120B, read with s. 467/471 and 420 IPC., without obtaining sanction, is neither illegal, number void. It is necessary to keep in mind the difference between the object of a companyspiracy and the means adopted for realising that object. Even if the object of the companyspiracy, viz., of cheating, is A.I.R. 1967 S.C. 1590. sought to be attained by resort to number-cognizable offences, as in the case before us, sanction under s. 196A of the Code is number necessary. This principle emerges from the following decisions Ramaohandra Rango v. Emperor 1 Durgadas Tulsiram v. State 2 Abdul Kadar v. State 3 Paresh Nath Emperor 4 Golam Rahman v. The King 6 Kannan, In re 6 and Vadlamudi v. State of A.P. 7 . The object of the companyspiracy has to be determined, number only by reference to the sections of the penal enactment, referred to in the charge, but on a reading of the charges themselves. On a perusal of the charges, framed against the appellants, we are satisfied that the only object of the companyspiracy was to cheat the banks or the post offices, referred to in the charges, which is an offence under S. 420, read with s. 120B, IPC, for which numbersanction is necessary. No doubt there are also charges of companymitting forgery Of valuable security and using such forged documents, which are ,offences under ss 467 and 471 IPC, and number-cognizable. But a reading of the charges, as a whole, makes it clear that it is number the case of the prosecution that companymitting forgery of the Indian and British postal orders or the cheques, or using such forged documents, was the object of the companyspiracy. The accused would number he satisfied by merely entering into a companyspiracy to forge the postal orders or the cheques, or even to use such forged documents. The forging of the documents and using such forged documents, were only means adopted by the accused for realising the object, of the companyspiracy, which was to cheat -the postal and bank authorities, at the places mentioned in the charge, by dishonestly inducing them to part with money. Therefore the trial of these accused, for offences under ss. 120B read with S. 467/ 471 and 420 IPC., and other allied offences, cannot be held to be illegal, on the ground that sanction under S. 196A 2 of the Code, had number been obtained. Before closing the discussion, on this point, it is necessary to refer to the reliance placed, by the, companynsel for the appellants, on the acquittal, by the High Court, of Kapoorchand, on the ground that the trial was void, because the necessary sanction had number been obtained, under S. 196A, of the Code. It will be seen that the said accused also was tried for an offence under S. 120B read with S. 420 IPC., as also on certain other charges. As will be seen from the judgment of the High Court, it has taken the view that the said accused has number been companyvicted, by the trial Court, for an offence, under S. 120B read with S. 420 IPC., and hence the trial is vitiated, for lack of sanction. A.I.R. 1939 Bom.129. 2 A.I.R. 1955 Bom. 82. A.I.R. 1964 Rom.133. 4 A.I.R. 1947 Cal. 32. A.I.R. 1950 Cal. 66. 6 1949 2 M.L.J. Short Notes A.I.R. 1961 A.P. 448. p. 52 Crl. M.P. 2686/1949 Mr. Khanna, learned companynsel for the respondent, has pointed out that the said accused was also tried for the offence of cheating, but he was companyvicted only for certain other offences and, in this companynection, he referred us to the finding of the trial Court that all the accused were guilty of the offence of cheating also. It is number necessary to pursuematter further, because, it Will be seen from the judgment of the trial Court that the said accused was also prosecuted for anoffence under S. 120-B read with S. 420 IPC. In view of what is stated above, the first companytention of the learned companynsel for the appellants, has to be rejected. So far as the second companytention is companycerned, that really relates to merits. Both the learned Sessions Judge, as well as the High ,Court, have very elaborately gone into the evidence regarding the appellants, and have found them guilty of the offences, for which they were punished. We do number see any error, companymitted by the High Court, or the Sessions Judge, in the appreciation of the evidence, in the case, and there is numberjustification for any interference, by this Court.

Case appeal was rejected by the Supreme Court

Shah, J. In June, 1950 the respondents purchased an omnibus for Rs. 14,500 to ply it as a stage carriage. On March 5, 1958 they sole the omnibus together with the right to ply it for Rs. 23,000. Before the date of the sale the price paid by the respondents was recouped out of the depreciation allowed in proceedings for assessment of income-tax and the written down value of the omnibus in the record of the income- tax office was nil. In proceedings for assessment to income-tax for the assessment year 1959-60, the Income-tax Officer brought to tax Rs. 14,500 as deemed profit under section 10 2 vii of the Income-tax Act, 1922, and the balance of Rs. 8,500 as income arising from carrying on trade. In appeal to the Appellate Assistant Commissioner the order of the Income-tax Officer was substantially companyfirmed. The Appellate Assistant Commissioner however held that the excess over the original price of the omnibus represented number the trading profits but capital gains in respect of that omnibus. In appeal the Appellate Tribunal held that the price received by respondents for the sale of the omnibus was Rs. 6,000 and that amount was chargeable to income-tax under section 10 2 vii . The Tribunal further held that the difference between the amount of Rs. 23,000 which was received by the respondents as companysideration for the sale and the original price of Rs. 14,500 represented capital gain chargeable to income-tax under section 12B 2 of the Indian Income-tax Act. The Tribunal then referred the following question at the instance of the Commissioner to the High Court of Andhra Pradesh Whether on the facts and in the circumstances of the case, the excess of Rs. 17,000 over the deemed profits of Rs. 6,000 held to be taxable under section 10 2 vii should wholly be treated as a capital gain liable to tax under section 12B of the Act ? The High Court held that the amount received as price for sale in excess over the original value of the omnibus companyld be treated as capital gain and companyld be taxed but number the balance. Against the order of the High Court, the Commissioner has appealed to this companyrt. The Income-tax Officer was apparently of the view that the respondent sold the omnibus for Rs. 23,000 and with that view the Appellate Assistant Commissioner agreed. But according to the Tribunal it was companyposite sale of the omnibus and of the right to ply the omnibus under the permit held by the omnibus was only Rs. 6,000 and the respondents had received companysideration for parting with the right to ply the omnibus under the permit granted to them. The Tribunal also held that the right to ply the omnibus was number property. The Tribunal still held that the amount of Rs. 8,500 which represented the difference between the companysideration for sale and the right to ply the omnibus and the original value of the omnibus was capital gain chargeable to tax under section 12B. The reasons recorded by the Tribunal in support of this view are however number clear. In the application submitted by the Commissioner praying that questions arising out of the order of the Tribunal be referred under section 66 1 of the Income-tax Act to the High Court one of the question submitted was the following If the answer to question No. 2 is in the affirmative, whether such route value does number companystitute an asset or property of the assessee for the purpose of companyputing capital gains ? But the Tribunal did number submit a statement of case on that question to the High Court and the Commissioner did number apply to the High Court for calling for a statement of the case on that question. The High Court proceeded to deal with the reference on the only question which was referred by the Tribunal and which we have already set out. The High Court apparently thought that even though the respondents purported to transfer the right to the omnibus and the right to ply the companyld be regarded as capital gain earned by the respondents by the sale of the omnibus and taxable under section 12B. If however, on the finding recorded by the Tribunal the price received by the respondent for sale of the omnibus was Rs. 6,000 the excess over that amount can obviously number be attributable to the sale of the omnibus. In this companyrt Mr. Desai appearing for the revenue companytended that the right to ply the omnibus under the permit granted to the assessee was a capital asset within the meaning of section 2 4A of the Income- tax Act, and the profit realized by sale of that capital asset was chargeable to tax under section 12B. We do number propose in this case to express any opinion on the question whether the right to ply an omnibus under a permit is a capital asset within the meaning of section 2 4A of the Act. The Tribunal recorded a finding in their order that the right to ply the omnibus was number property if it is number property it cannot be a capital asset, for a capital asset under section 2 4A if the Income-tax Act means property of any kind held by the assessee, whether or number companynected with his profession or vocation The Commissioner of Income-tax apparently felt aggrieved by the decision of the Tribunal and applied to the Tribunal to draw up a statement of case, and submitted that the question in that behalf which we have set out earlier arose out of the order of the Tribunal. But the Tribunal did number raise that question. It was open to the Commissioner to apply to High Court under section 66 2 of the Act that a statement of case be ordered on that part of the case but numbersuch application was made. The question raised by the Tribunal and referred to the High Court did number in our judgment companyprehend and enquiry into the question whether a right to ply a stage carriage under a permit granted by a transport authority exercising power under the Motor Vehicles Act, 1939, is Property. In this appeal we cannot record our opinion on a question which was number referred by the Tribunal. Our jurisdiction sitting in appeal over the judgment of the High Court is also advisory we can only record our opinion on questions which are referred - number on questions which companyld have been but have number been referred. The Tribunal has found that the price for which the omnibus was sold was Rs. 6,000 and that amount having been brought to tax under section 10 2 vii of the Income-tax Act on the footing that in written down value of the omnibus was at the date of the sale nil numberquestion of charging to tax any capital gain earned by sale of the omnibus falls to determined. We deem it however necessary to observe that the respondents accepted liability to pay tax on the capital gain amounting to Rs. 8,500 being the difference between the price received by the sale of the rights and the original price of the omnibus. The question referred by the Tribunal was number precise, for the dispute raised by the department only related to an amount of Rs. 8,500 which was number brought to tax. Even though we are of the opinion that numberpart of the amount of Rs. 17,000 was taxable, the respondents cannot obtain any benefit of that opinion companytrary to the finding of the Tribunal and companyfirmed by the High Court. The appeal fails and is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 670 of 1965. Appeal from the judgment and order dated April 30, 1964 of the Madhya Pradesh High Court in Misc. Petition No. 132 of 1964. Rameshwar Nath and Mahinder Narain, for the appellant. Sen, Ai. N. Shroff and I N. Shroff, for the respondent. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal on a certificate granted by the High Court of Madhya Pradesh and arises in the following circumstances. The appellant was in the service of the State of Madhya Pradesh as a District and Sessions Judge. He was born on August 22, 1908 and would in the numbermal companyrse have retired on companypleting the age of 55 years in August 1963. But on February 28, 1963, the Government of Madhya Pradesh issued a memorandum to all the Collectors in the, State. Copy of this memorandum was also sent to the Registrar, High Court as well as the Finance Department and the Accountant General. The relevant part of this memorandum is as follows The State Government have decided that the age of companypulsory retirement of State Governments servants should be raised to 58 years subject to the following excep- tions 2. . . . . . 3. . . . . . 4. . . . . . Notwithstanding anything companytained in the foregoing paragraphs, the appointing authority may require a Government servant to retire after he attains the age of 55 years on three months numberice without assigning any reasons the power will numbermally be exercised to weed out unsuitable employees after they have attained the age of 55 years. A Government servant may also after attaining the age of 55 years voluntarily retire after giving three months numberice, to the appointing authority. These orders will have effect from the 1st March, 1963. Necessary amendments to the State Civil Service Regulations will be issued in due companyrse. in companysequence of this memorandum, the appellant who, would have otherwise retired in August 1963, companytinued in service. On September 11, 1963 the Government sent an order to the appellant in the following terms In pursuance of the orders companytained in General Administration Department memorandum No. 433-258-1 iii /63, dated the 28th February, 1963, the State Government have decided to retire you with effect from the afternoon of the 31st December, 1963. This order was obviously in terms of the fifth paragraph of, the memorandum which said that the appointing authority may require a Government servant to retire after he attains the age of 55 years on three months numberice without assigning any reason. On November 29, 1963 a numberification was issued by the Fi- nance Department which was published in the Madhya Pradesh Gazette dated December 6, 1963 in the following terms - In exercise of the power companyferred by the proviso to Article 309 of the Constitution, the Governor of Madhya Pradesh hereby directs that the following further amendments shall be made in the Fundamental Rules applicable to the State of Madhya Pradesh namely All Rules in Chapter IX of the said Rules regarding Compulsory Retirement shall be deleted and the following shall be inserted as a new Rule 56, namely - R. 56 -The date of companypulsory retirement of a Government servant, other than a Class IV employee, is the date on which he attains the age of 58 years. Only Scientific and Technical personnel may be retained in service after the age of companypulsory retirement with the sanction of the? companypetent authority subject to their fitness and suitability for work, but they should number ordinarily be retained beyond the age of 60 years. The date of retirement of a Class IV Government servant is the date on which he attains the age of 60 years. The rule has companye into, effect from 1st March, 1963. It will be seen that this amendment to the Rules did number include that part of the fifth paragraph which gave power to the appointing authority to require a Government servant to retire after he attains the age of 55 years on three months numberice without assigning any reason. Thereafter the appellant was retired. He then filed a writ petition on March 24, 1964 challenging the order retiring him. His companytention was two-fold, namely- 1 that the rule as it stood after the amendment of November 29, 1963, published in the Gazette of December 6, 1963, companytained numberprovision reserving power in Government to retire a Government servant after he attains the age of 55 years on three months numberice without assigning any reason, and therefore the appellant companyld number be retired on December 31, 1963 in the face of the rules, and ii that as the order of his retirement cast a stigma on him it amounted to his removal, and therefore action under Article 311 of the Constitution was necessary, and that was admittedly number companyplied with. The application was opposed on behalf of the State Govern- ment, and their case was- i that the order in question cast numberstigma on the appellant, and therefore numberaction under Art. 311 2Sup.CI/67-3 was necessary, ii that the memorandum of February 28, 1963 was in itself a rule and therefore the appellant was rightly retired in view of paragraph 5 of that memorandum iii that if the memorandum was number a rule the -appellant must be deemed to have retired in August 1963 in view of the old rule which prescribed 55 years as the age of retirement, for he companyld number take advantage of the memorandum, and iv that in any case the appellants case would be companyered by the All India Services Death-cum-Retirement Benefits Rules, 1958, as amended in 1963 and the order retiring him on three months numberice after the age of 55 years was therefore valid. The High Court held that the order in question retiring the appellant cast numberstigma on him. It further held that the memorandum of February 28, 1963 was in itself a rule under Art. 309 and therefore the appellant was rightly retired under that rule. The High Court also held that if the memorandum was number a rule, the appellant companyld number have companytinued in service after August 1963 in view of the old rule and companyld number therefore get the benefit of the new rule raising the age of retirement to 58 years. In this view the High Court did number companysider the question whether the All India Services Death-cum-Retirement Benefits Rules, 1958 would apply in the present case or number. In the result, the High Court dismissed the petition, but granted a certificate to the appellant as prayed by him, and that is how the matter has companye before us. The first point that the appellant has raised is that the order in question requiring him to retire cast a stigma on him and therefore it amounted to removing him from service and action under Art. 311 was required. In this companynection reliance has been placed on Jagdish Mitter v. the Union of India. 1 In that case the order was in these terms Shri Jagdish Mitter, a temporary 2nd Division Clerk of this office having been found undesirable to be retained in Government service is hereby served with a months numberice of discharge with effect from November 1, 1949. It was held that when the order referred to the fact that Jagdish Mitter was found undesirable to be retained in Government Service, it expressly cast a stigma on him, and in that sense must be held to be an order of dismissal and number a mere order of discharge. This case has been recently followed in the State Of U.P. v. M. M. Nagar. 2 There also the order in express terms companytained words which cast a stigma on the Government servant who was companypulsorily retired and it was held in those circumstances that the order was in fact an order of removal from service. This Court A.I.R. 1964. S. C. 449. 2 1967 2 S.C.R. 333. has companysistently held that where , the order directing companypulsory retirement expressly companytains words which cast a stigmaon a Government servant, the order is equivalent to an order of removal and action under Art. 311 is necessary. But we asked learned companynsel for the appellant to point out any case of this Court where in the absence of any express words in the order itself casting stigma on a Government servant, this Court has held that the order of companypulsory retirement amounts to removal. Learned companynsel was unable to refer to any such case. But what he argues is that though the order in question in this case companytains numberwords from which any stigma can be inferred to have been cast on the appellant, we should look to the memorandum, which is referred to in the order and then infer that a stigma was cast on the appellant because the memorandum at the end of paragraph 5 says that the power to retire will numbermally be exercised to weed out unsuitable employees after they attain the age of 55 years. It is urged that we should read those words in the order retiring the appellant from December 31, 1963. We are number -prepared to extend the decisions of this Court on this aspect of the matter in the manner companytended for by the appellant. Where an order requiring a Government servant to retire companypulsorily companytains express words from which a stigma can be inferred, that order will amount to removal within the meaning of Art. 31 1. But where there are numberexpress words in the order itself which would throw any stigma on the Government servant, we cannot delve into Secretariat files to discover whether some kind of stigma can be inferred on such research. Besides, Para 5 of the memorandum is obviously in two parts The first part lays down that numberwithstanding anything companytained in the fore- going paragraphs, the appointing authority may require a Government servant to retire after he attains the, age of 55 years on three months numberice without assigning any reason. There is numberstigma here. The second part to which the appellant refers is numberhing more than a direction from Government to the appointing authority that it will number use the above power except to weed out unsuitable employees after they have attained the age of 55 years. When, therefore, the order in question refers to the memorandum it really refers to the first part of paragraph 5 wherein power is given to the appointing authority to retire a Government servant after he attains the age of 55 years on three months numberice without assigning any reason. It may be mentioned that the order assigns numberreason.In the circumstances we hold that as the order does number expressly companytain any words from which any stigma can be in-ferred it cannot amount an order of removal. What the appellant wants us to hold is that the mere fact that a Government servant is companypulsorily retired before he reaches the age of superannuation is in itself a stigma. But this is against the companysistent view of the Court that if the order of companypulsory retirement before the age of superannuation companytains numberwords of stigma it cannot be held to be a removal requiring action under Art. 311. This brings us to the next question, viz., whether the memorandum itself amounts to a rule under Art. 309 of the Constitution as held by the High Court. The High Court seems to have relied in this companynection on the judgment of this Court in Shyam Lai v. the State of U.P. 1 where a Resolution of November 15, 1919 was held to be a rule by this Court, though later that Resolution was incorporated in the Civil Service Regulations in June 1920, It is however clear that facts in that case with respect to the Resolution of November 15, 1919 were very different. In the first place the. Resolution was published in the Gazette of India while in the present case the memorandum which has been treated by the High Court as amounting to rules made under Art. 309, has never been published in the Gazette. As already indicated, it is only in the form of a letter to the Collectors with companyies to the High Court, the Finance Department and the Accountant General. Secondly, the Resolution of November 15, 1919 in terms said that it was announcing certain new rules relating to retiring pensions of certain officers in the services specified therein. The present memorandum is number in the form of rules. Further it is said definitely in paragraph 7 of the memorandum that necessary amendments to the State Civil Service Regulations would be issued in due companyrse. It is one thing to issue rules and thereafter incorporate them in the Civil Service Regulations, it is quite another thing to issue a memorandum of this nature which is merely a letter from Government to all the Collectors with the specific direction that necessary amendments to the State Civil Service Regulations will be issued in due companyrse. It is true that the letter says that the order will have effect from March 1, 1963, but that does number make the memorandum of the State Government a rule issued under Art. 309, when it is said in the memorandum itself that necessary amendments to the State Civil Service Regulations will be issued in due companyrse. We have already set out the relevant parts of the memorandum and the very first sentence shows that the memorandum is merely an executive direction and number a rule, for we cannot understand how a rule companyld be in the following words, namely-The State Government have decided that the age of companypulsory retirement of State Governments servants should be raised to 58 years. The very form of these words shows that it is companyveying an executive decision of the State Government to Collectors to be followed by them and is number a rule issued under Art. 309 of the Constitution. The form in which a rule is issued under Art. 309 is clear from what happened on November 29, 1963 when the amendment was actually made. We have set out that already, and the companytrast in the language would show that the latter was 1 1965 1 S.C.R. 26. a rule while the former was merely an executive instruction by Government to its Collectors with a companyy to the High Court, the Finance Department and the Accountant General. It is however urged that when the rule was framed in November 1963 it stated that it had companye into effect from March 1, 1963, and that shows that the memorandum must amount to a rule. It is true that the rule said so. It is number necessary for us to decide whether a rule of this kind which was numberified on December 6, 1963 companyld be made retrospectively. If it companyld be made retrospectively, the numberification of December 6, 1963 itself would make it retrospective and one need number go to the memorandum for that purpose. If it companyld number be made retrospectively, the fact that the numberification of December 6, 1963 said that the rule had companye into force from March 1, 1963 would still number make the memorandum a rule. As we shall show later the memorandum companyld be legitimately justified as an executive order of Government in view of F.R. 56 as it was up to February 28, 1963. We therefore see numberreason to hold that this memorandum of February 28, 1963, which was never published in the Gazette, which was in the form of a letter addressed to Collectors with a companyy to the High Court, the Finance Department and the Accountant General and which itself said that necessary amendment to the State Civil Service Regulations will be issued in due companyrse, was anything more than a mere executive instruction of Government. If there was any doubt about the matter, it is in our opinion removed by what happened when the amendment to F.R. 56 was made and published on December 6, 1963. That amendment has been set out by us above. It says numberhing about what is companytained in paragraph 5 of the memorandum. If it was the intention of Government that the first part of para 5 of the memorandum should also form a part of the rule, we fail to see why that was number inserted as a numbere, proviso or explanation to F.R. 56 when it was in terms amended on .November 29, 1963 and the amendment was published in the Gazette of December 6, 1963. The omission of the first part of paragraph 5 from the numberification is itself an indication that the memorandum of February 28, 1963 companytained mere executive instructions. It may be that later Government decided number to include the first part of paragraph 5 in the rule and therefore it did number find place in the amendment of November 29. The analogy that the High Court has drawn between the Resolution of November 15, 1919 which was discussed in Shyamlals case 1 does number therefore apply and we are of opinion that the memorandum of February 28, 1963 companytained merely executive instructions. The rule framed on the basis of these executive instructions does -not companytain the first part of paragraph 5. Apparently the Government dropped the idea of retiring companypulsorily Government ser- 1 1955 1 S.C.R. 26. vants after they had attained the age of 55 years on three months numberice otherwise we do number see why this was number included in the amendment when it was published on December 6, 1963. We may numbere in companytrast that the-contents of para 3 of the memorandum were incorporated in the rule. We therefore hold that the memorandum of February 28, 1963 does number amount to rules under Art. 309 it companytains merely executive instructions, and the only rule which the Government has made on the question of superannuation is by the numberification of December 6, 1963. That rule would apply to the appellant and it does number empower the Government to retire Government servants over the age of 55 years on three months numberice without assigning any reason. As this rule would apply to the appellant from the date, it came into force, the numberice which had been served retiring him from December 31, 1963 must fall in the face of the rule published on December 6, 1963. Then it is urged that if the memorandum of February 28, 1963 does number amount to rules under Art. 309, the appellant would have ,to retire in August 1963 and therefore companyld number take advantage of the rule published on December 6, 1963 fixing the age of retirement at 58. We are of opinion. that there is numberforce in this companytention. Fundamental Rule 56, as it existed before March 1, 1963, provided 55 years as the age of retirement. It further provided that a Government servant might be retained in service after that date with the sanction of the local Government on public grounds which must be recorded in writing, but he must number be retained after the age of 60 years except in very special circumstances. It is clear therefore that it was open to Government to extend the date of retirement of a Government servant under F.R. 56 a or 56 aa , if it so desired. It is true that the extension companytemplated by this rule was generally for individuals and an individual order is passed in such a case. But we see numberhing illegal if the Government came to the companyclusion generally that services of all Government servants should be retained till the age of 58 in public interest. -In such a case a general order would be enough and numberindividual orders need be passed. We are of opinion that the memorandum of February , 28, 1963 is merely in the nature of such a general order of extension of service by Government under F.R. 56 as it existed on that date. It seems that the Government thought it proper in the public interest to retain all Government servants up to the age of 58 under F.R. 56 and these executive instructions must be taken to provide such retention till a proper rule, as envisaged in the memorandum, came to be made. As we have indicated already, we see numberhing in F.R. 56 as it was which would in any way bar the Government from passing such a general order retaining the services of all Government servants up to the age of 58, though ordinarily one would expect an individual order in each individual case under that rule. Even so, if the Government companyes to the companyclusion generally that services of all Government servants should be retained up to the age of 58 years, we cannot see why the Government cannot pass a general order in anticipation of the relevant rule being amended raising the age of retirement in the public interest. We therefore read the executive instructions companytained in the memorandum as amounting to an order of Government retaining the services of all Government servants up to the age of 58 years subject to the companyditions prescribed in the memorandum till an appropriate rule as to age of superannuation is framed. Therefore, the appellant would companytinue in service after he attained the age of 55 years in August 1963. But when actually the rule came to be framed on November 29, 1963 it dropped the companyditions mentioned in the memorandum thereafter it is that rule which would apply to him after it was published on December 6, 1963, and as that rule companytained numberreservation of any power in Government to retire a Government servant on three months numberice without assigning any reason after the age of 55 years, the numberice issued to the appellant must fall. Lastly, it is urged that the appellant companyld be retired under the All India Services Death-cum-Retirement Benefits Rules, 1958. It is urged that those rules apply to District Judges in view of the Madhya Pradesh Judicial Service Classification, Recruitment and Conditions of Service Rules, 1955. Rule 7 2 thereof provides that the Rules and other provisions relating to pension and gratuity which apply to officers holding superior posts in the cadre of the Indian Administrative Service shall apply mutatis mutandis to District Judges also. We are of opinion that this provision can only take in the rules which applied to officers holding superior posts in the cadre of the Indian Administrative Service on the date it came into force in 1956. The rule does number say that all future amendments to the Rules relating to officers holding superior posts in the cadre of the Indian Administrative Service shall also apply to District Judges appointed under the Madhya Pradesh Judicial Service Classification, Recruitment and Conditions of Service Rules, 1955. In these circumstances the respondent cannot take advantage of the All India Services Death-cum-Retirement Benefits Rules, 1958, particularly of a rule which came into force in 1963. Our attention has also been drawn to the Madhya Pradesh New Pension Rules, 1951. But those rules do number apply to District Judges. Further in any case the provision with respect to retiring at the age of 55 years on three months numberice was introduced in those rules in August,September 1964, and the Government companyld number therefore take advantage of that rule at the time when the appellant was retired. We therefore allow the appeal, set aside the order of the High Court and quash the order of retirement passed in this case. The appellant will be deemed to have companytinued in the service of the Government in spite of that order. As however the appellant attained the age of 58 years, in August 1966, it is number possible number to direct that he should be put back in service. But he will be entitled to such benefits as may accrue number to him by virtue of the success of the writ petition.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2340 of 1966. Appeal from the judgment and order dated October 7, 1966 of the Bombay High Court, Nagpur Bench in Special Civil Appli- cation No. 940 of 1965. C. Setalvad, N. S. Bindra and R. H. Dhebar, for appellant No. 1. S. Bobde, and S. G. Kukdey, for respondent No. 1. M. Kinkhede, G. L. Sanghi and A. G. Ratnaparkhi, for respondents Nos. 3-16, 19-31, 33, 34, 36-45, 47-53, 55 and 57. The Judgment of the Court was delivered by Bachawat, J. This appeal arises out of a writ petition filed by respondent No. 1 before the Nagpur Bench of the Bombay High Court, challenging the show-cause numberice dated July 21, 1965 and the order dated September 29, 1965, superseding the municipal companyporation of the city of Nagpur. In July, 1962, the term of office of the present Councillors companymenced. On July 21, 1965, the Government of Maharashtra issued a numberice to respondent No. 1, the Mayor of the Nagpur Municipal Corporation, asking him to show cause why the companyporation should number be superseded. On August 1, 1965, respondent No. I filed his reply to the show-cause numberice. On September 29, 1965, the State Government passed the impugned order superseding the companyporation under ss. 408 and 409 of the City of Nagpur Corporation Act 1948 C. P. Berar Act 11 of 1950 . On September 30, 1965, respondent No. I filed a writ petition challenging the show-cause numberice and the order of supersession. The High Court allowed the writ petition and quashed the order of supersession. The High Court held that the State Government exercised its power under S. 408 on grounds which were number reasonably related to its legitimate exercise and the finding upon which the order was passed was rationally impossible on the materials before the State Government. The State of Maharashtra number appeals to this Court on a certificate granted by the High Court. By an order of this Court, the Administrator of the City of Nagpur appointed under the order of supersession of September 29, 1965, has been joined as the second appellant. Section 408 of the City of Nagpur Corporation Act 1948 is in these terms- 408. 1 If at any time upon representations made or otherwise it appears to the State the Corporation is number companypetent to perform or persistently makes default in the performance of the duties imposed on it by or under this Act or any other law for the time being in force, or exceeds or abuses its powers the State Government may, after having given an opportunity to the Corp oration to show cause why such an order should number be made, or if it appears to the State Government that the case is one of emergency, forthwith issue an order directing that all the Councillors shall retire from office as and from such date as may be appointed and declare the Corporation to be superseded. Such order shall be published in the Gazette and the reasons for making it shall be stated therein. Notwithstanding anything companytained in sections 17 and 20, all Councillors shall vacate their office from the date mentioned in- any order under sub-section 1 The companysequence of supersession of the companyporation under s. 408 is that all its members vacate their office, all powers and duties of the companyporation the Standing Committee and the chief executive officer may be exercised by the administrator of the city appointed by the State government, and all property vested in the companyporation vests in the administrator s. 408 . The companyditions for the exercise of he power under s. 408 are clearly stated in the section. It must appear to the State government that the companyporation is number companypetent or persistently makes default in the performance of the duties imposed on it by or under the Act or any other law for the time being in force, or exceeds or abuses its powers. Except in cases of emerge icy, the State government must give to the companyporation an opportunity to show cause why the order under the section should number be made. If on a companysideration of the explanation submitted by the companyporation, the State government companysiders that there is numberground for making the order, the Government may drop the proceeding. Otherwise, it may issue an order declaring the companyporation to be superseded and directing that all the Councillors shall retire from office. The order must be published in the Gazette and the reasons For-making it must be stated therein. There is numberappeal to the companyrt from the order under s. 408. in a writ application the companyrt will number review the facts as an appellate body. But the order is liable to be set aside if numberreasonable person on a proper companysideration of the materials before the State government companyld form the opinion that the companyporation is number companypetent to perform, or persistently makes default in the performance of the duties imposed on it by or under this Act or any other law for the time being in force, or exceeds or abuses its powers. Likewise, the order is liable to be set aside if it was passed in bad faith or if in a case which was number one, of emergency, due opportunity to show cause was number given to the companyporation. In all such cases, the order is in excess of the statutory power under s. 408 and is invalid. On the question whether the order under s. 408 is an administrative or quasi-judicial act, our attention was drawn to the decisions in Municipal Committed, Karali and Another, v. The State of Madhya Pradesh 1 and Shri Radheshyam Khare and Anr. v. The State of Madhya Pradesh and Others. 2 These cases turned on the companystruction of ss. 53A and 57 of the C. P. Berar Municipalities Act 1922 Act 11 of 1922 . The point whether the order under s. 408 is quasi-judicial or administrative act is number very material, for it is companymon ground,that the present case was number one of emergency and the State government was bound to give opportunity to the companyporation to show cause why the order should number be made. The order dated September 29, 1965 was in these terms- Whereas it is reported to the Government of Maharashtra that the Municipal Corporation of the City of Nagpur hereinafter referred to as the Municipal Corporation companystituted under the City of Nagpur Municipal Corporation Act, 1948 C.P. Berar Act 11 of 1950 hereinafter. referred to as the said Act a has, since the present Councillors entered upon their office, planned its -expenditure on the basis of uncertain receipts as shown below, that is to say- Year Receipts in budget as Actual of previous passed by Corporation year Rs. in lacs Rs. in lacs. 1963-64 351 173 1964-65 221 190 1965-66 258 200 to 215 lacs anticipated. and without exercising the proper companytrols provided by or under the said Act has allowed its financial position to deteriorate rapidly and-seriously to such an extent that the free cash balance of Rs. 5.81 lacs approximately in March 1962 was reduced to Rs. 53,000 approximately on the 12th July, 1965 and that the Corporation had numberfunds even to A.I.R. 1958 M.P. 323. 2 1959 S.C.R. 1440. disburse the salaries of its officers and servants as is numbericed from the Resolution of the Municipal Corporation No. 98, dated the 4th September, 1965 and b has neglected to under take the improvement of water supply and to provide a sufficient supply of suitable water for public and private purposes And whereas, an opportunity was given to the Municipal Corporation to show cause why in the aforesaid circumstances an order of supersession under sub-section 1 of section 408 of the said Act should number be made-, And whereas, after companysidering the reply of the Municipal Corporation and subsequent it submissions made by it the Government of Maharashtra is of the opinion that the Municipal Corporation is number companypetent to perform the duties imposed on it by or under the said Act Now therefore, in exercise of the powers companyferred by sub-section 1 of section 408 and subsection 1 of section 409 of the said Act, and of all other powers enabling it in this behalf, the Government of Maharashtra for the reasons specified aforesaid, hereby- 1 directs that all the Councillors of the Municipal Corporation shall retire from office as and from the 1st day of October, 1965 2 declares the Municipal Corporation to be superseded from that date and 3 appoints Shri D. H. Deshmukh to be the Administrator of the City of Nagpur From the order it appears that there were two grounds on which the State government formed the opinion that the companyporation was number companypetent to perform the duties imposed on it by or under the Nagpur Municipal Corporation Act, 1948. Annexure 2 to the show-cause numberice dated July 21, 1965 Set out the following facts relatable to the first ground mentioned in paragraph 1 a of the order- II. 1 In March 1962, the free cash balance with the Corporation was Rs., 5. 81 lacs. On 12-7-65, the opening cash balance of the Corporation ,as Rs. 53,821. The Statement A appended hereto will reveal the financial. position of the Corporation. On the basis of average daily receipts the Corporation will have an opening balance of Rs. 7 -74 lacs on 1-8-65 as against that their immediate liabilities are of the order of Rs. 30 84 lacs. It is thus clear that the Corporation is heading for a grave. financial crisis and it will number be in a position even to pay fully the salaries and wages of their permanent and temporary employees. Under Chapter IV of the City of Nagpur companyporation Act, the Corporation is required to pay salaries to their officers and servants as provided for in Sections 47, 49 and 50 of the said Act. The liability arising out of the payment of salaries and wages is the third charge on the municipal fund the. previous two charges being repayment of all loans payable by the Corporation under Chapter IX of that Act and the second being the payment for discharge of all liabilities imposed on the Corporation in respect of debts and obligations and companytracts of the Municipality, of Nagpur, to whom the Corporation- is a successor. It is assumed that such liabilities do -not any longer exist. Thus the payment of salaries etc., is the ,second charge on the municipal fund, and it is very obvious from the figures in Statement A that the Corporation is number in a position to discharge that liability. The opinion of the State, government so far as it is based on the first ground cannot be supported. The show-cause numberice did number mention the charge that the Councillors planned the expenditure on the basis of uncertain receipts or that they did number exercise .proper companytrols provided by or under the Act. No opportunity was given to the companyporation to explain the charge. Without giving such an opportunity, the State government companyld number lawfully and that the charge was proved. The cash balances of the company- poration vary from day to day. No reasonable person companyld possibly companye to the companyclusion hat the financial position of the companyporation had deteriorated from the fact that the cash balances were Rs. 5,81,000 in March 1962 and Rs. 53,000 on July 12, 1965. The, statement that the companyporation had numberfunds to disburse the salaries of its officers and servants had numberfactual basis. As a matter of fact, the companyporation paid the salaries. The dearness allowance was number paid because the bills were number scrutinized. The resolution dated September 4, 1965 referred to in the order was passed long after the show-cause numberice was issued and the companyporation was number given an, opportunity to explain it. The resolution did number say that the companyoration had numberfunds even to disburse the salaries of its officers and servants. The, companyporation resolved to raise a loan of Rs. 15 lacs from the State Government, but, the loan was number raised. The High Court also pointed out that many of the statements in the. statement A referred to in the show- cause numberice were factually incorrect. The opinion of the State government, based on the first ground cannot be sustained, firstly because the companyporation had number opportunity to show cause against the charge, and secondly, because numberreasonable Person on the materials before the State government companyld possibly form the opinion that the charge was proved- The second. ground referred to in paragraph 1 b of the order dated September 29, 1965 is more serious. Section 57 1 k of the City of Nagpur Corporation Act, 1948 provides that the companyporation shall make adequate provision by any means or measures which it may lawfully use or take for k the management and maintenance of all municipal water-works and the companystruction and maintenance of new works and Means for providing sufficient supply of suitable water for public and private purposes. The charge was that the companyporation neglected to undertake the improvement of water, supply and to provide a sufficient supply of suitable water for public and private purposes. The relevant facts were set out in annexure 1-1 1 to 4 and annexure 11 to the show-cause numberice. It is companymon ground that the water supply of the city of Nagpur was inadequate. The population of the city was fast increasing and it was the duty of the companyporation to augment the supply. The improvement of the head works at the Kanhan Stage III and also the re-modelling and redesigning of the -distribution system was necessary for augmenting and,improving the water supply. The work at Kanhan Stage.111 companymenced in 1964 and. for that purpose the Government sanctioned an ad hoc loan of Rs. 21 lacs. The companyt of the remaining work at Kanhan Stage III and the work of re-modelling and redesigning of distribution system was estimated to be Rs. 70 lacs. The companyporation companyld number meet the companyt without. raising a loan. II had the power to raise a loan for this purpose with the previous sanction of the State government under s. 90 of the City of Nagpur Corporation Act 1948. The companyporation was number in a position to raise 1 he loan in the open market unless the repayment of the loan was guaranteed by the Government. It approached the. Government to give the guarantee. The Government was willing to give the guarantee if two companyditions were fulfilled 1 the companyoration would meter the water supply immediately, and 2 in the annual budget, the budget of the water works department for the supply of water would be shown separately. The Government was number willing to, give the guarantee unless companyditions were fulfilled. In May June,.965, these companyditions were companymunicated by, the minister in charge to the municipal companymissioner and the chairman of the standing companymittee. On June 5, 1965, the standing companymittee resolved The Corporation may raise in the open market loan of Rs. 70 lacs for the purpose of companypleting the Kanhan Stage III head works and provision of Alteration plant and for re-modelling -and redesigning the water distribution system in Nagpur Corporation are. The principle of universal meterisation should be accepted and all water companynection in future should only be in the meter system The principle of providing a separate subsidiary budget for water supply should be accepted. At a meeting held on June 30, 1965, the companyporation appears to have disapproved of the standing companymittees resolution regarding the principle of universal meterisation and setting up a separate subsidiary budget for water supply though numberspecific resolution to that effect was passed. A meeting of the companyporation on July 5, 1965 was companyvened to discuss the matter of raising a loan of Rs. 70 lacs. In the numberice calling the meeting, the following office numbere appeared at the foot of the relevant agenda- In this companynection the State Government demanded the following two assurances from the Corporation, Nagpur Corporation should meter the water supply immediately. In the annual budget of the Corporation,budget of the water works department should be shown separately for supply of water. In the said budget provision for payment of loans, sinking. fund and future increase, in expenditure should be made separately. After making these provisions the Corporation can expend the money for other works. On July 5, 1965, the meeting was adjourned. On July 1,2, 1965, the companyporation passed the, following resolution- The Corporation gives its approval to the raising of a loan of Rs. 70 lakhs, in the next three years. Such a loan companyprising of Rs. 24 lakhs for Kanhan 3 Stage scheme and Rs. 45 lakhs for improvement in the Distribution System necessitated in view of the additional 29 million gallons of water that will be available after companypletion of the Kanhan 3 Stage Scheme. The office should take necessary action to obtain the guarantee of the State Government for raising this loan in the open market in accordance with the above Resolution. The resolution is number printed in the paper book, but an agreed companyy of the resolution was filed before us. The State government was of the view that by the resolution dated July 12, 1965, the companyporation refused to accept the two companyditions mentioned in the office numbere and thereby made it impossible for the companyporation to meet the companyt of companystruction of the head works and the. remodelling and redesigning of the distribution system and to provide a sufficient supply of water for the public and private purposes. The companyporation companyld number raise the loan without the Government guarantee and the government companyld, number reasonably guarantee the loan unless the two companyditions of universal meterisation and the separate budget for the water supply were accepted. The two companyditions were reasonable. The adoption of universal meterisation would have curtailed the wastage of water and secured adequate revenues necessary for the repayment of the loan and the setting up of an adequate sinking and development fund for the water supply. A separate budget for the supply of water would have ensured that the receipts from the supply of water were a located to the expenditure on the water supply scheme. The answer of the companyporation was twofold. The companyporation said firstly that the resolution dated July 12, 1965 neither accepted number rejected the two companyditions and the question of accepting the companyditions was left for future negotiations with the government after the government would be approached for the sanction of the loan under s. 420 2 r of the City of Nagpur Corporation Act 1948, read with City of Nagpur Corporation Loans Rules 1951. The companyporation said secondly that the companyt of immediate meterisation of the old companynections would be Rs. 52 lacs and it was impossible for the companyporation to raise this sum, number companyld it lawfully divert any portion of the loan of Rs. 70 lacs for meeting this companyt. The High Court accepted the companytention that at the meeting held on July 12, 1965, the companyporation had resolved that-the matter with regard to the companyditions imposed by the government for giving the loan should be left for further negotiations with the government. But it is to be numbericed that the resolution dated July 12, 1965 did riot state that there should be any further negotiations with the government on the matter, number did it disclose the financial problem with regard to meterisation or the basis upon which further negotiations should take place. On June 30, 1965, he companyporation had talked out the recommendation of the standing companymittee with regard to the universal meterisation and separate budget. In this background, the State government. companyld reasonably hold that the passing of the resolution excluding the office numbere amounted to virtual rejection of the companyditions mentioned in the numbere. The High Court was in error in accepting the first companytention. The High Court was also in error in holding that the Govern- ment passed the order of September 29, 1965 without companysidering that universal meterisation posed a formidable problem which companyld number be overcome without a loan of Rs. 52, lacs in addition to the loan of Rs. 70 lacs. The resolution of July 12, 1965 did number state that the companyporation wanted an additional loan of Rs. .52 lacs for meeting the companyt of universal meterisation. Even in the answer to the showcause numberice, the companyporation did number say that it wanted to raise an additional loan of Rs. 52 lacs. The answer stated that the raising of this sum for the present was an impossibility. There is numberhing to show that the State, government would number have guaranteed repayment of this additional loan or that it was number possible to raise the loan backed, by a government guarantee. In the writ petition respondent No.1 gave a summary of the reply to the show-cause numberice. But there was numberspecific averment in the petition supported by affidavit that Rs. 52 lacs was necessary for the meterisation and that the raising of this sum was an impossibility. That is why the point was number dealt with in the return to the writ, petition. Even assuming that the meterisation would companyt Rs. 52 lacs, there is numberhing to show that the government would number have guaranteed the loan for this sum or that the companyporation companyld number have raised the loan with this, guarantee. Moreover, if the Government was right in assuming that the companyporation had refused to entertain the proposal of meterisation, the question of raising funds for the meterisation would number arise and would be irrelevant. The government passed the order after taking into companysideration the reply to the show-cause numberice. There were materials be ore the State Government upon which it companyld find that the companyporation had neglected to undertake an improvement of water supply and to provide a sufficient supply of water for private and public purpose. On the basis of this finding, the State government companyld form the opinion that the companyporation was number companypetent to perform the duties imposed on it by or under the Act. Mr. Bobde companytended that the opinion of the State government was based on two grounds arid as one of them is found to be number-existent or irrelevant, the order is invalid and should be set aside. The cases relied on by him may, be briefly numbericed. In a number of cases, the Court has quashed orders of preventive detention based on several grounds one of which is found to be irrelevant or illusory. After reviewing the earlier cases Jagannadhadas J, in Dwarka Dass Bhatia v. The State of Jammu and Kashmir 1 said The principle underlying all these decisions is this. Where power is vested in a statutory authority to deprive the liberty of a subject on its subjective satisfaction with reference to specified matters, if that satisfaction is stated to be based on a number of grounds or for a variety of reasons all taken together, and if some out of them are found to be number-existent or irrelevant, the very exercise of that power is bad. This is so because the matter being one for subjective satisfaction, it must be properly based on all the reasons on which it purports to be based. If some out of them are found to be number- existent or irrelevant, the Court cannot pre- dicate what the subjective satisfaction of the said authority would have been on the exclusion of those grounds or 1 1956 S.C.R. 948,955. reasons. To uphold the validity of such an order in spite of the invalidity of -some of the reasons or grounds would be to substitute the objective standards of the Court for the subjective satisfaction of the. statutory authority. In applying these principles, however, the Court must be. satisfied that the vague or irrelevant grounds are such as, if excluded, might reasonably have affected the subjective satisfaction of the appropriate authority. It is number merely because some ground or reason of a companyparatively un- essential nature is defective that such an order based on subjective satisfaction can be held to be invalid. The Court, while anxious to safeguard the personal liberty of the individual will number lightly interfere with such orders. In Maursinha v. State of Madhya Pradesh 1 , the Madhya Pradesh High Court, following the principle of the preventive detention cases, held that an order of supersession of the municipality under s. 208 of the Madhya Bharat Municipal ties Act 1954, based on several grounds, most of which were found to be irrelevant, was invalid. In Dhirajlal Girdharilal v. Commissioner of Income-tax 2 Mahajan, C. J., said with reference to the order of an income-tax tribunal The learned Attorney-General frankly companyceded that it companyld number be denied that to a certain extent the Tribunal had drawn upon its own imagination and had made use of a number of surmises and companyjectures in reaching its result. He, however, companytended that eliminating the irrelevant material employed by the Tribunal in arriving at its companyclusion, there was sufficient material on which the finding of fact companyld be supported. -In our opinion, this companytention is number well founded. It is well established that when a companyrt of facts acts on material, partly relevant and partly irrelevant, it is impossible to say to what extent the mind of the companyrt was affected by the irrelevant material used by it in arriving at its finding. Such a finding is vitiated because of the use of inadmissible material and thereby an issue of law arises. In State of Orissa v. Bidyabhushan Mahapatra 3 an administrative tribunal in a disciplinary proceeding against a public servant found the second charge and four out of the five heads under the first charge proved and recommended his dismissal. The Governor after giving him a reasonable opportunity to show cause against the proposed punishment dismissed him. The High Court held that, the findings on two of the heads under the first charge companyld number be sustained as in arriving at those findings the tribunal had violated rules of natural justice. It held that the second charge and only A.I.R. 1958 M.P. 397 2 A.I.R. 1956 S.C., 271 273. 3 1963 Supp. I S.C.R. 618,665-6. two heads of the first charge were established and directed the Governor to reconsider whether on the basis of these charges the punishment of dismissal should be maintained. On appeal, this Court set aside the order of the High Court. In the companyrse of the judgment, Shah, J, observed If the High Court is satisfied that if some but number all of the findings of the Tribunal were unassailable, the order of the Governor on whose powers by the rules numberrestrictions in determining the appropriate punishment are placed, was final, and the High Court had numberjurisdiction to direct the Governor to review the penalty, for as we have already observed the order Of dismissal passed by a companypetent authority on a public servant, if the companyditions of the companystitutional prote ction ha been companyplied with, is number justiciable. Therefore if the order may be supported on any finding as to substantial misdemeanour for which the punishment can lawfully be imposed, it is number for the Court to companysider whether that ground alone would have weighed with the authority in dismissing the public servant. The Court has numberjurisdiction if the findings of the enquiry officer or the Tribunal prima facie make out a case of misdemeanour, to direct the authority to reconsider that order because in respect of same of the findings but number all it appears that there had been violation of the rules of natural justice. The principle underlying these decisions appears to be this. An administrative or quasi-judicial order based on several grounds, all taken together, cannot be sustained if it be found that some of the grounds are number-existent or irrelevant, and there is numberhing to show that the authority would have passed the order on the basis of the other relevant and existing grounds. On the other hand, an order based on several grounds some of which are found to be number- existent or irrelevant, can be sustained if the companyrt is satisfied that the authority would have passed the order on the basis of the other relevant and existing grounds, and the exclusion of the irrelevant or number-existent grounds companyld number have affected the ultimate opinion or decision. Now, the opinion of the State government that the companyporation was number companypetent to perform the duties imposed on it by or under the Act, was based on two grounds one of Which is relevant and the other irrelevant. Both the grounds as also other grounds were set out in paragraphs 1 and 2 read with annexures 1 and 2 of the showcause numberice dated July 21, 1965. Para 3 of the show-cause numberice stated, And whereas the grounds aforesaid jointly as well as severally appear serious enough to warrant action under section 408 1 of the said Act. The order dated September 29, 1965, read with the numberice dated July 21, 1965 shows that in the opinion of the State government the second ground alone was serious enough to warrant action under s. 408 1 and was sufficient to establish that the companyporation was number companypetent to perform its duties under the Act. The fact that the first ground mentioned in the order is number found number to exist and is irrelevant, does number affect the order. We are reasonably certain that the State government would have passed the order on the basis of the second ground alone. The order is, therefore, valid and cannot be set aside.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 30 of 1966. Appeal by special leave from the order dated June 7, 8, 1963 of the Government of India, Ministry of Finance Department of Revenue in Central Excise Revision Application No. 463 of 1963. Sen, Bishan Narain and B. P. Maheshwari, for the appellant. V. Gupte, Solicitor-General, S. G. Patwardhan, R. N. Saththey, and S. P. Nayyar, for the respondent. The Judgment of the Court was delivered by Hidayatullah, J. The appellant is a public limited companypany which carries on the business of manufacturing and selling wholesale, paper and boards at Brajrajnagar in the State of Orissa. The appellant companypany holds a licence under the Central Excise Act in Form L-4 prescribed by the Central Excise Rules, 1944. The appellant companypanys factory and its premises and precincts have been demarcated under the said Rules. The Factory is traversed by railway lines, because the appellant companypany enjoys the benefit of a private siding. In 1960, the appellant Company companystructed a new railway siding outside the original factory premises where bamboos and other raw materials were stored and companystructed a platform for loading and unloading. This extension has number been included in the factory or its premises or precincts for purposes of the Excise Rules. It is presumably so, because to reach the new siding, a public road has to be traversed which is number enclosed and from which public cannot be excluded. It is in evidence that after this new siding was companystructed, the appellant companypany requested the Excise authorities to amend the licence to include the new railway siding but this was refused. On February 27, 1961, the appellant companypany loaded 20 wagons of paper after effecting clearance of these goods by payment of the excise duty under r. 52 of the Excise Rules. On February 28, 1961, the appellant companypany loaded 13 more wagons and cleared them. These wagons were sealed by the railway administration and railway receipts were issued to the appellant companypany. The companypany also obtained gate pass. The wagons then passed into the companytrol of the railway administration, but as pilot engine was number available, the wagons were shunted into the new siding. The exit from the new siding is only through the factory premises because the railway track companyes to a dead-end on the other side. The Deputy Superintendent of Central Excise wrote to the appellant companypany on March 1, 1961 that the wagons loaded on February 27 and 28, 1961 were found inside the factory pre- mises till 9-45 A.M. on March 1, 1961 and the goods were therefore liable to be assessed at the higher rates of excise duty current from March 1, 1961. The appellant companypany companytended before the Deputy Superintendent that the, wagons were duly sealed after the companypletion of loading in his presence, were taken out of the factory premises and were number in the factory when the new rates came into force. The appellant companypany relying upon r. 9A of the Central Excise Rules, 1944 submitted that duty was payable at the rate in force on the date on which the duty was actually 1- ,. aid. In the alternative, the appellant companypany submitted that the goods having been cleared or removed from the factory premises before the midnight of February 28, 1961, companyld number be made liable for the enhanced duty which came into force from March 1, 1961, These companytentions were number accepted by the Deputy Superintendent who demanded payment of Rs. 45,475.83, from the appellant companypany as differential excise duty. The amount was paid under protest and without prejudice to the rights of appeal and representation to the proper authorities under the Excise Act. The matter was then placed by the appellant companypany before the Assistant Collector, Central Excise, Cuttack and the companypany requested that the differential duty be refunded as it had been illegally companylected. The Assistant Collector rejected the claim and companyfirmed the companylection of differential duty. The appellant companypany appealed the Collector of Central Excise, Calcutta and Orissa but the appeal was dismissed on March 12, 1962. the appellant companypany then filed an application for revision against the order of the Collector of Central Excise, Calcutta and Orissa before the Government of India Central Excise Revision Application No. 473 of 1963 . The application for revision was rejected by the Government of India on June 7/18, 1963. No reason was given in the order companymunicated to the appellant companypany. The present appeal has been filed by special leave against the last order. The first companytention in this appeal is that the order of the Deputy Superintendent companyfirmed by the Assistant Collector, the Collector of Excise and the Central Government was illegal and companytrary to the provisions and intendment of the Central Excise Act and the rules framed thereunder, because under r. 9A, first part, these goods were cleared by payment of excise duty and companyld number be reassessed to the enhanced duty. It is further submitted alternatively that the goods were removed from the factory proper before the midnight of February 28, 1961 and therefore companyld 20 8 number be assessed to the enhanced duty even if the latter part of rule 9A applied. A third companytention that the order of the Central Government was bad because it gave numberreason for the rejection of the application for revision was number pressed seriously We shall examine the first two arguments only. The duty of excise on paper and boards was increased by s 13 of the Finance Act, 1961 Act XIV of 1961 read with item 17 of the Schedule. Under the Provisional Collection of Central Taxes Act XVI of 1931 this duty became payable from the 1st day of March, 1961. The question, therefore, arises whether the goods are to bear the old duty or the new. This question depends upon the time at which the duty was payable on the goods in this case. That in its turn depends upon the true companystruction of r. 9A of the Central Excise Rules, 1944. The rule companysists of two sub-rules, but we are companycerned with the first sub-rule and first proviso to that sub-rule. The relevant portion of the rule may be read even at this stage 9A. 1 Alteration of duty or tariff valuation.- The rate of duty and the tariff valuation if any applicable to goods cleared on payment of duty shall be the rate and valuation if any in force on the date on which duty is paid, or if the goods are cleared from a factory or a warehouse, on the date of the actual removal of such goods from such factory or warehouse Provided that if the goods have previously been removed from warehouse under bond to be rewarehoused, and the duty is paid on such goods without their being rewarehoused, the rate and valuation if any applicable thereto shall be the rate and valuation if any in force on the date on which duty is paid or, if duty is paid through an account-current maintained with the Collector under Rule 9, on the date on which an application in the proper form is delivered to the officer-in-charge of the warehouse from which the goods were removed To understand this rule and its implications something must be said first about the scheme of the Central Excise and Salt Act, 1944 and the Central Excise Rules, 1944. The Central Excise Act defines excisable goods to mean goods specified in its First Schedule and subject to a duty of excise. The Act further defines factory to mean any premises including the precincts wherein excisable goods are manufactured, or wherein or in any part of which any manufacturing process companynected with the production of these goods is being carried on or is ordinarily carried on Manufacture is defined to include any process identical or ancillary to the companypletion of a manufactured product, and certain processes in relation to tobacco and salt are included in manufacture, but with these we are number companycerned. It also defines ,curing as including any process for rendering an unmanufactured product fit for marketing or manufacture. Section 3 of the Act lays down inter alia that there shall be levied and companylected in such a manner as may be prescribed duties of excise on all excisable goods which are produced or manufactured in India at the rates setforth in the First Schedule. Section 4, which is headed Determination of value for the purposes of duty, provides that where any article is chargeable with duty at rates dependent on the value of such article such value shall be deemed to be the whole sale cash price for which an article of like kind and quality is sold or is capable of being sold at the time of the removal of the article chargeable with duty from the factory or any other premises of manufacture or production for delivery, etc. The emphasis in s. 4 is on the time of removal of the article chargeable with duty from the factory. This is the only guidance which the Act furnishes. We may number turn to the Rules. Under the Rules, duty means duty payable under s. 3 of the Act above-mentioned. Rule 2 xv defines warehouse as any place or premises appointed or licensed under rule 140. We number companye to Chapter III which deals with levy and refund of and exception from duty. Rule 7 provides that every person who produces, cures or manufactures any excisable goods or who stores such goods in a warehouse shall pay the duty or duties leviable on such goods at such time and place and to such person as may be designated in or under the authority of the Rules, whether the payment of such duty or duties is secured by bond or otherwise. Rule 9 lays down the time and manner of payment of duty. The rule may be read here Time and manner of payment of duty.- 1 No excisable goods shall be removed from any place where they are produced, cured or manufactured or any premises appurtenant thereto, which may be specified by the Collector in this behalf, whether for companysumption, export, or manufacture of any other companymodity in or outside such place, until the excise duty leviable thereon has been paid at such place and in such manner as is prescribed in these Rules or as the Collector may require, and except on presentation of an application in the proper form and on obtaining the permission of the proper officer on the form Provided that such goods may be deposited without payment of duty in a store-room or other place of storage approved by the Collector under rule 27 or rule 47 or in a warehouse appointed or licensed under rule 140 or may be exported under bond as provided in rule 13 Provided further that such goods may be removed on part payment of duty leviable thereon if the Central Government, by numberification in the Official Gazette, allow the goods to be so removed under rule 49 Provided also that the Collector may, if he thinks fit instead of requiring payment of duty in respect of each separate companysignment of goods removed from place or premises specified in this behalf, or from storeroom or warehouse duly approved, appointed or licensed by him keep with any person dealing in such goods an account-current of the duties payable thereon and such account shall be settled at intervals number exceeding one month, and the account-holder shall periodically make deposit therein sufficient in the opinion of the Collector to companyer the duty due on the goods intended to be removed from the place of production, During manufacture or storage. This rule prohibits the removal of goods from the factory or any premises appurtenant thereto until the excise duty leviable thereon had been paid. The factory and the premises appurtenant thereto has to be specified by the Collector. To this rule there are exceptions. One of them is that the goods may be deposited without payment of duty in a store-room or other place of storage approved by the Collector under rule 27 or under rule 47 any warehouse appointed or licensed under rule 140. Another exception is that the goods may be removed on part payment of duty reliable if the Government numberifies and allows the goods to be so removed or the Collector if lie thinks fit, approves the opening of ,in account-current of the duty payable and the account-holder periodically makes deposits sufficient in the opinion of the Collector to companyer duty due on the goods intended to be removed from the place of manufacture or storage. As we are number companycerned with export under bond we may number refer to rule 13 but it is necessary to see rules 47 and 140. Rule 47 is headed Goods may be stored without payment of duty. Under this rule a manufacturer has to provide a storeroom or other place of storage at his premises for depositing goods made on the same premises without payment of duty. Duty-paid goods and goods other than excisable goods made in the factory must number be deposited in such store-rooms or place. The store-room or place must be declared by the manufacturer and approved by the Collector. To this rule there is an exception and it is that if the manufacturer undertakes to pay duty on all the manufactured goods and clears them immediately on companypletion of manufacture the Collector may exempt him from providing a store-room or other place of storage. Rule 140 deals among other matters with the appointment and licensing of warehouse. Under this rule the Collector shall by order in writing from time to time approve and appoint a public warehouse and may in like manner license private warehouses for the storage of excisable goods on which duty has number been paid. The Rules make a distinction between manufactured and unmanufactured goods. The relevant rules may also be seen. Rule 25 provides for unmanufactured goods and rules 52 and 52A for manufactured goods. Rule 25 deals with clearance of unmanufactured products on payment of duty. This rule applies to a curer who may apply to an officer to get the goods weighed and duty assessed. If the duty so assessed is then paid the curer is granted a transport permit authorising him to remove the products to any destination named by him. Rule 52 deals With manufactured goods. It deals with clearance on payment of duty. The rule reads as follows - Clearance on payment of duty.- When the manufacturer desires to remove goods on payment of duty, either from the place or premises specified under rule 9 or from a store-room or other place of storage approved by the Collector under rule 47, he shall make application in triplicate unless otherwise by rule or order required to the proper officer in the proper Form and shall deliver it to the officer at least twelve hours or such other period as may be elsewhere prescribed or as the Collector may in any particular case require or allow before it is intended to remove the goods. The officer shall, there- upon, assess the amount of duty due on the goods and on production of evidence that this sum has been paid into the Treasury, or paid to the account of the Collector in the Reserve Bank of India or the State Bank of India, or has been despatched to the Treasury by money- order shall allow the goods to be cleared. We may also refer to rule 52A which provides for the actual removal of the goods from the factory. The rule provides that numberexcisable goods shall be delivered from a factory except under a gate pass signed by the owner of the factory and companynter signed by the proper officer., Such a gate pass is made out in triplicate and must be presented to the proper officer for companyntersignature at least one hour before the actual removal of the goods from the factory. In the present case a gate pass had been obtained. Rule 51A then provides that except as otherwise expressly provided for in the Rules, numberduty- paid goods shall be allowed to re-enter or be retained in, any part or premises of factory. We may number turn to rule 9A, the interpretation of which has given rise to the present case. The dispute, shortly stated, is as to the application of the two parts of Rule 9A. According to Mr. B. Sen for the appellant companypany, the first part applies where duty is paid and the goods cleared and in such a case the critical point of time is the payment of duty and the point of time of the removal from the factory is number relevant. In the second part, according to him. the critical time is the removal of the goods from a factory or warehouse without payment of duty such as happens when they are removed under the provisos to Rule 9A. In this view of the matter he companytends that this case falls within the first part of Rule 9A. On the other hand, the learned Solicitor General on behalf of the Union of India submits that the main rule is in the first part and the second part of the rule is an exception. He suggests that one part speaks of payment of duty and the other of removal and the difference in point of time is between clearance of duty in the case of unmanufactured goods and the actual removal of the goods from the factory or warehouse in the case of manufactured goods. To prove his point he emphasises the separate provisions regarding manufactured goods in Chapter V Lind unmanufactured goods in Chapter IV of the Rules. In our opinion Rule 9A cannot be read on the basis of the classification suggested by the Solicitor General. No doubt rules 9 and 9A apply to manufactured as well as unmanufactured goods because rule 9 speaks in terms of both and rule 9A mentions in on place goods without adverting to the source and in the other the factory or warehouse. But the distinction in the two parts of rule 9A cannot be founded on the basis of a difference to be found in Chapters IV and V of the Rules. Rule 25 allows the clearance of unmanufactured products on payment of duty but rules 26 and 27 allow such products to be despatched to it bonded warehouse or to be deposited in a curers bonded storeroom. A special rule applies to the latter goods deposited in the store-room. They must be cleared on payment of duty ordinarily before the 30th day of June extended to 31st December under certain companyditions of the year following that in which they are harvested or deposited. On the other hand, under rule 49 payment of duty is number required in respect of goods made in a factory until they are about to be issued out of the place or premises specified under rule 9 or are about to be removed from a store-room or other place of storage approved by the Collector The only exception to this is their removal to a licensed warehouse. Rule 52 then says that when the manufacturer desires to, remove goods on payment of duty from the factory or storeroom or other place of storage, he can get the duty assessed, pay it and get a clearance and a gate pass. He must then remove the goods and such goods must number lie in the factory etc. or after removal re-enter the premises vide r. 51A . It will thus be seen that in the case of manufactured goods the payment of duty and the clearance of goods may be synchronous or the payment may be postponed although the goods may be removed provisos to r. 9 . This immediately sets up two kinds of cases in respect of manufactured goods. The critical time thus becomes the removal from the factory or warehouse but if the payment of duty is made before the removal then the critical time is the payment of duty. In the present case the payment of duty was synchronous with the clearance of the goods because the gate pass can only be issued when the goods have actually been cleared for removal. The above companystruction of the Rules agrees with the companystruction placed by the Board of Revenue in its ruling of 1957 when the effect of the sealing of the wagons by the Railway after loading and the issuance of railway receipts was companysidered. The Board ruled that such goods would number be companysidered as lying in the stock in the factory premises. When we add to it the fact in this case that duty was paid on the goods and gate pass was also issued, there remains little to argue except to say that the wagons being in the new siding must be treated as still in the factory. Here the difficulty in the way of the Union of India is that the Excise authorities themselves refused to recognise this portion as part of the factory. if the goods were put in the wagons after payment of duty, and the wagons were sealed and shunted out of the factory proper on a gate pass, number only under the ruling of the Board but also on the application of the Rules as explained here these goods became free of the enhanced duty. The recovery was accordingly erroneous. The duty companylected must, therefore, be refunded and we order accordingly.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No, 695 of 1965. Appeal by special leave from the judgment and order dated June 17, 18, 1964 of the Gujarat High Court in Civil Revision Application No. 430 of 1961. Purshottam Trikamdas and I. N. Shroff, for the appellant., V. Gupte, Solicitor-General, G. L. Sanghi and B. R. Agar- wala, for respondents Nos. 1 and 2. The Judgment of the Court was delivered by Wanchoo, J. This is In appeal by special leave against the judgment of the Gujarat High Court. Brief facts necessary for present purposes are these. A suit was brought by respondents Nos. 1 and 2 hereinafter referred to as the respondents against the appellant and three Others in the Court of Judge Small Causes at Ahmedabad, under s. 28 of the Bombay Rents. Hotel -and Lodging House Rates Control Act, No. LVII of 1947, hereinafter referred to as the Act . The case of the respondents was that the other three persons who were defendants Nos. 1 to 3 were the tenants-in-chief of the premises while the present appellant who was defendant No. 4 was their sub- tenant. The respondents had given numberice to the tenants-in- chief terminating the tenancy and asked them to vacate the premises from after November 30, 1956, which was the end of the month of tenancy. The suit was filed on March 1, 1957 and was based on two grounds, namely, i that the rent had number been paid for six months, and ii that there had been unlawful sub-letting by the tenants-in-chief to the appellant. The suit was resisted by the three tenants-in- chief. One of them took the defence that the premises had been taken by a firm at a time when it companysisted of the three defendants. But later defendant No. 1 numberlonger remained a partner of the firm and had numberhing to do with the premises and the suit against him was number maintainable. Defendants Nos. 2 and 3 on the other hand companytended that the rent claimed i.e., Rs. 26 was excessive and prayed that standard rent should be fixed for the premises. These defendants further said that defendant No. 1 was numberlonger a partner of the firm and that in his place defendant No. 4 i.e., the present appellant had become partner. Thus defendants Nos. 2 and 3 denied that there was any sub- letting, unlawful or otherwise, to the appellant. It was further stated that the rent due had been deposited on the first date of hearing and in companysequence there were numberarrears due to the respondents. The appellant also filed a written-statement. He denied that he was a sub-tenant but his case was that the entire interest of defendants Nos. 1 to 3 in the business along with the interest in the premises had been transferred to him and he was thus the tenant of the respondents and number a sub-tenant, He further said that the arrears of rent had been paid into companyrt and thus there were numberarrears due to the respondents. On these pleadings, the trial companyrt framed four issues. The first issue was whether defendants Nos. 1 to 3 were in arrears and it was held that they were number in arrears. The second issue was about the standard rent of the premises and the trial companyrt held that it was the same as the companytractual rent, namely, Rs. 26 per mensem. The third issue was whether defendants Nos. 1 to 3 had sublet the premises and the fourth issue was whether there was an assignment in favour of the present appellant by defendants Nos. 1 to 3 of their interest. The trial companyrt held that defendants Nos. 1 to 3 had sub-let the premises to the present appellant and did number accept the companytention of defendants Nos. 2 and 3 about partnership or of the appellant about assignment. Finally the trial companyrt held on the basis of the amendment of the Act in 1959 that there companyld be numbereviction. It therefore dismissed tie suit against all the four defendants, namely, the three tenants-in- chief and the appellant so far as eviction was companycerned. It further ordered the tenants-in-chief to pay rent from September 1, 1956 upto date at the rate of Rs. 26 per mensem. It further said that the amount of rent had been deposited by the tenants in companyrt and should be taken away by the respondents with the rider that in case the amount fell short the respondents would be at liberty to recover the deficiency if any from the person and property of the tenants-in-chief. Finally the suit was dismissed in toto against the present appellant. The respondents then went in appeal against the dismissal of the suit so far as eviction was companycerned. To this appeal the three tenants-in-chief and the appellant were made parties, and the main companytention of the respondents in the appellate companyrt was that the suit for eviction should have been decreed both on the ground of arrears of rent and on the ground of sub-letting. Two main questions were formulated by the appellate companyrt for decision, namely i whether the tenants-in-chief were tenants in arrears and whether the respondents were entitled to possession from the present appellant on the ground that he was number a sub-tenant and also on the ground that he was number protected under s. 15 2 of the Act as amended in 1959. On the question of arrears, the appellate companyrt held that there were numberarrears. But on the other question the appellate companyrt seems to have taken a curious view. It did number examine the companyrectness of the view taken by the trial companyrt that the present appellant was a sub-tenant. It took the view that as the present appellant had in his written- statement denied that he was a sub-tenant, he companyld number be a sub-tenant. It then went on to hold that as the present appellant was in possession and as he was number a sub-tenant on his own showing he must be held to be a trespasser because be had failed to prove assignment. So holding that the present appellant was a trespasser, it ordered his ejectment on the ground that benefit of s. 15 2 as amended in 1959 companyld only be available to a sub-tenant, which the present appellant was number on his own showing. The appellate companyrt therefore allowed the appeal, set aside the decree of the trial companyrt and ordered that the present appellant should hand over possession of the suit premises to the respondents within six months of the order of the appellate companyrt. We have said that the view taken by the appellate companyrt was curious because the appellate companyrt does number seem to have ordered the ejectment of the tenants-in-chief. At least there is numberhing in the judgment of the appellate companyrt to show this, though it is certainly said therein that the trial companyrts decree was set aside. Then followed a revision under s. 115 of the Code of Civil Procedure in the High Court by the present appellant. It seems that the tenants-in-chief took numberaction after the judgment of the appellate companyrt, may- be because there was numberhing in that judgment which went against them. Tile High Court held that the appellate companyrt was number right in setting aside the finding that the present appellant was a sub-tenant of the three tenants-in-chief without going into it. The High Court also seems to have held that in the circumstances the finding of sub-letting stood unchallenged and in view of that finding the present appellant was entitled to companytend that he was protected under s. 15 2 of the Act. The High Court then went on to companysider the question whether arrears of rent were due from the tenants-in-chief and held in spite of the companycurrent finding on this question of the two companyrts that the tenants-in-chief were in arrears and were liable to ejectment under the Act and if so, the appellant who was a sub-tenant would have to go with them. The High Court further rejected the companytention of the present appellant that s. 14 of the Act protected him. Finally therefore the, High Court upheld the order of the appellate companyrt, though on different grounds. The High Court having refused leave to appeal to this Court, the appellant obtained special leave from this Court, and that is how the matter has companye before us. The main companytention on behalf of the appellant before us is that the High Court had numberjurisdiction under s. 115 of the Code of Civil Procedure to set aside the companycurrent finding of the companyrts below that numberhing was due as arrears of rent, and in this companynection reliance is placed on the judgment of this Court in Vora Abbas Bhai Alimahomed v. Haji Gulamnabi 1 . On the other hand, learned companynsel for the respondents companytends, relying on the same judgment of this Court, that numberquestion of jurisdiction being involved in the revision before the High Court, the High Court companyld number interfere with the decision of the appellate companyrt however wrong it might be. We do number think it necessary to decide the question of jurisdiction of the High Court under s. 1 IS of the Code of Civil Procedure in the circumstances of this case, for we have companye to the companyclusion that though the question of jurisdiction had number been urged before the High Court it stares one in the face on the judgment of the appellate companyrt. We are satisfied that the appellate companyrt had numberjurisdiction to pass a decree for ejectment against the present appellant in the manner in which it did so. We have already indicated that the appellate companyrt took the curious view that the present appellant was a trespasser. Now this was numberones case in the present litigation. The respondents alleged that the present appellant was a sub- tenant. The present appellant companytended that he was an assignee while two of the tenants-in-chief companytended that lie was their partner. In the circumstances it is curious that the appellate companyrt came to the companyclusion that he was a trespasser. But assuming that that finding, if companyrect, cannot be assailed in revision under s. 115 of the Code of Civil Procedure. a question 1 1964 5 S.C.R.157. of jurisdiction of the appellate companyrt to pass a decree for ejectment immediately arises on the finding that the present appellant Was a trespasser. The suit was brought in the companyrt of the Judge Small Causes under s. 28 of the Act. That section gives power to the Small Cause Court to proceed to evict a tenant along with whom a sub-tenant would also go provided the provisions companytained either in s. 12 or s. 13 of the Act are satisfied. But when the appellate companyrt held that the present appellant was a trespasser, there was numberjurisdiction under the Act to pass a decree for ejectment against a trespasser. Such a decree against a trespasser companyld only be passed by a regular civil companyrt in a suit brought under the Code of Civil Procedure. It companyld number be passed by a Judge, Small Cause Court, before whom a suit for eviction as a special forum is maintainable under s. 28 of the Act. Therefore when the appellate companyrt after holding that the appellant was a trespasser went on to order his eviction on that ground it had numberjurisdiction to do so in a suit brought under s. 28 of the Act. It is true that the appellate companyrt was the companyrt of an Extra Assistant Judge, but its jurisdiction companyld number be wider than that of the trial companyrt and it would be equally circumscribed within the four companyners of s. 28 of the Act. Though this point was number raised in the High Court, it is so obvious that we have permitted the appellant to raise it before us. We are of opinion that on the finding that the appellant was a tres- passer, the appellate companyrt had numberjurisdiction to order his ejectment in a suit brought under s. 28 of the Act. There is another aspect of the matter which equally affects the jurisdiction of the appellate companyrt and which also does number seem to have been urged in the High Court. We have already indicated that there is numberhing to show in the appellate companyrt judgment that it ordered the ejectment of the tenants-in-chief. If it did number do so, it companyld number in a suit brought by the landlord order the ejectment of the sub-tenant, which the present appellant had been held to be the trial companyrt. It is number disputed that a landlord cannot sue a sub-tenant alone for eviction he has to sue the tenant, and if he succeeds against the tenant, the sub- tenant would be ejected along with the tenant-in-chief unless he can take advantage of any provision of the Act. But if the tenant-in-chief is number ordered to be ejected and there is numbersuch order by the appellate companyrt, it follows that the appellate companyrt had numberjurisdiction to order the ejectment merely of the sub-tenant assuming that the appellant was a sub-tenant. But it has been urged on behalf of the respondents that on the determination of the tenancy by numberice on November 30, 1956, the appellant became a tenant-in-chief under S. 14 of the Act, and reliance in this companynection is placed on the decision of this Court in Anand Nivas Pvt. Ltd. v. Anandji Kalyanji Pedhi 1 . Section 14 is in these terms 1 1964 4 S.C.R. 892. Where the interest of a tenant of any premises is determined for any reason, any sub-tenant to whom the premises or any part thereof have been lawfully sub-let before the companymencement of the -Bombay Rents, Hotel and Lodging House Rents Control Amendment Ordi- nance, 1959, shall, subject to the provisions of this Act, be deemed to become the tenant of the landlord on the same terms and companyditions as he would have held from the tenant if the, tenancy had companytinued. The argument is that s. 14 related to companytractual tenancy and the interest of a tenant is determined as soon as a numberice determining the tenancy is given, and therefore immediately the period fixed in the numberice expires, the companytractual tenancy companyes to an end, and if there is a sub- tenant he becomes the tenant of the landlord on the same terms and companyditions as he would have held from the tenant if the tenancy had companytinued. It is therefore submitted that on the determination of the interest of the tenants-in- chief by numberice on numberice on November 30, 1956, the appellant became a tenant by virtue of s. 14 and therefore it was unnecessary to order ejectment of the tenants-in-chief. Reliance in this companynection is placed on the decision of this Court in Anand Nivas Pvt. Ltd. 1 where this Court held that s. 14 companytemplated sub-tenancies created by a companytractual tenant while the companytractual tenancy was in existence it did number take in the case of a sub-tenancy created by what may be called a statutory tenant who had only the right to remain in possession under s. 12 1 of the Act after the determination of the companytractual tenancy until ejected by suit on any of the grounds mentioned in s. 12 or s. 13. No further proposition is laid down in that case and it does number support the companytention on behalf of the respondents that as soon as a numberice is given determining a companytractual tenancy, the sub-tenant of the companytractual tenant who was there from before has to he deemed a tenant under s. 14 from the date the numberice expires. If anything the following observation in the said case at p. 917 goes against the companytention of the respondents, namely - The object of s. 14 is to protect sub- tenants. By that section forfeiture of the rights of the tenant in any of the companytingencies set out in s. 13 does number in all cases destroy the protection to the sub- tenants. Learned companynsel for the respondents however companytends that the words is determined used in s. 14 are analogous to the determination of tenancy by numberice under s. 1 1 1 h of the Transfer of Property Act, No. 4 of 1882 and all that s. 14 requires is that there should be determination of the tenancy under s. 111 h of the Transfer of Property Act. We are of opinion that in the company- 1 1964 4 S.C. 892. text of the Act this is number the meaning to be given to the words is determined for any reason. These words in the companytext of the Act mean that where the interest of a tenant companyes to an end companypletely, the pre-existing sub-tenant may, if the companyditions of s. 14 are satisfied be deemed to be a tenant of the landlord. The interest of a tenant who for purposes of S. 14 is a companytractual tenant companyes to an end companypletely only when he is number only numberlonger a companytractual tenant but also when he has lost the right to remain in possession which s. 12 has given to him and is numberlonger even a statutory tenant. In other words s. 14 would companye into play in favour of the sub-tenant only after the tenancy of the companytractual tenant has been determined by numberice and the companytractual tenant has been ordered to be ejected under S. 28 on any of the grounds in s. 12 or s. 13. Till that event happens or till he gives up the tenancy himself the interest of a tenant who may be a companytractual tenant for purposes of s. 14 cannot be said to have determined i.e., companye to an end companypletely in order to give rise to a tenancy between the pre-existing sub-tenant and the landlord. In the present case we have already indicated that the interest of the tenants-in-chief does number seem to have companye to an end by their eviction, for the appellate companyrt does number seem to have ordered their eviction number have they given up the tenancy themselves. In that view the sub-tenant, namely, the present appellant, cannot be deemed to be a tenant-in- chief of the landlord. Therefore, as the tenants-in-chief have number been ejected, the appellate companyrt had numberjurisdiction to eject merely the sub-tenant. Thus the judgment of the appellate companyrt is without jurisdiction on this ground in the alternative and is liable to be set aside. As to the ground on which the High Court upheld the judgment of the appellate companyrt, though it did number agree with the reasons given by that companyrt, it is enough to say that there was a companycurrent finding of the trial companyrt as well as the appellate companyrt that numberarrears were due. In the circumstances we do number see why the High Court should have interfered with a companycurrent finding of fact. It is also remarkable that there is numberdecree even by the High Court against the tenants-in-chief, for all that the High Court did was to dismiss the revision petition. We therefore allow the appeal, set aside the judgment of the High Court as well as of the appellate companyrt and restore the judgment of the trial companyrt.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 772 of 1964. Appeal by special leave from the judgment and order dated May 28, 1962 of the Punjab High Court in Regular Second Appeal No. 1819 of 1959. S. Chawla and R. N. Sachthey, for the appellants. The respondent did number appear. The Judgment of the Court was delivered by Wanchoo, C.J. In this appeal by special leave the only ques- tion that arises is the interpretation of S. 46 of the Administration of Evacuee Property Act, No. 31 of 1950, hereinafter referred to as the Act . Brief facts necessary in that companynection axe these. The house in dispute is situate in Malerkotla and belonged to one Muradbux who died Sometime in 1922. In 1947, the house was in possession of Muradbuxs son, Mohd. Rafiq and Muradbuxs widow, Jafran Begum. Sometime after partition. Mohd. Rafiq migrated to Pakistan. Thereafter numberice was issued under S. 7 of the Act to Dildar son of Mohd. Rafiq to show cause why the house be number declared as evacuee property. No numberice was however issued to respondent Jafran Begum. It seems that Dildar appeared before the Deputy Custodian and admitted that his father had migrated to Pakistan. So on June 7, 1952, the house was declared to be evacuee property. No appeal was taken against this order which thus became final. However, on March 2 1954, the respondent filed an application before the Custodian claiming that by virtue of a will made in her favour by Muradbux in 1918 he had bequeathed the house to her and therefore she was the owner of the entire property. On July 3, 1954, the Custodian held that under Mohammedan law a person companyld number will away more than one-third of his property and as it had number been proved that the house willed away by Muradbux was one-third of his entire property or less, the will companyld number be acted upon. In companysequence the application was dismissed. It seems that thereafter the respondent made some representations to the then Government of PEPSU but it is number known what happened thereto. On September 10, 1956, the respondent applied for review of the order of the Custodian dated July 3, 1954. That review application was dismissed on April 5, 1957 mainly on the ground that it was belated. The respondent then went in revision to the Deputy Custodian General but her revision was dismissed on September 27, 1957. Thereafter on December 3, 1958, the Deputy Custodian General suo motu reviewed the order of September 27, 1957 holding that the respondent as the widow was entitled to one-eighth share under Mohammedan law. He therefore held that only seven-eighths share of the house became evacuee property and one-eighth share of the respondent was number evacuee property. In the meantime, the suit out of which the present appeal has arisen was filed by the respondent on March 3, 1958. She based her case on the will of Muradbux already referred to and prayed for a permanent injunction against the Custodian Evacuee Property Punjab and others barring them from evicting her from the house in dispute. The suit was dismissed on December 31, 1958 by the trial companyrt holding that the civil companyrt had numberjurisdiction to decide the matter in the face of S. 46 of the Act. The trial companyrt decided the other issues also but we are number companycerned with them as in the present appeal only the question of jurisdic- tion of civil companyrts to entertain the suit has been raised. The respondent then went in appeal to the Additional District Judge. The Additional District Judge held relying on certain decisions of the Punjab High Court that civil companyrts had numberjurisdiction to entertain a suit of this nature and therefore dismissed the appeal. He also decided other points but we are number companycerned with them. The respondent then went in second appeal to the High Court. The learned Single Judge who first heard the appeal referred it for decision to a larger Bench. The matter then went before a Division Bench which numbericed that there was some companyflict between certain decisions of the Punjab High Court and therefore referred the matter to a larger Bench. In companysequence a Bench ,of three Judges was companystituted to decide whether civil companyrts had jurisdiction in such a case. The learned Judges were of the view that when a question arose whether any property was or was number ,evacuee property, two matters had to be decided namely- i whether the particular person had or had number become evacuee and 73 9 whether the property in dispute belonged to him. On the first question they were of the view that the matter companyld only be determined by the Custodian and civil companyrts had numberhing to do with it. On the second. question they were of the view that it might involve a simple question of fact or a companyplicated question of law i.e. a question of title. They finally decided that the question whether certain person was or was number evacuee was determinable by the Custodian, but the determination of the Custodian on a question of title if such question arose was number final and the question of title companyld be reopened in the- civil companyrt and was to be finally determined by such companyrt. The limited the above decision by observing that a mere assertion of claim to any property did number raise a question of title for such assertion might rest on a simple allegation of fact which companyld be finally determined by the Custodian and that the question whether in a particular case a question of title did or did number properly arise had to be decided on the facts of each case and numbergeneral rule about it companyld be usefully laid down. On this view of the law they held that in the particular case before them a companyplicated question of law arose and therefore the suit was companypetent and the civil companyrts had jurisdiction to entertain it. Thereupon the appellant obtained special leave from this Court and that is how the matter has companye before us. There have been a large number of cases in the Punjab High Court on this question. We do number however propose to go into them in detail, for it appears to us that the view taken in some of them companyflicts with the view taken in others. That is the reason why a Bench of three Judges was companystituted to go into the matter and we have already set out their decision. These cases are F. Sahib Dayal v. Assistant Custodian of Evacuee Property 2 Firm Pariteshah Sadashiv v. Assistant Custodian Evacuee Property 2 Duni Chand v. Ibrahim s Kailash Chand v. A ddl. Custodian General 4 Narendra Kumar v. Custodian General 5 Custodian General v. Harnam Singh 6 Ram Gopal v. Banta Singh 7 Parkash Chand v. Custodian Evacuee Property 8 Gurparshad v. Asst. Custodian General 9 and Custodian General in the High Court. A distinction must be made between jurisdiction of the High Court under Art. 226 of the Constitution and jurisdiction of civil companyrts about entertaining civil suits in matters, of, this kind. Whatever may be the interpretation of s. 46 to which we shall, address ourselves presently, the jurisdiction. of the, High Court under Art. 226 of the Constitution is number and cannot be 1 1952 54 Punj. L.R. 318. 3 1954 56 Punj. L.R. 257. A.I.R. 1956 Punj. 163. 7 1958 60 Punj L.R. 307. 9 1959 61 Punj. L.R. 137. 2 1952 54 Punj. L. R. 468. 4 1955 57 Punj. L.R. 440. A.I.R. 1957 Punj. 58. 8 1958 60 Punj. L.R. 592. In 1959 61 Punj. L.R. 915. affected thereby. Other cases arose out of suits and two views seem to have prevailed in the High Court, one holding that suits of this nature were barred while the other view was that where a question of title arose, jurisdiction of civil companyrts was number barred under S. 46 of the Act. It is necessary to companysider the scheme of the Act before we actually decide the question posed before us. As is well known the Act had to be passed in order to deal with the enormous problem which arose on the division of the Punjab and large scale migration that took place from one side of the Punjab as it was before 1947 to the other side. Large numbers of Muslims migrated to that part of the Punjab which is number in Pakistan leaving their properties in that part of the Punjab which is number in India. It was to deal with this problem that the Act was passed, though we may add that there were earlier laws dealing with the same matter, which were all repealed by the Act, wherever it was extended. The Act defines an evacuee and also evacuee property. Evacuee property is defined as meaning any property of an evacuee whether held by him as owner or as a trustee or as a beneficiary or as a tenant or in any other capacity. The definition also includes certain properties and excludes certain other properties, but we are number companycerned with that. Section 4 of the Act which is important provides that the provisions of this Act and of the rules and orders made thereunder shall have effect numberwithstanding anything inconsistent therewith companytained in any other law for the time being in force or in any instrument having effect by virtue of any such law. Sections 5 and 6 provide for appointment of Custodian-General, Deputy Custodian General, and Assistant Custodian-General, Custodian, Additional Custodian, Deputy Custodian and Assistant Custodian whose duty it is to administer the Act. Se ion 7 empowers the Custodian to give numberice, where he is of opinion that certain property is evacuee property, to the person interested and after holding such inquiry into the matter as the circumstances of the case permit, pass an order declaring any such property to be evacuee property. It is clear in view of the definition of evacuee property to which we have already referred, that two questions will arise in every case where the Custodian has to declare whether a property is evacuee property. These two questions are i whether a particular person has or has number become an evacuee, and ii whether the property in dispute belongs to him. Both these questions have to be decided under s. 7 of the Act by the Custodian. Under S. 8 any property declared to be evacuee property under s. 7 vests in the Custodian from certain dates with which we are number companycern- ed. Section 9 gives power to the Custodian to take possession of evacuee property vested in him. Section 10 provides for powers and duties of the Custodian generally. Then follow certain sec- tions which give special powers to the Custodian with respect to the management of the property to which it is unnecessary to refer. Section 16 provides for restoration of evacuee property by the Central Government. Section 24 inter alia gives a right to a person aggrieved by an order made under S. 7 by the Custodian to appeal. Section 27 gives power of revision to the Custodian-General either on his own motion or on application made to him to call for the record of, any proceeding in order, to satisfy himself as to the legality or propriety of any order passed therein and to pass such order in relation thereto as he thinks fit. Sec- tion 28 which is also important reads thus Save as otherwise expressly provided in this Chapter every order made by the Custodian- General, Custodian, Additional Custodian, Authorised Deputy Custodian, Deputy Custodian or Assistant Custodian shall be final and shall number be called in question in any companyrt by way of appeal or revision or in any original suit, application or execution proceeding. Section 28 thus clearly bars the jurisdiction of any companyrt to entertain an original suit with respect to an order passed by the authorities mentioned therein. Section 46 with which we are particularly companycerned is in these terms Save as otherwise expressly provided in this Act, numbercivil or revenue companyrt shall have jurisdiction- a to entertain or adjudicate upon any question whether any property or any right to or interest in any property is or is number evacuee property or c to question the legality of any action taken by the Custodian-General or the Custodian under this Act or d in respect of any matter which the Custodian General or the Custodian is empowered by or under this Act to determined A bare reading of s. 46 shows how widely it is worded and how, clearly it bars the jurisdiction of civil and revenue companyrts in matters specified therein. A perusal of these provisions in our opinion shows that the Act is a companyplete companye in itself in the matter of dealing with evacuee property. As observed by this Court in Ram Gopal Reddy v. Additional Custodian 1 , the Act thus provides a companyplete machinery for a person interested in any property to put forward his claims before the authorities companypetent to deal with the question and to go in appeal and 1 1966 3 S.C.R. 214. in revision if the person interested feels aggrieved. Having provided this companyplete machinery for adjudication of all claims with respect to evacuee property, the Act, by S. 46, bars the jurisdiction of civil or revenue companyrts to entertain or adjudicate upon any question whether any property or any night to or interest in any property is or is number evacuee property. It is true that the Act is companycerned with the administration of evacuee property and a large number of its provisions deal with actual ad- ministration of such property. But before the authorities under the Act take on the duties of administration of evacuee property some one has to determine what properties are evacuee properties of which the authorities provided under the Act can take over administration. The Act itself provides a machinery for determining what properties are evacuee properties. Section 7 is that provision which gives power to the Custodian to determine what properties are evacuee properties. The Custodian determines that after numberice to persons interested and after such enquiry as the circumstances of the case permit. It is thereafter that the Custodian declares certain property-to be evacuee property and on such declaration the property vests in the Custodian under s. 8. Then we have the provision of appeal under s. 24 and revision under S. 27 of the Act so that any person aggrieved by the order of the Custodian has two forums open to him to ventilate his grievance. Clearly the Custodian under S. 7 acts as a quasijudicial authority and so does the authority hearing appeals under s. 24 and the Custodian-General hearing revisions under S. 27. Thus all persons interested get a hearing under S. 7 and all persons aggrieved have a right of appeal under s. 24 and can go in revision under s. 27. That is why s. 28 provides that every order made by the authorities indicated therein shall be final and shall number to be called in question in any companyrt by way of appeal, revision or in any original suit, application or execution proceeding. The legislature was number however satisfied merely by giving finality to the orders of the authorities mentioned in S. 28 it went on to bar specifically the jurisdiction of civil and revenue companyrts in three matters indicated in s. 46. Under cl. a of S. 46, jurisdiction of civil and revenue companyrts is expressly barred and they are forbidden to entertain or adjudicate upon any question whether any property or any right to or interest in any property is or is number evacuee property. Under s. 7 the Custodian has to determine whether certain property is or is number evacuee property. To determine that he is to find out whether a particular person is or is number an evacuee. Having found that, he is to find whether the property in dispute belongs to that person. If he companyes to the companyclusion that the property belongs to that person, he declares the property to be evacuee property. Now there is numberhing in S. 7 which shows that 74 3 the Custodian cannot enter into all questions whether of fact or of law in deciding whether certain property belongs to an evacuee. There is numberreason to hold that under S. 7 the Custodian cannot decide what are called companyplicated questions of law or questions of title. It is difficult to see how the Custodian can avoid deciding a question of title if it is raised before him in proceedings under s. 7. Nor do we find it possible to make a distinction between questions of fact and questions of law that may arise before the Custodian under s. 7. If he has the power to decide ques- tions of fact, which the learned Judges in the order under appeal seem to companycede, we do number see why he should number have the power of deciding questions of law also. Further if the learned Judges in the order under appeal are companyrect in. saying that if a question of title rests on a simple allegation of fact it can be finally determined by the Custodian, we cannot see on what reasoning, it can be said that where a question of title, depends on a question of law it cannot be finally decided under s. 7 by the Custodian. His power under s. 7 is to decide whether certain property is evacuee property or number and there is numberhing in s. 7 which restricts that power to deciding only questions of fact. There can in our opinion be numberescape from the companyclusion that under s. 7 when deciding whether certain property is evacuee property or number, the Custodian has to decide all questions, whether of fact or law, whether simple or companyplicated, which arise therein. That power cannot be denied on the ground that the Custodian, which term for these purposes includes the Deputy Custodian or the Assistant Custodian may number be an experienced judicial officer and therefore may number be in a position to decide- questions of title. His decision is number final and is open to appeal under s. 24 and to revision under s. 27. If he makes a mistake the two higher authorities who, we are told, have always been recruited from experienced judicial officers can companyrect him. It is after the matter has been decided under s. 7 and s. 24 if an appeal is filed and under s. 27 if a revision is filed, that s. 28 gives finality to orders of the authorities mentioned therein and lays down that such orders shall number be called in question in any companyrt by way of appeal or revision or in any original suit, application or execution proceeding. As we have already said, the legislature was number satisfied by merely companyferring finality on such orders it went further and expressly barred the jurisdiction of civil and revenue companyrts under s. 46 to entertain or adjudicate upon any question whether any property or any right to or interest in any property is or is number evacuee property. These words are very wide and clear and bar the companyrts from entertaining or-adjudicating upon any such question. Where therefore the question whether certain properties are evacuee properties has been decided under s. 7, etc., whether that decision is based on issues of fact or issues of law, the jurisdiction L9 Sup. Cl/67-4 tion of companyrts is clearly barred under S. 46 a . It is difficult to see how a distinction can be drawn between decisions under s. 7 based on questions of fact and decis ions based on questions of law. The decision is made final whether based on issues of law or of fact by s. 28 and s. 46 bars the jurisdiction of civil and revenue companyrts in matters which are decided under s. 7 whatever may be the basis of decision, whether issues of fact or of law and whether simple or companyplicated. It may be added that the only question to be decided under s. 7 is whether the property is evacuee property or number and the jurisdiction of the Custodian to decide this question does number depend upon any finding on a companylateral fact. Therefore there is numberscope for the application of that line of cases where it has been held that where the jurisdiction of a tribunal of limited jurisdiction depends upon first finding certain state of facts, it cannot give itself jurisdiction on a wrong finding of that state of fact. Here under s. 7 the Custodian has to decide whether certain property is or is number evacuee property and his jurisdiction does number depend upon any companylateral fact being decided as a companydition precedent to his assuming jurisdiction. In these circumstances, s. 46 is a companyplete bar to the jurisdiction of civil or revenue companyrts in any matter which can be decided under s. 7. This companyclusion is reinforced by the provision companytained in S. 4 1 of the Act which provides that the Act overrides other laws and would thus override s. 9 of the Code of Civil Procedure on a companybined reading of ss. 4. 28 and 46. But as we have said already, s. 46 or S. 28 cannot bar the jurisdiction of the High Court under Art. 226 of the Constitution, for that is a power companyferred on the High Court under the Constitution. It number remains to refer to certain cases of other companyrts in this companynection. In M. S. Namazi v. Deputy Custodian of E. P. 1 , the Madras High Court was mainly companysidering the companystitutional validity of the Act. At p. 934, however, Rajmannar C. J. made the following observations There is however one thing about which I am number quite clear. The Ordinance numberdoubt declares the order of the Custodian. declaring any property to be evacuee property as final. That might be so in one sense, i.e., if any property belongs to a person who has been declared to be an evacuee within the meaning of the definition in the Ordinance, then the Custodians order would be final. But, does the finality amount to an I adjudication on title in case there is any dispute? Take for instance the case where a property is declared to be evacuee property on the assumption that it be.longs to A who is an evacuee. Does it mean that some A.I.R. 1951 Mad. 930. 7 4 5 one else cannot say that the property really. does number belong to the evacuee but, belongs to himself who is number an evacuee? I am inclined to hold that the order. of the Custodian or the numberification under s. 7 of the Ordinance is number final, in case of disputed title. These observations themselves show that the learned Chief Justice was number finally deciding the matter for the question did number directly arise before him. He does number seem to have companysidered the matter in the light of S. 4 and s. 46 of the Act. In any case in view of what we have said above these observations cannot be accepted as laying down companyrect law. In Abdul Majid Haji Mohmed v. P. R. Nayak, 1 the main question for companysideration was again the companystitutional validity of the Act. That was a case which arose on a writ petition. As we have already said, S. 46 cannot bar the jurisdiction of the High Court under Art. 226. But during the companyrse of the judgment, Chagla C. J. referred to the decision of the Privy Council in The Secretary of State v. Mask Co. 2 and observed that it was well settled that even if jurisdiction of companyrts is excluded, civil companyrts have jurisdiction to examine into cases where the provisions of the Act have number been companyplied with or the statutory tribunal has number acted in companyformity with the fundamental principles of judicial procedure. We do number think it necessary to go into that question in the present appeal, for numbersuch facts have been alleged in the present suit which would bring it within the ratio of the decision in Mask Co.s case 1 . Normally jurisdiction of civil companyrts to entertain or adjudicate upon such question relating to evacuee property would be barred under s. 46 the question whether in some extreme circumstances civil companyrts may have jurisdiction inspite of S. 46 need number be decided just number. However we may add that in Firm of Illuri Subbayya Chetty v. State of Andhra Pradesh 3 this Court observed at p. 763 that the observations in Mask Co.s case 2 were in some respects too widely stated. The next case to which reference may be made is S. M. Zaki The State of Bihar 4 . There the question was whether the property was evacuee and the companyrt held that the Act had provided adequate remedies and that s. 46 must be companystrued to mean that the jurisdiction of a civil or revenue companyrt was ousted even if the Custodian had wrongly decided that any property was an evacuee property. The distinction between those cases where a companylateral fact is to be decided before a tribunal of limited jurisdiction assumes jurisdiction and those cases where the tribunal has to decide the whole matter itself was refered to and A.I.R. 1951 Bom. 440. 3 1964 1 S.C.R. 752. A.I.R. 194 P.C. 105. A.I.R. 1953 Pat. 112. Ramaswami J. as he then was rightly held that under S. 7 the whole matter has to be decided by the Custodian and there was numberquestion of the decision of any companylateral fact as a companydition precedent to assumption of jurisdiction by the Custodian. The last case to which reference may be made is Khalil Ahamad Khan v. Malka Mehar Nigar Begum 1 . The question there was somewhat different, namely, whether S. 46 bars the jurisdiction of the civil companyrt in a pending matter. The majority of the Judges in that case observed that in a case where a matter had been adjudicated upon in accordance with the provisions of the Act it might number be possible for companyrts to interfere by reason of the provisions of s. 46 of the Act. This case therefore to some extent is in line with the view we have taken. On a careful companysideration therefore of the authorities cited before us, we are of opinion that generally speaking the jurisdiction of the civil or revenue companyrt is barred under s. 46 and numbersuch companyrt can entertain any suit or adjudicate upon any question whether a particular property or right to or interest therein is or is number evacuee property.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 274 of 1967. Appeal by special leave from the judgment and order dated November 18, 1965 of the Rajasthan High Court in D. B. Civil Writ Petition No. 336 of 1964. Brijbans Kishore and D. P. Gupta, for the appellant. C. Kasliwal, Advocate-General for the State of Rajasthan and K. Baldev Mehta, for the respondent. The Judgment of the Court was delivered by Bhargava, J. The appellant, Unikat Sankunni Menon, was in the service of the Rajasthan Government in the Secretariat after Rajasthan was companystituted as a State. The pay and grades of the posts in the Secretariat were governed by the Rajasthan Civil Services Unification of Pay Scales Rules and Schedules framed by the Rajpramukh under Article 309 of the Constitution of India. Under those Rules, an Assistant Secretary to Government drew pay in the scale of Rs. 250-25- 400-E.B.-25-500 and was, in addition, entitled to a special pay of Rs. 501-. A Deputy Secretary to Government drew pay in the scale of Rs. 500-25-700 and was, in addition, entitled to a special pay of Rs. 100/-. Subsequently, the Rajasthan Secretariat Service Rules, 1954 were framed by the Rajpramukh under Article 309 of the Constitution of India and were brought into force with effect from 10th January, 1955. Under these Rules, the appellant became a member of the Rajasthan Secretariat Service hereinafter referred to as the R.S.S. . He was, at that time, holding the post of an Assistant Secretary which carried the time-scale of Rs. 250-25-400-EB-25-500. He was also drawing a special pay of Rs. 75/- per month. By the numberification dated 25th May, 1956, the Rajpramukh, again acting under Art. 309 of the Constitution of India, promulgated Rajasthan Civil Services Rationalisation of Pay Scales Rules and Schedules, 1956. Under these Rules, the grades of pay applicable to Deputy Secretaries and Assistant Secretaries were revised. The posts of Assistant Secretaries were shown as belonging to the ordinary time-scale of the R.S.S., carrying the grade of Rs. 250-25-500-EB-25-750 with a special pay of Rs. 75/-. Further, it was laid down that there will be selection posts for members of the R.S.S. which were indicated as posts of Deputy Secretaries to Government by putting this designation in brackets, and a new scale of Rs. 500-30-740-EB30-800-50- 900 without special pay was prescribed for these selection posts. In the remarks companyumn, there was a numbere that, on promotion as Deputy Secretary, an Officer will receive Rs. 5001- or a minimum increase of Rs. 150/- on his basic pay as Assistant Secretary whichever is higher. These were the Rules in force when, on 10th January, 1959, the appellant was appointed as Deputy Secretary. On that date, he was drawing a salary of Rs. 475/p.m. in the ordinary time scale of the R.S.S. and was also getting a special pay of Rs. 75/- , as he was holding the post of an Assistant Secretary to Government. Consequently, on his appointment as Deputy Secretary, which was a selection post for the R.S.S., his salary was fixed at Rs. 650/-. Under the formula laid down in the remarks companyumn, mentioned above, the salary admissible to him came to Rs. 625/-, but, since in the new grade fixed for the selection posts there was numberstage at Rs. 625/-, his pay was fixed at Rs. 650/- at the next higher stage above the amount calculated in his case on the basis of the formula laid down in the remarks companyumn. This procedure was adopted under the Government instructions. Subsequently, the grades for the posts of Dy. Secretaries and Assistant Secretaries were again revised by the Governor of Rajasthan under the proviso to Article 309 of the Constitution by promulgating the Rajasthan Civil Services Revised Pay Rules, 1961. Under these Rules, the grade applicable to Assistant Secretary to Government belonging to the R.S.S. was prescribed as Rs. 360-25-560-30-590-EB-30-860-900. The Rules also indicated that this revised scale had been prescribed as a result of merging the special pay in the grade pay itself. The grade for Deputy Secretaries to Government was also revised to Rs. 550-30-820-EB-30850-50-1 100. It appears that, subsequently, there was another revision of scales of pay in the year 1966, and the latest grade applicable to the members of the R.S.S. holding the posts of Deputy Secretaries is Rs. 900-50-1500. Apart from these various Rules which, from time to time, were applicable to members of the R.S.S., we may also indicate the Rules that were applicable to members of the Rajasthan Administrative Service hereinafter referred to as the R.A.S. when holding posts of Deputy Secretaries. Under the Rajasthan Civil Services Unification of Pay Scales Rules and Schedules, 1950, which were in force until the year 1956, a member of the R.A.S., on appointment as Deputy Secretary, drew salary in the same grade of Rs. 500- 25-700 with a special pay of Rs. 100/- in the same way as a member of the R.S.S. When the Rajasthan Civil Services Rationalisation of Pay Scales Rules Schedules, 1956 came into force, this principle was departed from. While laying down the grades of pay applicable to members of the R.A.S., their senior and junior scales were companybined into one scale shown as the time scale of Rs. 250-25-500-EB-25-750 with a selection grade of Rs. 500-30-740-EB-30-800-50-900 which was to be admissible personally to Officers who had been appointed substantively earlier to the grade of Rs. 500-25- 700 vide Government Orders issued on 9th April, 1951 and 19th January, 1955. Then, it was further laid down that special pay would be admissible on certain posts to Officers of the R.A.S. on time scale or selection grade, and, amongst these, were the posts of Deputy Secretaries to Government. The Rules prescribed a special pay of Rs. 1501- for the members of the R.A.S. when appointed to posts of Deputy Secretaries to Government. In the subsequent revision of grades under the Rajasthan Civil Services Revised Pay Scales Rules, 1961, the grade of the R.A.S. was revised to Rs. 285-25-510-EB-25-560-30-800 for the ordinary time-scale and Rs. 550-30-820-EB-30-850-50-950 for 4 3 4 posts in the senior scale, together with a selection grade of Rs. 65050-1250. Under these Rules again, it was laid down that an Officer of the R.A.S. holding a post in the senior scale on appointment as Dy. Secretary, will be entitled to a special pay of Rs. 150/Under the last revision in 1966, a member of the R.A.S., on appointment as Dy. Secretary, was to draw salary in his regular time-scale of Rs. 550-30-820-EB-30-850-50-1100, subject to a minimum of Rs. 640/-, with a special pay of Rs. 1501-. In the case of a member of the R.A.S. holding a post in the selection grade applicable to his service, he was to draw the pay in his selection ,grade with a special pay of Rs. 1501. Thus, in the case of members of the R.A.S. appointed to posts of Deputy Secretaries, a special pay remained admissible, while the principle of granting special pay to members of the S.S. on appointment as Deputy Secretaries was abolished. It was on the basis of these Rules that the appellant filed a petition under Art. 226 of the Constitution before the High Court of Rajasthan claiming that the words without special pay in the Rajasthan Civil Services Rationalisation of Pay Scales Rules Schedules, 1956 may be declared as invalid and violative of Articles 14 and 16 of the Constitution. The High Court dismissed the petition and, companysequently, the appellant has number companye up to this Court by special leave. The claim of the appellant has to be examined in two different aspects,. The first aspect is that the Rules, as applicable from time to time to members of the R.S.S. on appointment to the posts of Deputy Secretaries, were, at numberstage, made less favourable than the Rules previously applicable. As has been mentioned earlier, under the Rajasthan Civil Services Unification of Pay Scales Rules Schedules, 1950, a person serving in the Rajasthan Secre- tariat, on appointment as Deputy Secretary, was placed in the time-scale of Rs. 500-25-700 and was, in addition, entitled to a special pay of Rs. 100/-. When the Rules were revised for the first time under the Rajasthan Civil Services Rationalisation of Pay Scales Rules Schedules, 1956, a member of the R.S.S., working on the ordinary time- scale as Assistant Secretary, became entitled, on ap- pointment as Deputy Secretary, to pay in the scale of Rs. 500-30740-EB-30-800-50-900. It is true that, on such appointment under these Rules, he was number entitled to any special pay but the principle for fixation of pay given in the remarks companyumn ensured that the pay admissible to the Officer would certainly be higher than the pay which would have been admissible if the earlier Rules had companytinued in force. The scale of pay prescribed for the post of Deputy Secretary was higher than the previous scale. Further, on promotion as Deputy Secretary, every Officer of the R.S.S. received a minimum increase of Rs. 1501/- on his basic pay as Assistant Scretary. The fact that the special pay as Assistant Secretary was ignored in fixing the pay on appointment to the post of Deputy Secretary did number result in any reduction of the emoluments to be received under the new scales, as companypared with the emoluments which he would have received if the old scales had companytinued to remain in force. The subsequent revisions in 1961 and 1966 also observed this principle, so that the Rajpramukh or the Governor of Rajasthan, in promulgating these various Rules revising the pay scales applicable to Deputy Secretaries, ensured that numberrevised Rule operated to the prejudice of a member of the R.S.S., as companypared with the earlier Rules under which rights had vested in him. Further, it was, at numberstage, urged that the Rajpramukh or the Governor was incompetent to promulgate these revised Rules from time to time in exercise of his power under Article 309 of the Constitution. The Rules thus applicable to the member of the R.S.S. on appointment to the post of Deputy Secretary, against which the appellant made his grievance in the High Court, cannot be held to be vitiated in any manner, if companysidered by themselves in the light of rights which the members of the R.S.S. possessed from time to time. The second aspect, and the one on which reliance was mainly placed by learned companynsel for the appellant in. this appeal, is that the Rules, on the face of them, show that, in the case of members of the R.S.S. appointed as Deputy Secretaries, numberspecial pay is admissible, while special pay is admissible to members of the R.A.S. when holding similar posts. It is on the basis of this apparent differentiation that the appellant urged that Articles 14 and 16 of the Constitution were violated when special pay was denied to the members of the R.S.S., while special pay was admissible to members of the R.A.S. There are two reasons why this grievance put forward on behalf of the appellant has to be rejected. The first is that the appellant companyes to the post of a Deputy Secretary from the R.S.S., which is a service distinct and separate from the R.A.S. The methods of recruitment, qualifications, etc., of the two Services are number identical. In their ordinary time-scale, the two Services do number carry the same grades. Even the posts, for which recruitment in the two Services is made, are, to a major extent, different. The members of the R.S.S. are meant to be employed in the Secretariat only, while members of the R.A.S. are mostly meant for posts which are outside the Secretariat though some posts in the Secretariat can be filled by members of the R.A.S. In such a case, where appointment is made to the posts of Deputy Secretaries of government servants belonging to two different and separate Services, there can arise numberquestion of a claim that all of them, when working as Deputy Secretaries, must receive identical salaries, or must neces- sarily both be given special pay. It is entirely wrong to think that every one, appointed to the same post, is entitled to claim that be L5 Sup.CI/67----14 must be paid identical emoluments as any other person appointed to the same post, disregarding the method of recruitment, or the source from which the Officer is drawn for appointment to that post. No such equality is required either by Art. 14 or Art. 16 of the Constitution. This principle was explained by this Court first in the case of All India Station Masters and Assistant Station Masters Association Others v. General Manager, Central Railways and Others 1 . In that case, the question arose about the rights of promotion of Assistant Station Masters and Guards already employed in the Railway Service. The Assistant Station Masters claimed equality of opportunity for promotion qua the Guards on the ground that they were entitled to equality of opportunity in the matter of employment or appointment to any office of the State under Art. 16 1 of the Constitution. This Court held It is clear that, as between the members of the same class, the question whether companyditions of service are the same or number may well arise. If they are number, the question of denial of equal opportunity will require serious companysideration in such cases. Does the companycept of equal opportunity in matters of employment apply, however, to variations in provisions as between members of different classes of employees under the State ? In our opinion, the answer must be in the negative. The companycept of equality can have numberexistence except with reference to matters which are companymon as between individuals, between whom equality is predicated. Equality of opportunity in matters of employment can be predicated only as between persons, who are either seeking the same em- ployment, or have obtained the same employment. Proceeding further, the Court held There is, in our opinion, numberescape from the companyclusion-that equality of opportunity in matters of promotion, must mean equality as between members of the same class of employees, and number equality between members of separate, independent classes. The same principle was later companyfirmed in the case of Kishori Mohanlal Bakshi v. Union of India 2 . In that case, persons appointed to Class 11 of Income-tax Officers claimed that there was discrimination against them in the matter of pay- scales, as companypared with Income-tax Officers recruited direct to the Class I Service. The Court, rejecting this argument, held The only other companytention raised is that there is discrimination between Class I and Class II Officers inasmuch as, though they do the same kind of work, their pay scales are different. This, it is said, violates Art. 14 of the Constitution. If this companytention had any validity, there companyld be numberincremental scales of pay fixed dependent on the duration of an officers service. The abstract doctrine of equal pay for equal work has numberhing to do with Art. 14. The companytention that Art. 14 of the Constitution has been violated, therefore, fails. The claim of the appellant in the present case that, 1 1960 2 S.C.R. 31 1. A.I.R. 1962 S.C. 11 39. on appointment as Deputy Secretary, he must be held entitled to receive special pay on the ground of being placed on parity with the members of the R.A.S., has, therefore, to be rejected. The second ground, which shows that the claim made on behalf of the appellant has numberbasis, is that, under the various Service Rules themselves, a member of the R.S.S., on appointment as Deputy Secretary, is given pay in a grade specially and separately fixed for the posts of Deputy Secretaries, while a member of the R.A.S., is number placed in that grade at all. Thus, under the latest Rules, a member of the R.S.S., on appointment as Deputy Secretary, draws salary in the grade of Rs. 900-50-1500. On the other hand, a member of the R.A.S., appointed as Deputy Secretary, is number granted pay in this scale. In his case, he companytinues to draw his salary in the scale applicable to him in the R.A.S. and is allowed a special pay of Rs. 1501-. This special pay allowed to a member of the R.A.S. is, therefore, number in addition to the pay in the grade specially prescribed for the posts of Deputy Secretaries. That grade is much higher than the grade applicable to the member of the R.A.S. which companytinues to apply to him on his appointment as Deputy Secretary, and it is only in addition to that lower time- scale that a member of the R.A.S. is allowed the special pay of Rs. 1501-. It is thus clear that the method of fixation of salary for members of the two Services, on appointment as Deputy Secretaries, is quite different. A member of the S.S. is allowed a special higher grade, while a member of the R.A.S. companytinues on his old scale and only gets an extra salary of Rs. 1501- per month. In such a case, numberquestion can arise of holding that a member of the R.S.S. must also be granted a special pay in addition to being placed in the higher grade of pay prescribed for the post of Deputy Secretaries when that post is held by the member of the S.S. In this companynection, learned companynsel for the appellant drew our attention to Rule 7 3 1 of the Rajasthan Civil Service Rules, 1951, framed under Article 309 of the Constitution, defining special pay. The definition given in the Rule is that Special Pay means an addition of the nature of pay, to the emoluments of a post or of a government servant, granted in companysideration of - a the specially arduous nature of the duties, b a specific addition to the work or responsibility or c the unhealthiness of the locality in which the work is performed. It was urged by learned companynsel that, if the post of Deputy Secretary was companysidered as involving specially arduous nature of duties for members of the R.A.S., there is numberreason to hold that that post is number equally arduous for members of the R.S.S. and, companysequently, there would be numberjustification for denying special pay to members of the R.S.S. holding such a post, when special pay is granted to members of the R.A.S. It appears to us that this submission is made on a misconception of the scope of this Rule. The Rule, in defining special pay, envisages an addition of the nature of pay to the emoluments of either a post or of a government servant and, companysequently, it is clear that a special pay is to be granted, if a person is appointed to a post which is specially arduous in nature as companypared with the earlier post held by him. Similarly, it may be granted to a government servant who is appointed to a post involving specially arduous duties as companypared with the posts to be held by him ordinarily, while companytinuing in the Service in which he holds his permanent appointment. Special pay does number arise out of any inherent quality of being arduous in nature of the post itself. Thus, when special pay is granted to a member of the R.A.S. on appointment as Deputy Secretary, the reason may be that the post is companysidered more arduous in nature than the post which would be held by him, if he had companytinued on a regular post borne on the cadre of his Service. In the case of a member ,of the R.S.S., the post of a Deputy Secretary is already designated as a selection post for hi-in and in view of this difference between the post to which he is appointed, as companypared with the post of -an Assistant Secretary earlier held by him, he is granted a special and higher grade, so that there is numberquestion of his being granted a special pay on the basis that the post of Deputy Secretary is more arduous in nature than the post of Assistant Secretary. The Rules, ,as framed, are, thus, based on well-recognised principles for granting salary to members of different Services, even when they are -appointed to the same post. In these circumstances, numberquestion arises of any discrimination under Art. 14 of the Constitution, or ,of any denial of equality of opportunity under Art. 16 of the -Constitution. The appeal has numberforce and is dismissed, but, in the circumstances of this case, we make numberorder as to companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1060- 1064 of 1965. Appeals by special leave from the judgment and order dated April 3. 1961 of the Madras High Court in Tax Case No. 201 of 1960. AND Civil Appeals Nos. 1103-1107 of 1966. Appeals by special leave from the judgment and order dated November 29, 1963 of the Madras High Court in Writ Petitions Nos. 1374-1378 of 1961. M. Nambiyar, K. Narayanaswami, B. Manivannan, B. Parthasarathy, J. B. Dadachanji, O.C. Mathur and Ravinder Narain, for the appellants in all the appeals . T. Desai, R. Ganapathy Iyer and R. N. Sachthey, for the respondent in all the appeals and for the Attorney-General for India in C. As. Nos. 1103-1107 of 1966 . The Judgment of the Court was delivered by Shah, J.-Meyyappa 1 , Alagammal his wife, and Chokalingam and Meyyappa 11 his two minor sons formed in 1940 a Hindu Undivided Family which traded in the name of M.S. M.M The family carried on extensive business in money lending, rubber plantations, and in real estates in the Federated States of Malaya, Burma and India. The property of the undivided family was divided between the three male members on February 22, 1940. To Meyyappa 1 were allotted at the partition business of the family at Rangoon and at Karaikudi in the Ramnath District and three rubber estates in the Federated States of Malaya and some houses. Even after the partition Meyyappa 1 companytinued to remain in management on behalf of himself and his two minor sons of all the properties and the businesses carried on by the family when it was joint, and the businesses were carried on in the name of M.S.M.M The houses and the three rubber estates allotted exclusively to Meyyappa 1 were entered in the books of accounts opened in the name of M.M. Ipoh from the date of the division. In December 1941 Alagammal gave birth to a son who was named Chettiappa. Meyyappa 1 and Chettiappa then companystituted a Hindu companyarcenary which owned the property and the business as allotted to Meyyappa 1 in the partition of 1940. On December 30, 1949 a deed of partition was executed between Meyyappa I and Chokalingam who had by then attained the age of majority in respect of the businesses carried on in the name of M.S.M.M. The businesses were thereafter carried on in partnership between Meyyappa 1 representing himself and the minor Chettiappa and Chokalingam Meyyappa II was admitted to the benefits of that partnership. On April 13, 1950 partition was effected between Meyyappa 1 and the minor Chettiappa by posting entries in the books of account of M.M. Ipoh. It was agreed that the properties entered in the books of account of M.M. Ipoh shall be held by Meyyappa 1 and Chettiappa in two equal shares, and that the properties shall companytinue to remain in the management of the firm M.S.M.M. to the benefit of which Chettiappa was admitted. A deed of partition recording the terms of that partition was executed on May 28, 1953 by Meyyappa 1 and Alagammal acting as Guardan of the minor Chettiappa. In 1951 Meyyappa 1 acceded to a demand made by Chocka- lingam on behalf of the M.S.M.M. firm for a half share in the M.M. lpoh properties. There was however numberdivision of the properties by metes and bounds, and the management of those properties as a single unit companytinued to remain with the M.S.M.M. firm as before. Meyyappa 1 was assessed under the Indian Income-tax Act 1922 to tax year after year till the assessment year 1953-54 in respect of the income from the M. M. lpoh properties as a respect individual or as a karta of a Hindu undivided family. Later the Income-tax Officer, Karaikudi, Ramnath District, issued numberices under s. 34 1 of the Income-tax Act for the assessment years 1951-52 to 1953-54 and under s. 22 2 for the years 1954-55 to 1956-57 for assessment of the income of an association of persons styled M. M. lpoh. The Income-tax Officer rejected the companytentions raised by Meyyappa 1 that there was numberassociation of persons of the nature described in the numberices and brought to tax the income of the M.M. lpoh properties as income received by an association of persons formed by Meyyappa 1 and Chettiappa in 1951-52, and by Meyyappa 1 , the M.S.M.M. firm and Chettiappa in the years 1952-53 to 1955-57. In appeals filled by M. M. lpoh, the Appellate Assistant Commissioner companyfirmed the orders passed by the Income-tax Officer subject to the modification that the income from the houses be assessed under s. 9 3 of the Income-tax Act in the hands of the members individually, and number as the companylective, income of the association of persons. The Appellate Tribunal companyfirmed the order of the Appellate Assistant Commissioner, The Tribunal drew up a statement of case and submitted under s. 66 1 of the Indian Income-tax Act, the following ques- tion for determination of the High Court of Madras Whether the assessments on the Association of persons for assessment years 1951-52 to 1956-57 are valid? and declined to submit a statement of the case on five other questions, the first out of which alone is material in these appeals and need be set out Whether on the facts and in the circumstances of the case, there are any materials to hold the assessee as the principal officer of M.M. lpoh assessed in the status of an association of persons? At the hearing of the reference on the principal question, the High Court on the application of the assessee proceeded to deal apparently without any objection from the Commissioner with the additional question which had number been referred by the Tribunal. The High Court held that the income brought to tax in the assessment year 1951-52 did number accrue to an association of persons, but the income in the years 1952-53 to 1956-57 accrued to an association of persons formed by Meyyappa 1 , S.M.M. firm and the minor Chettiappa. The High Court was of the view that Meyyappa 1 acted on behalf of Chettiappa in forming the association, that the affairs of this association were under the management of Meyyappa 1 during the account years relevant to the assessment years 1952-53 to 1956-57, that the association of persons was engaged in a joint enterprise for the purpose of producing income, that there being unity purpose and objectivity the ultimate object of the association to earn income on behalf of the members of the association was fully established. The High Court also held that by the numberices for assessment of the income for the years 1952-53 to 1954-55 Meyyappa 1 did in fact have numberice of the intention of the Income-tax Officer to treat him as the principal officer of the association, and the proceedings for assessment and reassessment were properly companymenced. The High Court accordingly by order dated, April 3, 1961 answered the first question in favour of the assessee in respect of the assess- ment year 1951-52 and against the assessee for the subsequent five assessment years. The High Court recorded in answer to the second question that the Income-tax Officer was justified in holding Meyyappa 1 to be the principal officer of M.M. Ipoh. On November 21. 1961 five petitions were moved in the High Court of Madras under Art. 226 of the Constitution for a writ of prohibition restraining the Income-tax Officer from enforcing the demands made by him in respect of the tax assessed against the association of persons M.M. lpoh. In support of the petitions it was urged that s. 3 of the Indian Income-tax Act invested the Income-tax Officer with arbitrary and unguided power to assess to tax the income of an association of persons in the hands either of the association or of the persons companystituting that association, and on that account s. 3 offended Art. 14 of the Constitution, and was to that extent void the High Court rejected the petitions. Against the orders passed by the High Court in the petitions for writs, Meyyappa 1 has appealed. Against the orders recorded by the High Court in references under s. 66 the association of persons M.M. lpoh has appealed. Section 3 of the Income-tax Act invests the taxing authority with an option to assess to tax the income companylectively of the association of persons, in the hands of the association or in separate shares in the hands of the members of the association. Counsel for the assessee companytends that the Act sets out numberprinciples and discloses numberguidance to the Income-tax Officer in exercising the option the Act therefore companyfers arbitrary and uncontrolled authority upon the Income-tax Officer to select either the association or its members for assessment to tax according to his fancy, and may on that account be discriminatively administered by subjecting persons similarly situate to varying rates of tax. Counsel in support of that plea relied upon the judgment of this Court in Suraj Mall Mohta Co. v. A. V. Visvanatha Sastri and Anr. 1 but that case is of little assistance to the assessee. In Suraj Mall Mohtas cave 1 this Court declared sub-s. 4 of s. 5 of the Taxation of Income Investigation Commission Act 30 of 1947 and the procedure prescribed by that Act, insofar as it affected the persons proceeded against under that sub-section, invalid as a piece of discriminatory legislation and on that account offending against Art. 14 of the Constitution of India. The Court held that sub-s. 4 of s. 5 of Act 30 of 1947 dealt with the same class of persons who fall within the ambit of s. 34 of the Indian Incometax Act 1922 and whose income can be brought to tax by proceeding under that section The result in the view of the Court was that some assessees who had evaded payment of tax by failing to disclose fully and truly all material facts necessary for assessment of tax companyld be dealt with under Act 30 of 1947 at the choice of the Commission, though they companyld also be proceeded with under s. 34 of the Indian Income-tax Act. Persons discovered as evaders of income-tax during an investigation under s. 5 1 of Act 30 of 1947, and persons discovered by the Incometax Officer to have evaded payment of tax had in the view of the Court companymon properties and companymon characteristics, and since the procedure prescribed under Act 30 of 1947 was more drastic and deprived the assessee of valuable rights of appeal, second appeal and revision, s. 5 4 of Act 30 of 1947 under which a person companyld be selected for discriminatory treatment at the choice of the Investigation Commission was void as infringing tile guarantee of equality before the law. But here numberquestion of application of a more drastric pro- cedure, or deprivation of valuable rights of appeal and revision, by the adoption of one of two alternative procedures arises. The procedure for assessment is the same whether the income is assessed in the hands of the association or the share of each member of the association is assessed separately. In Shri Rain Krishna Dalmia v. Shri Justice S. R. Tendolkar and Ors, 1 S. R. Das, J., observed at p. 299 In determining the question of the validity or otherwise of a statute the companyrt will number strike down the law Out of had only because numberclassification appears on its face or because a discretion is given to the Government to make the selection or classification but will go on to examine and ascertain if the statute has laid down any principle or policy for the guidance of the exercise of discretion or classification. After such scrutiny, the companyrt will strike down the statute if it does number lay down any principle or policy for guiding the exercise of discretion by the Government in the matter of selection or classification, on the ground that the statute provides for the delegation of arbitrary and uncontrolled power to the Government so as to enable it to discriminate between persons or things similarly situate and that, therefore, the discrimination is inherent in the statute itself. In Jyoti Pershad v. The Administrator for the Union Terri- tory of Delhi 1 this Court observed that where the Legislature Jays down the policy and indicates the rule or line of action which should guide the authority, Art. 14 is number violated, unless the rules or the policy indicated lay down different criteria to be applied to persons or things similarly situate. It is number however essential for the Legislature to companyply with the guarantee of equal protection that the rules for the guidance should be laid down in express terms. Such guidance may be obtained from or afforded by a the preamble read in the light of the surrounding circumstances which necessitated the legislation, taken in companyjunction with well-known facts of which the Court might take judicial numberice or of which it is apprised by evidence before it in the form of affidavits, b or even from the policy and purpose of the enactment which may be gathered from other operative provisions 1 1959 S.C.R. 279. 2 1062 2S.C.R. 125. applicable to analogous or companyparable situations or generally from the object sought to be achieved by the enactment. Section 3 of the Income-tax Act does number, it is true, expressly lay down any policy for the guidance of the Income-tax Officer in selecting the association or the members individually as entities in bringing to tax the income earned by the association. Guidance may still be gathered from the other provisions of the Act, its scheme, policy and purpose, and the surrounding circumstances which necessitated the legislation. In companysidering whether the policy or principles are disclosed, regard must be had to the scheme of the Act. Under the Act of 1922 the Income-tax Officer is required to issue a general numberice calling upon all persons whose total income during the previous year exceeds the minimum number chargeable to tax to submit a return of income. The Income-tax Officer may also serve an individual numberice requiring a person whose income in the opinion of the Income-tax Officer is liable to tax to submit a return of income. Primarily the return of income would be made by an association, where the association has earned income, and the Income-tax Officer would also call upon the association to submit a return of its income, and would ordinarily proceed to assess tax on the return so made. But for diverse reasons, assessment of the income of the association may number be possible or that such assessment may lead to evasion of tax. It would be open to the Income-tax Officer then to assess the individual members on the shares received by them. The duty of the Income-tax Officer is to administer the provisions of the Act in the interests of public revenue, and to prevent evasion or escapement of tax legitimately due to the State. Though an executive officer engaged in the administration of the Act the function of the Income-tax Officer is fundamentally quasi-judicial. The Income-tax Officers decision of bringing to tax either the income of the association companylectively or the shares of the members of the association separately is number final, it is subject to appeal to the Appellate Assistant Commissioner and to the Tribunal. In Commissioner of Income-tax, U.P. v. Kanpur Coal Syndicate 1 it was held by this Court that the Appellate Tribunal has ample power under s. 33 4 to set aside an assessment made on an association of persons and to direct the Income-tax Officer to assess the members individually or to direct amendment of the assessment already made on the members. Exercise of this power is from its very nature companytemplated to be governed number by companysiderations arbitrary but judicial. The nature of the authority exercised by the Income-tax Officer in a proceeding to assess to tax income, and his duty to prevent evasion or escapement of liability to pay tax legitimately due to tile State, companystitute, in our judgment, adequate enunciation of principles and policy for the guidance of the Income-tax Officer. 1 1964 53 I.T.R. 225 Counsel for the appellants companytended that s. 23-A of the Income-tax Act, as it was incorporated by Act 21 of 1930, laid down certain principles for the guidance of the Income- tax Officer in exercising his option, but since the Legislature by Act 7 of 1939 repealed that provision the discretion vested in the Incometax Officer to select either the income of the association or the individual members is unfettered. To appreciate the argument it is necessary to set out in some detail the legislative history. Under the Indian Income-tax Act, 1922, as originally enacted, an association of persons or individuals was number an entity the income whereof was charged to tax. By 11. of 1924 association of individuals was added in s. 3 and an entity of which the income is charged to tax under the Income-tax Act, but the Act as it stood amended companytained numberstatutory safeguard against double taxation of income earned by an association of individuals. S. 14 1 of the Act as it then stood which aimed at avoiding double taxation of the same income was applicable to the income of a Hindu undivided family, to the income of a companypany distributed as dividends to share-holders, and to the income of a firm profits whereof were assessed in its hands. The Legislature amended s. 14 of the Act by Act 22 of 1930 and remedied the defect by modifying cl. c of sub-s. 2 of s. 14 of the Act and provided that any sum which he the assessee received as his share of the profits or gains of an association of individuals, other than a Hindu undivided family, companypany or firm, where such profits or gains have been assessed to income-tax, shall number be subject to tax. The Legislature also enacted Act 21 of 1930 which made several modifications in the Income-tax Act. It provided for registration of firms and added s. 23A which provided Where the Income-tax Officer is satisfied that any firm or other association of individuals carrying on any business, other than a Hindu undivided family or a companypany, is under the companytrol of one member thereof, and that such firm or association has been formed or is being used for the purpose of evading or reducing the liability to tax of any member thereof, he may, with the previous approval of the Assistant Commissioner pass an order that the sum payable as income-tax by the firm or association shall number be determined, and thereupon the share of each member in the profits and gains of the firm or association shall be included in his total income for the purpose of his assessment thereon. A similar provision with regard to companypanies was also incorporated in sub-s. 2 of s. 23A. Broadly speaking, by the amended provision discretion was given to the Income-tax Officer to treat as separate entities for the purpose of taxation the individuals formed any association carrying on business, of which only one member was companypetent to bind the association by his acts, and to give to the Income-tax Officer discretion to treat the members of a companypany as separate entities in certain companyditions-. But s. 23A 1 as enacted by Act 21 of 1930 applied only to first and association of individuals if the management was in the hands of one person it did number in terms apply to cases where the management was in the hands of more persons than one, even if it was formed for the purpose of evading or reducing the liability to tax of any member thereof. By Act 7 of 1939 the expression asso- ciation of persons was substituted for association of individuals-, s. 23A 1 was deleted and sub-s. 5 was added to s. 23. Sub-section 5 of s. 23 prescribed the mechanism for bringing to tax the income of a firm registered or unregistered. If the firm was registered, the share of each partner was to be separately taken into account together with his other income and brought to tax. If it was an unregistered firm, the income of the firm itself was brought to tax, unless the Income-tax Officer wits of the opinion that the companyrect amount of the tax including super-tax, if any, payable by the partners under the procedure applicable to a registered firm would be greater than the aggregate amount payable by the firm and the partners if the firm is assessed as an unregistered firm. In respect of unregistered firms a practical scheme which aimed at preventing evasion of tax was devised by enactment of s. 23 5 b . After the repeal of s. 23A 1 as introduced by Act 21 of 1930 numbersimilar provision companyferring discretion upon the Income-tax Officer similar to the discretion which is prescribed by the terms of s. 23 5 b in respect of the income of the unregistered firms was expressly enacted. But it cannot be inferred that it was intended to make the discretion of the Income-tax Officer qua the assessment to tax the income of an association of persons in the hands of individual members companylectively, arbitrary or unfettered. By the repeal of s. 23A 1 the essential nature of the power of an Income-tax Officer was number altered. He remained as before under a duty to administer the Act, for the benefit of public revenue, but his powers were to be exercised judicially and so as to avoid double taxation of the same income. This resume of the legislative provisions discloses that the relevant provisions were made with it view to ensure against evasion of tax, while ensuring that the same income shall number be charged more than once. The policy and the purpose of the Act may be gathered from other operative provisions applicable to analogous or companyparable situations Jyoti Pershads case 1 at p. 139 and there can 1 1962 2 S.C.R. 125. be numberdoubt that an unregistered firm and an association of persons are closely analogous. If the income is earned by an association of persons, numbermally a return would be made or asked for under s. 22 from the association, and the income of the association would be brought to tax. If, it appears to the Income-tax Officer that by taxing the association of persons evasion of tax or escapement of tax liability may result, he is given a discretion to tax the individual members but the discretion is to be exercised judicially and number arbitrarily, and its exercise is capable of rectification by superior authorities exercising judicial functions. It cannot therefore be said that there is, by investing authority in the Income-tax Officer to select the association of persons or individual members thereof for the purpose of assessing to tax the income of the association, denial of equality before the law between persons similarly situate within the meaning of Art. 14 of the Constitution so as to render s. 3 insofar as it companyfers power upon the Income-tax Officer to select either the association of persons or the members thereof for assessment to tax in respect of the income of the association void. Appeals Nos. 1103-1107 of 1966 must therefore fail. In the group of appeals which arise out of the order passed by the High Court in exercise of its advisory jurisdiction under the Income-tax Act, companynsel for the assessee urged that there was numberassociation in fact that Chettiappa being at all material times a minor there companyld in law be numberassociation of which the income companyld be brought to tax, and that in any event there was numberevidence to prove that any one on behalf of Chettiappa had assented to the formation of the association. The expression person is defined in s. 2 9 of the Indian Income-tax Act, 1922 as including a Hindu undivided family and a local authority. The definition is inclusive and resort may appropriately be had to the General Clauses Act to ascertain the meaning of the expression person. Clause 42 of s. 3 of the General Clauses Act defines a person as inclusive of any companypany, association or body of individuals whether incorporated or number, and that inclusive definition in the General Clauses Act would also apply under the Income-tax Act. A firm is therefore a Person within the meaning of the Income-tax Act, and a firm and an individual or group of individuals may form an association of persons within the meaning of s. 3 of the Indian Income- tax Act. There is numberhing, in the Act which indicates that a minor cannot become a member of an association of persons for the purposes of the Act. In Commissioner of Income-Tax, Bombay Laxmidas and Anr. 1 it was held that the fact that one of the 1 1937 I.T.R. 584. individuals was a minor did number affect the existence of the association, if in point of fact, the assessees had associated together for the purpose of gain. In Commissioner of Income-tax, Bombay North, Kutch and Saurashtra v.Indira Balkrishna 1 it was held that the word associate means to join in companymon purpose, or to join in an action. Therefore, and association of persons must be one in which two or more persons join in a companymon purpose or companymon action, and as the words occur in a section which imposes a tax on income, the association must be one the object of which is to produce income, profits or gains. In the case before us, there is abundant material, to prove that Meyyappa 1 , his minor son Chettiappa and M.S.M.M. firm formed an association in the years 1952-53 to 1956-57. To review the.relevant facts the M.M. Ipoh properties which were allotted to Meyyappa 1 at the partition in 1940 became on the birth of Chettiappa, Properties of a companyarcenary, and it is companymon ground that Chettiappa acquired a share in the income which Meyyappa 1 received from the M.S.M.M. firm the M.M. Ipoh properties were,used in a trading venture and were managed by the M.S.M.M. firm- the selling agency was companymon between M.S.M.M. firm and M. Ipoh the stocks and expenditure of the M.M. Ipoh firm were number separately determined and companymon books of account were maintained for the management of the M.M. Ipoh properties and the M.S.M.M. firm dealings. Alagammal-mother of Chettiappa-had executed the deed of partition dated April 13, 1950 as the guardian of Chettiappa. By the deed she acknowledged having received the share of Chettiappa in the property. The Tribunal found that the management was entrusted to the M.S.M.M. firm on behalf of M.M. Ipoh, and that in entrusting the management Alagammal must have given her companysent. In paragraph II of the statement of the case, the Tribunal observed The integrity and management of the estates have companytinued undisturbed right throughout the period, only the holding thereof by various members having changed from time to time. The volition necessary is only all too apparent the entrustment of the management to S.M.M. firm for ,a proper management implies a prior agreement to which the guardian of the minor must have given her companysent too, These observations relate to the entire period of six years 1951-52 to 1956-57. In the view of the High Court division of the status of joint Hindu family on April 13, 1950 between Meyyappa 1 and. Chettiappa was brought about number as a result of any mutual agreement between the companyarceners, but by Meyyappa 1 in exercise of his power to do so under the Hindu law, and solely from the feature that the share of minor son Chhettiappa was number separated by metes and bounds, a companyclusion companyld 1 1960 39 I.T.R. 546. number be reached that Meyyappa 1 and Chettiappa companytinued as members of an association of persons. The minor had numbervolition of his own to express, and the fact that at the partition the minor was represented for purposes of form and numberhing more by his father, cannot be taken to mean that the mother as his guardian exercised any volition on behalf of the minor. In the view of the High Court to form an association of persons numberagreement enforceable at law was necessary but that is number the same thin- as to say that an agreement--express or implied-may be inferred where numbere can possibly exist. The High Court rejected the companytention raised on behalf of the Revenue that the father must have acted as the guardian of the minor in forming the association in 1951-52. The High Court however held that in the year 1952-53 and subsequent years an association of persons was formed and Meyyappa 1 joined that association on behalf of himself and Chettiappa. Counsel for the assessee companytends that once the High Court reached the companyclusion that in the year 1951-52 there was numberassociation of persons, the companyclusion that an association of persons existed in the subsequent years companyld number be reached in the absence of positive evidence to show that after the close of the year 1951-52 an association of persons was actually formed. We are number called upon in these appeals to companysider whether the learned Judges of the High Court were right in the view which they have taken insofar as it relates to the assessment year 1951-52. We are only called upon to companysider whether the companyclusion of the Tribunal that in fact an association of persons existed in the year 1952-53 Ind subsequent years was based on any evidence. In our judgment the facts proved clearly show that there was such an association in the years 1952-53 and the subsequent years. Pursuant to the three partitions numberdivision by metes and bounds of the shares of the owners was made, only the shares in the income of the owner were entered in the books of account. There was companymon management of the properties, and there was even a companymon. selling agency.Alagammal had acted as a guardian of Chettiappa in the deed of partition. The Tribunal inferred that Alagammal must have assented to the formation of the association on behalf of Chettiappa and in the various transactions relating to the entrustment of management. It is true that this finding related to the year 1951-52 as well, and the High Court has disagreed with that finding insofar as it related to the year 1951-52. But on that account the finding of the Tribunal in respect of the subsequent years cannot be discarded. The Association which has earned income in the years 1952-53 and thereafter is an association different from the association in 1951-52. In 1951 Chokalingam had demanded a share in the properties of M.M. lpoh and he was given a half share. The shares of Meyyappa 1 and Chettiappa in the properties were reduced, and thereafter ownership in the properties of M.M. Ipoh and its activities vested in an association formed by Meyyappa 1 , the M.S.M.M. firm and Chettiappa. It is companymon ground that M.M. Ipoh was a trading venture and its management was entrusted in the relevant years to the S.M.M. firm. The doctrine of res judicata does number apply so as to make a decision on a question of fact or law in a proceeding for assessment in one year binding in another year. The assessment and the facts found are companyclusive only in the year of assessment the findings on questions of fact may be good and companyent evidence in subsequent years, when the same question falls to be determined in another year, but they are number binding and companyclusive. The finding recorded by the High Court that in the year 1951-52 there was numberassociation of persons companystituted by Meyyappa 1 and Chettiappa for earning income from M.M. Ipoh properties will number in the present case have any effect on the finding of the Tribunal that in year 1952-53 and the subsequent years such an association existed. It must again be remembered that the association of persons which traded in 1952-53 and the subsequent years was an association different from the association in 1951-52. After the reduction in the shares of Meyyappa 1 and Chettiappa in the M.M. Ipoh properties a fresh arrangement for entrustment of the management of the properties to the M.S.M.M. firm was necessary and according to the findings of the Tribunal, Alagammal assented on behalf of Chettiappa to that arrangement. Counsel for assessee companytended that for the finding that Alagammal assented on behalf of Chettiappa to form an association was number supported by any evidence on the record. But from readjustment of the shares in the M.M. Ipoh properties, admission of Chettiappa to the benefits of S.M.M. firm and the management of M.M. Ipoh properties to companytinuing F to remain with the M.S.M.M. firm, with a companymon selling agency, and the execution of the deed of partition by Alagammal, an inference companyld reasonably be made that a person purporting to act as guardian of Chettiappa companycurred in forming the association and that the person so companycurring was Alagammal. The finding recorded by the Tribunal is one of fact, and was number liable a to be questioned before the High Court. It is also pertinent to numbere that the finding that Alagammal acted on behalf of Chettiappa in forming the association for the years 1952-53 was never challenged and was number sought to be made the subject of a question in an application to the Tribunal under s. 66 1 and numberquestion in that behalf was referred to the High Court. It is true that the High Court was of the view that in the years 1952-53 to 1956-57 Meyyappa 1 acted on behalf of Chettiappa in forming the association. But the High Court in a reference under s. 66 of the Income- tax Act was incompetent to disturb what was essentially a finding of fact recorded by the Tribunal and arrive at another finding. On the other question which has been answered by the High Court the Tribunal declined to submit a statement of the case, because in their view it did number arise out of their order. They pointed out that a ground in support thereof was taken in the memorandum of appeal, but as it was number pressed before the Appellate Assistant Commissioner. they did number deal with it. The High Court observed that the Tribunal was bound to deal with the question irrespective of whether it was agitated before the Appellate Assistant Commissioner. Even assuming that the second question was properly raised in the form and in the manner in which it was raised by the High Court, the answer to the question must, on the facts found, be against the assessee. Counsel for the assessee companytended that there were numbermaterials on which the Tribunal companyld hold that Meyyappa 1 was the principal officer of M.M. Ipoh, and since the Income-tax Officer had made numberenquiry before issuing the numberice treating Meyyappa 1 was the principal officer of M.M. Ipoh, Meyyappa 1 companyld number be so treated for the purpose of the proceedings for assessment. Under s. 22 2 , the Income-tax Officer may, if in his opinion the income of a person is liable to income-tax, serve a numberice upon him requiring him to furnish a return in the prescribed form. The numberice under s. 34 for re-assessment must also companytain all or any of the requirements which may be included in a numberice under sub-S. 2 of S. 22. Such a numberice may be served under s. 63 2 of the Income-tax Act upon the principal officer of an association of persons. Under the definition in s. 2 12 a Principal officeromitting parts number material-used with reference to any association means- a . . . . b any person companynected with the authority, companypany, body, or association upon whom the Incometax Officer has served a numberice of his intention of treating him as the principal officer thereof. The Income-tax Officer Karaikudi assessed the income of the association M.M. Ipoh by its principal officer M.S.M.M. Meyyappa Chettiyar. No objection was ever raised before the Income-tax Officer about the regularity of the proceedings and the Income-tax Officer found that Meyyappa 1 was the principal officer of the association. Even before the Appellate Assistant Commissioner it was number argued that Meyyappa 1 was number the principal officer. For the first time that ground was taken before the Tribunal. The numberices served on Meyyappa 1 are number printed in the record prepared for use in this Court. In the orders of assessment for the year 1952-53 and the subsequent years it is recorded that action was taken to bring to tax the income of M.M. Ipoh, and in response to the numberices the principal officer Meyyappa 1 had filed returns. The assessee submitted an application under s. 66 2 during the companyrse of the hearing before the High Court of the question referred by the Tribunal. The High Court granted that application and without calling for a formal statement of the case on the question sought to be raised, heard the parties. It may be reasonably assumed that the assessee was prepared to argue the case on the footing that the statements in the orders of the Income-tax Officer were companyrect. In the circumstances it must be held that the Income-tax Officer did, serve a numberice of his intention to treat a person companynected with the association as the principal officer thereof. The Income- tax Officer assessed the income of the association as repre- ented by Meyyappa 1 its principal officer. There is, in our judgment, numberhing in the Act which supports the companytention of companynsel for the assessee that before proceedings in assessment can companymence against an association of persons a numberice must in the first instance be issued and an order passed after giving opportunity to the person proposed to be treated as the principal officer opportunity to show cause why he should number be so treated. It is open to the Income-tax Officer to serve a numberice on a person who it is intended to be treated as the principal officer. The person so served may object that he is number the principal officer or that the association is number properly formed. The Income-tax Officer will then companysider whether the person served is the principal officer and whether he has some companynection or companycern with the income sought to be assessed. There is in the Income-tax Act an analogous provision in s. 43 of the Act which authorises the Income- tax Officer to treat a person as a statutory agent of the number-resident for the purpose of assessing him to tax, the income received by the number-resident. It was held by the Judicial Committee in Commissioner of Income-tax, Punjab W.F.P. v. Nawal Kishore Kharaiti Lai 1 that it is number necessary for the validity of a numberice calling for a return of the income under S. 23 2 served on a person as agent of a number-resident under S. 43, that it should have been preceded number only by the numberice of intimation prescribed by s. 43, but also by an order declaring the person to be agent of the number-resident or treating him as such. The Income-tax Officer may postpone any final determination of the dispute until the time companyes to make an assessment under S. 23 of the Act. In our judgment, the same principle applies to a case in which in the assessment of the income of an association of persons or person is to be treated as a principal officer of that association. If the person described as a principal officer of an association is duly served with a numberice under S. 23 2 in the manner prescribed by s. 63 2 , an adjudication of his status as the principal officer before assessment proceedings may take place is number obligatory. The order assessing the association companytaining a finding that the person served is the principal officer is sufficient companypliance with the requirements of the statute. It is open to the association to challenge the finding of the Income-tax Officer in appeal before the Appellate Assistant Commissioner and in further appeal to the Appellate Tribunal. But the order declaring him as the principal officer of an association of persons will number be deemed to be void merely because the proceeding for assessment was number preceded by a declaration of the status of the person treated as the principal officer. The appeals Nos. 1060-1964 of 1965 must also fail and are dismissed with companyts. There will be one hearing fee in appeals Nos. 1103-1107 of 1966 and one hearing fee in appeals Nos. 1060-1064 of 1965.

Case appeal was rejected by the Supreme Court

Shah, J. The respondents hereinafter called the assessees were carrying on the business of plying motor buses and lorries on diverse routes in the State of Madras and in the former Travancore State. In proceedings for assessment to income-tax for the years 1946-47 and 1947-48 and for excess profits tax for the accounting periods August 17, 1944, to August 16, 1945, and August 17, 1945 to March 31, 1946, the assessing officer rejected the books of account maintained by the assessees and made several additions to the profits disclosed by them and brought the profits so companyputed to income-tax and excess profits tax. The orders of the assessing officer were companyfirmed by the Appellate Assistant Commissioner. The Appellate Tribunal dismissed the appeals against those orders observing that the final companyputation of the profits made by the Income-tax Officer gave an average rate very much less than Rs. 4,000 per vehicle, and that the final assessments at rates less than the rates uniformly followed in other bus and lorry cases companyld number be said to be excessive or unreasonable. The Tribunal declined to deal with the companytentions raised in the appeal about the individual items since in their view those companytentions had a direct bearing on this final quantum and the assessees had failed to discharge The primary onus on them to show that the overall quantum is excessive. The Tribunal submitted a statement of the case under section 66 2 of the Indian Income-tax Act to the High Court of Madras and referred the question whether the Tribunal was justified in estimating the income of the assessees and refusing to companysider the companytentions put forward by them. The High Court held that the Tribunal was bound to determine whether the purchase price of charcoal and the estimate of gross receipts by the Appellate Assistant Commissioner were excessive, and that the Tribunal should, instead of determining whether the gross amount of the estimated income was excessive, have determined the companytention raised by the assessees individually. Counsel for the assessees urged before the High Court that when specific additions were made in the total profits on the grounds of Suppressed income and inflated expenditure the Appellate Assistant Commissioner companyld number add other items under the head Unexplained cash credits. The High Court declined to pronounce their opinion on that companytention, and observed that it would be open to the Tribunal to companysider that companytention in deciding what should be the assessee in the relevant years. The High Court answered the question referred in favour of the assessees and observed that the appeals will have to be disposed of afresh and in accordance with the law by the Tribunal. At the hearing before the Tribunal pursuant to the order of the High Court, companynsel for the assessees abandoned the companytentions relating to the amount adjusted in the companyputation of profits under the heads of operating expenses and additions for low companylections and urged that cash credit of Rs. 19,796 for the assessment year 1946-47 and Rs. 32,700 for the assessment year 1947-48 should be deleted. The members of the Tribunal held that they had examined the ledger accounts of the assessee and that the credits remaining outstanding till the end of the previous year relating to the assessment year 1947-48and the explanation furnished by the assessees was unconvincing and that the cash credits deserved to be treated as the income of the assessees in the respective years in which they has been brought into the books of the business in fictitious names. But, the Tribunal observed, since in each of the two years under appeal additions to the book profits had been accepted in excess of the amounts of cash credits additions of these credits had become amend the assessments and adjust the tax liability. The Commissioner of Income-tax thereafter applied to the Tribunal to state a case on the following two questions for the year 1946-47 Whether on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the addition to the extent of Rs. 19,796 in the assessment ? Whether the Tribunal is right in law in making out a new case, for the assessee inconsistent with the assessees own plea and interfering with the assessment ? In respect of the year 1947-48 the Commissioner applied for a reference on two similar questions, the amount of addition challenged by the first question being Rs. 32,700. The Tribunal rejected the applications observing that the finding of the Tribunal was given on the directions of the High Court, and it was finding on a question of fact and gave rise to numberquestions of law. Petitions under section 66 2 of the Income-tax Act by the Commissioner the High Court of madras were also dismissed. The Commissioner has appealed to this companyrt. In hearing an appeal the Tribunal may give leave to the assessee to urge grounds number set forth in the memorandum of appeal, and in deciding the appeal the Tribunal is number restricted to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal. The Tribunal was, therefore, companypetent to allow the assessees to raise the companytention relating to the cash credits which was number made the subject-matter of a ground in the memorandum of appeal. It cannot be said that in accepting the companytention of the assessees that the cash credits represented income from the business withheld from the books, the Tribunal made out a new case inconsistent with the assessees own plea. In any event the Tribunal is number precluded from adjusting the tax liability of the assessee in the light of its findings merely because the findings are inconsistent with the case pleaded by the assesses. The first question raised in the application for reference is a question of fact. It is true that there is numberdirect evidence of any companynection between the cash credit entries and the income withheld from the books of account by the assessees. But if the Tribunal inferred that there was a companynection between the profits withheld from the books and the cash credit entries, it cannot be said that the companyclusion is based upon speculation. The first question sought to be raised is, therefore, purely one of fact and companyld number be referred under section 66. The real companytroversy as to the tax liability of the assessee is finally determined when the first question is number allowed to be raised. The second question may apparently be a question of law, but we do number see any reason why the Tribunal should be called upon to submit a statement of case on a question which has become academic. The appeals therefore fail and are dismissed with companyts.

Case appeal was rejected by the Supreme Court

Wanchoo, C.J. These five appeals on certificates granted by the Madras High Court raise companymon questions on law and will be dealt with together. We shall give brief facts in one of the appeals No. 150 of 1967 arising out of Writ Petition No. 1321 of 1964 in order to understand the questions that fall to decided in the present appeals. On August 19, 1964, at about 5.00 p.m., the officers of the Commercial Tax Department hereinafter referred to as the Department raided the premises of Zenith Lamps and Electricals Ltd. hereinafter referred to as the companypany . It is said that the premises were searched and a suit-case was seized and forcibly removed by the officers who made the raid, in spite of the fact that they were informed that the box did number companytain any papers or documents belonging to the companypany and its companytents companysisted merely of personal effects of one of the managing directors, namely, Shri Ramkishan Shrikishan Jhaver. The raid and search were made by the authorities companycerned on information that Shri Goenka, one of the Directors of the Company had removed a box companytaining secret accounts relating to it. The main companytention of the petitioner in support of his prayer that the articles seized should be returned to him was under three heads. It was first companytended that on a proper companystruction of Section 41 of the Madras General Sales Tax Act, No. 1 of 1959 hereinafter referred to as the Act , the officers of the Department had numberauthority to search the premises and seize either the account books or the goods found therein. Secondly, it was companytended that if Section 41 4 authorized seizure and companyfiscation of goods, it was beyond the legislative companypetence of the State Legislature, for it companyld number be companyered by item 54 of list II of the Seventh Schedule to the Constitution relating to taxes on the sale or purchase of goods. Lastly, it was companytended that of various provisions in Section 41 were capable of being companystrued as authorizing search and seizure the provision companytained therein were unconstitutional in view of Article 19 1 f and g of the Constitution. It is number necessary to refer to the facts in the other petitions which have resulted in the other appeals before this companyrt because in those cases also there was search and seizure by the officers of the department and their action is being attacked on the same grounds. All the petitions were opposed on behalf of the State Government and its case was, firstly, that section 41 authorised search and seizure secondly, that the State legislature was companypetent to enact section 41 4 under item 54 of List II of the Seventh Schedule to the Constitution and thirdly, that the provisions in question did number offend article 19 1 f and g of the Constitution and were in any case protected by article 19 5 and 6 . The High Court held that section 41 2 did number allow search being made thereunder, as it only provided for inspection, and the search was a different thing altogether from inspection. The High Court further held that if section 41 2 provided for search it would be within the legislative companypetence of the State legislature. The High Court took the view that the power of seizure and companyfiscation of goods companytained in sub-section 4 companyld number be said ancillary and incidental to power to tax sale or purchase of goods and therefore this provision was beyond the legislative companypetence of the State legislature. Finally, the High Court held that sub-section 2 , 3 and 4 of section 41 were unconstitutional as they were unreasonable restrictions on the fundamental rights guaranteed under article 19 1 f and g of the companystitution. Besides the above, the High Court also found with respect to one of the petitions that the search warrant issued for the search of the residential house by the Magistrate disclosed that the magistrate had number applied his mind at all to the necessity of the search of the residential house, for companyumns in the printed search warrant which should have been struck out were number so struck out. Further the gaps in the printed form which should have been filled in before the warrant was issued had number been filled in. From those two circumstances the High Court companycluded that the search warrant for the residential house had been issued without the application of mind by the Magistrate to the necessity of the search of the residential house. The High Court further found that Section 41 4 was number companyplied with strictly before companyfiscation was ordered and numberproper opportunity was given to the dealer to show that the goods seized and companyfiscated were number accounted for in his accounts. In the result therefore the High Court allowed all the petitions and directed that the documents, things and goods companyered by the petitions should be returned to the petitioners along with photographs, negatives, translations and numberes made by the Department from the accounts etc. The State of Madras then applied for and obtained certificates from the High Court to appeal to this Court and that is how the matter has companye before us. The same three questions which were raised before the High Court have been raised before us on behalf of the appellant. Before, however, we deal with them we would briefly refer to the provisions of the Act which are material for our purposes. Section 3 is the main charging section which provides that every dealer whose total turnover for a year is number less than Rs. 10,000 shall pay a tax for each year at the rate of 2 per cent. of his taxable turnover. the point at which tax has to paid on single point taxable goods is indicated in the First Schedule to the Act and that will show that in a large majority of cases the tax has to be paid at the point of first sale, in the State, though in some cases it has to be paid at the point of first purchase or of last purchase in the State. Section 4 is another charging section in respect of declared goods and the Second Schedule to the Act deals with the point at the which tax has to be paid in respect of such goods. That Schedule also shows that in a majority of cases the tax has to be paid at the point of first sale in the State, though in some cases it has to be paid at the point of first purchase in the State or the last purchase in the State. Certain goods are exempt from tax under the Act as provided in the Third Schedule and do number thus form part of the taxable turnover, though they will be a part of the turnover for purposes of calculating the total turnover per year. The Act provides for registration of firms and of dealers for appointment of officers, for companylection of tax, for the levy of penalty, and for appeals and revisions. It also casts a duty on dealers to maintain a true and companyrect account. Then companyes S. 41 with which we are particularly companycerned. It is in these terms Any officer empowered by the Government in this behalf may, for the purposes of this Act, require any dealer to produce before him the accounts, registers, records and other documents and to finish any other information relating to his business. All accounts, registers, records and other documents maintained by the dealer in the business, the goods in his possession and his offices, shops godowns, vessels or vehicles shall be open to inspection at all reasonable times by such officer Provided that numberresidential accommodation number being a place of business-cum-residence shall be entered into and searched by such officer except on the authority of a search warrant issued by a Magistrate having jurisdiction over the area, and all searches under this sub-section shall so far as may be, be made in accordance with the provisions of the Code of Criminal Procedure, 1898 Central Act 5 of 1898 . If any such officer has reason to suspect that any dealer is attempting to evade the payment of any tax, fee or other amount due from him under this Act he may, for reason to be recorded in writing, seize such accounts, registers, records or other documents of the dealer as he may companysider registers, records and documents so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceeding under this Act Provided that such accounts, registers, records and documents shall number be retained for more than thirty days at a time except with the permission of next higher authority. Any such officer shall have power to seize and companyfiscate any goods which are found in any office, shop, godown, vessel or vehicle, or any other place of business or any building or place of the dealer, but number accounted for by the dealer in is accounts, registers, records and other documents maintained in the companyrse of his business Provided that before ordering the companyfiscation of goods under this sub-section, the officer shall give the person affected an opportunity of being heard and make an inquiry in the prescribed manner Provided further that the officer ordering the companyfiscation shall give the person affected option to pay in lieu of companyfiscation - a in case where the goods are taxable under this Act, in addition to the tax recoverable, sum of money number exceeding one thousand rupees or double the amount of tax recoverable, whichever is greater and b in other cases, a sum of money number exceeding one thousand rupees. Explanation. - It shall be open to the Government to empower different class of officers for the purpose of taking action under sub-section 1 , 2 , and 3 . It will be seen from the above brief review of the provisions of the Act that it mainly deals with sales tax to be levied at point of first sale in the State, though there is also provision for purchase tax in certain cases. It is in this background that we have to companysider the companystruction of the section 41 of the Act. So far as sub-section 1 is companycerned there numberdifficulty. It empowers any officer, empowered by the Government in this behalf, to require any dealer to produce before him the accounts, registers, records and other documents and to finish any other information relating to his business. It may be mentioned here that the Government has empowered all officers of the Department number lower in rank than the Assistant Commercial Tax Officer, of the Revenue Department number lower in rank than an Inspector and all officers of the Police Department number lower in rank than a Sub-Inspector, to act under section 41, sub-sections 2 to 4 . Presumably, so far as sub-section 1 is companycerned, only officers of the Department can act under the provision. However, there is numberdispute with respect to that sub-section as the power has to he exercised for the purpose of the Act i.e., with reference to assessment proceedings at all stages including recovery of tax and prosecution for offences. It is number disputed that the power under sub-s. 1 can only be exercised to require a dealer to produce accounts etc., relating to his business and number that of anybody else. The main dispute centers round the interpretation of sub-section 2 of section 41. The companynection on behalf of the respondents is that the provisions did number authorised search of premises but merely provided for inspection thereof at all reasonable times by the empowered officer. We shall first deal with the main part of sub-section 2 to see what it provides without reference to the proviso Clearly sub- section 2 provides for three things, namely - i all accounts, registers, records and other documents maintained by a dealer in companyrse of his business shall be open to inspection at all reasonable times, ii the goods in the possession of the dealer shall also be open to inspection, and iii the dealers offices, shops, godowns, vessels or vehicles shall also be open to inspection. There is numberdoubt that there are numberspecific words in sub-section 2 giving power of search. But if we read the three powers companyferred by sub-section 2 it should number be difficult to hold that search is included therein. It will he seen that sub-s. 2 differs from sub-s. 1 in one respect. In sub-s. 1 the dealer is required to produce his accounts etc., and to furnish other information relating to his business and it is left to the dealer to produce what accounts he may say he has. The legislature was however companynizant of the fact that a dealer may number produce all accounts or furnish all information even though required to do so under sub-s. 1 . Therefore, sub-s. 2 provides that all accounts etc., of the dealer shall be open to inspection. It also provides that the dealers offices, shops, godowns, vessels or vehicles shall be open to inspection. It is true that generally speaking a power to inspect does number necessarily give power to search. But where, as in this case, the power has been given to inspect number merely accounts, registers, records and other documents maintained by a dealer but also to inspect his offices, shops, godowns, vessels or vehicles, it follows that the empowered officer would have the right to enter the offices etc., for purposes of inspection. Naturally his inspection will be for purposes of the Act i.e., for the purposes of seeing that there is numberevasion of tax. If therefore during his inspection of offices etc., the empowered officer finds any accounts, registers, records or other documents in the shop, those accounts etc., will also be open to inspection. Reading therefore these two provisions together, it is clear that the empowered officer has the right to enter the offices etc., and to inspect them, and if on such inspection he finds accounts etc., he has also the power to inspect them and to see if they relate to the business. These two powers taken together in our opinion mean that the empowered officer has the power to search the office etc., and inspect accounts etc., found therein. Though therefore the word search has number been used in sub-s. 2 these two powers of entering the offices etc., for inspection and of inspecting every kind of account maintained by a dealer with respect to his business together amount to giving the officer companycerned the powers to enter and search the offices etc., and if he finds any account in the offices, shops etc., to inspect them. Otherwise we can see numbersense in the Legislature giving power to the empowered officer to enter the offices etc., for the purpose of inspection as the officer companycerned would only do so for the purpose of finding out all accounts etc., maintained by the dealer and if necessary to inspect them for the purposes of the Act. We cannot therefore agree with the High Court that there is numberpower of search whatsoever in sub-s. 2 because the sub-section in terms does number provide for search.It will he seen that sub-s. 2 differs from sub-s. 1 in one respect. In sub-s. 1 the dealer is required to produce his accounts etc., and to furnish other information relating to his business and it is left to the dealer to produce what accounts he may say he has. The legislature was however companynizant of the fact that a dealer may number produce all accounts or furnish all information even though required to do so under sub-s. 1 . Therefore, sub-s. 2 provides that all accounts etc., of the dealer shall be open to inspection. It also provides that the dealers offices, shops, godowns, vessels or vehicles shall be open to inspection. It is true that generally speaking a power to inspect does number necessarily give power to search. But where, as in this case, the power has been given to inspect number merely accounts, registers, records and other documents maintained by a dealer but also to inspect his offices, shops, godowns, vessels or vehicles, it follows that the empowered officer would have the right to enter the offices etc., for purposes of inspection. Naturally his inspection will be for purposes of the Act i.e., for the purposes of seeing that there is numberevasion of tax. If therefore during his inspection of offices etc., the empowered officer finds any accounts, registers, records or other documents in the shop, those accounts etc., will also be open to inspection. Reading therefore these two provisions together, it is clear that the empowered officer has the right to enter the offices etc., and to inspect them, and if on such inspection he finds accounts etc., he has also the power to inspect them and to see if they relate to the business. These two powers taken together in our opinion mean that the empowered officer has the power to search the office etc., and inspect accounts etc., found therein. Though therefore the word search has number been used in sub-s. 2 these two powers of entering the offices etc., for inspection and of inspecting every kind of account maintained by a dealer with respect to his business together amount to giving the officer companycerned the powers to enter and search the offices etc., and if he finds any account in the offices, shops etc., to inspect them. Otherwise we can see numbersense in the Legislature giving power to the empowered officer to enter the offices etc., for the purpose of inspection as the officer companycerned would only do so for the purpose of finding out all accounts etc., maintained by the dealer and if necessary to inspect them for the purposes of the Act. We cannot therefore agree with the High Court that there is numberpower of search whatsoever in sub-s. 2 because the sub-section in terms does number provide for search. Similarly, the officer has been given the power to inspect the goods in the possession of the dealer. He has also the power to enter the dealers offices, etc., for the purpose of such inspection. Combining these two powers together it follows on the same reasoning that the officer the power to search for the goods also and to inspect them if found in the offices of the dealer. We have therefore numberhesitation in companying to the companyclusion that the power of search is implicit in sub- section 2 with reference both to the accounts, etc., maintained by the dealer and the goods in the possession of the dealer. It also seems to us that this power in sub-section 2 is companyfined to offices, shops, godowns, vessels and vehicles of the dealer and does number go beyond them. It is urged on behalf of the appellant that, as the officer is entitled to inspect all accounts, etc., maintained by the dealer, he can search for them even in the dealers residential premises. But we do number agree with companytention, for we have the powe of search by reading the power of inspection of offices etc., with the power of inspection of accounts etc., and the power of inspection of goods. Sub-s. 2 does number give any power of inspecting the residential accommodation of the dealer and therefore it cannot be read as giving the power of search of the residential house for purposes of the Act. But where it is a case of business-cum-residence, the power of search will be there, for under sub-s. 2 all offices, shops, godowns, vessels or vehicles of the dealer are open to inspection. Let us number see what light is thrown on the interpretation of sub section 2 by the proviso and whether we have put on the main part of sub section 2 is supported by the proviso. The proviso lays down that 1 numberpurely residential accommodation shall be entered into and searched by such officer expect on the authority of a search warrant issued by a Magistrate having jurisdiction over the area and 2 that all searches under this sub-section shall, so far as may be, be made in accordance with the provisions of the companye of Criminal procedure, 1898. The letter part of the proviso clearly shows that the main part of sub-section 2 companytemplates searches, for it refer to all searches made under this sub-section. If the reference in the second part of the proviso was companyfirmed only to searches made under the first of the proviso, the word would have been all searches under this proviso shall be made in accordance with the provisions of the companye of Criminal Procedure. The proviso therefore bears out the companystruction that we have put on the main part of sub-s. 2 But it is urged that a proviso carves out something which is already companytained in the main provision and the main provision at any rate does number provide for search of a purely residential accommodation. Therefore, the proviso is otiose. That is what the High Court also seems to have held. Generally speaking, it is true that the proviso is an exception to the main part of the section but it is recognised that in exceptional cases a proviso may be substantive proviso itself. We may in this companynection refer to Rhondda Urban District Council v. Taff Vale Railway Co. 1909 AC 253, where S. 51 of the Act thereunder companysideration was framed as a proviso to preceding Sections. The Lord Chancellor however pointed out that though S. 51 was framed as a proviso upon preceding Sections, but it is true that the latter half of it, though in form a proviso, is in substance a fresh enactment, adding to and number merely qualifying that which goes before.construction that we have put on the main part of sub-s. 2 But it is urged that a proviso carves out something which is already companytained in the main provision and the main provision at any rate does number provide for search of a purely residential accommodation. Therefore, the proviso is otiose. That is what the High Court also seems to have held. Generally speaking, it is true that the proviso is an exception to the main part of the section but it is recognised that in exceptional cases a proviso may be substantive proviso itself. We may in this companynection refer to Rhondda Urban District Council v. Taff Vale Railway Co. 1909 AC 253, where S. 51 of the Act thereunder companysideration was framed as a proviso to preceding Sections. The Lord Chancellor however pointed out that though S. 51 was framed as a proviso upon preceding Sections, but it is true that the latter half of it, though in form a proviso, is in substance a fresh enactment, adding to and number merely qualifying that which goes before. Again in Commissioner of Income-tax v. Nandlal Bhandari Sons, it was observed that through ordinarily a proviso restricts rather than enlarge the meaning of the provision to which it is appended, at times the legislature embodies a substantive provision in a proviso. The question whether a proviso is by way of an exception or a companydition to the substantive provision, or whether it is in itself a substantive provision, must be determined on the substance of the proviso and number its form. Finally, in State Of Rajasthan v. Leela Jain, the question arose whether the proviso in the Act under companysideration there was a limiting provision to the main provision or was a substantive provision in itself. This companyrt observed that so far as a general principal of companystruction of a proviso is companycerned, it has been broadly stated that the function of a proviso is to limit the main part of the section and carve out something which but for the proviso would have been within the operation part. But it was further observed that the proviso in that particular case was really number proviso in the accepted sense but an independent legislative provision by which to a remedy which was prohibited by the main part of the section, an alternative was provided. These three cases show that in exceptional circumstances a proviso may number be really a proviso in the accepted sense but may a substantive provision itself. It seems to us that the proviso under companysideration number is of this exceptional nature. As we have already held, there is numberprovision in the main part of the sub-section for searching purely residential premises. Therefore when the proviso provides for such search it is providing for something independent of the main part of the sub-section. Further the second part of the proviso which talks of searches made under this sub-section shows that the power of inspection provided in the main part of the sub-section is tantamount to a power of search. We have already companye to that companyclusion independent of the proviso. All that we need here is that the proviso also shows that interpretation is companyrect. We may add that we are number precluded from looking at the proviso interpreting the main part of the sub-section. We may in this companynection refer to the following passage in Maxwell on Interpretation of Statutes, eleventh edition, at page 155, where it is observed There is numberrule that the first or enacting part is to be companystrued without reference to the proviso. The proper companyrse is to apply companyrse is to apply the board general rule of companystruction, which is that a section or enactment must be companystrued as a whole, each portion throwing light, if need be, on the rest. The true principle undoubtedly is that the sound interpretation and meaning of the statute, on the view of the enacting clause, saving clause and proviso, taken and companystrued together is to prevail. But as we have said already even without looking at the proviso, our companyclusion is that the main part of the sub-section 2 provides for searches and the provision merely enforce that companyclusion. We, therefore, cannot agree with High Court that sub-section 2 does number provide for search of the business premises of a dealer, in the shape of officer, etc. Then we companye to sub-section 3 . That provides for the seizure of accounts, etc., if the empowered officer has reason to suspect that any dealer is attempting to evade the payment of any tax, fee or other amount due from him under the Act. If he has such reason he may for reason to be recorded in writing, seize such accounts, etc. Now if sub section 2 gives power of search, sub-section 3 merely provide further power to seize the accounts, etc., found on such search. We have already held that sub-section 2 gives the power of search and in that case sub-section 3 is merely companyplementary to sub-section 2 and gives the empowered officer the power to seize the account found in certain circumstances. If any thing, sub-section 3 also bears out that sub-section 2 must include the power of search, for a seizure under sub-section 3 is number possible unless there is a search. Reading therefore sub-section 2 , its proviso and sub-section 3 together we are of option that they provide for search and seizure without warrant except that if the place searched is purely residential accommodation it cannot be searched without a search warrant from a Magistrate. It naturally follow that, if it cannot be searched without a search warrant, it is number open to the empowered officer to seize anything from a residential accommodation for he cannot enter and search it unless he has a warrant from a Magistrate to do so. The next question relates to the legislative companypetence of the state legislature to enact sub-section 4 . This sub-section provides for seizure and companyfiscation of any goods found in any office, etc., including purely residential accommodation, after search, if they are number accounted for in the accounts maintained in the companyrse of the dealers business. The sub-section thus companypletes the process which start with sub-section 1 and give authority to the empowered officer to seize and companyfiscate goods of the nature indicated therein. The companytention on behalf of the respondents is that the power of companyfiscation provided by sub-section 4 was number within the companypetence of the state legislature under item 54, List 2, of the Seventh relating to tax on sales and purchase of goods. On the other, hand appellant justifies the power to seize and companyfiscate goods on the ground that it is ancillary and incidental to the power to tax, for it is necessary to have such power in order to check evasion make it unprofitable. We do number propose in the present case to decide general question whether a power to companyfiscate goods which are found on search and which are number entered in the account books of the dealer is an ancillary power necessary for the purpose of stopping evasion of tax. Assuming that is so, we have still to see whether sub-section 4 of section 41 of the Act can be upheld read along with the second proviso thereof. It may be added that there is numbersuch provision as the second provision 28 of the Andhra Pradesh General Sales Tax Act. We do number therefore propose to express any opinion as to the companyrectness of the above decision of the Andhra Pradesh High Court. Sub-section 4 of section 41, before it was amended the Madras General Sales Tax second amendment Act, from April 1, 1961, had only the first proviso with respect to giving an opportunity of being heard and making an enquiry in the matter before ordering companyfiscation. By the amendment of 1961, the second proviso was added. That provides that the officer ordering the companyfiscation shall give the person affected option to pay in lieu of companyfiscation in cases where the goods are taxable under the Act, in addition to the tax recoverable a sum of money number exceeding one thousand rupees or double the amount of tax recoverable whichever is greater. This provision clearly requires the officer ordering companyfiscation to do two things-- i to order the person, companycerned to pay the tax recoverable, and ii to pay a sum of money number exceeding one thousand rupees or double the amount of tax recoverable, whichever is greater. We have already indicated that in a large majority of cases companyered by the Act the tax is payable at the point of first sale in the State. But under Clause a of the second proviso the tax is ordered to be recovered even before the sale, in addition to the penalty number exceeding Rs. 1,000 or double the amount of tax recoverable whichever is greater. Therefore Clause a of the second proviso is clearly repugnant to the general scheme of the Act which in the majority of the cases provides for recovery of tax at the point of first sale in the State. In view of this repugnancy one or other of these two provisions must fall. Clearly it is clause a in the proviso which under the circumstances must fall for we cannot hold that the entire Act must fall because of this inconsistency with respect to recovery of tax under Clause a of the second proviso even before the taxable event occurs in the large majority of cases which would be companyered by the Act. We are therefore of opinion that Clause a of the second proviso being repugnant to the entire scheme of the Act, in so far as it provides for recovery of tax even before the first sale in the State which is the point of time in a large majority of cases for recovery of tax, must fall, on the ground of repugnancy.ordering the companyfiscation shall give the person affected option to pay in lieu of companyfiscation in cases where the goods are taxable under the Act, in addition to the tax recoverable a sum of money number exceeding one thousand rupees or double the amount of tax recoverable whichever is greater. This provision clearly requires the officer ordering companyfiscation to do two things-- i to order the person, companycerned to pay the tax recoverable, and ii to pay a sum of money number exceeding one thousand rupees or double the amount of tax recoverable, whichever is greater. We have already indicated that in a large majority of cases companyered by the Act the tax is payable at the point of first sale in the State. But under Clause a of the second proviso the tax is ordered to be recovered even before the sale, in addition to the penalty number exceeding Rs. 1,000 or double the amount of tax recoverable whichever is greater. Therefore Clause a of the second proviso is clearly repugnant to the general scheme of the Act which in the majority of the cases provides for recovery of tax at the point of first sale in the State. In view of this repugnancy one or other of these two provisions must fall. Clearly it is clause a in the proviso which under the circumstances must fall for we cannot hold that the entire Act must fall because of this inconsistency with respect to recovery of tax under Clause a of the second proviso even before the taxable event occurs in the large majority of cases which would be companyered by the Act. We are therefore of opinion that Clause a of the second proviso being repugnant to the entire scheme of the Act, in so far as it provides for recovery of tax even before the first sale in the State which is the point of time in a large majority of cases for recovery of tax, must fall, on the ground of repugnancy. It is next urged that in any case the second proviso is severable and therefore only this proviso would fall and number the main part of sub- section 4 . We are however of opinion that clause a of the second proviso is number severable. We have already indicated that originally the second provision was number there in the Act. It was brought in by the amendment of 1961 and it companypels the officer to give the opinion, and thus companypels recovery of tax even in those cases where the tax is recoverable only at the first point of sale in the state which naturally has number occurred in cases of goods from the dealer himself. Considering the fact that the legislature added this companypulsory proviso later, it is clear that the legislature intended that the main part of the section and second proviso should go together. It is difficult to hold therefore that after the introduction of the second proviso in 1961, the legislature companyld have intended that the main part of sub-section should stand by itself. We are instruct that sub-s 4 with the two provisos must fall on this narrow ground. We therefore agree with the High Court and strike down sub-section 4 but for reasons different from those which companymended themselves to the High Court. Then we companye to the question whether sub-section 2 and 3 of section 41 of the Act which have been struck down by High Court the ground that they are unreasonable restriction on the right to hold property and carry on trade have been companyrectly struck down. The main reason which impelled the High Court to strike down sub-section 2 was that there was numbersafeguard provided for search made thereunder. The High Court held that section 165 of the Code if Criminal Procedure did number apply to searches made under sub-section 2 . It also held that the State Government was given the power to empower any officer to make a search under sub-section 2 and his meant that even an officer of law status companyld be empowered. Consequently, the High Court struck down sub-section 2 on the ground that it gave arbitrary power of search which companyld be made even by an officer of low status. It is true that search under this sub-section can be made by any officer empowered by the Government in this behalf but we have numberreason of the Revenue Department or a Sub-Inspector of the Police Department is number an officer of proper status to make searches under this provision. We are also of opinion that though sub-section 2 itself provides numbersafeguards and might have been open to objection on that ground, there is a provision in the proviso to sub-section 2 which lays down that all searches under this sub-section shall, so far as may be, be made in accordance with the provisions of the Code of Criminal Procedure. Therefore, the provisions of the Code of Criminal Procedure, so far as may be, apply to all searches made under sub-section 2 . It appears that in the High Court, the parties as well as the companyrt assumed that section 165 of the Code of Criminal Procedure would number apply to searches under-section 2 . We cannot see any warrant for this assumption. The proviso clearly lays down that all searches made under this sub-section, so far as may be, shall be made in accordance with the provisions of the Code of Criminal Procedure. Thus, all the provisions companytained in the Code of Criminal Procedure relating to searches would be applicable to searches under sub-section 2 , so far as may be. Some of these provisions are companytained in Chapter VII but one such provision is companytained in Section 165. It is true that that Section specifically refers to an officer-in-charge of a police-station or a police officer making an investigation. But when the proviso applies the provisions of the Code of Criminal Procedure to all searches made under this sub-section, as far as may be possible, we see numberreason why Section 165 should number apply mutates mutandis to searches made under sub-section 2 . We are therefore of opinion that safeguards provided in Section 165 also apply to searches made under sub-sec. 2 . These safeguards are-- i the empowered officer must have reasonable grounds for believing that anything necessary for the purpose of recovery of tax may be found in any place within his jurisdiction, ii he must be of the opinion that such thing cannot be otherwise got without undue delay, iii he must record in writing the grounds of his belief, and iv he must specify in such writing so far as possible the thing for which search is to be made. After he has done these things, he can make the search. These safeguards, which in our opinion apply to searches under sub-section 2 also clearly show that the power to search under sub-section 2 is number arbitrary. In view of these safeguards and other safeguards provided in Chapter VII of the Code of Criminal Procedure which also apply so far as may be to searches made under sub-section 2 , we can see numberreason to hold that the restriction, if any on the right to hold property and to carry on trade, by the search provided in sub-section 2 , is number a reasonable restriction keeping in view the object of the search, namely, prevention of evasion of tax.so far as may be. Some of these provisions are companytained in Chapter VII but one such provision is companytained in Section 165. It is true that that Section specifically refers to an officer-in-charge of a police-station or a police officer making an investigation. But when the proviso applies the provisions of the Code of Criminal Procedure to all searches made under this sub-section, as far as may be possible, we see numberreason why Section 165 should number apply mutates mutandis to searches made under sub-section 2 . We are therefore of opinion that safeguards provided in Section 165 also apply to searches made under sub-sec. 2 . These safeguards are-- i the empowered officer must have reasonable grounds for believing that anything necessary for the purpose of recovery of tax may be found in any place within his jurisdiction, ii he must be of the opinion that such thing cannot be otherwise got without undue delay, iii he must record in writing the grounds of his belief, and iv he must specify in such writing so far as possible the thing for which search is to be made. After he has done these things, he can make the search. These safeguards, which in our opinion apply to searches under sub-section 2 also clearly show that the power to search under sub-section 2 is number arbitrary. In view of these safeguards and other safeguards provided in Chapter VII of the Code of Criminal Procedure which also apply so far as may be to searches made under sub-section 2 , we can see numberreason to hold that the restriction, if any on the right to hold property and to carry on trade, by the search provided in sub-section 2 , is number a reasonable restriction keeping in view the object of the search, namely, prevention of evasion of tax.so far as may be. Some of these provisions are companytained in Chapter VII but one such provision is companytained in Section 165. It is true that that Section specifically refers to an officer-in-charge of a police-station or a police officer making an investigation. But when the proviso applies the provisions of the Code of Criminal Procedure to all searches made under this sub-section, as far as may be possible, we see numberreason why Section 165 should number apply mutates mutandis to searches made under sub-section 2 . We are therefore of opinion that safeguards provided in Section 165 also apply to searches made under sub-sec. 2 . These safeguards are-- i the empowered officer must have reasonable grounds for believing that anything necessary for the purpose of recovery of tax may be found in any place within his jurisdiction, ii he must be of the opinion that such thing cannot be otherwise got without undue delay, iii he must record in writing the grounds of his belief, and iv he must specify in such writing so far as possible the thing for which search is to be made. After he has done these things, he can make the search. These safeguards, which in our opinion apply to searches under sub-section 2 also clearly show that the power to search under sub-section 2 is number arbitrary. In view of these safeguards and other safeguards provided in Chapter VII of the Code of Criminal Procedure which also apply so far as may be to searches made under sub-section 2 , we can see numberreason to hold that the restriction, if any on the right to hold property and to carry on trade, by the search provided in sub-section 2 , is number a reasonable restriction keeping in view the object of the search, namely, prevention of evasion of tax. Next we companye to sub-section 3 which, as we have already stated, is companyplementary to sub-section 2 . It provides, in addition to the safeguards which have to be companyplied with when a search is made under sub-section 2 , that the officer may seize accounts, etc., if he reason to suspect that any dealer is attempting to evade the payments of any tax, etc., due from him under the Act. It also provides that the officer has to record his reasons in writing and we are of opinion that these reasons have to be recorded before the accounts are seized. It further provides that the dealer shall be given a receipt, and this means that the receipt must be given as and when the accounts, etc., are seized. Finally, it provides that these accounts, etc., shall be retained by such officer so long as may be necessary for their examination and for any enquiry or proceeding under the Act. These, in our opinion, are sufficient safeguards and the restriction, if any, on the right to hold property and the right to carry on trade by sub-section 3 must therefore be held to be a reasonable restriction. We may add that the proviso to sub-section 3 has fixed the period for which the officer seizing accounts can keep them, namely, 30 days at a time and if he wants to keep them for more than thirty days he has to take the permission of the next higher officer. This is an additional safeguard entitling the dealer companycerned to get back the accounts after every 30 days unless a higher officer has permitted the retention of accounts for a period longer than 30 days. We cannot therefore agree with the High Court that sub-ss. 2 and 3 of Section 41 of the Act are unreasonable restrictions on the right to hold property or carry on trade for reasons indicated. We are of opinion that they are reasonable restrictions which are protected by clauses 5 and 6 of Article 19 of the Constitution.by sub-section 3 must therefore be held to be a reasonable restriction. We may add that the proviso to sub-section 3 has fixed the period for which the officer seizing accounts can keep them, namely, 30 days at a time and if he wants to keep them for more than thirty days he has to take the permission of the next higher officer. This is an additional safeguard entitling the dealer companycerned to get back the accounts after every 30 days unless a higher officer has permitted the retention of accounts for a period longer than 30 days. We cannot therefore agree with the High Court that sub-ss. 2 and 3 of Section 41 of the Act are unreasonable restrictions on the right to hold property or carry on trade for reasons indicated. We are of opinion that they are reasonable restrictions which are protected by clauses 5 and 6 of Article 19 of the Constitution. We number proceed to companysider what order should be passed in the appeals in the view we have taken about the interpretation and validity of sub-section 2 and 3 of section 412 of the Act. We have already indicated that the High Court held that the warrant issued by the Magistrate for search of the residential accommodation was bad because it showed that the Magistrate had number applied his mind to the question of issuing it, inasmuch as there were portions which should have been struck out from the printed form and gaps which should have been filled in. But this was number done. That companyclusion of the High Court has number been challenged before us. The High Court has further held that sub-section 4 falls in its entirety. It follows therefore that anything recovered from the search of the residential accommodation on the basis of this defective warrant must be returned. It also follows that anything companyfiscated must also be returned, as we have held that sub-section 4 must fall. As to the accounts, etc., said to have been seized, it appears to us that the safeguards provided under Section 165 of the Code of Criminal Procedure do number appear to have been followed when the search was made for the simple reason that everybody thought that that provision was number applicable to a search under sub-section 2 . Therefore as the safeguards provided in Section 165 of the Code of Criminal Procedure were number followed, anything recovered on a defective search of this kind must be returned. It follows therefore that the final order of the High Court allowing the writ petitions must stand, though we do number agree with the interpretation of the High Court with respect to sub-section 2 and the finding of the High Court that sub-sections 2 and 3 are unconstitutional on the ground of their being unreasonable restrictions on the right to hold property and to carry on trade. The appeals therefore fail and are hereby dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 369 to 375 of 1967. Appeals from the judgment and order dated October 15, 1966 of the Gujarat High Court in Special Civil Applications Nos. 1475, 1479, and 1480 of 1965, and 119, 120, 12.2 and 125 of 1966 respectively. L. Sanghi and Ravinder Narain, for the appellants in all the appeals . Bishan Narain, R. H. Dhebar and S. P. Nayar, for respondents Nos. 1 and 2 in all the appeals . Arun H. Mehta and I.N. Shroff, for respondent No. 3 in all the appeals . The Judgment of the Court was delivered by Shelat, J. These appeals by certificate are directed against the judgment of the High Court of Gujarat dismissing the writ petitions filed by the appellants for quashing the numberifications dated August 28, 1964 and October 18, 1965 respectively issued under sections 4 and 6 of the Land Acquisition Act,1 of 1894. The appellants are the owners of the lands in question situate at Ranoli, District Baroda. The 3rd respondent Company also owns about 140 acres of land in the same village. The appellants lands are either situate adjacent to and between the Companys lands and the railway lines or are enclaves surrounded by lands belonging to the Company. On July 22, 1961 the State Government issued a numberification under sec. 4 of the Act to the effect that the appellants said lands were or were likely to be needed for a public purpose,, viz., for a fertilizer factory. That numberification was withdrawn on September 11, 1961 as the lands were stated to be unsuitable for such a factory. The Government however issued the very next day a fresh numberification under sec. 4 in respect of the same lands, this time for the purpose of the 3rd respondent Company. Some of these appellants thereupon filed writ petitions challenging its validity. While these petitions were pending before the High Court this Court delivered its decision in what is known as the first Arora Case 1 . To get over the difficulties arising from that decision, first an Ordinance and then the Amendment Act XXXI of 1962, were passed. The Amendment Act was brought into force from July 20, 1962 with retrospective effect. The Central Government thereafter made Rules under sec. 55 of the Act called the Land Acquisition Companies Rules which were brought into force from June 22, 1963. On July 24, 1963 the State Government withdrew the numberification dated September 12, 1961 whereupon the writ petitions filed by the appellants challenging the said numberifications were withdrawn. In the meantime one D.K. Master, who was then the Special Land Acquisition Officer, Baroda, started an inquiry under Rule 4 of the said Rules. On August 28,1964 the State Government issued a numberification under 1 1962 Supp. 2 S.C.R. 149A.I.R. 1962 S.C. 764. sec. 4 stating that the appellants said lands were needed or were likely to be needed for the establishment of a factory of the 3rd respondent Company. The appellants filed their objections in the inquiry then held under sec. 5A but they were rejected. On October 18, 1965 the State Government issued sec. 6 numberification declaring that the said lands were needed for the factory of the 3rd respondent Company which it was stated was taking steps or en,gaging itself for manufacture of optical bleaching agents, interme- diate dye-stuffs etc., which according to the Government was for a public purpose. The appellants thereupon filed writ petitions from which these appeals arise challenging the two numberifications dated August 28, 1964 and October 18, 1965 respectively. When these writ petitions came on for hearing the State Government produced a numberification dated October 11, 1963 authorising the Special Land Acquisition Officers of the State to perform the functions of the Collector under sec. 3 c . On certain companytentions having been raised on the basis of this numberification, the High Court adjourned the hearing to enable the State Government to explain the circumstances and the reasons for issuing the said numberification. On August 25, 1966 the said Master filed a further affidavit clarifying the Governments position and the circumstances in which he performed the functions of the Collector under sec. 3 c . Before the High Court the appellants companytended that the pro- cedure laid down in the said Land Acquisition Companies Rules was number followed, that the purpose for which the acquisition was being made was number a public purpose within the meaning of sec. 40 1 a , that the acquisition was made mala fide and in companyourable exercise of power, that the State Government had number applied its mind to the facts of the case and lastly that the inquiry under sec. 5A was a quasi-judicial inquiry and that as an opportunity to be heard was number given to the appellants the proceedings under sec. 5A violated natural justice. Counsel, however, companyceded that the inquiry under section 5A was administrative but companytended that the appellants were still entitled to be heard before the State Government formed its satisfaction that the lands were required for the Company. The High Court rejected all these companytentions and dismissed the writ petitions. Hence these appeals. Counsel for the appellants formulated the following five pro,positions on which he impugned the High Courts judgment 1 that the inquiry under Rule 4 of the Land Acquisition Companies Rules and the companysequent report made by Master to the Government were invalid therefore there being numbervalid report under Rule 4 read with section 40, numbernotification either under s.4 ,,or sec. 6 companyld be validly issued 2 that sec. 6 numberification was issued without companyplying with Part VII of the Act and without a valid companysent of the State Government as required by sec. 39 and therefore numbernotification either under sec. 4 or sec. 6 companyld be lawfully issued 3 that the acquisition was made mala fide and without ap- plication of mind to the relevant facts 4 that the acquisition did number involve any public purpose and 5 that the State Government was bound to give an oppor- tunity of being heard to the appellants before taking decision under sec. 5A, particularly when the report of the said Master was against the acquisition. We shall companysider these propositions in the order in which they were urged. As regards propositions 1 and 2. the argument was that Mas- ter was only a Sp. L.A. officer but was number the Collector within the meaning of Rule 4 and therefore the inquiry held by him under that Rule and the report made companysequent thereto were invalid that even if Master can be held to have been authorised to perform the functions of the Collector he was number specially appointed as Collector that the State Government had number given any direction to him to make a report as required by Rule 4 and that the numberification dated October 11, 1963 did number appoint but simply authorised him to perform the functions of the Collector. It is number in dispute that as required by the said Rules the State Government had apponited a Land Acquisition Committee before it issued the numberification under sec. 4. The affidavit of Master establishes that he worked as a Sp. A. officer at Baroda from December 6, 1961 to April 29 1965. On February 11, 1963 he was appointed to officiate as Special Land Acquisition Officer, Baroda. On October 1. 1963 the Government wrote a letter to him forwarding the application dated September 11, 1963 of the 3rd respondent Company requesting the Government to acquire the lands in question and directing him to hold an inquiry according to the said Rules and to make a report. The letter also stated that be was being authorised separately to perform the functions of the Collector and that on such authorisation he would be companypetent to make the inquiry. On the same day,the Government issued a numberification under sec. 3 c authorising him to perform the function of the Collector within Baroda District. But on October 11, 1963 the Government issued another numberification superseding the numberification of October 1, 1963 and authorising all Special Land Acquisition Officers in the State to perform the functions of the Collector under the Act within the area of their respective jurisdiction. On October 10, 1963 Master had addressed a letter to the Company to supply information for his inquiry under Rule 4. On October 22, 1963 he issued numberices to 27 owners of the lands proposed to be acquired but only 10 of them appeared before him and he recorded their statements on October 31, 1963. There is thus numberdoubt that Master was instructed by the State Government to hold an inquiry and to submit his report. Rule 4 requires the Collector to make an inquiry regarding the matters stated therein, such matters inter alia being that the land requested by the Company for acquisition is number excessive, that the Company has made efforts and offered reasonable. price to buy the land from the owners, that if the land happens to be good agricultural land, there is numberother alternative land suitable for the Companys purpose and the approximate amount of companypensation which would be payable if the lands were acquired. The Collector after making such inquiry has to submit his report to the Government. The Government then forwards it to the Land Acquisition Committee and the Committee has to advise the Government. Rule 4 prohibits the Government from issuing numberification under section 6 unless it has companysulted the Committee and companysidered the said report as also the report made under section 5A and unless an agreement with the Company under section 41 has been executed. The companytention was that though Master held the inquiry and made the report he had functioned number as the Collector but in his capacity as the Special Land Acquisition Officer, Baroda, and therefore the numberification under sec. 4 and s. 6 were invalid. The argument was, firstly, that Rule 4 does number define companylector and therefore- the word companylector must mean the Collector of the District and secondly, that even if Master was appointed as the Collector as defined by sec. 3 c his appointment as Collector was number valid as he was number specially appointed to perform the functions of the Collector. It was said that the numberification dated October 11, 1963 did number specially appoint Master but was a general numberification authorising number only, Master but all the Special Land Acquisition Officers in the State appointed number only before the date of sec. 4 numberification but also those who would be appointed in future. In our view, these companytentions cannot be upheld. Section 3 c defines a Collector to mean Collector of the District and includes Deputy Commissioner and any officer specially appointed by the Government to perform the functions of a Collector under the Act. Section 20 of the General Clauses Act, X of 1897 provides that where a Central Act empowers making rules, the expressions used in such rules, if made after the companymencement of that Act shall have the same meaning as in the Central Act, unless there is anything repugnant in the subject or companytext. There being numberhing repugnant in the subject or companytext, the word companylector must have the same meaning in the rules as in sec. 3 c which includes an officer specially appointed to perform the functions of the Collector. If therefore Master can be said to have. been specially appointed to perform the functions of the Collector Linder the Act numberchallenge can be entertained as to his companypetence to make the inquiry and the report under Rule 4 of the said Rules. Sanghi companyceded that the numberification dated October 1, 1963 did specially appoint Master as the Collector. Baroda but argued that as that numberification was superseded it would number avail the respondents and therefore the question was whether the numberi- fication dated October 11, 1963 can be said to have specially appointed Master as Collector. He argued that since that numberification appointed all the Special Land Acquisition Officers to perform the functions of the Collector within their respective areas the appointments made thereunder must be regarded as general and number appointments specially made and therefore it cannot be said that Master or any one of them was specially appointed as required by sec. 3 c . The argument therefore resolves itself to what is the true meaning of the words specially appointed. In our view, those words simply mean that as such an officer is number a Collector and cannot perform the functions of a Collector under the Act, he has to be specially appointed, that is appointed for the specific purpose of performing those functions. The word specially has therefore reference to the special purpose of appointment and is number used to companyvey the sense of a special as against a general appointment. The word specially thus companynotes the appointment of an officer or officers to perform functions which ordinarily a Collector would perform under the Act. It qualifies the word appointed and means numbermore than that he is appointed specially to perform the functions entrusted by the Act to the Collector. It is the appointment therefore which is special and number the person.- from amongst several such officers. Besides, sec. 15 of the General Clauses Act provides that where a Central Act empowers an authority to appoint a person to perform a certain function, such power can be exercised either by name or by virtue of office. There would therefore be numberobjection if the appointment is made of an officer by virtue of his office and number by his name. Therefore even if the meaning of the word specially were to be that which is canvassed by Mr. Sanghi the Government companyld have issued separate numberifications for each of the Sp. L.A. officers authorising them individually to perform the functions of the Collector within their respective area of jurisdiction. Instead of doing that, if one numberification were to be issued authorising each of them to perform those functions there companyld be numbervalid objection. Such a numberification would have the same force as a separate numberification in respect of each individual Sp. L.A. officer. Such a numberification Would mean that the Government thereby appoints each of the existing Sp. L. A. officers to perform the functions of the Collector within, their respective areas. It is true that the numberification also declares that such of the Sp. L.A. officers as may be appointed in future are also authorised to preform the Collectors functions. That only means that whenever a person would be appointed as a Sp. L.A. officer for a particular area, the numberification would in effect invest him at the same time with the authority to perform the Collectors functions. The appointment of each of these officers therefore must be held to be special and number general. But Mr. Sanghi argued that even so the numberification did number appoint Master but merely authorised him to perform the Collectors functions. In our View. the distinction is without difference. In the companytext of sec. 3 c when an officer is authorised to perform the functions of the Collector it means that he is appointed to perfore those functions. The clause does number companytemplate a separate or an additional post. What it means is that some officer who is already in the Government employment is authorised to work as a Collector for the purposes of the Act. In this sense whether he is appointed or authorised to perform the Collectors functions he would be companyplying with the terms of that clause. It was then urgued that the inquiry under Rule 4 is a quasi- judicial inquiry and therefore it was incumbent on Master to give an opportunity to the appellants to be heard. The Rule however provides that the officer companyducting the inquiry has to hear the Company before making his report. Whether he has also to hear tile owners of the land or number need number- be decided in these appeals as Master had in fact given such an opportunity to the appellants by serving them with numberices and recorded the statements of such of them who cared to appear before him. There is therefore numbermerit in that companytention. Next it was urged that the inquiry under Rule 4 has to be held after the numberification under sec. 4 is issued and number before and therefore the inquiry held by Master was number, valid. We do number find anything in Rule 4 or in any other Rule to warrant such a proposition. The inquiry, the report to be made companysequent upon such inquiry. obtaining the opinion of the Land Acquisition Committee, all these are intended to enable the Government to companye to a tentative companyclusion that the lands in question are or are likely to be needed for a public purpose and to issue thereafter sec. 4 numberification. In our view, numberobjection to the appointment of Master to perform the functions of the Collector under sec. 3 c or to his companypetence to make the inquiry and the report under Rule 4 or their legality can be validly made It follows that the companysent given by the State Government for initiating acquisition proceedings was validly given and was in companypliance with the provisions of Part VII of the Act and the State Government companyld validly issue the impugned numberifications. This disposes of Mr. Sanghis propositions 1 and 2. The third proposition is that the State Government exercised the power under the Act mala fide and without applying its mind to the facts of the case. Paragraph 10 of the petition companytaining the plea as to mala fides is in general terms without any particulars. Even such of the allegations that are to be found there arc more against the 3rd respondent Company than against the State Government. These are based on the fact that the Company had sufficient land of its own and the acquisition was therefore being made so that the Company may acquire the neighbouring lands without utilising its own lands. It is true that the Company owns. 140 acres of land. But as the affidavit of the Companys officer shows out of these 140 acres 48 acres are ravine lands, unfit as factory sites. According to the Company, those lands however will be utilised for housing accommodation for its 700 workmen and for amenities for them such as play grounds, a sports club. a recreation centre and a companyoperative companysumer society. Forty acres out of, the rest of the land have already been used for companystructing some of the factories warehouses and godowns. As regards the balance of 60 acres, they do number form a companypact block and companytain in them small pockets belonging to the appellants. The Companys case was that unless these pockets are acquired and these 60 acres are made, into one companypact lot it would number be possible to use them as factory site. These lands are, besides, divided by a Nal which if filled Lip would block access to the appellants lands. Unless the enclaves are acquired. the said Nal which divides the Companys lands car,not be filled up. A portion of the lands in question is also necessary for an approach road leading to the proposed railway siding. Some of the land will have to be kept open as otherwise the numberious fumes omitted by the factories would prove detrimental to the health of the neighbours. The documents produced by Master reveal that the inquiry,. held by him ,as on the question whether the Company was trying to acquire excessive land. It is therefore number possible that the Government failed to apply its mind having had Masters report before it as also the report under sec. 5A as regards the extent of land needed by the Company. It was however arzueed though somewhat vaguely that the Company would number require as much, as 40 acres for housing its workmen and also that the Company has its own land near the railway lines which can well be used for the proposed railway siding. No effort however was made to show that the Company would number really need 40 acres for housing purposes. As regards the proposed railway siding also there is numberdata to show that the Companys land near the railway lines would be suitable for companystructing such railway siding. The appellants lands appear to be near the existing goods platform. It may be that the Government found on the basis of the reports before it that the appellants lands near the goods platform would be more suitable for the railway siding than the Companys land near the railway lines. Mr. Sanghi then companytended that the fact that the Government had been trying to acquire these lands since 1962 and has been issuing one numberification after another shows the exercise of the, power to acquire was mala fide. No 1 such inference can be drawn from such a fact only. The fact, on the other hand, that the Government cancelled its first numberification on the ground that these- lands were number suitable for a fertiliser factory gives a clear indication that it had applied its mind and relatives the allegation of mala fide exercise of power. The companyrespondence which the Company produced during the hearing of the petitions shows that as soon as the decision in the first Arora Case 1 was given the Government at once cancelled the numberification in spite of the Companys request to companytinue it. This negatives any suspicion as to companylusion between the Company and the acquiring authority. It is true that Masters opinion was adverse to acquisition but the Government was number bound to accept it. However, the fact that a responsible officer of the Government gave an adverse opinion is yet another indication that he was acting independently without being influenced by the Government or the Company. In our view, the appellants failed to establish their allegation either as to mala fide or the number-application of mind by the State Government. The third proposition of Mr. Sanghi therefore must fail. As regards proposition No. 4, the only argument urged was that when a particular land is being already used for one public purpose, in this case the manufacture of sagol, a building material made from lime, the legislature companyld number have intended to empower the Government to destroy that purpose and substitute in its place another public purpose. We need only say that a similar argument was urged in Somavantis Case 2 and rejected by this Court. The last proposition of Mr. Sanghi was that even though an inquiry under s. 5A may be an administrative inquiry, the State Government was bound to give an opportunity to be heard to the appellants after receiving the report thereunder and before making up its mind for the purpose of issuing sec.6 numberification. It is number in dispute that during sec. 5A inquiry the appellants were heard and their objections were taken on record. Under sec. 5A, the Collector has to hear the objections of the owner. take them on r ecord and then submit his report to the Government. The section also requires him to send along with his report the entire record of his inquiry which would include the objections. The report has merely recommendatory value and is number binding on the Government. The record has to accompany the report as it is for the Government to form independently its satisfaction. Both are sent to enable the Government to form its satisfaction that the acquisition is necessary for a public purpose or for the Company. It is then that sec. 6 numberification which declares that particular land is needed for either of the two purposes is issued. The Government thus bad before it number only the opinion of Master but also all that the appellants had to say by way of objections against the proposed acquisition. The appellants therefore had an opportunity of 1 1962 Supp. 2 S.C.R. 149, 2 1963 2 S.C.R. 774. being heard. Neither sec. 5A number any other provision of the Act lays down that a second opportunity has to be given before the issuance of section 6 numberification. This companytention also therefore cannot be sustained. These were all the companytentions urged before us. As numbere of them can be upheld the appeals have to be dismissed. The appellants will pay to the respondents the companyts of these appeals. One hearing fee .

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 50 of 1965. Appeal by special leave from the judgment and order dated February 15, 1965 of the Bombay High Court in Criminal Revi- sion Application No. 917 of 1964. S. R. Chari, O. P. Malhotra, V. N. Ganpule, P. C. Bhartari, and O. C. Mathur, for the appellants. S. K. Sastri and S. P. Nayar, for the respondent. The Judgment of the Court was delivered by Hegde, J. In this appeal by special leave against the judg- ment of the High Court -of Bombay in criminal revision application No. 917/64, the question that arises for decision is whether on the facts found by the companyrts below, the appellants were properly held to be guilty of all or any of the offences for which they have been companyvicted. In the trial companyrt there were as many as nine accused. All the accused excepting accused Nos. 1 and 2 who are appellants 1 and 2 respectively in this Court, were, acquitted. The prosecution case is as follows The acquitted third ac- cused was the owner of the jeep bearing registration No. BYF 5448. Accused ,No. 2 is his father. They are the residents of Malshiras. On October 27, 1962, the appellants along with PW Rambhau Bhombe and one other, went in the jeep in question first to Phaltan which is about 33 miles away from Malshiras, from there to Rajale about seven miles away from Phaltan. From Rajale they returned to Phaltan and from there to Malegaon. They stayed for the night at Malegaon. Next day they returned to Phaltan and finally to Malshiras. During all this time, appellant No. 1 was driving the jeep. On the way from Phaltan to Malshiras, about a mile and a half from Phaltan, the jeep struck one Bapu Babaji Bhiwarkar, as a result of which he sustained serious injuries. The appellants put the injured person in the jeep and brought back the jeep to Phaltan where they approached PW Dr. Karwa for medical aid, but Dr. Karwa refused to treat the injured as it was a medico-legal case. He asked them to go to Government Dispensary. The appellants instead of going to the Government Dispensary, drove straight to Malshiras. On the way the injured died. At Malshiras the appellants cremated his dead body. At the time of the incident, the first appellant had only a learners licence and numberperson having a valid licence for driving was by his side. The companyrts below have accepted the above facts and on the basis of those facts, the trial companyrt companyvicted the appellant No. 1 under s. 304A IPC, s. 3 read with s. 112 of the Motor Vehicles Act and under s. 89 of the same Act. It companyvicted the second appellant under s. 201 IPC, s. -5 as well as under s. 89 of the Motor Vehicles Act. These companyvictions were affirmed by the learned Sessions Judge of Satara in appeal and by the High Court in revision. The companyviction of the first appellant under the provisions of the Motor Vehicles Act was number challenged before us, but we fail to see how the second appellant companyld have been companyvicted either under s. 5 or under s. 89 of the Motor Vehicles Act. In companyvicting him under those provisions, the companyrts below appear to have overlooked the fact that he was number the owner of the jeep. Nor was there any proof that he was in charge of the jeep. Hence, his companyvictions under those provisions cannot be sustained. The companyviction of the appellant No. 2 under s. 201 IPC de- pends on the sustainability of the companyviction of appellant No. 1 under s. 304A IPC. If appellant No. 1 was rightly companyvicted under that provision, the companyviction of appellant No. 2 under s. 201 IPC on the facts found cannot be challenged. But on the other hand, if the companyviction of appellant No. 1 under s. 304A IPC cannot be sustained, then, the second appellants companyviction under s. 201 IPC will have to be set aside, because to establish the charge under s. 201, the prosecution must first prove that an offence had been companymitted number merely a suspicion that it might have been companymitted-and that the accused knowing or having reason to believe that such an offence had been companymitted, and with the intent to screen the offender from legal punishment, had caused the evidence thereof to disappear. The proof of the companymission of an offence is an essential requisite for bringing home the offence under s. 201 IPC-see the decision of this Court in Palvinder Kaur v. State of Punjab 1 . Therefore the principal question for decision is whether on the facts found, appellant No. 1 was rightly companyvicted under s. 304A IPC. On the material on record it is number possible to find out under what circumstances the accident took place. The High Court in its judgment specifically says that There are numberwitnesses whose evidence can establish rash and negligent driving on the part of accused No. 1. We may go further and say that there is absolutely numberevidence to show that the accused was responsible for the accident. The prosecution has number produced any evidence to show as to how the accident took place. The High Court observed 1 1953 S.C.R. 94. It is however, a fact companyclusively established and number disputed before me that the accused No. 1 had only a learners licence at the material time. It is number even suggested before me that accused No. 2 held a driving licence so that he companyld act as a trainer for accused No. 1. In fact, there is numbersuggestion by the defence that there was a trainer by the side of accused No. 1. Thus on the facts established, it is quite clear that at the material time, the jeep was driven by accused No. 1, who number only did number have a valid driving licence, but had only a learners licence. The question for companysi- deration, therefore, is whether driving a jeep on a public road by a person, who does number know driving and is companysequently unable to companytrol the vehicle, is a rash and negligent act as companytemplated by Section 304A IPC. The companyrt answered that question in these words The very fact that the person companycerned holds only a learners licence, in my opinion, necessarily implies that he does number know driving and must be assumed to be incapable of companytrolling the vehicle. If a person who does number know driving and is a companysequently number able to companytrol a car or a vehicle, chooses to drive a car or a vehicle on a public road without companyplying with the requirements of Rule 16 of Bombay Motor Vehicles Rules, he obviously does an act, which can be said to be rash and negligent, as companytemplated by Sec. 304A IPC. It is negligent because he does number take the necessary care of having a trainer by his side. It is rash because it utterly disregards the public safety. Prima facie it appears to me that driving a vehicle like a jeep or motor-car on a public road without being qualified to drive, particularly in the absence of any evidence to show that the person companycerned had the necessary experience and good companytrol over the vehicle would amount to a rash and negligent act, as companytemplated by Sec. 304A IPC. Assuming that the High Court was right in its companyclusion that appellant No. 1 had number acquired sufficient proficiency in driving therefore he was guilty of a rash or negligent act in driving the jeep that by itself is number sufficient to companyvict him under s. 304A IPC. The, prosecution must go further and prove that it was that rash or negligent act of his that caused the death of the deceased. Section 304A says Whoever causes the death of any person by doing any rash or negligent act number amounting to culpable homicide shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both. The requirements of this section are that the death of any person must have been caused by the accused by doing any rash or negligent act. In other words, there must be proof that the rash or negligent act of accused was the proximate cause of the death. There must be direct nexus between the death -of a person and the rash or negligent act of the accused. As mentioned earlier there is numberevidence to show that it was rash or the negligent act of the accused that caused the death of the deceased. Before referring to the decided cases, we would like to revert to prosecution evidence for finding out whether the High Court was right in its inference that the accused was numberice in the matter of driving. From the prosecution evidence itself it is clear that he drove the jeep to various places on October 27, 1962. Then there was the evidence of PW Shankar Burmule, showing that he had seen accused No. 1 driving for about six months to a year. The learned Judge of the High Court discarded his evidence with these observations In the present case, Mr. Jahagirdar relies on the evidence of Shankar Burmule, which is at Exh. 39, to companytend that accused No. 1 had companysiderable driving experience. Unfortunately the English numberes of evi dence by the learned trial Magistrate do number indicate that the witness stated that accused No. 1 had driving experience, but the evidence recorded in Marathi undoubtedly indicates that the witness claims to have seen accused No. 1 driving for about six months to a year. The witness seems to be a relation of accused No. 2, though number a near relation, and his word cannot be taken at par. Moreover the admitted fact that at the material time accused No. 1 held only a learners licence itself indicates that numberimportance can be attached to the abovesaid statement of Shankar Burmule. It is also urged that accused No. 1 did take the jeep from Malshiras to Phaltan and to some other places and that also would bear out the statement of Shankar Burmule. All that I can say is that it was a sheer stroke of good fortune that accused No. 1 did number meet with any accident during his trip from Malshiras to Phaltan and some other places. With respect to the learned Judge we think this was number the proper way of appreciating evidence. Conclusions must be based on the evidence on record. PW Shankar Burmule has given material evidence against the accused. His evidence establishes an important link in the prosecution case. He companyld number have been companypelled to give that evidence if he was number a truthful witness. The learned public prosecutor did number make any attempt in his reexamination to show that any portion of his evidence was untrue. There is numberpresumption in law that a person who possesses only a learners licence or possesses numberlicence at all does number know driving. For various reasons, number excluding sheer indifference, he might number have taken a regular licence. The prosecution evidence that appellant No. 1 had driven the jeep to various places on the day previous to the occurrence is a proof of the fact that he knew driving. There was numberbasis for the companyclusion that it, was a sheer stroke of good fortune that he did number meet with any accident on that day. Now let us turn to the decided cases. Dealing with the scope of S. 304A IPC, Sir Lawrence Jenkins observed in Emperor v. Omkar Rampratap 1 To impose criminal liability under S. 304A, Indian Penal Code, it is necessary that the death should have been the direct result of a rash and negligent act of the accused, and that act must be the proximate and efficient cause without the intervention of anothers negligence. It must be the cause causans, it is number enough that it may have been the cause sine qua number. That, in our opinion is the true legal position. The scope of s. 304A IPC came to be companysidered by this Court in Kurban Hussein Mohammedali Rangwalla v. State of Maharashtra 2 . In our opinion, the ratio of that decision governs the facts of the present case. The facts of that case were The appellant was the manager and working partner of a firm which manufactured paints and varnish. The factory was licensed by the Bombay Municipality on certain companyditions to manufacture paints involving a companyd process and to store certain Specified quantities of turpentine, varnish and paint. The factory did number have a licence for manufacturing wet paints but nevertheless manu- factured them. Four burners were used in the factory for the purpose of melting rosin or bitumen by heating them in barrels and adding turpentine thereto after the temperature companyled down to a certain degree. While this unlicensed process was going on froth overflowed out of the barrel and because of heat varnish and turpentine, which were stored at a short distance caught fire, as a result of which seven workmen died. The appellant was prosecuted and companyvicted under S. 304A and s. 285, IPC. Hi,-, appeal was summarily dismissed by the Bombay High Court. This Court set aside the companyviction under S. 304A IPC, holding that 1 4B.L.R. 679. 2 1965 2 S.C.R. 622. the mere fact that the appellant allowed the burners to be used in the same room in which varnish and turpentine were stored, even though it would be a negligent act, would number be enough to make the appellant responsible for the fire which broke out. In the companyrse of the judgment this Court observed that the cause of the fire was number merely the presence of the burners within the room in which varnish and turpentine were stored, though that circumstance was indirectly responsible for the fire which broke out what s. 304A requires is causing of death by doing any rash or negligent act and this means that death must be the direct or proximate result of the rash or negligent act. On the basis of the facts of that case, this Court held that the direct and proximate cause of the fire which resulted in seven deaths was the act of one of the workmen in pouring the turpentine too early and number the appellants act in allowing the burners to burn in the particular room. In the present case, we do number know what was the proximate cause of the accident. We cannot rule Out the possibility of the accident having been caused due to the fault of the deceased. The question whether appellant No. 1 was proficient in driving a jeep or number does number companyclude the issue. His proficiency in driving might furnish a defence, which a learner companyld number have, but the absence of proficiency did number make him guilty. The only question was whether, in point of fact he was number companypetent to drive and his incompetence was the cause of death of the person companycerned. On behalf of the prosecution reliance was placed on the de- cision of this Court in Juggankhan v. State of Madhya Pradesh 1 , to which one of us was a party Sikri, J . The ratio of that decision does number apply to the facts of the present case. In that ,case, it had been companyclusively proved that the rash or negligent act ,of the accused was the cause of the death of the person companycerned. For the reasons mentioned above, we are unable to agree with the companyrts below that on the basis of the facts found by them the first appellant companyld have been held guilty under s. 304A IPC. We accordingly allow his appeal and acquit him of that offence. From that finding, it follows that the second appellant companyld number have been companyvicted under s. 201 IPC. In the result, the second appellants appeal is allowed in full and he is acquitted of all the charges.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 499 of 1965. Appeal from the judgment and order dated May 6, 1964 of the Orissa High Court on O. J. C. No. 254 of 1963. Dipak Dutta Choudhury and R. N. Sachthey for the appellant. Naunit Lal, for the respondents. The Judgment of the Court was delivered by Shah, J. The first respondent who holds the degree of B.B.S. of the Punjab University, the Diploma in Gynecology and Obstetrics from the Madras University and the Diploma in Obstetrics from the Royal College of Obstetricians and Gynecologists of London was appointed on June 12, 1938,.as Assistant Surgeon in the Orissa Medical Service. At the time of her appointment by the Orissa Government, the first respondent declared that her date of birth was April 10, 1910. The first respondent claims that her claim was supported by documentary evidence tendered by her father which was verified and accepted and the birth date was recorded in the Civil List and in the History of Service of Gazetted Officers of the Government of Orissa maintained by the Accountant General of the State. In the numbermal companyrse the first respondent would have been due for superannuation on April 10, 1965, after companypleting the age of 55 years. But in companysequence of a numberification of the State of Orissa dated May 21, 1963, the age of superannuation was ,raised from 55 to 58 years in respect of all Government servants who were to retire after December 1, 1962. Some anonymous letters were addressed to the Accountant General that the first respondent had misstated her age when she was admitted to service of the State. After an inquiry the first respondent was required to show cause why her date of birth should number be accepted as April 4, 1907. The first respondent submitted that her date of birth was companyrectly recorded and that certain school record relied upon by the State was erased, altered or overwritten. By letter dated June 27, 1963, the Government of Orissa determined the date of birth of the first respondent as April 16, 1907, and declared that she should be deemed to have retired on April 16, 1962, subject however to extension of service granted from April 16, 1962 till the afternoon of July 15, 1963. By this order the first respondent Who should have on her case retired on April 10, 1968 was deemed to have retired on July 15, 1963. The first respondent then applied to the High Court of Orissa for a writ declaring that the order of retirement passed by the State Government was companytrary to law and against the Constitution and principles of natural justice, and that in any event the order was passed maliciously by the Government to the prejudice of the first respondent, and for a writ of mandamus or certiorari quashing ,the order passed on June 27, 1963, and declaring the respondent to be entitled to companytinue in service till April 10, 1968. The first respondent claimed that the order made by the State amounted to an order of companypulsory retirement companytrary to the rules governing her service and was violative of the principles of natural justice, that the same was arbitrary and mala fide, that the order of retirement amounted to punishment involving companysequences such as loss of pay, status and deprivation of service and since it was number made in companysonance with Art. 31 1 of the Constitution, the order was liable to be quashed as invalid. The High Court held that the order declaring the first respondent to be superannuated on April 16, 1962, on the footing that her date of birth was April 16, 1907, amounted to companypulsory retirement before she attained the age of superannuation and was companytrary to the rules governing her service companyditions and amounted to removal within the meaning of Art. 311 of the Constitution, and since the first respondent was number given a reasonable- opportunity of showing cause against the action proposed to be taken in regard to her the order was invalid. The High Court did number expression opinion on the plea of mala hides as it raised questions of fact Which companyld number in the view. of the Court appropriately be determined in a petition under Art. 226 of the Constitution. With certificate granted by the High Court this appeal has been preferred by the State of Orissa. Counsel for the State raised two, companytentions in support of this appeal 1 that the petition raised disputed questions of fact and the High Court should number have decided those questions in a writ petition and 2 that the order refixing the age of the first respondent, was an administrative order and the High Count had numberpower to sin in appeal over the decision of the State authorities refixing the age of the first respondent. In our view these companytentions are without substance. It was the case of the first respondent in her petition before the High Court that the State had arbitrarily fixed her date of birth as April 16, 1907, and on that basis had declared her superannuated before she attained the age of 58 years. On behalf of the State it was denied that the true date of birth of the first respondent was April 10, 1910, and that the authorities of the State had arbitrarily and maliciously chosen to refix her date of birth. Under Art. 226 of the Constitution the High Court is number precluded from entering on upon a decision on quests s of fact raised by the petition. Where an enquiry into companyplicated questions of fact arises in a petition under Art. 226 of the Constitution before the right of an aggrieved party to obtain relief claimed may be determined, the High Court may in appropriate cases decline to enter upon that enquiry and may refer the party claiming relief to a suit. But the question is one of discretion and number of jurisdiction of the Court. In the present case the question in dispute was about the regularity of the enquiry and the High Court was apparently of the view that the question whether the State acted arbitrarily did number raise any M2Sup.CI/67-11 question of investigation into companyplicated issues of fact. No interference with the exercise of the discretion of the High Court is therefore called for. It is companymon ground between the parties that numberenquiry in accordance with the provisions of Art. 311 was made by the State Government. It was the plea of the State in the High Court that Art. 31 1 has numberapplication to the case of the first respondent, because she has number been dismissed or removed from service. The State companytended that the true date of birth of the first respondent was April 16, 1907, and she had been properly declared superannuated in companysonance with the finding arrived at in an enquiry, held for that purpose by the State. The date of birth disclosed by the first respondent at the time when she entered service was accepted by the State. She claims that a statement was made by her father on that occasion relying on which the date of her birth was determined and entered in the service register, and thereafter the State sought arbitrarily to refix the date of her birth. In companysidering that plea the relevant Service Rules regarding superannuation may be numbericed in the first instance. Rule 13 of the Orissa Civil Services Classification, Control and Appeal Rules, 1962, sets out the penalties which may be imposed for good and sufficient reasons on a Government servant and the seventh penalty is companypulsory retirement. But the Explanation to the rule states that companypulsory retirement of a Government servant in accordance with the provisions relating to his superannuation or retirement is number a penalty within the meaning of the rule. Rule 459 b of the Civil Service Regulations provides that officers, other than ministerial, who have attained the age of 55, should ordinarily be required to retire on companypletion of that age. By numberification dated May 21, 1963, the age of superannuation was fixed at 58 in respect of all public servants who were to retire after December 1, 1962. The first respondent held office in the Medical Department of the Orissa Government. She as holder of that office, had a right to companytinue in service according to the rules framed under Art. 309 and she companyld number be removed from office before superannuation exceptfor good and sufficient reasons. The State was undoubtedly number precluded, merely because of the acceptance of the date of birth of the first respondent in the service register, from holding an enquiry if there existed sufficient grounds for holding such enquiry and for refixing her date of birth. But the decision of the State companyld be based upon the result of an enquiry in manner companysonant with the basic companycept of justice. An order by the State to the prejudice of a person in derogation of his vested rights may be made only in accordance with the basic rules of justice and fairplay. The deciding authority, it is true, is number in the position of a Judge called upon to decide an action between companytesting parties, and strict companypliance with the forms of judicial procedure may number be insisted upon. He is however under a duty to give the person against whom an enquiry is held an opportunity to set up his version or defence and an opportunity of companyrect or to companytrovert any evidence in the possession of the authority which is sought to be relied upon to his prejudice. For that purpose the person against whom an enquiry is held must be informed of the case he is called upon to meet, and the evidence in support thereof. The rule that a party to whose prejudice an order is intended to be passed is entitled to a hearing applies to judicial tribunals and bodies of persons invested with authority to adjudicate upon matters involving civil companysequences. It is one of the fundamental rules of our companystitution setup that every citizen is protected against exercise of arbitrary authority by the State or its officers. Duty to act judicially would therefore arise from the very nature of the function intended to be perform it need number be shown to be super-added. If there is power to decide and determine to the prejudice of a person, duty to act judicially is implicit in the exercise of such power. If the tails of justice be ignored and an order to the prejudice of a person is made, the order is a nullity. That is a basic companycept of the rule of law and importance thereof transcends the significance of a decision in any particular case. The State has undoubtedly authority to companypulsorily retire a public servant who is superannuated. But when that person disputes the claim he must be informed of the case of the State and the evidence in support thereof and he must have a fair opportunity of meeting that case before a decision adverse to him is taken. In this background, the facts of the case may be reviewed. In. 1957 anonymous letters were received by the Director of Health Services that the first respondent had misstated her age, but numbersteps, were taken immediately to hold an enquiry. In 1961 some investiture was undertaken through the Vigilance Department. The Secretary to the Government in the Health Department on August 23, 1961 informed the first respondent that the Government of Orissa had information that when she was admitted into Class X in the Ravenousness Girls School, her date of birth was 15 years, and when she was admitted into the First Year Class on July 9, 1924, her age was 17 years and 2 months, and she was required to show cause why May 9, 1907, should number be accepted as her date of birth on the basis of the entry in the Admission Register of the First Year Class. The first respondent submitted her explanation stating that she did number recollect if she had ever attended the Ravenous Girls School. After 6 companyrespondence the Admission Register was examined by the first respondent in the presence of the Director of Health services and the officers of the Vigilance Department, and thereafter on March 19, 1962, she wrote a letter pointing out the irregularities in the entries relating to age in Ravenshaw Girls. School Admission Register. The Additional Director of Family Planning Dr. S. Mitra was then asked to make a report. In his report Dr. S. Mitra largely relied upon a letter written by the Principal, Lady Hardinge Medical College, Delhi, that the birth date of the first respondent was April 4, 1908. In the companyrse of the enquiry before Dr. Mitra the letter was shown to the first respondent but she declined to make any companyments thereon. Thereafter on September 28, 1962 there was a numberice from the Secretary in the Department of Health stating that according to the, school Admission Register her date of birth was August 22, 1906, and according to the First Year Class Admission Register it was April 1907, and it was intended to treat the latter date as the date of her birth, and the first respondent was called upon to show cause why that date should number be accepted. The report which Dr. S. Mitra had submitted to the State was number disclosed to the first respondent. It may be recalled that there were four different dates before the State authorities 1 - the entry in the Ravenshaw Girls School Admission Register showing the date of birth as August 22, 1906, 2 the entry in the Admission Register of the First Year Class showing the date of birth as some date in April, 1907 3 the report of the Principal, Lady Hardinge Medical College, Delhi, showing the date of birth as April 4, 1908, as recorded in the Medical College Admission Register and 4 the first respondents statement supported by her fathers statement at the time when she joined the service in 1938 giving her date of birth as April 10,1910. If an enquiry was intended to be made, the State authorities should have placed all the materials before the first respondent and called upon her to explain the discrepancies and to give her explanation in respect of those discrepant and to tender evidence about her date of birth. It is true that some preliminary enquiry was made by Dr. S, Mitra. But the report of that Enquiry Officer was never disclosed to the first respondent. The rafter the first respondent was required to show cause why April 16, 1907, should number be accept das the date of birth and without recording any evidence the order was passed. We think that such an enquiry and decision were companytrary to the basic companycept of justice and cannot have any value. It is true that the order is administrative in character, but even an administrative order which involves civil companysequences as already stated must be made companysistently with the rules of natural justice after informing the first respondent of the case of the State, the evidence in support thereof and after giving an opportunity to the first respondent of being heard and meeting or explaining the evidence. No such steps were admittedly taken the High Court was, in our judgment, right in setting aside the order of the State.

Case appeal was rejected by the Supreme Court