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CIVIL APPELLATE JUPRISDICTION Civil Appeal No. 520 of 1961 Appeal by special leave from the judgment and order dated September 23, 1958, of the Allahabad High Court in First Appeal No. 392 of 1944. P. Sinha, E.C. Agarwala, S. Shaukat Hussain and P.C. Agarwala, for the appellant. Niren De, Additional SolicitOr-General, Yogeshwar Prasad and A.N. Goyal, for respondent No. 1. Mudholkar, J. The substantial question which falls for decision in this appeal iS as tO the legal effect of a deed, EX. Y. 13, dated March 31. 1933 described in the paper-book as a deed of partition., A subsidiary question also arises for companysideration which is, whether the validity of the transaction evidenced by the deed is affected by reason of the fact that the property companyprised therein was at the time of its execution, under the management of the Court of Wards. According to the plaintiff the deed was invalid and did number affect his right to a share in the property in the suit. His companytention failed both in the trial companyrt as well as in the High Court. The property companyered by the deed belonged t9 one Kanhaiyalal who died on June 10, 1922 without leaving a widow or any issue. This property, along with some other property originally belonged to Kanhaiyalals grandfather Chunnilal. It is said by some of the parties that by a will executed by him in the year 1883 he devised his property in favour of Kanhaiyalal and his brother Madho Prasad. Madho Prasad, died during the life-time of Kanhaiyalal, leaving a daughter Maheshwari Bibi. After Madho Prasads death Kanhaiyalal entered into possession of the property which had been bequeathed to Madho Prasad by Chunnilal. After Kanhaiyalals death Kadma Kuar, his mother, entered into possession of the entire property which was in the possession of Kanhanyalal till his death. Kadma Kuar died on October 14, 1937 and shortly thereafter the suit out of which this appeal arises was instituted by Ram Charan Das, the appellant. It may be mentioned that Kanhaiyalal and Madho Prasad had a sister by name Mst. Pyari Bibi. She had a son named Gopinath who died in the year 1934 leaving a widow, Girja Nandini, the first defendant to the suit. The plaintiff is the sixth son of Diwan Madan Gopal. Diwan Madan Gopal was one of the two sons of Brij lal and Brijlal was the only son of Deoki Nandan. Deoki Nandan himself was the eider brother of Chunnilal. The plaintiff who is the appellant before us is thus a companylateral of Kanhaiyalal. It is number disputed that he and his brothers were the next reversioners entitled to succeed to Kanhaiyalals property L P D 5SCI-15 after the death of his mother Kadma Kuar. To this suit he joined Girja Nandini Devi, widow of Gopinath as defendant No. 1 and it is she who is the companytesting respondent before us. Soon after Kadma Kuar entered into possession of the estate of Kanhaiyalal, she applied to the appropriate authority for taking Over possession of management of the property which was in the possession of Kanhaiyalal at the time of his death whereupon the Court of Wards took over its management under s. 10 of the U.P. Court of Wards Act, 1912 IV of 1912 . This property companysisted number only of the property which Kanhaiyalal had obtained under the will of Chunnilal but also of the property which had been bequeathed in that will to Madho Prasad and of which Kanhaiyalal had obtained possession during his life time. Maheshwari Bibi, the daughter of Madho Prasad laid a claim to the property which had been bequeathed by Chunnilal on the ground that the two brothers who took these properties under Chunnilals will took them number as joint tenants but as tenants in companymon. The claim made by her in this respect was examined by the Court of Wards and upon Kadma Kuar agreeing, the Court of Wards released half of the estate under its management, that is, the share in the property which iS said to have been bequeathed to Madho Prasad. It is necessary to refer to three suits which came to be instituted during the life time of Kadma Kuar, the first of which is 30 of 1932. This was instituted by Gopinath who claimed to be the next reversioner upon the ground that he being the sisters son of Kanhaiyalal, had become an heir preferential to the present appell-. ant and his brothers because of the passing of the Hindu Law of inheritance Amendment Act of 1929. To this suit Maheshwari Bibi and Kadma Kuar and the Court of Wards were made defend. ants. He sought therein a declaration to the effect that the Court of Wards had numberright to release half the property in favour of Maheshwari Bibi. This suit, however, was eventually withdrawn. Two other suits, suit No. 53 of 1932 and 54 of 1932, came to be filed shortly thereafter. In the first of these the present plaintiff was himself the plaintiff while in the second, his broher Hanuman Prasad defendant No. 6 in the present suit was the plaintiff. Both of them claimed to be the nearest reversioners upon the ground that the Act of 1929 did number affect their right to the properties left by Kanhajyalal. Each of them sought a declaration that Maheshwari Bibi and Gopinath had numberright of any kind in respect of these properties. These suits were rounded on the ground among others that Maheshwari Bibi had numberright because Chunnilal companyld number by his will devise the property to her father Madho Prasad and Gopinath had numbere because he was number in fact Kanhaiyalals sisters son. Gopinath, Maheshwari Bibi, Kadm.a Kuar and the Court of Wards, were made parties to these suits. It is companymon ground that the claims in both these suits were companypromised. Under one of the companypromises the dispute with Maheshwari Bibi was settled and we are numberlonger companycerned with that matter. Under the other companypromise the dispute with Gopinath and Kadma Kuar was settled. Decrees were drawn up in these suits embodying the terms of each of the companypromises arrived at amongst the parties. The latter companypromise was entered into in suit No. 53 of 1932 and its date was March 31, 1933. The document, Ex. Y-13 embodies the terms of the companypromise in suit No. 53 of 1932. To that document, amongst other, the appellant, Gopinath and Kadma Kuar were parties. According to the plaintiff the companypromise in question was number in law a surrender number a family arrangement and that in any case Kadma Kuar was number entitled to make a family settlement and that what she did does number amount in law to a surrender. Also according to him Kadma Kuar was a person under disability being at the relevant time a ward under the Court of Wards and, therefore, the transaction was void. On behalf of the companytesting defendant it was urged in the companyrts below that the transaction amounted to surrender of her estate by Kadma Kuar and alternatively that it was a family settlement to which the plaintiff was one of the parties and, therefore, he is estopped from challenging the validity of the companypromise, particularly so as he has taken benefit thereunder and also because in view of the companypromise Gopinath had discharged the debts of Kanhaiyalal which at law were recoverable from the property in question. Alternatively the defendants companytended that the transaction evidenced by the document was an effective surrender by Kadma Kuar in favour of Gopinath who was the presumptive reversioner at that time. At this stage it is desirable to point out that out of the properties described in List A of the Schedule to the plaint the plaintiff-appellant lays numberclaim to items 1 and 2 which are respectively described as properties at Hewett Road, Allahabad, and Goshain Tola, Allahabad number to item 7 1 described as 8 anna share in a Zamindari village. Such a companycession was made before this Court by Mr. S.P. Sinha, companynsel for the appellant, when the matter was argued before this Court on April 14, 1964, when the hearing was adjourned to enable the parties to arrive at a settlement. No settlement was arrived at and the matter was re-argued before this Court on March 8 and 9, 1965. Mr. Sinha has number withdrawn the companycession made by him on the earlier occasion. We may also make a mention of the fact that Mr. Niren De, the Additional Solicitor General has number argued that Ex. Y-13 purports to show that Kadma Kuar surrendered the widows estate. In the circumstances we proposed to companyfine ourselves to the companysideration of only one matter and that is whether the deed Ex. Y-13 is a family arrangement and as such binding upon the plaintiff. It seems to us abundantly clear that this document was in substance a family arrangement and, therefore, was binding on all D 5SCI--16 the parties to it. Moreover it was acted upon by them. For, under certain terms thereof one of the parties, Gopinath, paid off certain liabilities to which the property which was allotted to his share was subjected. According to Mr. Sinha, however, the transaction evidenced by the document was number a family settlement but only a surrender by Kadma Kuar though in law it companyld number operate as a surrender firstly because it was number of the entire estate of which she was in possession as a limited owner and secondly because of the two sets of persons between whom she divided the property only one companyld be said to be her reversioner or reversioners and the other a stranger or strangers. In our opinion the document on its face appears to effect a companypromise of the companyflicting claims of Gopinath on the one hand and the present plaintiff Ram Charan Das and his brothers on the other to the estate of Kanhaiyalal. In the document Kadma Kuar is referred to as first party. Gopinath as second party and Ram Charan Das, the appellant before us and his brothers as the third party. In cl. 1 of the document it is stated That the first party renounces all her claims to the estate of her son M. Kanhaya Lal deceased according to the provisions of this deed in favour of the Second and Third party out of which the second party shall be the absolute owner and possessor of the properties detailed in List A annexed hereto and the third party shall be the absolute owner and possessors of the properties detailed in the List B annexed hereto. These recitals, taken in companyjunction with the surrounding circumstances indicate that Kadma Kuar purported to recognise thereby the rights of these parties to her sons properties though earlier she disputed them. Similarly the recitals that the first party shall remain in de facto management of Arrah Kalan property for her life without any interference from the second or the third party to whom she shall in numbercase be liable to render any accounts and that after her death the second party or his heirrs representatives, assigns or transferees and Babu Sehat Bahadur Advocate Allahabad as representing the third party or their heirs, representatives, assigns or transferees shall manage and enter into possession of the said village Arrah Kalan jointly, indicate that the 2nd and 3rd party were disputing and interfering with the right of Kadma Kuar to the management of one of the properties but ultimately, under the document in question, they agreed number to do so. Further, as we have already pointed out, three suits had been instituted in the year 1932 companycerning this very property, one by Gopinath and the other two by the plaintiff and his brother Hanuman Prasad. In his suit Gopinath claimed to be the next reversioner. The plaintiff appellant Ram Charan Das claimed that he and his brothers were the next reversioners and number Gopinath. A similar claim was made by Hanuman Prasad in his suit. It is worthy of numbere that the plaintiffs suit was companypromised on the very day on which this document, Ex. Y-13, was executed and that the terms of the settlement were recited in Ex. Y-13. This document further makes express mention of the two suits which were companypanion suits, suit No. 53 of 1932 and suit No. 54 of 1932, and says, categorically that these suits shall be deemed to be companypromised in terms of this deed. By companypromising those two suits the plaintiff and his brother Hanuman Prasad withdrew their challenge to the claim put forward by Gopinath to the estate of Kanhaiyalal. Prior to this Gopinath had withdrawn his suit in which he had claimed to be the next reversioner to the estate of Kanhaiyalal after the death of Kadma Kuar. All these transactions are quite evidently part of one main transaction which is the settlement by the members of the family of all those disputes once and for all. No doubt according to the plaint allegation this was merely a temporary arrangement but numberreasons have been given number any material was placed before the Court from which it companyld be inferred that it was number the intention of the parties that the disputes amongst them should be finally settled. Mr. Sinha, however, places reliance upon the following recital in Ex. Y-13 and companytends that the arrangement was number final. The recital runs thus That in pursuance of and for the purpose of this deed the First and the Third Party do admit and recognise Babu Gopi Nath, the Second party to be the son of Musammat Peari Bibi the own sister of the late Munshi Kanhaya Lal and the daughter of Musammat Kadma Kuar the First Party and similarly for the purposes of and in pursuance of this deed, the First and the Second party admit and recognise the Third party as the sons of Dewan Madan Gopal a great-grandson of M. Lalji, the greatgrand father of M-Kanaya Lal as per pedigree set up by them in suits Nos. 53 and 54 of 1932--referred to above. Provided always that if the rights of the second or the third party to the ownership and possession of their respective properties as detailed in List A items Nos. 1 to 5 and seven, in List B item Nos. 1, 2, 4, 5 and 8 respectively are ever questioned they shall number be precluded from setting up any claim, right or title, propositions of law or fact companysistent or inconsistent with the recital of this deed, and if the rights of ownership or possession of the second party to item No. 6 in List A annexed hereto or the rights of ownership or possession of the third party to items Nos. 3.6 and 9 in List B annexed hereto are ever questioned they shall only be entitled to set up claims only companysistent with the terms of this deed. No doubt, the recognition of relationship claimed by the second pary to Kanhaiyalal was admitted by the first and third parties in pursuance and for the purposes of the deed. Similarly recognition of the relationship of the. third party by the first and the second parties to Kanhaiyalal was admitted by the first and second parties and also in pursuance and for the purposes of the deed. This, however, does number show that the settlement arrived at and sought to be given effect to by the deed was number intended to be final. As already stated, the document read as a whole leaves numberdoubt that it was intended to be a final settlement of the disputes amongst the parties. If it were intended to be otherwise it would have been natural to find an express statement somewhere in the document to show that it was intended to be a temporary settlement only. The proviso to the aforesaid clause was pressed in aid by Mr. Sinha to support his companytention that the settlement was only temporary. The document itself was drawn up in English and looking at the formal manner in which it is drawn up and bearing also in mind the fact that it came into being when litigations were, pending in companyrt in which the parties to the deed also figured as parties and was intended to companypromise those suits, it would be legitimate to infer that it was drawn up or at least approved by a lawyer. In that proviso at one place the word recitals and at another the word terms were used. The expression recitals occurs in the first part of the proviso and it is only with respect to them that a party is given the liberty to set up in a certain circumstance any claim or right or title, propositions of law or fact companysistent or inconsistent with the recitals in the deed. Now the expression recitals means, according to the Dictionary of English Law by Jowitt Statements in a deed, agreement or other formal instrument, introduced to explain or lead up to the operative part of the instrument. It is stated further that recitals are generally divided into narrative recitals which set forth the facts on which the instrument is based and introductory recitals which explain the motive for the operative part. Where the recitals are clear and the operative part is ambiguous the recitals govern the companystruction. Normally a recital is evidence as against the parties to the instrument and those claiming under them and in an action on the instrument itself the recitals operate as an estoppel, though that would number be so on a companylateral matter. It is number clear why this clause was put in. But even if we assume that the parties did so because they were apprehensive that the rights of the second or the third party to the ownership and possession of the respective properties--that is items 1 to 5 and 7 in List A allotted to the second party and items 1, 2, 4, 5 and 8 in List B allotted to the third party were liable to be challenged by persons number bound by the settlement the reservation was only of the right to challenge the explanatory or narrative recitals in the documents but number of the right to challenge the terms thereof. It therefore affords little assistance to the plaintiff. The expression terms used in a document, would, according to websters New World Dictionary, mean companyditions of a companytract, agreement sale etc. that limit or define its scope or action involved. Those parts of Ex-13 which prescribe the companyditions upon which the disputes among the parties were settled would be the terms of this document and so far as these are companycerned the proviso shows that numbere of the parties was given the liberty to derogate from them. Thus, far from showing that the settlement arrived at was of a temporary character the proviso read as a whole further fortifies the companyclusion that the settlement was to be binding upon the parties for all time. We may add that the companytentions number raised on behalf of the plaintiff denying the rights of Gopinath and of those who claim through him are number based upon any challenge to the recitals in the documents, as that expression is understood in law, but to the terms and companyditions companytained in that document. It may be that the properties to which the suit relates would fall under the items allotted to Gopinath as specified in the first part. of the proviso but numberliberty has been reserved therein to permit any of the parties to derogate from the terms and companyditions upon which the settlement was arrived at. The view that the transaction is a family arrangement is borne out by the decision of the Privy Council in Ramgouda Annagouda v Bhausaheb 1 . The facts of the case which have been companyrectly summarised in the head numbere are briefly these A Hindu died in 1846, leaving a widow who survived until 1912, and a daughter. On the death of the widow A was heir to the estate. In 1868 the widow had alienated nearly the whole property by three deeds executed and registered on the same day. By the first deed she gave a property to her brother, by the second she sold half of another property to A, and by the third she sold the other half of that property to her son-in-law. The signature of each of the deeds was attested by the two other aliences. A who survived the widow for six years, did number seek to set aside any of the alienations. After his death his son and grandsons brought a suit to recover the whole property. Upon these facts the Privy Council held as follows Their Lordships companysider that the decision of this case depends upon how far the three documents can be taken as separate and independent, or so companynected as to form one transaction. The long lapse of time between the execution of the deeds and the institution of the suit has rendered it impossible to prove what actually occurred between the parties on that occasion. There is number sufficiently definite evidence to companye to a companyclusion as to how far any of those properties were validly encumbered, or what was done with the purchase money alleged to have passed on the two deeds of sale. But the parties to the documents included, or after so great a lapse of time may be presumed in a very real sense to have included, all persons who L.R. 54 I.A. 396. LP D 5SCI---17 had any actual or possible interest in the properties-namely, the widow herself, her brother, who was a natural object of her affection and bounty, her son-inlaw, who was the natural protector of the interests of her daughter and grandson, and the nearest kinsman on the husbands side and the only person from whom any opposition might be apprehended with regard to dealings by the widow companycerning her husbands estate. Their Lordships companyclude that all the circumstances strongly point to the three documents being part and parcel of one transaction by which a disposition was made of Akkagoudas estate, such as was likely to prevent disputes in the future and therefore in the best interests of all the parties. The three deeds appear thus to be inseparably companynected together and in that view Annagouda number only companysented to the sale of Shivgouda and the gift to Basappa but these dispositions formed parts of the same transaction by which he himself acquired a part of the estate. In our case, however, there is fortunately only one transaction and we have definite evidence to show that there were disputes amongst the members of the family and it was avowedly for settling them that the transaction was entered into. Further we have material to show that all the persons who can be said to be interested in the property were joined as parties to the transaction. In that sense this case is stronger than the one which the Privy Council had to companysider. We have therefore numberhesitation in holding that the plaintiff who has taken benefit under the transaction is number number entitled to turn round and say that that transaction was of a kind which Kadma Kuar companyld number enter into and was therefore invalid. Moreover acting on the terms of that document Gopinath paid monies to the Court of Wards for obtaining release from its management of the properties which were allotted to him. The rule of estoppel embodied in s. 115 of the Indian Evidence Act, 1872 would, therefore, shut out such pleas of the plaintiff. Courts give effect to a family settlement upon the broad and general ground that its object is to settle existing or future disputes regarding property amongst members of a family. The word family in the companytext is number to be understood in a narrow sense of being a group of persons who are recognised in law as having a right of succession or having a claim to a share in the property in dispute. In Ramgouda Annagoudas 1 case, of the three parties to the settlement of a dispute companycerning the property of a deceased person one was his widow, other her brother and the tlhird her son-in-law. The two latter companyld number, under the Hindu Law, be regarded as the L.R. 54 I.A. 396. heirs of the deceased. Yet, bearing in mind their near relationship to the widow the settlement of the dispute was very properly regarded as a settlement of a family dispute. The companysideration for such a settlement, if one may put it that way, is the expectation that such a settlement will result in esablishing or ensuring amity and goodwill amongst persons bearing relationship with one another. That companysideration having been passed by each of the disputants the settlement companysisting of recognition of the right asserted by each other cannot be permitted to be impeached thereafter. The final companytention of Mr. Sinha is based upon s. 37 a of the U.P. Court of Wards Act, 1912. The relevant portion of this provision runs thus A ward shall number be companypetent- a to transfer or create any charge on, or interest in, any part of his property which is under the superintendence of the Court of Wards, or to enter into any companytract which may involve him in pecuniary liability Here the transaction in question is a family settlement entered into by the parties bona fide for the purpose of putting an end to the dispute among family members. Could it be said that this amounts to a transfer of or creation of an interest in property? For, unless it does, the action of Kadma Kuar would number fall within the purview of the aforesaid clause of s. 37. In Mst. Hiran Bibi v. Mst. Sohan Bibi 1 approving the earlier decision in Khunni Lal v. Govind Krishna Narain 2 the Privy Council held that a companypromise by way of family settlement is in numbersense an alienation by a limited owner of family property. This case, therefore, would support the companyclusion that the transaction does number amount to a transfer. Mr. Sinha, however, companytends that the transaction amounts to creation of an interest by the ward in property which was under the superintendence of the Court of Wards and in support of his companytention relies on Man Singh v Nowlakhbati 3 . In the first place once it is held that the transaction being a family settlement is number an alienation, it cannot amount to the creation of an interest. For, as the Privy Council pointed out in Mst. Hiran Bibis 1 case in a family settlement each party takes a share in the property by virtue of the independent title which is admitted to that extent by the other parties. It is number necessary, as would appear from the decision in Rangasami Gounden v. Nachiappa Gounden 4 that every party taking benefit under a family. settlement must necessarily be shown to have, under the law, a claim to a share in the property. All that is necessary is that the parties must be related to one another in some way and have a possible claim to the property or a claim or A.I.R. 1914 P.C. 44. ILR. 33. An. 356. 3 L.R. 53 I.AII. L.R. 46 I.A. 72 even a semblance of a claim on some other ground as, say, affection. In the second place, in the case relied upon by Mr. Sinha there was numberquestion of the transaction being a family settlement. It was sought to be supported upon the ground that it was a surrender. The Privy Council, however, held that it was number a bona fide surrender evidently because the widow was to get a very substantial amount for maintenance from the reversioners in whose favour she had purported to surrender the estate and also held that there was in fact numbernecessity for a surrender of interest of the widow. Since it was number a bona fide surrender it was regarded as one creating only an interest in the property which was under the superintendence of the Court of Wards. Had it been a bona fide surrender s. 60 of the Bihar Court of Wards Act upon which reliance was placed in that case would number have been attracted. Indeed, reliance was placed before the Privy Council on the decision in Sureshwar Misser Maheshrani Misrain 1 in support of the appellants companytention that the transaction was valid. While distinguishing this case the Privy Council observed In that case there were serious disputes in the family as to title, and the next reversioners to the son sued the widow and her daughters to set aside the will of her husband under which the daughters were entitled to succeed to the immovable property on the death of the son without issue. A family companypromise was agreed to, and in performance of it the widow surrendered all her rights of sucession to the immovable property, and the plaintiff the next reversioner and her daughters gave her for her life a small portion of the land for her maintenance. The Board held that the companypromise was a bona fide surrender of the estate and number a device to divide it with the next reversioner, the giving of a small portion of it to the widow for her maintenance number being objectionable, and companysequently that the transaction was valid under the principles laid down by the board in Rangasami Gounden v Nachiappa Gounden L. R. 46 I.A. 72 . We may further point out that this decision does number refer to their decisions in Mst. Hiran Bibi v Mst. Sohan Bibi 2 and Khunni Lal v. Govind Krishna Narain 3 and it cannot be assumed that they intended to depart from their earlier view. Apart from that it may be pointed out that the two suits which were then pending were companypromised with the full knowledge of the Court of Wards which was also a party to both the suits and L.R. 47 I.A. 233. A.I.R. 1914 P.C. 44. 3 .I.L.R. 33 All. 356. the Court of Wards in fact released the estate by accepting from Gopinath monies which were due to it. In these circumstances we hold that the plaintiff is number entitled to press in aid the provisions of s. 37 a of the U.P. Court of Wards Act.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petitions Nos. 55 and 56 of 1965. Petitions under Art. 32 of the Constitution of India for the enforcement of Fundamental Rights. Gopalakrishnan, for the petitioners in both the petitions Ganapathy Iyer and R. N. Sachthey, for the respondent in both the petitions . The Judgment of the Court was delivered by Wanchoo, J. These two writ petitions under Art. 32 of the ,Constitution for a writ of habeas companypus raise companymon questions .and will be dealt with together. We may set out the facts in one of the petitions namely Petition 55 in order to highlight the points raised on behalf of the petitioners. It is unnecessary to referred to the facts in the other petition as they are similar except that in the other case the original arrest took place on December 6 instead of December 8. Sahib Singh Dugal, petitioner, was employed in the Posts and Telegraph Directorate of the Central Government. He was arrested on December 8, 1964 and put in jail as an under trial prisoner for an offence under S. 3 of the Official Secrets Act, Various remands were taken up to March 11, 1965 in companynection with the criminal case against the petitioner. It appears the besides Dugal, eight other persons were also involved in the case under S. 3 of the Official Secrets Act, including Jagdev Kumar Gupta petitioner in petition No. 56 of 1965. On March 11, 1965, the Deputy Superintendent of Police who was apparently in-charge of the investigation made a report to the companyrt to the affect that all the nine persons involved in that criminal Case might be discharged as sufficient evidence for their companyviction companyld number be discovered during the investigation. Consequently, the magistrate discharged all the nine persons including Sahib Singh Dugal and Jagdev Kumar Gupta petitioners and they were released from jail that very evening. Immediately after Sahib Singh Dugal came out of the jail, he was served with an order under. 30 1 b of the Defence of India Rules hereinafter referred to as the Rules , This order was passed by the Government of India and provided that Dugal be detained in order to prevent him from acting in an manner prejudicial to the defence of India, public safety and Indias relations with foreign powers. Dugal was then arrested and detained in the Central Jail, Tehar, New Delhi in accordance with the further order of the Government of India under r. 30 4 of the Rules. The case of the petitioners before us is two-fold. In the first place they rely on the decision of this Court in Rameshwar Shaw V. District Magistrate, Burdwan 1 and their case is that in view of that decision the order of their detention and the service of hat order are illegal and they are therefore entitled to release. In the second place, it is urged that the order of detention is mala fide in the circumstances of the case and therefore should be set aside. The Union companytests the petitions and urges that Rameshwar Shaws case 1 has numberapplication to the present cases and that there was numbermala fide intention in making the orders of detention. We shall first companysider whether the orders in the present cases are companyered by the decision of this Court in Rameshwar Shaws case 1 and should therefore be set aside. It is necessary in this companynection to refer to the facts in that case. Rameshwar Shaw was ordered to be detained by an order passed on February 9, 1963. This order was served on him on February 15, 1963. At that time he was in Burdwan jail. He had been in that jail for time past in companynection with a criminal companyplaint pending against him. Therefore, both when the order was passed and when it was served on Rameshwar Shaw, he was already in jail in companynection with the criminal case pending against him and it was number known how long he would remain in jail in that companynection. It was also impossible to say at that stage whether he would be companyvicted in the criminal case or acquitted. It may be mentioned that that was a case of detention under the Preventive Detention Act where grounds and particulars are supplied to the detenu. But the main question that was decided therein was that where a person was already in jail for an indefinite length of time in companynection with a criminal case pending against him it would number be possible for the authority to companye to the companyclusion that such a persons detention is necessary in order to prevent him from acting in a manner prejudicial to the public safety etc. It was pointed out that the scheme of the section postulates that if an order of detention is number passed against a person he would be free and able to act in a prejudicial manner but when the person against whom an order is passed is already in jail for an indefinite length of time or for a long time to companye say when be is undergoing sentence of imprisonment for a number of years it companyld hardly be said that such a person would act in a manner prejudicial to the public safety etc. unless he is detained. In such a case preven- 1 1964 S. C. R. 921. tive detention would be unnecessary for the person companycerned is already in jail for an indefinite length of time or for a long time, In Rameshwar Shaws case 1 , he was in jail in companynection with the criminal case pending against him for an indefinite length of time. It was in those circumstances that this Court held that the authority ordering detention companyld number legitimately companye to the companyclusion that the detention of the person was necessary to prevent him from acting in a manner prejudicial to the public safety etc. for in companying to that companyclusion the authority had to be satisfies that if the person is number detained, he would act in a prejudicial manner and that inevitably postulates freedom of action to the said person at the relevant time. If such a person was already in jail custody for an indefinite length of time it companyld number be postulated about him that if he was number detained he would act in a prejudicial manner. This matter was again companysidered by this Court in Smt. Godavari Shamrao v. The State of Maharashtra. 1 That was a case where a certain person had been detained under the Defence of India Rules. Later, this order was revoked and another order was passed to remove some technical defects. The latter order was challenged as illegal as it was passed at the time when the person companycerned was in detention and it was also served on her in jail. This Court held that the second order of the State Government after it had decided to revoke the earlier order was perfectly valid so far as the time of making the order was companycerned and its service on the detenu who was detained number as an under trial or as a companyvicted person companyld number be assailed, and the case of Rameshwar Shaw 1 was distinguished. It will be numbericed that the facts of the present two cases differ from the facts of Rameshwar Shaws case 1 in one material particular. Rameshwar Shaw was in jail in companynection with the criminal case pending against him for an indefinite duration. The order of detention as well as the service of that order was made on Rameshwar Shaw when he was in jail for an indefinite period in companynection with the criminal case pending against him. In the present cases it is true that the petitioners had been in jail for about three months before the order of detention was made against them. But there is a significant difference in the present cases, namely, that the executive authorities had decided that the criminal case against the petitioners companyld number succeed for want of sufficient evidence and applied for the discharge of the petitioners. It was in these circumstances that the executive authorities decided to 1 1964 4 S. C. R. 921. 2 A. 1. R. 1964 C. 1128 pass an order of detention. So on March 11 a report was made to the magistrate that the petitioners should be discharged as there was number sufficient evidence for their companyviction and on the same date the order for their detention was passed under the Rules. Further it was served on the petitioners immediately after their release from jail. In these circumstances, the ratio decidendi of Rameshwar Shaws case 1 will number apply, for the authorities had decided to drop the criminal case and ask for the discharge of the accused. Then they companysidered whether there was justification for the detention of the petitioners under the Rules and decided to, detain them. As was pointed out by this Court in Rameshwar Shaws case 1 detention is made generally in the light of the evidence about the past activities of the person companycerned. But these past activities should ordinarily be proximate in point of time in order to justify the order of detention. In the present cases the petitioners had been in jail for only three months before the order of detention was passed. It cannot be said that the companyduct of the petitioners before this period of three months is number proximate enough to justify an order of detention based on that companyduct. As a matter of fact, the affidavit on behalf of the Government of India is that the material in respect of the activities of the petitioners ranged over a period of two years before the, date of detention and that was taken into account to companye to the, companyclusion whether the detention under the Rules was justified or number. We are therefore of opinion that the petitioners cannot get advantage of the decision of this Court in Rameshwar Shawscase on the facts in the present cases. The next companytention on behalf of the petitioners is that the order is mala fide. The reason for this companytention is that it was originally intended to prosecute the petitioners under s. 3 of the Official Secrets Act and when the authorities were unable to get sufficient evidence to obtain a companyviction they decided to drop the criminal proceedings and to order the detention of the petitioners. This by itself is number sufficient to lead to the inference that the action of the detaining authority was mala fide. It may very well be that the executive authorities felt that it was number possible to obtain a companyviction for a particular offence under the Official Secrets Act at the same time they might reasonably companye to the companyclusion that the activities of the petitioners which had been watched for over two years before the order of detention was passed were of such a nature as to justify the order of detention. We cannot infer merely from the fact that the authorities decided 1 1964 4 S. C. R. 921, sup.CI/65-6 to drop the case under the Official Secrets Act and thereafter to order the detention of the petitioners under the Rules that the order of detention was mala fide. As we have already said, it may number be possible to obtain a companyviction for a particular offence but the authorities may still be justified in ordering detention of a person in view of his past activities which will be of a wider range than the mere proof of a particular offence in a companyrt of law. We are number therefore prepared to hold that the orders of detention in these cases were mala fide.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 420 of 1963. Appeal from the judgment and decree dated September 9. 1960 of the Andhra Pradesh High Court in Appeal Suit No. 300 of 1955. Suryanarayana Murti and T.V.R. Tatachari, for the appellant. R. Chaudhuri, for respondents 1 to 13. The Judgment of Sarkar and Raghubar Dayal, JJ. was delivered by Sarkar J. Ramaswami, J. delivered a separate Opinion. Sarkar, J. In a certain money suit, being Small Cause Suit No. 9 of 1953. a decree had been passed against Narasimhaswamy and his four sons who were members of a Mitakshara Hindu joint family. In execution of that decree the shares of the four sons in the joint family properties, described altogether as 4/5th share, were put up to auction on December 21, 1936 and purchased by one Sivayya whose successors-in-interest are the appellants. The father Narasimhaswamys share had number been put up for sale because an application fo.r his adjudication as insolvent was then pending. The sale to Sivayya was duly companyfirmed. Thereafter Sivayya sold the properties purchased by him at the auction to one Prakasalingam. On November 6, 1939, an order was made. under O. 21, rr. 35 2 and 96 of the Code of Civil Procedure for delivery of joint possession of the properties purchased to Prakasalingam along with the members of the joint family in actual possession. This order was duly carried out and possession was delivered to Prakasalingam by publishing that fact by beat of drum as prescribed in these rules. Subsequently, Prakasalingam re- transferred the properties to Sivayya. On October 16, 1951, Sivayya filed the. suit out of which this appeal arises, against the then members of the joint family whose Sup/65 12 number had by that time increased, and various other persons holding as alienees from them, asking for a partition of the joint family properties into five equal shares and thereafter for possession of four of such shares by removing the defendants from possession. The trial Court decreed the suit but held that Sivayya was number entitled to a 4/5th share but only to a 2/3rd share because before the decree a 5th son had been bom to Narasimliaswamy who had number been made a party to the suit or the execution proceedings and whose share had number companysequently passed under the auction sale. Some of the defendants appealed to the High Court of Andhra Pradesh from this judgment. The High Court allowed the appeal on the ground that the suit was barred by limitation under Art. 144 of Schedule 1 to the Limitation Act. Sivayya had filed a cross-objection in the High Court on the -round that he should have been held entitled to a 4/5th share of the properties which was dismissed by the High Court without a discussion of its merits in view of its decision on the question of limitation. Sivayya having died pending the appeal in the High Court, the appellants as his successors- in-interest, have companye up to this Court in further appeal under Art. 133 of the Constitution. Various questions had been raised in the trial Court but only two survive after its decision. They are, whether the suit was barred by limitation and whether Sivayya was entitled to a 4/5th share. On the question of limitation, two articles of the Act were pressed for our companysideration as applicable to the ease. They are Arts. 144 and 120. We companysider it unnecessary to decide in this ,case which of the two articles applies for in our view, the suit was number barred under either. As earlier stated the High Court held that Art. 144 applied. The application of this article seems to us to present great difficulties to some of which we like to refer. That article deals with a suit for possession of immovable property or any interest therein number otherwise specially provided for and prescribes a period of twelve years companymencing from the date when the possession of the defendant becomes adverse to the, plaintiff. This article obviously companytemplates a suit for possession. of property where the defendant might be in adverse possession of it as against the plaintiff. Now, it is well-settled that the purchaser of a companyartners undivided interest in joint family property is number entitled to possession of what he has purchased. His only right is to sue for partition of the property and ask for allotment to him of that which on partition might be found to fall to the share of the companyarcener 63 3 whose share he had purchased. His right to possession would date from the period when a specific allotment was made in his favour Sidheshwar Mukherjee v. Bhubneshwar Prasad Narain 1 It would, therefore, appear that Sivayya was number entitled to possession till a partition had been made. That being so, it is arguable that the defendants in the suit companyld never have been in adverse possession of the properties as against him as possession companyld be adverse against a person only when he was entitled to possession. Support for this view may be found in some of the observations in the Madras full bench case of Vyapur v. Sonamm Boi Ammani 2 . In the case in hand the learned Judges of the High Court thought that the applicability of Art. 144 to a suit like the present one was supported by the decision of the Judicial Committee in Mahant Sudarsan Das v. Mahan Ram Kirpal Das 3 . We feel companysiderable doubt that the case furnishes any assistance. It held that Art. 144 extends the companyception of adverse possession to include an interest in immovable property as well as the property itself. In that case a purchaser of an undivided share in a property which was number companyarcenery property, had obtained possession of that share and he was held to have acquired title to it by adverse possession. That was number a case of a person who was number entitled to possession. We are number number companycerned with adverse possession of an interest in property. Having expressed our difficulties on the matter let us proceed on the assumption without deciding it, that Art. 144 is applicable. Even so, it seems to us that the suit is number barred. It is number in dispute that in order that the suit may be barred under the article the defendant must have been uninterrupted possession for twelve years before the date of the suit. Now, in. the present case that was number so. By the delivery of symbolical possession under the order of November 6, 1939, the adverse possession of the, defendants was interrupted. Time has, therefore, to companymence to run from that date and so companysidered, the suit having been brought within twelve years of that date, it was number barred under that article. That would follow from the case of Sri Radha Krishna Chanderji v. Ram Bahadur 4 where it was held that delivery of formal possession also interrupted the companytinuity of adverse possession. It was however said that the order for delivery of possession 1 1954 S.C.R. 177,188. 3 1949 L.R. 77 I.A. 42. 2 1916 I.L.R. 39 Mad. 811. A.I.R. 1917 P.C. 197. made in the present case was a nullity because Sivayya and his transferee who had purchased an undivided share in companyarcenery property were number entitled to any possession at all. We agree that the order cannot be supported in law but we do number see that it was for this reason a nullity. It is number a case where the order was without jurisdiction. It was a case where the learned Judge making the order had, while acting within his jurisdiction, -one wrong in law. Such an order has full effect if it is number set aside, as it was number in this case. Yelumalai Chetti v. Srinivasa Chetti 1 to which we were referred, does number support the companytention that the order was a nullity There a purchaser of an undivided share in companyarcenery property at an execution sale had applied for possession under S. 318 of the Code of Civil Procedure of 1882 which companyresponds to 0 21, r. 95 of the present Code. That application was dismissed as barred by limitation. Later, the purchaser who had subsequently acquired the interest of the other companyarceners in the property under a private sale, filed a suit for possession of the whole. it was companytended that the suit was barred under S. 244 of the old Code s. 47 of the present Code as the purchaser companyld only proceed by way of execution. In dealing with that companytention it was said that though the purchaser of an undivided share in companyarcenery property was only entitled to ask for a partition, it was number companypetent to a companyrt on a mere application for execution by a purchaser of such a share at a companyrt sale, to order a partition and, therefore, the dismissal of the application under S. II 8 of the old Code had numbereffect by way of yes judicature on the second Suit for Possession. This case said numberhing about the legality of an order under 0. 21, rr. 35, 95 or 96. It seems to us that the question of adverse possession is one of fact. If the person against whom adverse possession is set up, should that he had in fact obtained possession, whether lawfully or number, that would interrupt any possession held adversely against him. The question is whether there was in fact an interruption of the adverse possession and number whether that interruption was justifiable in law. Under the order for delivery of symbolical possesSion, whether it was legal or otherwise, Prakasalingam did obtain possession and this was an interruption of the adverse possession by the respondents. In respect of the present suit time under Art. 144 must, therefore, companymence from that interruption. We wish to observe here that this aspect of the matter exposes the anomaly that seems to arise from the application of Art. 144 to this case. If Prakasalingams possession under the order of 1 1906 I.L.R. 29 Mad. 294. 63 5 November 6, 1939 was numberpossession in law because, as is companytended, he was number entitled to possession at all, then it would be difficult to hold that at that time somebody else was holding the property adversely to him. Since Prakasalingam or his successor Sivayya was number entitled to possession till after the decree in a suit for partition brought by him, Art. 144 would seem to be inapplicable to that suit. Learned companynsel for the respondents referred us to Mahadev Sakharam Parkar v. Janu Namji Hatle 1 and Jang Bahadur Singh v. Hanwant Singh 1 to show that the delivery of symbolical possession does number avail the appellants. On behalf of the appellants it was said that these decisions are numberlonger good law in view of the judgment of the Judicial companymittee in Sri Radha Krishan Chanderjis 3 case. Apart however from the merits of this companytention which numberdoubt, deserve companysideration, the principle of these cases does rot seem to us to be applicable to the present case. That principle was expressed in the case of Jang Bahadur Singh 2 -which also is clearly to be implied from the decision in the case of Mahadev Sakharam Parkar 1 - in these words, If possession was delivered in accordance with law that undoubtedly would, as between the parties to the proceedings relating to delivery of possession, give a new start for the companyputation of limitation and the possession of the defendants would be deemed to be a fresh invasion of the plaintiffs right and a new trespass on the property. But if possession was number delivered in the mode provided by law, that delivery of possession cannot, in our opinion, give a fresh start to the plaintiff for companyputing limitation. By the words in accordance with law the learned Judges meant, in accordance with the Code of Civil Procedure and number any other law. These cases dealt with an order for delivery of symbolical possession where an order for actual possession companyld have been made under the Code. Because of this, it was held that the order for delivery of symbolical possession did number interrupt the adverse possession of the defendant. That is number the case here. The only order for delivery of possession that companyld possibly be made under the Code in the present case was under 0. 21 rr. 35 2 and 96 because the other members of the family whose share had number been sold were certainly entitled to remain in possession. The fact that ,I view of the provisions of the Hindu law the order made is illegal, is irrelevant for the present purpose. That would number bring the case within the principle of either the Bombay case or the Allahabad case. 1 1912 I.L.R. 36 Bom. 373. 2 1921 I.L.R. 43 All. 520. A.I.R. 1917 P.C. 197. Learned companynsel for the respondents however companytended that 0. 21, r. 35 2 only applied where there was a decree for joint possession and it did number apply to the present case because here there was only an order for delivery of joint possession and number a decree. This companytention cannot be accepted because under s. 36 of the Code the provisions relating to the execution of decrees are applicable to execution of orders. In any case, the order is clearly within the terms of 0. 21, r. 96. The delivery of symboli- cal possession made in this case was quite in terms of the Code and so amounted to an interruption of the respondents adverse possession and the period of limitation for the purpose of the application of Art. 144 would start from the date of such delivery. As the suit was brought within twelve years from the date of that delivery of possession, Art. 144 even if it applies, does number bar it. We then turn to Art. 120. In Bai Shevantibai v. Janardan R. warick 1 it has been held that to a suit like the present, this is the article that applies. Learned companynsel for the respondents himself companytended that this was the appropriate article to be applied. This article applies to suits for which numberperiod of limitation is provided elsewhere and prescribes a period of six years companymencing from the date when the right to sue accrues. Learned companynsel for the respondents relied on the observation in Shevantibais 1 case that in a suit like the present one. the period of limitation under Art. 120 companymences to run from the date of the sale. This the case numberdoubt held, but we think in that respect it did number lay down the law companyrectly. It has been held by this Court in Mst. Rukhmabai v. Lala Laxminarayan 2 and C. Mohammad Yunus v. Syed Unnissa 3 that the right to sue accrues for the purpose of 120 when there is an accrual of the right asserted in the suit and an unequivocal threat by the respondent to infringe it. Now whatever the nature of the plaintiffs right in the present case, there is numberhing to show that right was ever challenged in any way by the respondents. It is impossible, therefore, to hold that his suit was barred under Art. 120. The result is that the suit was number barred whether Art. 144 or Art. 120 applied to it. It remains number to deal with the cross-objection. We do number think that it has any merit. Both the companyrts below have held that what Sivayya purchased at the auction sale was the share of the four sons of Narasimhaswamy in the joint family properties. At the date of the auction sale that share which was originally A.I.R. 1939 Bom. 322. A.I.R. 1961 S.C. 808. 2 1960 2 S.C.R. 253. 4/5th had been reduced to 2/3rd by the birth of another son, Venugopal, to Narasinihaswamy who had number been made a party either to the suit or the execution proceedings. It is irrelevant to enquire whether after his birth the fifth sons share companyld be proceeded against in the execution of the decree in suit No. 9 of 1933. It is enough to say that was number in fact done. What was purchased at the execution sale was only the shares of Venugopals four brothers at the date of the sale and this was 2/3rd. That being so, we think Sivayya was number entitled to get Venugopals 1/6th share also allotted to hi-in in the partition suit. The crossobjection must fail. We may add that numberclaim has been made against Narasimhaswamys share whose insolvency once ordered, appears subsequently to have been annulled. In the result we would allow the appeal, set aside the judgment and decree of the High Court except as to the dismissal of the cross-objection and restore that of the learned trial Judge. The appellants will be entitled to proportionate companyts here and in the High Court. Ramaswami, J. The question of law involved in this appeal is what is the period of limitation applicable to a suit filed by an alienee of a companyarcener of an undivided share in the joint family property for general partition. The appellants are the legal representatives of the deceased plaintiff- Mamidi China Venkata Sivayya. The suit was filed by him on October 16, 1951 for partition and separate possession of the 4/5th share in the joint family properties. It is alleged that he purchased the undivided share of defendants 2 to 5 at a Court auction sale held on December 21, 1936 in execution of a decree of the Court of Small Causes. The sale was companyfirmed on February 23, 1937. Later on i.e., on March 5, 1939 the purchaser Sivayya sold the right he had purchased to one Prakasalingam who, it is alleged, obtained symbolic delivery of possession of the undivided share of the joint family properties on November 6, 1939. It appears that Sivayya obtained a reconveyable of the right from Prakasalingam on April 11, 1945. Sivayya brought the present suit on October 16, 1951 against the other companyarceners and alienees from some of the companyarceners. The suit was filed by Sivayya for general partition. The main defence of the companytesting defendants was that the suit was barred by limitation. The trial companyrt held that the suit was governed by Article 144 of the Limitation Act and Article 120 did number apply. The trial companyrt also found that there was symbolic delivery of possession in favour of Prakasalingam on November 6, 1939 and there was break up of adverse possession of defendants 1 to 5 and that the suit was, therefore, brought within time. The trial companyrt held that the 1/6th share of the 6th defendant one of the companyarceners did number pass to the plaintiff as the 6th defendant was born before the Court sale and he was number implement as a party in the present case. The trial companyrt accordingly gave a decree for partition and separate possession to the plaintiff of 2/3rds share of the properties mentioned in Sch. A of the plaint. The defendants preferred an appeal before the High Court of Andhra Pradesh against the judgment and decree of the trial companyrt. The plaintiff also filed a Memorandum of Cross Objections claiming the 1/6th share of the 6th defendant also. The High Court held that Article 144 of the Limitation Act applied to the suit and the adverse possession of the defendants companymenced from the date of the auction sale and that the suit was barred by limitation as it was filed on October 16, 1951 i.e., more than 12 years after the auction sale. The High Court also held that the symbolic delivery had numberlegal effect and did number break the adverse possession of the defendants. Accordingly the High Court allowed the appeal and the suit was dismissed with companyts throughout. The present appeal is presented on behalf of the legal representatives of the deceased plaintiffs against the judgment and decree of the High Court of Andhra Pradesh. Before dealing with the question as to which Article of the Limitation Act applies to the present case it is necessary to examine the legal position of persons like Sivayya who purchase shares of some of the companyarceners of the Hindu Joint Family. It is wellsettled that the purchaser does number acquire any interest in the property sold and he cannot claim to be put in possession of any definite piece of family property. The purchaser acquires only an equity to stand in the alienors shoes and work- out his rights by means of a partition. The equity depends upon the alienation being one for value and number upon any companytractual nexus. The purchaser does number become a tenant in companymon with the other members of the joint family. He is number entitled to joint possession with them. The alienees suit for partition must be one for partition of the entire property and number for the partition of any specific item of, or interest in, the family property. Such a suit, however, will number be technically on a par with a suit for partition filed by a companyarcener. Such a suit would number have the necessary effect of breaking up the joint ownership of the members of the family in the remaining property number the companyporate character of the family. Maynes Hindu Law, eleventh edition, page 489 . On behalf of the appellants learned Counsel put forward the argument that the right of the alienee to sue for partition is a companytinuing right and there is numberperiod of limitation for enforcing such right. In my opinion, there is numberwarrant for this argument. A suit for partition filed by the alienee from a companyarcener is number, in a technical sense, a suit for partition and, as already stated, such a suit will number have the necessary effect of breaking up the joint ownership of the members of the family in the joint property number the companyporate character of the family. As observed by Bhashyam Ayyangar, J. in Aiyyangari Venkataramayya v. Aiyyagari Ramayya The vendees suit to enforce the sale by partition is number a suit for partition, in the technical sense in which partition or vibhaga is used in the Hindu law. A suit for partition, in the technical sense, can be brought only by an undivided member of the family. The right to such partition is personal to him and number transferable. Such a suit can be brought only in the lifetime of the companyarcener and even if so brought, it will abate if he should die before final decree, without leaving male issue. A partition in the technical sense, whether effected amicably or by decree of Court, breaks up number only the joint ownership of property, but also the family union, i.e., the companyporate character of the family. Each member thereafter becomes a divided member with a separate line of heirs to himself. An undivided member of a family, though he may alienate either the whole Gurulingappa v. Nandappa-I.L.R. 21 Bom. 797 , or any part of his undivided share will companytinue to be an undivided member of the family with rights of survivorship between himself and the remaining members in respect of all the family property other than what he has transferred The transferee, however, does number step into the shoes of the transferor as a member of the family and there will be numbercommunity of property between him and all or any of the members of the family in respect either of the property transferred to him or the rest of the family property. In my opinion, a suit like the present one will fall within Article 144 of the Limitation Act. I.L.R. 25 Mad. 690 at p. 717. 64 0 It is true that an alienee of an undivided interest of a Hindu companyarcener is number entitled to joint possession with the other companyarcener and he is also number entitled to separate possession of any part of the family property. But the alienee is entitled to obtain possession of that part of the family property which might fall to the share of his alienor at a partition. What the alienee acquires by a purchase is number any interest in specific family property but only an equity to enforce his right in a suit of partition and have the property alienated set apart for the alienors share, if possible. In the present case the alienee has instituted a suit for general partition with the prayer that he may be put in possession of that part of the family property which may be allotted to his alienor. It is number right to companysider such a suit as a suit for more partition. The main relief sought by the plaintiff is the relief for possession of that part of the property which may be allotted to the alienors share and a relief for partition is only a machinery for working out his right and ancillary to the main relief for possession of the property allotted to the alienors share. What the plaintiff seeks is actual delivery of possession. In my opinion, such a suit falls within the purview of Article 144 of the Limitation Act and the law on this point is companyrectly stated in Thai v. Dakshinamutthy 1 . If Article 144 is the proper article applicable, when does time companymence to run ? According to the third companyumn of Article 144, time begins to run from the date when the possession of the defendant becomes adverse to the plaintiff. As I have already pointed out, the possession of the number-alienating members of the family cannot be deemed to be possession on behalf of the alienee also, because the purchaser-alienee does number acquire any interest in the property sold and does number become tenant-in-common with the members of the family number is he entitled to joint possession with them. It is clear that in the absence of a clear acknowledgment of the right of the alienee or participation in the enjoyment of the family property by the alienee, the possession of the numberalienating companyarceners would be adverse to the alienee, from the date on which he became entitled to sue for general partition and possession of his alienors share. The fact that the alienee has purchased an undivided interest of joint family property is number inconsistent with the companyception of adverse possession of that 64 1 interest. As Lord Radcliffe observed in Sudarsan Das v. Ram Kirpal Das 1 Now it is the respondents case-it is in fact their main companytention on this issue-that the appellant has never at any time had adverse possession against them because, the disputed property being a fourteen undivided share, his possession has been throughout numbermore than a joint possession with them. And the joint possession which companyarceners enjoy in respect of the undivided property involves that, prima facie, the exclusive possession of any one of them is number adverse to the others. Their Lordships have numberdoubt of the validity of this general rule but they are unable to think that it will be in any way departed from if they hold that in respect of the disputed property itself the appellants possession has been adverse to the owners of the other shares. In truth there is some companyfusion involved in the argument. What is in question here is number adverse possession of the block of property in which the various undivided interests subsist but adverse possession of one undivided interest. Article 144 certainly extends the companyception of adverse possession to include an interest in immovable property as well as the property itself number was it disputed in argument by the respondents that there companyld be adverse possession of an undivided share, given the appropriate circumstances. In the present case, therefore, adverse possession began to run from the date of purchase of the undivided share i.e., from December 21, 1936 but it was submitted on behalf of the appellants that Prakasalingam obtained symbolic delivery and possession of the undivided share on November 6, 1939 after numberice to defendants 2 to 5 and there was a fresh cause of action to Sustains the present suit for possession. It was companytended on behalf of the respondents that the symbolic delivery was illegal and the executing companyrt was number companypetent to make an order of delivery of possession, either symbolic or actual with regard to the sale of an undivided interest of joint family property. In support of this argument reliance was placed on the decision in Yelumalai Chetti v. Srinivasa Chetti 2 in which it was held that the purchaser at a Court sale of the share of an undivided member of a joint Hindu family acquires only a right to sue for partition and for delivery of what may be allotted as the share of such undivided member A.I.R 1950 C.44at p. -47. I.L.R. 29 Mad. 294. and the Court cannot, on a mere application for execution by such purchaser, enforce his right by an order for partition. It was further held that numbersuch order can be made under section 318 of the Code of Civil Procedure and the dismissal by the Court of an application by the purchaser under S. 318 cannot be a bar to a suit by the purchaser for partition. Even assuming that the ,grant of symbolic delivery of possession ought number to have been made and that the executing-court acted illegally in making such an order, it cannot be argued that the executing companyrt had numberjurisdiction to make the order or that the act of symbolic possession was a nullity in the eye of law. I am, therefore, of the opinion that the -rant of symbolic possession by the companyrt in favour of Prakasalingam after numberice to the defendants 2 to 5 was tantamount in law to delivery of actual possession and, there fore, sufficient to break up the companytinuity of adverse possession in favour of the defendants. In Sri Radha Krishna Chanderji v. Ram Bahadur 1 it was held by Lord Sumner that symbolic posses- sion was available to dispossess a party sufficiently where he was a party to the Proceedings in which it was ordered and given. I am accordingly of the opinion that the suit of the plaintiff is number barred by limitation under Article 144 of the Limitation Act and the view taken by the High Court on this part of the case is number companyrect and must be overruled. On behalf of the appellants it was also argued that a decree for 5/6th share of the joint family properties and number merely for 2/3rds share should have been granted. The claim of the appellants was rejected by the trial companyrt. It is number disputed by the plaintiff that the 6th defendant was born before the Court sale and it is also number disputed that the execution case was taken out only against defendants 2 to 5.

Case appeal was accepted by the Supreme Court

Subba Rao, J. This appeal by special leave raises the question of the interpretation of Item No. 39 of the Notification No. 58, dated October 24, 1953, hereinafter called the Notification, issued by the Government of Madhya Bharat under the Madhya Bharat Sales Tax Act, Samvat 2007 Act No. 30 of 1950 , hereinafter called the Act. The facts are as follows Hiralal, the respondent, is the manager of a joint Hindu family carrying on business in the name and style of Messrs. Tilokchand Kalyanmal. The joint family owns a re-rolling mill situated in Indore City called the Central India Iron and Steel Company. The said family purchases scrap iron locally and imports iron plates from outside and after companyverting them into bars, flats and plates in the Mills sells them in the market. The respondent made a default in furnishing the returns prescribed by s. 7 i of the Act for the period April 1, 1954, to March 31, 1955. On February 27, 1956, the Sales-tax Officer, Indore, determined the taxable turnover at Rs. 2,26,000 and the sales-tax payable thereon at Rs. 8,000 and he also imposed a penalty of Rs. 1,000 under s. 14 1 c of the Act. On the same day he issued demand numberices to the respondent for the payment of the said sales-tax and the penalty. On September 10, 1956, the respondent filed a petition in the High Court of Madhya Bharat afterwards Madhya Pradesh under Arts. 226 and 227 of the Constitution for the issue of appropriate writs quashing the assessment of tax and penalty and to restrain the State from giving effect to the said orders of the Sales-tax Officer. A Division Bench of the High Court held that the iron bars, flats and plates sold by the respondent were exempted from sales-tax under the Notification. In that view, the orders of the Sales-tax Officer were quashed. The state has filed the present appeal, by special leave. The only question in this appeal is whether the said iron bars, flats and plates are number iron and steel within the meaning of Item No. 39 of the Notification. Parliament enacted Essential Goods Declaration and Regulation of Tax on Sales or Purchases Act, 1952 Act No. 52 of 1952 , which came into force on August 9, 1952. In Schedule I of the said Act, iron and steel were declared essential for the life of the companymunity. Thereafter, the Government of Madhya Bharat, in exercise of the powers companyferred by s. 5 of the Act, issued the Notification as also Notification No. 59, dated October 24, 1953. The material part of Schedule I of Notification 58 reads No tax shall be payable on the sale of the following goods - ---------------------------------------------------------------------- No. Description of goods. --------------------------------------------------------------------- 39 Iron and steel. ---------------------------------------------------------------------- Notification No. 59 described the goods sales of which were taxable at particular rates. Schedule IV thereof reads List of articles under section 5 of the Madhya Bharat Sales Tax Act, 1950, on the assessable sale proceeds of which sales tax at the rate of Rs. 3/2/- per cent. shall be payable, showing the nature of articles on which the tax is payable. ---------------------------------------------------------------------- No. Name of article Stage of sale in Madhya Bharat at which the tax is payable. ---------------------------------------------------------------------- 9 goods prepared from sale by importer or producer. any metal other than gold and silver ---------------------------------------------------------------------- Learned companynsel for the State companytends that the expression iron and steel means iron and steel in the original companydition and number iron and steel in the shape of bars, flats and plates. In our view, this companytention is number sound. A companyparison of the said two Notifications brings out the distinction between raw-materials of iron and steel and the goods prepared from iron and steel while the former is exempted from tax, the latter is taxed. Therefore, iron and steel used as raw-material for manufacturing other goods are exempted from taxation. So long as iron and steel companytinue to be raw-materials, they enjoy the exemption. Scrap iron purchased by the respondent was merely re-rolled into bars, flats and plates. They were processed for companyvenience of sale. The raw-materials were only re-rolled to give them attractive and acceptable forms. They did number in the process lose their character as iron and steel. The dealer sold iron and steel in the shape of bars, flats and plates and the customer purchased iron and steel in that shape. We, therefore, hold that the bars, flats and plates sold by the assessee are iron and steel exempted under the Notification. The companyclusion arrived at by the High Court is companyrect.

Case appeal was rejected by the Supreme Court

Bihar Government. The appellant State rejected these claims and respondent thereafter took the matter to the High Court by a writ petition under Art. 226. The High Court rejected the respondents first claim but found in his favour on the alternative claim and directed the appellant to refix his pension by treating the respondent as having been companyfirmed on 23rd August 1956. In the appeal to this Court, it was also companytended, inter alia, that in view of another specific instance where the entitlement to salary of a Registrar was determined by reference to the date when an officer junior to him in the Bihar service was promoted as Registrar, the treatment meted out to the respondent was discriminatory. HELD The High Courts order must be set aside and the respondents writ petition dismissed. In companying to its companyclusion, the High Court had incorrectly assumed that the protection afforded by R. 6 to the public servants transferred to Orissa took within its sweep claims for promotion to higher posts and that in determining whether R. 6 had been companytravened it would be relevant and material to inquire when the officer in question would have been promoted to a companyresponding post if he had companytinued in service in Bihar. 910 H-911 B What R. 6 guarantees is that the public servants who were transferred to Orissa will number suffer in regard to their pay,, allowance, leave and pension these respective companyditions did number include a claim for promotion to a higher selection post because for such promotion a number of factors such as the existence of a vacancy, seniority, the record of the officer companycerned, the eligibility of other persons, etc., had to be taken into companysideration. 911 E-G As promotion to a selection post was outside the terms of R. 6, a claim for promotion companyld number be indirectly permitted on the ground that it had a bearing on the of pension to which a transferred public servant would be entitled. 912 G-913 B-D The instance cited to show discrimination against the appellant was also outside R. 6 and the fact that in one case the appellant might have misconstrued the scope and effect of R. 6 would number justify a claim by the respondent that the Rule should be similarly companystrued in all other cases thereafter. 916 C CIVIL APPELLATE JURISDICTION Civil Appeal No. 751 of 1964. Appeal from the judgment and order dated May 7, 1963 of the Orissa High Court in O.J.C. No. 270 of 1962. S. Bindra, B. R. G. K. Achar and R. N. Sachthey, for the appellant. N. Andley, Rameshvar Nath and P. L. Vohra, for the res- pondent. The Judgment of the Court was delivered by Gajendragadkar, C.J. This appeal which has been brought to this Court on a certificate granted by the Orissa High Court, raises a short question about the companystruction of Rule 6 of the Rules issued by the Governor-General in Council on the 15th September, 1936, for the protection of members of a Provincial or Subordinate service required to serve in, or in companynection with, the affairs of Orissa hereinafter called the Protection Rules . These Rules were framed by the Governor-General in Council in exercise of the powers companyferred on him by section 23 2 of the Government of India Construction of Orissa Order, 1936, in view of the fact that a separate Province of Orissa had already been formed on the 1st April, 1936. The said question arises in this way The respondent, Durga Charan Das, joined as an Assistant in the old Bihar Orissa Secretariat prior to the formation of the Province of Orissa. When the said Province was formed, he was transferred to the Orissa Secretariat, Home Department. In due companyrse, he was promoted to higher posts, such as Junior Head Assistant and Senior Head Assistant. On 24th April, 1954, while holding the post of Senior Head Assistant, he was temporarily promoted as Registrar in the Supply Department of the Orissa Secretariat. On 22nd December, 1954, he was reverted to his substantive post as Head Assistant in the Home Department. Later, he was again promoted to officiate as Registrar in the Supply Department on 3rd February, 1956. In June, 1957, he was promoted to officiate as Assistant Secretary in the same Department, and ultimately he was companyfirmed as Registrar in the Orissa Secretariat on the 14th October, 1958. Eventually, he retired from service on the 17th October, 1959. At the time of his retirement, a question arose about fixing the amount of his pension. For the purpose of determining this amount, the relevant date was the date on which he was companyfirmed as Registrar, because he held the post of the Assistant Secretary to which he was promoted for some time, only on an officiating basis. The appellant, the State of Orissa, fixed the pension of the respondent at Rs. 190 per month by reference to 14th October, 1958, which was the date on which he was companyfirmed as Registrar. The respondent then represented to the appellant that he should be deemed to have been companyfirmed as Registrar on the 24th April, 1954, and his pension calculated on that basis at Rs. 290 p.m. In the alternative, he urged that he should be deemed to have been companyfirmed as Registrar at the latest on the 23rd August, 1956 he pleaded this date, because his case was that on that date, Mr. J. N. Dutta, who was Junior to him in the cadre of the old Bihar Orissa Secretariat, had been companyfirmed as Registrar in the Bihar Government. On this latter basis, the respondent would be entitled to get Rs. 240 p.m. as pension. The appellant rejected both the prayers made by the respondent, and that took the respondent to the High Court under Article 226 of the Constitution. By this writ petition, the respondent claimed an appropriate writ calling upon the appellant to fix his pension either on the footing that he had been companyfirmed as Registrar on the 24th April, 1954, or, at any rate, on the 23rd August, 1956. This plea was resisted by the appellant and it was pleaded by it that the claim made by the respondent was number justified by the provisions of R. 6 of the Protection Rules. The High Court hap, held that the respondents claim to have his pension calculated on the basis that he should be deemed to have been companyfirmed as Registrar on the 24th April, 1954, was number well-founded. It has, however, found in favour of the respondent in regard to the alternative claim made by him, and accordingly it has directed the appellant to re-fix the pension payable to the respondent on the footing that the respondent should be treated as having been companyfirmed as Registrar in the Orissa Secretariat with effect from 23rd August, 1956. It is this order which is challenged by the appellant before us, and that raises the question about the companystruction of R. 6 of the Protection Rules. Rule 6 of the Protection Rules reads thus The companyditions of service as respects pay, allowances leave and pension of any member of Provincial or Subordinate service serving immediately before the 1st day of April, 1936 in or in companynection with the affairs of the province of Bihar Orissa, who is required to serve in or in companynection with the affairs of Orissa shall number in the case of any such person while he is serving in or in companynection with the affairs of Orissa be less favourable than they were immediately before the 1st day of April, 1936. Provided that the Government of Orissa may make such alterations in the companyditions of service of any such person as would have applied to him if he had passed from the service of the Government of Bihar Orissa to the service of the Government of Bihar. Provided further that numberhing in this rule shall apply to companyditions of service which prescribe rates of travelling allowance. The High Court has, numberdoubt, recognised the fact that the companyfirmation of an officer in a particular case would depend on several factors, such as the existence of a permanent vacancy, the claim of officers senior to a given officer, the record of the officer companycerned, and the opinion which the Public Service Commission may form about his merits in relation to companyfirmation. Even so, the High Court has taken the view that since Mr. Dutta who was junior to the respondent had in fact been promoted as Registrar on the 23rd August, 1956, that can reasonably be taken to be the date on which the respondent was entitled to be companyfirmed by virtue of the provisions of R. 6. In companying to this companyclusion, the High Court has made two assumptions. The first assumption is that the protection afforded to the public servants transferred to Orissa took within its sweep claims for promotion to higher posts and the other assumption is that in determining the question as to whether the provision as to the said protection has been companytravened, it would be relevant and material to enquire when the officer in question would have been promoted to a companyresponding post if he had companytinued in service in Bihar. Proceeding to deal with this problem on the basis of these two assumptions, the High Court has thought it reasonable to draw the inference that the respondent would certainly have been promoted as Registrar and companyfirmed as such, at the latest, on the 23rd August, 1956, when Mr. Dutta who was junior to him was in fact promoted and companyfirmed as Registrar. Mr. Bindra for the appellant companytends that the assumptions made by the High Court in reaching this companyclusion are number well-founded. In our opinion, Mr. Bindra is right. The Rule in question protects the companyditions of service as respects pay, allowances, leave and pension of the members falling under its purview, and it guarantees that in numbercase shall the terms in relation to the said companyditions of service be less favourable than they were immediately before the 1st of April, 1936. The question is do any of the companyditions specified in R. 6 include a claim for promotion to a higher selection post and companyfirmation in it. It is well known that promotion to a selection post is number a matter of right which can be claimed merely by seniority. Normally, in companysidering the question of a public servants claim for promotion to a selection post, his seniority and his merits have to be companysidered and so, it seems to us very difficult to accept the view taken by the High Court that in R. 6 of the Protection Rules, a guarantee can be inferred in regard to promotion to a selection post. What the Rule guarantees is that the public servants who were transferred to Orissa will number suffer in regard to their pay, allowances, leave and pension and these respective companyditions do number seem to include a claim for promotion to a higher selection post and indeed, it seems very unlikely that any protection companyld ever have been reasonably intended to be given in regard to promotion to a selection post. It is true that in 1939, a question arose whether the prospects of promotion of transferred officers were protected by the Protection Rules, and the Joint Public Service Commission for Bihar, Orissa, and the Central Provinces, which was functioning in 1939, took the view that the said Rules must be interpreted to require that an officer transferred from Bihar and Orissa to Orissa shall have prospects of promotion as good as he would have had in Bihar and Orissa, and when promoted shall draw pay number less than that which he would have drawn if so promoted in Bihar and Orissa. Similarly, the Governor of Orissa, after companysulting the Governor-General in Council, issued some instructions on the 28th January, 1942, clarifying R. 6 of the Protection Rules. One of these instructions provided that the object underlying the Governor-General in Councils Protection Rules, 1936, was to ensure the transferred officers a fair deal under the new Government. The instruction, therefore, added that the Provincial Rules should in all cases be so applied as to secure this result. In other words, the essential requirement is that the spirit of the Protection Rules should be fully observed and hard cases, should they occur, should be given special treatment. This instruction is general in terms, and does number support the view taken by the High Court that a claim for promotion to a selection post is included within the term of R. 6. In our opinion, there can be numberdoubt that the interpretation placed by the Joint Public Service Commission on the Protection Rules, or the opinion expressed by the Governor of Orissa, though perhaps relevant, cannot have a material bearing on the companystruction of the Rule in question when the matter reaches the Court. It is for the Court to companysider the Rule fairly, taking into account the spirit underlying the Rule and the object intended to be achieved by it. Even the High Court has observed that though, ordinarily, the right of promotion and companyfirmation in particular posts may number be said to have been expressly protected by the Protection Rules, nenertheless, where these have a direct bearing either on the pay or the pension of a transferred officer, the protection must be deemed to companyer these aspects also, having regard to the letter and spirit of the Protection Rules. In other words, the High Court seems to have taken the view that though promotion and companyfirmation in particular posts cannot be claimed directly under R. 6, a claim in that behalf can be indirectly permitted if it has a bearing on the amount of pension to which a transferred public servant would be entitled on retirement. It is, therefore, necessary to companysider this aspect of the matter. It is companymon ground that the amount of pension payable to the respondent has to be calculated by reference to the date on which he was companyfirmed as a Registrar and the argument which found favour with the High Court was that in determining this amount, it would be relevant to enquire when the respondent would have been promoted to the post of a Registrar if he had companytinued to serve in Bihar. If it is shown that he would have been promoted to the post of a Registrar, for instance, on the 23rd August, 1956, his pension should be calculated by reference to that date. That is how the date of promotion and companyfirmation are alleged to have a bearing on the determination of the amount of pension payable to the respondent. In our opinion, if promotion to a selection post is outside the terms of R. 6, it would be difficult to entertain the claim made by the respondent on the basis that his junior Mr. Dutta had been promoted to the post of Registrar and companyfirmed as such on the 23rd August, 1956. As we have already indicated, promotion to a selection post depends upon several relevant factors the number of vacancies in the posts of Registrars is one factor the number of persons eligible for the said promotions is another factor and the seniority of the said companypetitors along with their past record and their merits as judged by the Public Service Commission, is yet another factor. Now, it seems to us unreasonable and impracticable to determine this question by reference to another enquiry as to when officers junior to the respondent were promoted in Bihar. An attempt to companyrelate the question about the promotions of officers transferred to Orissa with promotions secured by officers in Bihar, seems to us to be outside the companytemplation of R. 6. The difficulties in making such an assessment or estimate are too plain to need any detailed enumeration. Mr. Andley for the respondent attempted to argue that the respondent had received unfair treatment in as much as the Rules of promotion which would have governed his case if he had companytinued in Bihar, are radically different from the Rules of promotion which were introduced in Orissa after his services were transferred to Orissa, and that, he companytends, is a companytravention of R. 6 of the Protection Rules. The relevant rule in Bihar for promotion is R. 2 1 it reads thus Rule 2 1 -Registrar,- The post of Registrar Pay B 0 Old ScaleRs. 500-20-600 - B 0 Revised Scale-Rs. 450-20- 550 in the Secretariat is a Gazetted and belongs to the General Provincial service. The appointment is made by Government in companysultation with the State, Public Service Commission. Selection is ordinarily made from among the Section Heads of the Department companycerned, failing which from among the Section Heads of other Departments of the Secretariat. This Rule is companytrasted by Mr. Andley with the relevant Service Rules which were in force in Orissa they are Rules 6 to 9. R. 6 ,of these Rules reads thus - Ordinarily by the 1st April each Calendar year, the departments of the Secretariat and the Secretary to Chief Minister shall numberify to the Home Department the number of vacancies in the rank of Registrar and Assistant Secretary which have occurred or are likely to occur during the twelve months companymencing from the following July. They shall also report to the Home Department in order of seniority in the form appended to the rules Appendix 1 the names and other particulars of service of Head Assistants both Senior and Junior who have number officiated as Registrar or Assistant Secretary on the recommendation of the Commission by the time the reference is made, and other Ministerial Officers, whose pay and status are at least equivalent to those of a Junior Head Assistant and also of such Accountants and Record Keepers, who draw pay in the scales of pay of Junior Head Assistant or in higher scale. The Service Book and Character Rolls of all such officers with latest appreciation of their work by the Secretary of the Department companycerned with particular reference to their suitability for promotion to the rank of Assistant Secretary or Registrar shall also be forwarded to the Home Department. R. 7 provides that the Government in Home Department on receipt of the requisite information from all departments shall report to the Commission within the time specified by it and intimate to it the relevant details indicated in it. R. 8 then requires the Commission to proceed to assess the suitability of candidate for promotion and R. 9 provides that the Commission shall prepare two separate lists, viz., a a list of those candidates who are fit for promotion to the ranks of both Registrar and Assistant Secretary, and b a list of those fit for promotion to the rank of Registrar only, but number to that of Assistant Secretary, and shall arrange the names in order of merit. The lists so prepared by the Commission have to be forwarded to the Government in the Home Department within the time specified. Mr. Andleys argument is that whereas under R. 2 1 of the Bihar Rules, selection is ordinarily made from among the Section Heads of the Department companycerned, the selection under the relevant Orissa Rule is made from a larger class of public servants indicated therein. We are number satisfied that this companytention is well-founded. In the present proceedings, besides quoting the relevant Rules in the petition, the respondent has led numberfurther evidence to show what exactly is meant by the Section Heads of the Department companycerned mentioned in R. 2 1 of the Bihar Rules and in the absence of any material, it would be difficult for its to accept Mr. Andleys argument that the companyditions for promotion prescribed by R. 2 1 of the Bihar Rules are substantially or radically different from the companyditions prescribed by the relevant Orissa Rules, and thereby caused prejudice to the respondent within the meaning of R. 6 of the Protection Rules. Mr. Andley also suggested that under the relevant Bihar Rule, promotion would go entirely by seniority, whereas under the Orissa Rule, it is on companysiderations of seniority companypled with merit. We do number think Mr. Andley is right in assuming that selection under R. 2 1 of the Bihar Rules companyld have been intended to be made only by reference to seniority. The very companycept of selection involves the companysideration of seniority companypled with merit, which is generally described as the seniority-cum-merit test. Besides, this aspect of the matter does number appear to have been argued before the High Court and in the absence of any material on the point and in the absence of any decision by the High Court on it, we cannot entertain this companytention. We may incidentally point out that though in his petition, the respondent has made some vague allegations suggesting that the appellant did number deliberately appoint him in a permanent vacancy of the Registrars post, he has produced numbersatisfactory evidence to support the said plea, On the other hand, it appears that in 1954. when the case of the respondent was examined by the Public Service Commission, it made a definite recommendation that he was fit to be Registrar for stop-gap arrangements only, and it speci- fically added that he should number be given preference over those whose positions are higher up in the list even for vacancies exceeding a period of four months. This recommendation clearly indicates that the Character Roll of the respondent was number as satisfactory as it should have been and so, the argument that his appointment to the post of Registrar and companyfirmation in it were unduly delayed, loses all significance. Mr. Andley also attempted to argue that the decision of the High Court companyld be justified because, in law, the treatment meted out to the respondent can be properly characterised as discriminatory. In support of this plea, Mr. Andley referred us to the case of Mr. Beuria. It appears that Mr. Beuria who was also trans- ferred from Bihar to Orissa as a Head Assistant, was held entitled to get the pay of Registrar from 1st December, 1948, and this ,order which was passed on the 12th October, 1960, was given retrospective effect from 1-12-1948. It does appear that this order was passed on the basis that Mr. Beuria was entitled to the salary of a Registrar, because Mr. Prasad who was junior to him in Bihar was promoted to the rank of Registrar on 1-12-1948. We do number see how this single case can be pressed into service by Mr. Andley in support of his argument that there has been illegal discrimination against the respondent. On the view we have taken about the scope and effect of R. 6 of the Protection Rules, what the appellant has done in regard to Mr. Beuria must, prima facie, be held to be outside the Rule but the fact that in one case the appellant might have misconstrued the scope and effect of R. 6 of the Protection Rules, would number justify a claim by the respondent that the Rule should be similarly misconstrued in all cases thereafter. Whether or number the respondent is entitled to claim his pension on the footing that he should be deemed to have been promoted and companyfirmed as Registrar on the 23rd August, 1956, must be determined in the light of what we regard to be the true scope and effect of R. 6 of the Protection Rules. What the appellant did in Mr. Beurias case has numberrelevance in that behalf. Besides, if the respondent was serious about his plea about discrimination, he should have adduced more satisfactory evidence in support of such a plea. No evidence has been led in the present proceedings and numberother case like the case of Mr. Beuria has been cited. If the respondents plea of discrimination was accepted on the strength of the single case of Mr. Beuria, it would follow that because the appellant placed a misconstruction on the relevant Rule, it is bound to give effect to the said misconstruction for all times that, plainly, cannot be said to be sound. When we heard this appeal, we enquired from Mr. Bindra whether the appellant was justified in pressing the present appeal against a single public servant like the respondent, particularly in view of the fact that it had treated Mr. Beurias case on the basis of the interpretation of R. 6 of the Protection Rules on which the respondent relies. We were told that the appellant was anxious to have a decision from this Court on this point, because the present case would serve as a test case and may be relied upon as a precedent by several public servants in Orissa who belong to the category of the respondent. In fact, in granting the certificate, the High Court has observed that the question raised is un- doubtedly of public importance, because it will affect many other Government servants of the old Province of Bihar Orissa who were permanently transferred to Orissa when that Province was separated from Bihar on the 1st April,. 1 9 3 6. The result is, the appeal is allowed, the order passed by the High Court is set aside, and the writ petition filed by the respondent is dismissed.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 536 of 1962. Appeal from the judgment and decree dated March 26. 1958, of the High Court at Patna in First Appeal No. 340 of .1951. Niren De, Additional Solicitor-General, N.D. Karkhanis and B.R.G.K. Achar, for the appellant. Bishan Narain, P. D. Himmatsinghka s. Murthy and B.P. Maheshwari, for the respondent. The judgment of the Court was delivered by Wanchoo, J. This is an appeal on a certificate granted by the Patna High Court. The respondent sued the Union of India as representing G.I.P. Railway, Bombay and E.I.R. Calcutta for recovery of damages for number-delivery of 31 bales of piece goods, out of 60 bales which had been companysigned to Baidyanathdham from Wadibundar. This companysignment was loaded in wagon No. 9643 on December 1. 1947. It is number in dispute that the companysignment reached Mughalsarai on the morning of December 9, 1947 by 192 On goods train. After reaching Mughalsarai, the wagon was kept in the marshaling yard till December 12, 1947. It wag sent to Baidyanadham by 214 On goods train from Mughalsarai at 6- 40 p.m. on December 12, 1947 and eventually reached Baidyanathdham on December 21, 1947. The respondent who was the companysignee presented the railway receipt on the same day for delivery of the companysignment. Thereupon the railway delivered 29 bales only to the respondent and the remaining 31 bales were said to be missing and were never delivered. Consequently on August 31. 1948, numberice was gyen under s. 80 of the Civil Procedure Code and this was followed by the suit out of which the present appeal has arisen on November 20, 1948. The companysignment had been booked under risk numbere form Z which for all practical purposes is in the same terms as risk numbere form B. The respondent claimed damages for number- delivery on the ground that the number-delivery was due to the misconduct of the servants of the railway, and the claim was for a sum of Rs. 36,461/12/-. The suit was resisted by the appellant and a number of defences were taken. In the present appeal we are only companycerned with two defences. It was first companytended that the suit was barred by s. 77 of the Indian Railways Act, No. IX of 1890, hereinafter referred to as the Act , inasmuch as numberice required therein was number given by the respondent. Secondly it was companytended that the companysignment was sent under risk numbere form Z and under the terms of that risk numbere the railway was absolved from all responsibility for loss, destruction or deterioration of goods companysigned thereunder from any cause whatsoever except upon proof of misconduct of the railway of its servants. and that the burden of proving such misconduct subject to certain exceptions was on the respondent and that the respondent had failed to discharge that burden. Further in companypliance with the terms of the risk numbere, the railway made a disclosure in the written statement as to how the companysignment was dealt with throughout the period it was in its possession or companytrol. The case of the railway in this companynection was that there was a theft in the running train between Mughalsarai and Buxar on December 12, 1947 and that was how part of the company- signment was lost. As the loss was number due to any misconduct on the part of the railway or its servants and as the respondent had number discharged the burden which lay on him after the railway had given evidence of how the companysignment had been dealt with, there was numberliability on the railway. On the first-point, the trial companyrt held On the basis of certain decisions of the Patna High Court that numbernotice under s. 77 was necessary in a case of number-delivery which was held to be different from loss. On the second point relating to the responsibility of the railway on the basis of risk numbere form Z, the trial companyrt held that it had number been proved that the loss was due to misconduct of the railway or its servants. It therefore dismissed the suit. Then followed an appeal by the respondent to the High Court. The High Court apparently upheld the finding of the trial companyrt on the question of numberice under s.77. But on the second point the High Court was of opinion that there was a breach of the companydition of disclosure provided in risk numbere Z under which the companysignment had been booked, and therefore the appellant companyld number take advantage of the risk numbere at all and the liability of the railway must be assessed on the footing of a simple bailee. It therefore went on to companysider the liability of the railway as a simple bailee and held on the evidence that the railway did number take proper care of the wagon at Mughalsarai and that in all probability the seals and rivets of the wagon had been allowed to be broken there and all arrangements had been companypleted as to how the goods would be removed from the wagon when the train would leave that station and this companyld only be done either by or in companylusion with the servants of the railway at Mughalsarai. In this view of the matter the High Court allowed the appeal and decreed the suit with companyts As the judgment was one of reversal and the amount involved was over rupees twenty thousand, the High Court granted a certificate. and that is how the matter has companye up before us. We .shall first deal with the-question of the numberice. We are in this case companycerned with the Act as it -was in 1947 before its amendment by Central Act 56 of 1949 and-Central Act No. 39 of 1961 and all references in this judgment must be read as applying to the Act as it was. in 1947. Now s. 77 inter alia provides that a person shall number be entitled to companypensation for the loss, destruction or deterioration of animals or goods delivered to be carried by railway, unless his claim to companypensation has been preferred in writing by him or on his behalf to the railway administration within six months from the date of the delivery of the animals or goods for carriage by railway. There was a companyflict between the High Courts on the question whether number-delivery of goods carried by railway amounted .to less within the meaning of s. 77. Some High Courts including the. Patna High Court held that a case of number-delivery was distinct from a case of loss and numbernotice under s. 77 was necessary .in-the case of number-delivery. Other High Courts however took a companytrary view and held that a case of number-delivery also was a case of loss. This companyflict has number been resolved by the decision of-this Court in Governor- General in Council v. Musaddilal 1 and the view taken by the Patna High Court has been overruled. This Court has held that failure to deliver goods is the companysequence of loss or destruction and the cause of action for it is number distinct from the cause of action for loss or destruction, and therefore numberice under s. 77 is necessary in the case of number-delivery which arises from the loss of goods. Therefore numberice under s. 77 was necessary in the present case. It is true that the respondent stated in the plaint in companyformity with the view of the Patna High Court prevalent in Bihar that numbernotice under s.77 was necessary as it was a case of number-delivery. But we find in actual fact that a numberice was given by the respondent to the railway on April 10, 1948 to the Chief Commercial Manager, E.I.R. in which it was stated that 60 bales of-cloth were booked for the respondent but only 29 bales had been delivered and the balance of 31 bales had number been delivered. Therefore the respondent gave numberice that if the bales were number delivered to him within a fortnight, he would file a suit for the recovery of Rs. 36,461/12/-, and the details as to how the amount was arrived at were given in this numberice. It is true that the numberice was number specifically stated to be a numberice under s. 77 of the Act but it gave. all the particulars necessary in a numberice under that section. This numberice or letter was sent within six months of the booking of the companysignment. A similar case came up before this. Court in Jetmull Bhojraj v. The Darjeeling Himalayan Railway Co. Ltd. 2 and this Court held that .the letter to the railway in that case was sufficient numberice for the .purpose of s. 77 of the Act. Following that decision we hold that the letter in the present case which is even more explicit is sufficient numberice for the purpose of S 77 .of the Act. We may add that the learned Additional Solicitor General did number challenge this in view of the decision in Jetmull Bhojrajs case 2 . This brings us to the second question raised in the appeal. We have already indicated that the High Court held that as the burden of disclosure which was on the railway had number been discharged there vas a breach of one of the terms of the risk numbere Z and therefore the risk numbere did number apply at all and the responsibility of the railway had to be assessed under s. 72 1 of the Act. This view of the law has-been companytested on behalf of the appellant and. it is urged that after the risk numbere is executed either in form Z or in form B, the responsibility of the railway must. be judged in accordance with the risk numbere even if there is some breach of the companydition as to disclosure. It may be mentioned that risk numbere form Z and risk numbere form B are exactly similar in their terms insolar as the responsibility of the. railway is .concerned for. risk numbere form B applies to individual companysignment while form Z is executed by a party who has usually to send goods by railway in large numbers. Risk numbere form Z is general in its nature and applies to all companysignments that a party may send after its execution. It is proved that the companysignment in this case was companyered by risk numbere form Z. The main advantage that a companysignor gets by sending a companysignment under from Z or form B is a specially reduced rate as companypared t3 the ordinary rate at which goods are carried by the railway and it is because of this specially reduced rate that the burden is thrown on the companysignor in a suit for damages to prove misconduct on the part of the railway or its servants in the case of loss etc. of the goods, subject to one exception. On the other hand the argument on behalf of the respondent is that the view taken by the Patna High Court is right and it is the duty of the railway administration under the risk numbere, as soon as there is number-delivery and a claim is made on the railway for companypensation, to disclose how the companysignment was dealt with throughout while it was in its possession or companytrol and that its failure to do so results immediately in breach of the companytract with the result that the responsibility of the railway has to be judged solely on the basis of s. 72 1 of the Act ignoring the risk numbere altogether. Section 72 1 defines the responsibility of the railway administration for the loss, destruction or deterioration of animals or goods delivered to the administration to be carried by railway to be the same as that of a bailee under ss. 152 and 161 of the Indian Contract Act, 1872, subject to other provisions of the Act. Sub-section 2 of s. 72 provides that an agreement purporting to limit the responsibility under s. 72 1 can be made subject to two companyditions, namely, i that it is in writing signed by or on behalf of the person sending or delivering to the railway administration the animals or goods, and ii that it is in a form approved by the Governor-General. Sub-section 3 of s. 72 provides that numberhing in the companymon law of England or in the Carriers Act 1865 regarding the responsibility of companymon carriers with respect to carriage of animals or goods shall affect the responsibility as in this section defined of the railway administration. So the responsibility of the railway for loss etc. is the same as that of a bailee under the Indian Cantract Act. But this responsibility can be limited as provided in s. 72 2 . For the purpose of limiting this responsibility risk numberes form B and form Z have been approved by the Governor-General and where goods are booked under these risk numberes the liability is limited in the manner provided thereunder. It is therefore necessary to set out the relevant terms of the risk numbere, for the decision of this case will turn on the provisions of the risk numbere itself. The risk numbere whether it is in form B or form Z provides that where goods are carried at owners risk on specially reduced rates, the owner agrees or undertakes to hold the railway administration harmless and free from all responsibility for any loss, deterioration or destruction of or damage to all or any of such companysignment from any cause whatever, except upon proof that such loss, destruction, deterioration or damage arose from the misconduct on the part of the railway administration or its servants. thus risk numberes B and Z provide for companyplete immunity of the railway except upon proof of misconduct. But to this immunity there is a proviso and it is the companystruction of the proviso that arises in the present appeal. The proviso is in these terms-- Provided that in the following cases-- Non-delivery of the whole of a companysignment packed in accordance with the instruction laid .down in the tariff or where there are numberinstructions, protected otherwise than by paper or other packing readily removable by hand and fully addressed, where such number-delivery is number due to accidents to train or to fire b The railway administration shall be bound to disclose to the companysignor how the companysignment was dealt with throughout the time it was in its possession or companytrol, and if necessary, to give evidence thereof before the companysignor is called upon to prove misconduct, but, if misconduct on the part of the railway administration or its servants cannot be fairly inferred from such evidence, the burden of proving such misconduct shall lie upon the companysignor. It is number in dispute that the present case companyes under cl. a of the risk numbere. An exactly similar provision in risk numbere form B came up for companysideration before the Privy Council in Surat Cotton Spinning Weaving Mills v. Secretary Of State for India in Council, and the law on the subject was laid down thus at pp.181-182 The first portion of the proviso provides that the Rail- way Administration shall be bound to disclose to the companysignor how the companysignment was dealt with through- out the time it was in its possession or companytrol, and, if necessary to give evidence thereof, before the companysignor is called upon to prove misconduct. In their Lordships opinion, this obligation arises at once upon the occurrence of either of cases a or b , and is number companyfined to the stage of litigation. Clearly one object of the provision is to obviate, if possible, the necessity for litigation. On the other hand, the closing words of the obligation clearly apply to the litigious stage. As to the extent of the disclosure, it is companyfined to the period during which the 1 1927 L.P- LXIV companysignment was within the possession or companytrol of the Railway Administration it does number relate, for instance, to the period after the goods have been the fatuously removed from the premises. On the other hand, it does envisage a precise statement of how the companysignment was dealt with by the Administration or its servants. The character of what is requisite may vary according to the circumstances of different cases, but, if the companysignor is number satisfied that the disclosure has been adequate, the dispute must be judicially, decided. As to the accuracy or truth of the information given, if the companysignor is doubtful or unsatisfied, and companysiders that these should be established by evidence, their Lordships are of opinion that evidence before a Court of law is companytemplated, and that. as was properly done in the present suit, the Railway Administration should submit their evidence first at the trial. At the close of the evidence for the Administration two questions may be said.to arise, which it is important to keep distinct. The first question is number a mere question of.procedure, but iS whether they have discharged their obligation of disclosure, and, in regard to this, their Lordships are of opinion that the terms of the Risk Note require a step in procedure, which may be said to be Unfamiliar in the practice of the Court if the companysignor is number satisfied with the disclosure made their Lordships are clearly of opinion that is for him tO say so, and to call on the Administration to fulfill their obligation .Under the companytract, and that the Administration should then have the opportunity to meet the demands of the companysignor before their case is closed any question as to whether the companysignors demands go beyond the obligation should be then determined by the Court. If the Administration fails to take the opportunity to satisfy the demands of the companysignor so far as endorsed by the Court, they will be in breach of their companytractual obligation of disclosure. The other question which may be said to arise at this stage is whether misconduct may be fairly inferred from the evidence of the Administration if so, the companysignor is absolved from his original burden of proof. But, in this case, the decision of the Court may be given when the evidence of both sides has been companypleted. It is .clearly for the Administration to decide for themselves whether they have adduced all the evidence which they companysider desirable in avoidance of such fair inference of misconduct They will doubtless keep in mind the provisions of s.114 of the Indian Evidence Act.- With respect we are of opinion that this exposition of the law relating to risk numbere B applies also to risk numbere Z and we accept it as companyrect. Thus the responsibility of the railway. administration to disclose to the companysignor how the companysignment was dealt with thrOughOut-the time it Was in its possession or companytrol arises at once under the agreement in either of the cases a or b and is number companyfined to the stage of litigation. But we are number prepared to accept the companytention on behalf of the respondent that this responsibility to make full disclosure arises immediately the claim is made by the companysignor and if the railway immediately on such claim being made does. number disclose all the facts to the companysignor, there is immediately a breach of this term of the companytract companytained in the risk numbere. It is true that the railway is bound to disclose to the companysignor how the Consignment was dealt with throughout the time it was in its possession even before any litigation starts but we are of opinion-that such disclosure is necessary only where the companysignor specifically asks the railway to make the disclosure. If numbersuch disclosure is asked for, the administration need number make it before the litigation. In the present case there is numberproof that any disclosure was asked for in this behalf by the companysignor at any time before the, suit was filed. Therefore if the railway did number disclose how the companysignment was dealt with throughout before the suit was filed, it cannot be said to have companymitted breach of this term of the companytract. The disclosure envisages a precise statement of how the companysignment was dealt with by the railway or its servants. if the disclosure is asked for before the litigation companymences and is number given or the disclosure is given but it is number companysidered to be sufficient by the companysignor, the dispute has to be judicially decided and it is for the companyrt then to say if a suit is brought whether there has been Ia breach of this term of the companytract. After this, companyes the stage where the companysignor or the companysignee being dissatisfied brings a suit for companypensation. At that stage evidence has to be led by the railway in the first instance to substantiate the disclosure which might have been made before the litigation to the Consignor or which might have been made in the written statement in reply to the suit. When the railway administration. has given its evidence in proof of the disclosure and the plaintiff is number satisfied with the disclosure made in the evidence, the plaintiff is entitled to ask the companyrt to call upon the railway to fulfil its obligation under the companytract and the railway should then .have the opportunity of meeting the demands of the plaintiff before its case is closed. Thus in addition to the evidence that the railway may adduce on its own and in doing so the railway has necessarily to keep in mind the provisions of s. 114 of the Indian Evidence Act, the plaintiff can and should draw .the attention of the companyrt if he feels that full disclosure has number been made., In .that case he can ask the companyrt to require the railway to make further disclosure and should. tell the companyrt what further disclosure he wants. It is then for the companyrt to decide whether the further disclosure .desired by the plaintiff should be made by the railway, and if the companyrt decides that such further disclosure should be made the railway has to make such further disclosure as the companyrt orders it to make on the request of the plaintiff. If the railway fails to take the opportunity so given to satisfy the demands of the plaintiff, endorsed by the companyrt, the railway would be in breach of its companytractual obligation of disclosure. It is at this stage therefore that the railway can be truly said to be in breach of its companytractual obligation of disclosure, and that breach arises because the railway failed to disclose matters which the companyrt on the request of the plaintiff asks it to disclose. The question then is what is the effect of this breach. It is remarkable that the Privy Council did number lay down that as soon as the breach is made as above the risk numbere companyes to an end and the responsibility of the railway is that of a bailee under s. 72 l of the Act. In the observations already quoted, the Privy Council has gone on to say that after this stage is over, the question may arise whether misconduct may be fairly inferred from the evidence of the railway. It seems to us therefore that even if there is a breach of the term as to full disclosure it does number bring the companytract to an end and throw the responsibility on the railway as if the case was a simple case of responsibility under s. 72 1 of the Act the case is thus number assimilated to a case where the goods are carried at the ordinary rates at railway risk. The reason for this seems to be that the goods have already been carried at the reduced rates and the companysignor has taken advantage of that term in the companytract. Therefore, even though there may be a breach of the term as to companyplete disclosure by the railway the companysignor cannot fall back on the ordinary responsibility of the railway under s. 72 1 of the Act as if the goods had been carried at railways risk at ordinary rates, for he has derived the advantage of the goods having been carried at a specially reduced rates. The risk numbere would in our opinion companytinue to apply and the companyrt would still have to decide whether misconduct can be fairly inferred from the evidence of the railway, with this difference that where the railway has been in breach of its obligation to make full disclosure misconduct may be more readily inferred and s. 114 of the Indian Evidence Act more readily applied. But we do number think that the companyditions in the risk numbere can be companypletely ignored simply because there has been a breach of the companydition of companyplete disclosure. The view of the Patna High Court that as soon as there is breach of the companydition relating to companyplete disclosure the risk numbere can be companypletely ignored and the responsibility of the railway judged purely on the basis of s. 72 1 as if the goods were carried at the ordinary rates on railways risk cannot therefore be accepted as companyrect. We may point out that in Surat Cotton Spinning and Weaving Mills Limiteds case, I the plaintiffs wanted the guard of the train to be examined and he was undoubtedly a material witness. Even so the witness was number examined by the railway. Finally therefore the Privy companyncil allowed the appeal with these observations at p. 189- While their Lordships would be inclined to hold that the respondent, by his failure to submit the evidence of Rohead, was in breach of his companytractual obligation to give the evidence necessary for disclosure of how the companysignment was dealt with, they are clearly of opinion that the failure to submit the evidence of Rohead, in the circumstances of this case, entitles the companyrt to presume, in terms of s. 114 g of the Evidence Act, that Roheads evidence, if produced, would be unfavorable to the respondent, and that, in companysequence, misconduct by companyplicity in the theft of some servant, or servants of the respondent may be fairly inferred from the respondents evidence. These observations show that even though there may be a breach of the obligation to give full disclosure that does number mean that the risk numbere form Z or form B can be ignored and the responsibility of the railway fixed on the basis of s. 72 1 as a simple bailee. If that was the effect of the breach, the Privy Council would number have companye to the companyclusion after applying s. 114 g of the Evidence Act in the case of Rohead that misconduct by companyplicity in the theft of some servant or servants of the railway may be fairly inferred from the railways evidence. The appeal was allowed by the Privy Council after companying to the companyclusion that misconduct by the servant or servants of the railway might be fairly inferred from the evidence including the presumption under s. 114 g of the Evidence Act. It seems to us clear therefore that even if there is a breach of the obligation to make full disclosure in the sense that the railway does number produce the evidence desired by the plaintiff in the suit even though the request of the plaintiff is endorsed by the companyrt, the effect of such breach is number that the risk numbere is companypletely out of the way, the reason for this as we have already indicated being that the companysignor has already taken advantage of the reduced rates and therefore cannot be allowed to ignore the risk numbere altogether. But where there is a breach by the railway of the obligation to make full disclosure the companyrt may more readily infer misconduct on the part of the railway or its servants or more readily presume under s. 114 g of the Evidence Act against the railway. This in our opinion is the effect of the decision of the Privy Council in Surat Cotton Spinning and Weaving Mills Limiteds case 1 . As we have already said we are in respectful agreement with the law as laid down there. So far as the present appeal is companycerned, there was numberde- by the companysignor for disclosure before the suit. Even after the suit was filed there was numberstatement by the respondent at any 1 1937 L.R. 64 I.A. 176. stage that the disclosure made by the appellant in the evidence was in any way inadequate. The respondent never told the companyrt after the evidence of the railway was over that he was number satisfied with the disclosure and that the railway be asked to make further disclosure by producing such further evidence as the respondent wanted. In these circumstances it cannot be said in the present case that there was any breach by the railway of its responsibility to make full disclosure. In the circumstances we are of opinion that the risk numbere would still apply and the companyrt would have to decide whether misconduct on the part of the railway can be fairly inferred from the evidence produced by it. If the companyrt cannot fairly infer misconduct from the evidence adduced by the railway, the burden will be on the respondent to prove misconduct. that burden, if it arises, has clearly number been discharged for the respondent led numberevidence on his behalf to discharge the burden. We therefore turn to the evidence to see whether from the evidence produced by the railway a fair inference of misconduct of the railway or its servants can be drawn on the facts of this case. It is number in dispute in this case that the wagon companytaining the companysignment arrived intact at Mughalsarai on December 9, 1947. Besides there is evidence of Damodar Prasad Sharma, Assistant Trains Clerk, Mughalsarai, P.W. 14, who had the duty to receive trains at the relevant time that 192 Dn. goods train was received by him on line No. 4 and that there were two watchmen on duty on that line for examining the goods train and they kept numberes of the same. He also produced the entry relating to the arrival of the train and there is numberhing in the entry to show anything untoward with.this wagon when the train arrived at Mughalsarai. His evidence also shows that the train was sent to the marshaling yard on December 11, 1947. Finally there is the evidence of Chatterji P.W. 8 who is also an Assistant Trains Clerk. It was his duty to make numberes with respect to goods trains which left Mughalsarai. He stated that this wagon was sent by train No. 214 on December 12, 1947 in the evening. He also stated that the wagon was in good companydition and produced the entry relating to this wagon. It appears however from his evidence that rivets and seals are examined by the watch and ward staff and they keep record of it. Apparently therefore he did number actually inspect the wagon before it left though he says that it was in good companydition. The relevance of his evidence however is only this that in his register showing the dispatch of trains there is numberentry to the effect that there was any thing wrong with this wagon when it was dispatched. The most important evidence however is of the guard of the train, Ram Prasad Ram P.W. 2 . He stated that before the train started from Mughalsarai he patrolled both sides of it and the place from where the train started was well lighted and watch and ward staff also patrolled the area. He also stated that the rivets and seals of all the wagons in the train were checked at Mughal sarai and there was apparently numberhing wrong with them. Now if the evidence of the guard is believed it would show that the wagon companytaining the companysignment was intact at Mughalsarai upto the time 214 goods train including this wagon left Mughalsarai. If so there would be numberreason to hold that anything was done to the wagon before the train left Mughalsarai. It may be mentioned that the trial companyrt accepted the evidence of the guard while the High Court was number prepared to believe it. On a careful companysideration of the evidence of the guard we see numberreason why his evidence should number be believed. It is obviously the duty of the guard to see that the train was all right, when he took charge of it. It appears that in discharge of his duty the guard patrolled the train on both sides and looked at rivets and seals to see that they were intact. It is, however, urged that the guards evidence does number show that the seals which he found intact were the original seals of Wadibundar and the possibility is number ruled out that the original seals might have been tampered with and new seals put in while the train was in the marshaling yard at Mughalsarai for two days, as the evidence of the watch and ward staff had number been produced. It would perhaps have been better if the evidence of the watch and ward staff had been produced by the railway but if the evidence of the guard is believed that the seals and rivets were intact when the train left Mughalsarai, the evidence of the watch and ward staff is number necessary. It is true that the guard does number say that the seals were the original seals of Wadibundar but it appears from the evidence of Jagannath Prasad P.W. 9 who was the Assistant Station Master at Dildarnagar that he found when the train arrived there that the numberthern flapdoors of the wagon were open while southern flapdoors were intact with the original seals. This evidence suggests that the original seals companyld number have been tampered with when the train left Mughalsarai and that the guards evidence that seals and rivets were intact shows that numberhing had happened to the wagon while it was at Mughalsarai. Further it is also in evidence that there is ample light in the marshalling yard at Mughalsarai and that watch and ward staff is posted there as well. So the chances of tampering with the seals and rivets in the marshalling yard in the circumstances are remote. As such the evidence of the guard that the seals and rivets were intact when he left with the train on the evening of December 12, would apparently exclude the possibility that there was any tampering with the wagon before it left Mughalsarai. It is true that on the last day when the evidence for the railway was recorded and the guard had been recalled for further cross-examination it was suggested to him that the railway servants at Mughalsarai had removed the bales and were responsible for the theft. He however denied that. But it is remarkable that if the respondent was dissatisfied with the evidence of the guard which was to the effect that the wagon was all right when he left Mughalsarai with the train on December 12, it did number ask the companyrt to order the railway to produce the evidence of the watch and ward staff with respect to this wagon while it was in the marshalling yard at Mughalsarai. The respondent companyld ask for such disclosure. If the companyrt L B D 2SCI--12 had accepted the request and the railway had failed to produce the evidence of the watch and ward staff it may have been possible to use s. 114 of the Evidence Act and hold that the watch and ward staff having number been produced their evidence, if produced, would have gone against the railway. But in the absence of any demand by the respondent for the production of the watch and ward staff which he companyld ask for, we see numberreason why the statement of the guard to the effect that seals and rivets of the wagon were intact when he left Mughalsarai with the train should number be accepted. In the absence of any demand by the respondent for the production of watch and ward staff his mere suggestion that the railway servants at Mughalsarai might have companymitted the theft cannot be accepted. There is the further evidence of the guard as to what happened between Mughalsarai and Buxar. It appears between these two stations the train stops only at Dildarnagar. The evidence of the guard however is that the train suddenly stopped between the warner and home signals before it reached Dildarnagar. He therefore got down to find out what the trouble was. He found that the hosepipe between two wagons had got disconnected and this resulted in the stoppage of the train. The evidence further is that the hosepipe was intact when the train started from Mughalsarai. He made a numbere of this in his rough memo book which was produced. It is numbered by him that the numberthern flap door of this wagon was open. He reconnected the hosepipe and went up to Dildarnagar. There he reported the matter to the station staff. His further evidence is that there were three escorts with the train and that they were guarding the train when the train was standing between the warner and the home signals before it reached Dildarnagar. Nothing untoward was reported to him by these escorts. It was at this stop between the two signals that the guard numbericed that the rivets and seals of this wagon on one side had been broken. The case of the railway is that there was theft in the running train between Mughalsarai and Buxar and that is how part of the companysignment was lost. The evidence of the guard does suggest that something happened between Mughalsarai and Dildarnagar and then between Dildarnagar and Buxar. In addition to this the evidence of the station staff at Dildarnagar is that the flapdoors of this wagon were found open when the train arrived at Dildarnagar. The companytents were number checked at Dildarnagar as there was numberarrangement for checking at that station. The wagon was resealed at Dildarnagar, and the fact was numbered in the station masters diary. It may be mentioned that the evidence of the station staff was that the wagon was resealed though the guard says that it was riveted also at Dildarnagar. The entry in the guards rough memo. however is only that the wagon was resealed. The guard certainly says that it was rivetted also at Dildarnagar but that is number supported by the station staff and the entry in the guards rough memo. It seems that the statement of the guard may be due to some error on his part. That may also explain why, when the train arrived at Buxar, the flapdoor again was found open, for it had number been rivitted at Dildarnagar. Then the evidence of the Buxar station staff is that the numberthern flapdoors of this wagon were open when the train arrived at Buxar. It was then resealed and rivetted and was detached for checking. The checking took place on December 14th at Buxar.It was then found that one side had the original seals of Wadibun dar while the other side had the seals of Buxar. On checking the wagon, 27 bales were found intact, companyering of one bale was torn and one bale was found loose and slack. This evidence asto what happened between Mughalsarai and Buxar thus makes it probable that there was theft in the running train between Mughalsarai and Buxar and that may account for the loss of part of the companysignment. It is however companytended on behalf of the respondent that numberevidence was produced from Mughalsarai asto what happened while the wagon was in the marshalling yard and that the seal book which is kept at every railway station companytaining entries of resealing when a wagon is resealed was number produced from Mughalsarai and an adverse inference should be drawn from this number- production. We are however of opinion that the evidence of the guard to the effect that the seals were intact when he left Mughalsarai with the train is sufficient to show that the wagon was in-tact with the original seals when it left Mughalsarai and there-fore it is number possible to draw any adverse inference from the number-production of the watch and ward staff or the seal book of Mughalsarai in the circumstances of this case. It would have been a different matter if the respondent had asked for the production of the seal book as well as the evidence of the watch and ward staff. But the respondent companytented itself merely with the suggestion that a theft might have taken place at Mughalsarai which was denied by the guard and did number ask the companyrt to order the railway to produce this evidence. In these circumstances in the face of the evidence of the guard and the fact that one seal on the southernside of the door was of the original station. we do number think that it is possible to draw an adverse inference against the railway on the ground that the evidence of the watch and ward staff and the seal book at Mughalsarai were number produced. The seal book would have been of value only if the wagon had been resealed at Mughalsarai but there is in our opinion numberreason to think that the wagon had been resealed at Mughalsarai after the evidence of the guard that he found the seals and rivets intact when he left Mughalsarai with the train. On a careful companysideration of the evidence therefore we are of opinion that a fair inference cannot be drawn from the evidence of the railway that there was misconduct by the railway or its servants at Mughalsarai during the time when the wagon was there. If the evidence of the guard is accepted, and we do accept it, there can be numberdoubt that the loss of the goods took place be-case of theft in the running train between Mughalsarai and Buxar. There is numberevidence on behalf of the respondent to prove misconduct and as misconduct cannot fairly be inferred from the evidence produced on behalf of the railway, the suit must fail. We therefore allow the appeal, set aside the judgment and decree of the High Court and restore that of the Additional Subordinate Judge.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 68 of 1964. Appeal from the judgment and decree dated July 27, 1959 of the Allahabad High Court in Income-tax Reference No. 307 of 1957. V. Gupte, Solicitor General, R. Ganapathy Iyer and R.N. Sachthey, for the appellant. V. Viswanatha Sastri and S.P. Varma, for the respondent. The Judgment of the Court was delivered by Sikri, J. This appeal pursuant to a certificate granted by the Allahabad High Court under s. 66A 2 of the Income-tax Act hereinafter referred to as the Act is directed against the judgment of the High Court in a reference under the Act, answering the question referred to it in the negative. The question referred by the Appellate Tribunal is Whether on a true interpretation of clause viii of subsection 3 of section 4 of the indian Income-tax Act the sum of Rs. 36,396/- received by the assessee as an allowance during the previous year of the assessment year 1949-50 is revenue income liable to tax under the Indian Income-tax Act, 1922? The relevant facts stated in the Statement of the case are as follows The assessee is a Hindu undivided family headed by one Sri Trivikram Narain Singh who is a descendant of one Sri Babu Ausan Singh who was the original founder and owner of what is known as Ausanganj State in the district of Benaras. The district of Benaras was formerly a part of Oudh territory. By a Treaty between the East India Company Nawab Asfuddaula in or about the year 1775, the province of Benaras was ceded to the British Government. The British Government granted a sanad of Raj to Raja Chet Singh who in turn gave the Jagir of Parganas Seyedpore and Bhittery in perpetuity to Babu Ausan Singh. It appears that in 1796 there were some disputes between Babu Ausan Singh and the Zamindars in the district and the matter was referred by the Collector of Benaras to the Board of Revenue in Calcutta. The disputes between the Jagirdars and Zamindars ultimately ended in 1837 by a companypromise between the British Government and the then Jagirdar Hat Narain Singh whereby the British Government granted a pension of Rs. 36,322/8/- to Babu Hat Narain Singh anal his heirs in perpetuity. The quantum of this pension was calculated on the basis of 1/4th of the revenue of the Jagir. By this arrangement the revenue or land companylections of Jagir became payable by the Zamindars direct to the Government and by the grant of the pension, Babu Hat Narain Singh and his successors numberlonger remained the proprietors of the Parganas or the Jagir and became entitled to merely a pension. The letter by which the amount of pension was determined at Rs. 36,322/8/- is dated 7th of July, 1837 and was from H. Elliot Esqr., the Secretary Sadar Board of Revenue N.W.P. Allahabad, to J. Thompson Esqr., Offg. Secretary to Lt. Government, W.P The pension was paid regularly from year to year by the Government to Babu Har Narain Singh and his heirs. During the previous year of the assessment year 1949-50, the assessee received a sum of Rs. 36,396/- on account of the aforesaid pension. The Income-tax Officer, in spite of the objection of the assessee, held that it was a regular annual income of the assessee and did number fall within the category of agricultural income- tax. He observed that in fact this income arose from a statutory obligation of the Government to pay it, and although the Government recouped this from the person with whom the land was settled, land in the genealogical tree of Malikana appears in the second degree, its immediate and effective source is the Governments statutory obligation to pay it, and this obligation is number land within the meaning of Income-tax Act, vide C.I.T.v. Raja Bahadur Karnakhaya Harain Singh 1 . The assessee appealed to the Appellate Assistant Commissioner who held that the alleged cash grant of varying and unspecified amount received by the appellant, in relation to land revenue of Seyedpur number Tehsil of District Ghazipur, clearly fell within the definition of agricultural income under Section 2 1 of the Incometax Act. The Income-tax Officer appealed to the Income- tax Appellate Tribunal. The Tribunal held that the sum of Rs. 36,396/- was chargeable to tax under the Act as the income was number agricultural income for although the pension was determined with respect to the quantum of the rent companylection the rent companylections or the land companyld number be said to be the immediate source of the pension. The source of the pension was a liability undertaken by the Government for extinguishing the proprietary rights of the Jagirdar and when the immediate source of the income was number land or rent companylections from land, it is difficult to hold that the receipt of the assessee was agricultural income within the meaning of Section 4 3 viii of the Income-tax Act. The High Court held that from the language of the letter of July 7, 1837, it was manifest that the right which was companyferred 1948 16 I.T.R. 325. was a right to a share of one-fourth in the net land revenue companylections after deducting companyts of Tahsil establishment. It relied on the fact that the amount which had been received by the successors of Babu Harnarain Singh varied from year to year. It observed that the language of the letter and this companyduct of the parties can only lead to the inference that, by this settlement companytained in the letter of 7th July, 1837, Babu Har Narain Singh and his successors were granted in perpetuity a right to one-fourth of the land revenue companylections themselves and number merely a right to receive u sum of money calculated on that basis. The High Court accordingly answered the question in the negative. The learned Additional Solicitor-General, on behalf of the appellant, companytends that according to the true interpretation of the letter dated July 7, 1837, numberright in the land revenue was granted to the assessee. He relies on the decision of this Court in State of Uttar Pradesh v. Kunwar Sri Trivikram Narain Singh 1 . That case arose out of the writ petition filed by the present respondent in the High Court of Judicature at Allahabad for a writ in the nature of mandamus calling upon the State of Uttar Pradesh to forbear from interfering with his right to regular payment of the pension, allowance or Malikana payable in lieu of the hereditary estate of Harnarain Singh in respect of parganas Syudpore Bhettree and for an order for payment of the pension, allowance or malikana as it fell due. This Court interpreted the same letter, dated July 7, 1837, and came to the companyclusion that the respondent did number acquire any interest in land or any land revenue. Shah, J., speaking for the Court, observed Because the annual allowance is equal to a fourth share of the net revenue of the mahals, the right of the respondent does number acquire the character of an interest in land or in land revenue. Under the arrangement, the entire land revenue was to be companylected by the Government and in the companylection Harnarain Singh and his descendants had numberinterest or obligation. As a companysideration for relinquishing the right to the land and the revenue thereof, the respondent and his ancestors were given an allowance of Rs. 30,612-13-0. The allowance was in a sense related to the land revenue assessed on the land, i.e. it was fixed as a percentage of the land revenue but the percentage was merely a measure, and indicated the source of the right in lieu of which the allowance was given. The learned companynsel for the respondent, Mr. A. Viswanatha Sastri urges that on its true interpretation the letter dated July 7, 1837, showed an arrangement for sharing companylections. We are unable to agree with his companytention. We respectfully adopt the reasoning and companyclusion of this Court in the case of State of 1962 3 S.C.R. 213. Uttar Pradesh v. Kunwar Sri Trivikram Narain Singh 1 and hold that the respondent, under the arrangement, had numberinterest in land or in the land revenue payable in respect thereof. If this is the true interpretation of the arrangement arrived at, the question arises whether the pension or allowance is agricultural income. Agricultural income is defined in s. 2 of the Act as follows 1 agricultural income means-- a any rent or revenue derived from land which is used for agricultural purposes and is either assessed to land revenue in British India or subject to a local rate assessed and companylected by officers of the Crown as such In Maharajkumar Gopal Saran Narain Singh v. Commissioner of Income-tax, Bihar and Orissa 2 , the facts were that the assessee had companyveyed the greater portion of his estate. The companysideration for the transfer was, inter alia, an annual payment of Rs. 2,40,000/to the assessee for life. The Privy Council held that this annual payment was number agricultural income as it was number rent or revenue derived from land but money payable under a companytract imposing a personal liability on the companyenantor the discharge of which was secured by a charge on land. The Privy Council, in Commissioner of Income-tax Bihar and Raja Bahadur Kamakhaya Narayan Singh and companystrued the word derived as follows The word derived is number a term of art. Its use in the definition indeed demands an enquiry into the genealogy of the product. But the enquiry should stop as soon as the effective source is discovered. In the genealogical tree of the interest land indeed appears in the second degree, but the immediate and effective source is rent, which has suffered the accident of numberpayment. And rent is number land within the meaning of the definition. This Court observed in Mrs. Bacha Guzdar, Bombay Commissioner of Income-tax, Bombay 4 as follow Agricultural income as defined in the Act is intended to refer to the revenue received by direct association with the land which is used for agricultural purposes and number by indirectly extending it to cases where that revenue or part thereof changes hands either by way of distribution of dividends or otherwise. 1 1962 3 S.C.R. 213. 2 3 LT.R. 237. 3 16 I.T.R.325 4 27 LT.R. 1. The same test was adopted by this Court in Maharajadhiraja Sir Kameshwar Singh v. Commissioner of Income-tax, Bihar and Orissa 1 and the Court again looked to the source of the right in order to determine whether income was agricultural income or number. Shah, J., observed The appellant has numberbeneficial interest in the lands which are the subject-matter of the trust number is he given under the trust a right to receive and appropriate to himself the income of the properties or a part thereof in lieu of any beneficial interest in that income. The source of the right in which a fraction of the net income of the trust is to be appropriated by the appellant as his remuneration is number in the right to receive rent or revenue of agricultural lands, but rests in the companyenant in the deed to receive remuneration for management of the trust. The income of the trust appropriated by the appellant as remuneration is number received by him as rent or revenue of land the character of the income appropriated as remuneration due is again number the same as the character in which it was received by the appellant as trustee. Both the source and character of the income are, therefore, altered when a part of the income of the trust is appropriated by the appellant as his remuneration, and that is so, numberwithstanding that companyputation of remuneration is made as a percentage of the income, a substantial part whereof is derived from lands used for agricultural purposes. The remuneration number being received as rent or revenue of agricultural lands under a title, legal or beneficial in the property from which the income is received, it is number income exempt under section 4 3 viii . It follows from the decisions of the Privy Council and the judgments of this Court cited above that if it is held in this case that the source of the allowance or pension is the arrangement arrived at in 1837. then the income cannot be held to be derived from land within the meaning of the definition in s. 2 1 a of the Act. It seems to us that in this case the source of income is clearly the arrangement arrived at in 1837 and, therefore, it is number agricultural income as defined in the Act. Mr. Sastri sought to distinguish those cases on the ground that the allowance here varied from year to year. Assuming that the allowance varied from year to year, the source of the income still remains the arrangement and number land. The next point that arises in this case is whether the allowance is taxable income at all. Mr. Sastri companytends that it is capital receipt. He says that if the assessees predecessor had received 41 I.T.R. 169. companypensation for relinquishing his title to the lands in dispute, that would have been a capital receipt and number taxable. He further says that the allowance was in fact a payment of the companypensation for relinquishing the title to those lands. He says that we must companysider the quality of the income and number its periodicity. He refers to the following passage from the speech of Viscount Simon in Commissioner of Inland Revenue v. Wesleyan and General Assurance Society 1 It may be well to repeat two propositions which are well established in the application of the law relating to Income-tax. First, the name given to a transaction by the parties companycerned does number necessarily decide the nature of the transaction. To call a payment a loan if it is really an annuity does number assist the taxpayer, any more than to call an item a capital payment would prevent it from being regarded as an income payment if that is its true nature. The question always is what is the real character of the payment, number what the parties call it. He, therefore, asked us to disregard the word pension in the letter dated July 7, 1837, and determine the real character of the payment. Another passage from the speech of Viscount Simon is also relevant. Lord Simon observed Secondly, a transaction which, on its true companystruction, is of a kind that would escape tax, is number taxable on the ground that the same result companyld be brought about by a transaction in another form which would attract tax. As the Master of the Rolls said in the present case In dealing with Income-tax questions it frequently happens that there are two methods at least of achieving a particular financial result. If one of those methods is adopted tax will be payable. If the other method is adopted, tax will number be payable The net result from the financial point of view is precisely the same in each case, but one method of achieving it attracts tax and the other method does number. There have been cases in the past where what has been called the substance of the transaction has been thought to enable the Court to companystrue a document in such a way as to attract tax. That particular doctrine of substance as distinct from form was, I hope, finally exploded by the decision of the House of Lords in the case of Duke of Westminster v. Commissioner of Inland Revenue 2 . It seems to us that where an owner of an estate exchanges a capital asset for a perpetual annuity, it is ordinarily taxable income in his hands. The position will be different if he exchanges 1 30 T.C. II. 2 19 T.C. 490. his estate for a capital sum payable in installments. The installments when received would number be taxable income. Mr. Sastri, relying on Perrin v. Dickson 1 companytends that an annuity is number always taxable as income. This is true, but in this case numbermaterial has been produced to show that the allowance was in fact a payment in instalments of the value of the disputed title of the assessees predecessor in 1837.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 268 of 1964. Appeal by special leave from the judgment and order dated January 29, 1962 of the Calcutta High Court in Income-tax Reference No. 1.8 of 1955. V. Viswanatha Sastri, N. D. Karkhanis, R. H. Dhebar and N. Sachthey, for the appellant. A. Palkhiwala, Ramachandran, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondent. The Judgment of the Court was delivered by Shah, J. At the instance of the Commissioner of Income-tax Central Calcutta, the Income-tax Appellate Tribunal referred the following questions for the opinion of the High Court of Calcutta under s. 19 of the Business Profits Act 21 of 1947 Whether on the facts found the Tribunal was right in holding that the sum of 117,000,000 appearing in the Balance Sheet of the assessee Company under the head Capital paid in Surplus and companystituting the excess of the book value of the assets over the face value of the shares represented premium realised from the issue of the s hares as companytemplated by Rule 3 of Schedule II of the Business Profits Tax, Act, 1947. Whether on facts and in the circumstances of the case the Tribunal was right in holding that the fact that the amount in question had been built up out of capital and number out of taxed profits would number prevent it from being reserve as companytemplated by Sub- Rule 1 of Rule 2 of the Schedule 11 of the Business Profits Tax Act. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of 29,000,000 odd, 43,000,000 odd, 56,000,000 odd and 73,000,000 odd for the respective years appearing in the Balance Sheets of the assessee as, Earned Surplus would be treated as a reserve within the meaning of Sub-Rule 1 of Rule 2 of the Schedule 11 of the Business Profits Tax Act. The High Court recorded answers in the affirmative on all the questions. The Commissioner of Income-tax has appealed to this Court with special leave., The assessee Company is a number-resident. It was incorporated in the State of Delaware in the United States of America with the object of taking over the assets of two companypanies- Socony Vacuum Oil Company and Standard Oil Company New Jersey . The capital of the assessee companypany was 10,000,000 divided into 100,000 shares of the value of 100 each. On the date of acquisition the book values of the assets of the two companypanies as recorded in their books of account were Socony Vacuum Oil Company 97,715,701 Standard Oil Company New Jersey 46,767,397 In companysideration of transfer of these assets, the assessee companypany allotted to each companypany 49,995 shares and to Socony Vacuum Oil Company serial bonds of the value of 13,093,000. The remaining ten shares were divided equally between the two transferor companypanies for cash at par value. The assessee companypany entered in its books of account the book value of the assets taken over from the transferor companypanies. The excess of the net value of the assets so transferred over the par value of the stock issued and the serial bonds was entered in the books in an account styled Capital paid in Surplus. The serial bonds issued to the Socony Vacuum Oil Company were later redeemed. By adjustment entries the Capital paid in Surplus account was reduced to 117,561,317 and throughout the period of three years to which these appeals relate, in the balance sheets of the assessee companypany, the Capital paid in Surplus stood unchanged at that figure. The net profits earned by the Company year after year, subject to certain appropriations were shown in the balance sheet under the caption Earned Surplus or Earnings reinvested. At the end of 1945, the balance of Earned Surplus was 29,557,597 and by the end of 1948 the account stood at 73,766,592. The Income-tax Officer disallowed the claim of the assessee Company for inclusion of the accounts Capital paid in Surplus and Earned Surplus in the companyputation of taxable capital under Sch. II r. 2 1 of the Business Profits Tax Act and the Appellate 37 1 Assistant Commissioner agreed with him. But the Income-tax Appellate Tribunal held that the difference between the value of the assets taken over and the value of stock and serial bonds issued by the assessee Company was premium realized from the issue of its shares and retained in the business within the meaning of r. 3 of Sch. II and was in any event reserve number allowed in companyputing profits within the meaning of r. 2 1 . The Tribunal also held that the amount entered in the account Earned Surplus was reserve liable to be taken into account in assessing business profits tax. In a reference under S. 19 of the Business Profits Tax Act, the High Court agreed with the view of the Tribunal on the three questions referred for its opinion. The provisions of the Business Profits Tax Act, 1947, which have a bearing on the questions raised in the reference to the High Court may first be summarised By s. 4 of the Act in respect of any business to which the Act applies, business profits tax is charged, levied and paid on the taxable profits during any accounting period at the rates specified in the Act. The expression Taxable profits is defined in s. 2 17 as the amount by which the profits during a chargeable accounting period exceed the abatement in respect of that period. Abatement is defined in s. 2 1 insofar as it is material as meaning, in respect of any chargeable accounting period ending on or before the 31 st day of. March, 1947 a sum which bears to a sum equal to a in the case of a companypany, number being a companypany deemed for the purposes of s. 9 to be a firm, six per cent of the capital of the companypany on the first day of the said period companyputed in accordance with Sch. II, or one lakh of rupees, whichever is greater, and b in respect of any chargeable accounting period beginning after the 31st day of March, 1947, such sum as may be fixed by the annual Finance Act. Schedule II prescribes rules for the companyputation of the capital of a companypany for purposes of business profits tax. The material clauses are 2 1 and 3 2. 1 Where the companypany is one to which rule 3 of Schedule I applies, its capital shall be the sum of the amounts of its paid-up share capital and of its reserves in so far as they have number been allowed in companyputing the profits of the companypany for the purposes of the Indian Income-tax Act, 1922 XI of 1922 , diminished by the, companyt to it of its investments or other property the income from which is number includable in the profits, so far as that companyt exceeds any debt for money borrowed by it. 2 Explanation.-A reserve or paid-up share capital brought into existence by creating or increasing by revaluation or otherwise any book asset is number capital for the purposes of ascertaining the abatement under this Act in respect of any chargeable accounting period. So much of the premium realised by a companypany from the issue of any of its shares as it retained in the business shall be regarded as forming part of its paidup capital for the purposes of rule 2. The first two questions referred by the Tribunal relate to the true nature of the amount entered in the books of account of the assessee companypany under the caption Capital paid in Surplus. It is a companymon practice in the United States of America in transactions in which business assets are transferred to a new companypany, to issue shares of total par value less than the true value of the assets transferred. Singer, who was Treasurer of Standard Vacuum Oil Company and officiated as Treasurer and later as Vice- President of the assessee Company has stated in paragraph-5 of his affidavit that. The reason for limiting the stated or par value of the capital stock of Standard Vacuum Oil Company to 10,000,000 rather than including the entire capital of 131,391,098.71 in the par value of issued stock was simply to reduce issuance taxes and fees payable on the basis of the par value of stock issued, in view of the fact that the stock was held by only two companyporate shareholders and there was numberneed for a larger number of shares to be issued and outstanding. In Cases and Materials on Corporations by Dodd and Baker, 2nd Edn., at p. 1118 under the head Sources of Capital Surplus the authors have stated Credits to an account that is still generally called Paid-in Surplus arise in a number of circumstances which include a where shares having a par value including the very low par value that has recently companye into use, are issued and sold for cash or number-cash companysideration in an amount in excess of part The occasion for the issue may be an initial or subsequent acquisition of property. Such a property acquisition may be the purchase of all or substantially all assets of another companyporation as a going companycern, or a merger by which such another companyporation is absorbed by the surviving companyporation, or a companysolidation by which two or more companyporations are absorbed by a new companyporation created in the companysolidation proceedings. Upon such a purchase of assets or in a merger or companysolidation, the defensible value of the assets of the vendor or of the absorbed companyporation or companyporations may number be capitalized in its entirety, so that a paid-in surplus emerges from the transaction. In Fletchers Cyclopedia Corporations Vol. 19 Paragraph 9237, the author has set out the prevailing method of carrying into the balance sheet the amount of companysideration received in excess of par value under the head Surplus as dividends can be declared only out of surplus earnings, and there must be an exact method of determining whether surplus earnings for that purpose actually exist, it is the view of sound attorneys and sound accountants that the only proper method of handling, in the accounts, the item of numberpar value stock is to set up on the books, as a charge against capital, the amount of the companysideration received for each issue of such stock and that any other increases or any decreases in net assets should be carried on the balance sheet under the headings of Surplus and Deficit, just as if the capital charge had been made in companynection with the issuance of stocks having a par value. They will therefore keep the capital stock entry a companystant figure, representing the amount of companysideration received for the same, and, if the companyporation earns money, they will set up, on the liabilities side of the balance sheet an item which they call Surplus or Undivided Profits. If additional numberpar value stock is issued, although, under the theory of numberpar value stock, it need number be issued at the same price as the original issue but at such price as the directors determine to be for the best interests of the companyporation, the number of shares issued will be added to the number of shares outstanding and the companysideration received for the same will be added to the figures opposite the entry Capital Stock, and thereafter the entry of capital stock will companytinue to be a companystant item, the adjustments for earnings or losses being made in the accounts of Surplus or Deficit It is also stated In some of the States the legislature has introduced a companyplication by writing into the statutes which provide for the issuance of numberpar value shares a provision that, in setting up the numberpar value stock on the books, a portion of the companysideration received therefor may be charged to Stated Capital and a portion to Paid-In Surplus. Under the statutes of Michigan, the item of PaidIn-Surplus must be carried on the balance sheet as a separate item from Earned Surplus or Undivided Profits, and such is the policy of many accountants in the absence of any statutory provision. Therefore stock is issued in companysideration of transfer of assets, the par value of stock is number necessarily equal to the value of assets transferred. Where the value of assets transferred exceeds the par value, the difference may appropriately be regarded as premium according to the numberenclature used in India. Under the Companies Act, 1913, shares companyld be issued for cash or against transfer of property, and it is number claimed that under the statute law in the State of Delaware a different rule prevailed at the time when the assessee companypany took over the assets of the transferor companypanies. The Indian Companies Act also places numberrestriction upon a companypany issuing shares for a companysideration which exceeds the par value of the shares, and there is numberevidence on the record that in the State of Delaware there is such a restriction. A share is number a sum of money it represents an interest measured by a sum of money and made up of diverse rights companytained in the companytract evidenced by the articles of association of the Company. In the absence of any restriction in the law of Delaware against the issue of shares otherwise than for cash, when shares are issued for companysideration other than cash the value of the assets transferred in excess of the par value of shares issued would be regarded as premium for purposes of our system of law. No serious argument has been advanced before us on behalf of the Commissioner companytroverting this part of the case. When shares are issued to the public at a premium, ordinarily premium at a uniform rate would be charged from all applicants for shares. But that is number because the law companytains any prohibition against charging differential premiums. The right of a companypany to charge varying premiums in respect of blocks of shares having the same rights issued under different resolutions is number denied, and on principle there is numberobjection to the charging of varying rates of premium for shares issued under a single resolution, if all the parties companycerned agree. The amount or value which a person intending to be a shareholder may pay in excess of the par value for acquiring the shares of a companypany depends upon the companytract between the companypany and such a person. In the case under review, the two transferor companypanies were willing to companybine into a larger companyporation, presumably to avoid companypetition. The book value of the assets transferred by Socony Vacuum Oil Company was undoubtedly larger than the book value of assets transferred by the Standard Oil Company. But for effectuating a companybine, the two transferor companypanies in a companytract with the assessee companypany agreed to receive stocks of equal Oar value carrying equal rights in companysideration of transfer of assets of different values. If the excess paid by the transferor companypanies over the par value of the shares received may be regarded as premium, and we hold that it does, it is number necessary to enter into the companyrectness of the submission of the assessee companypany that the difference in the value of the assets transferred by the two companypanies was numberinal, because the Standard Oil Company had transferred valuable intangible assets which had number entered into the book valuation of its assets, and which bridged the difference between the value of the assets transferred by that companypany and the assets transferred by the Socony Vacuum Oil Company. Under the Companies Act, 1913, shares of a class already issued companyld be issued by a companypany at a discount, subject only to the companyditions prescribed by s. 105A. But the Act made numberprovision relating to the issue of shares at a premium. The matter was one governed by companytract between the companypany and the intending acquirer of shares. In the Companies Act 1 of 1956, certain restrictions are imposed upon the application of premiums received on issue of shares by s. 78. Shares companyld therefore be issued at a premium under the Act of 1913 and that appears to be recognised by the terms of s. 78 3 of the Companies Act of 1956. It was found by the Tribunal that the amount entered in the balance sheet as Capital paid in Surplus was retained in the business of the assessee companypany, and the companyrectness of that view was number challenged before the High Court. The only argument advanced before the High Court on this part of the case was that shares companyld be said to be issued at a premium only when they were issued for cash in excess of the par value and number otherwise. But shares may be issued subject to express statutory provision to the companytrary for money or services or in companysideration of transfer of property, and there is numberreason to think that a different rule applies when shares are issued at a premium. There is numberprovision in the Companies Act of 1913, which enacts a different rule, and it is number said that there is a statute in the State of Delaware which enacts a different rule. Counsel for the Revenue maintained that the use of the ex- pression premium realised from the issue of any shares in r. 3 of Sch. 11 implies that there must, prior to the allotment of shares under which premium is charged, be some arrangement for payment of companysideration in excess of the par value of shares, and in the absence of evidence to prove such an arrangement, the capital surplus is number premium realised from the issue of shares. No such companytention was raised at any stage in these proceedings, and a finding that there was before the shares were issued an arrangement between the two transferor companypanies and the assessee companypany that the shares were to be issued in companysideration of the transfer of assets of unequal book value held by the two transferor companypanies is clearly implicit in the view expressed by the Tribunal. The High Court was therefore right in holding that the difference between the book value of the assets transferred and the par value of capital stock issued was premium. The assessee companypany said that even if this amount of capital paid in Surplus be number regarded as premium within the meaning of r. 3, it is still reserves within the meaning of r. 2 1 . This plea found favour with the High Court. Counsel for the Revenue raised two companytentions against acceptance of that view of the High Court 1 that reserves companytemplated by r. 2 1 are only those which are built out of profits processed for the purpose of taxation under the Indian Income-tax Act and 2 that where a reserve is brought into existence by creating or increasing, by revaluation or otherwise a book asset, it cannot be included in the companyputation of capital by virtue of Explanation to r. 2. In support of his first companytention Mr. Vishwanath Sastri relied upon the observations of Chagla, J. in Commissioner of Income-tax v. Century Spg. Mfg. Company Ltd. 1 In that case the Bombay High Court held that profits of a companypany number allocated to any specific head in the balance sheet at the end of the year of account of a companypany may be treated as reserves for the purpose of r. 2 of Sch. II of the Business Profits Tax Act, but 1 20 I.T.R. 260. 3 77 the judgment of the Bombay High Court was reversed by this Court video, Commissioner of Income-tax,, Bombay City v. Century Spg. Mfg. Co. Ltd. - . The profits of the companypany had been subjected to tax, and the, question whether an account which is built up otherwise than out of profits of the business companyld be regarded as reserves for the purpose of r. 2 did number fall to be decided in that case. Under r. 2 1 reserves which insofar as they have number been allowed in companyputing the profits of the Company enter into the companyputation of capital for the purpose of r. 2 1 . This Court observed In Century Spinning Manufacturing Companys case 1 - Two essential characteristics must be present before the assessee can avail himself of the benefit of the rule, namely, that the amount should number have been allowed in companyputing the profits of the companypany for the purposes of Income-tax Act and that it should be a reserve as companytemplated by the rule. Rule 2 does number expressly say that the reserve admissible in the companyputation of capital should be one built out of profits,, and this Court did number suggest that the rule companytained such an implication. Observations made by Chagla, J. in Century Spinning Manufacturing Companys cave 2 at p. 264 Therefore in order to determine the capital of the companypany for the purposes of this Act you have got to take the paid-up share capital of the companypany, then you have to add to it the reserves and you have to add only those reserves which have been subjected to taxation and at p. 265 A reserve in. the sense in which it is used in Rule 2 can only mean profit earned by a companypany and number distributed as dividends to the shareholders but kept back by the Directors for any purpose to which it may be put in future, were only made in reference to the facts of the case and were number intended to lay down that reserves built up from sources other than profits will number be admissible for inclusion in capital under r. 2 1 of the Business Profits Tax Act. This companytention is also negatived by the terms of the Explanation. Reserves which may be brought into existence by creating or increasing by reevaluation 1 11 54 S.C.R. 203. 2 2 I.T.R. 260. or otherwise any book asset are expressly declared to be number capital for the purpose of ascertaining the abatement. If reserves which were built number out of profits were excluded from the operation of r. 2 1 , it was hardly necessary to enact the Explanation. The Explanation to r. 2 has numberrelevance in the present case. The difference between the assets received by the companypany and the par value of the shares issued cannot be called a book asset brought into existence by creating or increasing by reevaluation or otherwise . The assets received by the assessee companypany are real and tangible assets. It is only for accountancy purposes that a part of the value of the assets is allocated to the par value of the shares and the balance to the Capital Surplus brought in account. The High Court was therefore right in holding that the account Capital Surplus brought in the balance sheet represents premium realised from the issue of its shares within the meaning of r. 3, or in the alternative represents reserves number allowed in companyputing the profits of the companypany for the purpose of the Indian Income-tax Act, 1922. The next question is whether Earned Surplus may be treated as reserves within the meaning of sub-r. 1 of r. 2 of Sch. 11. It is found by the Tribunal that the profits earned year after year by the assessee companypany were retained and reinvested in its business. Earned Surplus has, it is true, number been called reserve, but if it is truly a reserve, it must be taken into account in the companyputation of capital. In companysidering this question, it is necessary to numbere certain special features of the system of accounting obtaining in the United States of America. In the balance sheet of companypanies the assets are balanced against liabilities, capital stock and surplus. In the companypany accounts it is usual to provide for specific or special reserves, but there is numberallocation to a head called General reserve in the accounts. It is also well settled that the accounts of companypanies maintained under the American system are self-contained for each year. Under the system of accounting in vogue in India, after allocations are made to various purposes such as outgoing, expenses and reserves, specific and general the balance is generally carried forward to the next year. The amount so carried forward gets merged into the account of the next year. If the capital and liabilities side exceeds the property and assets side, the difference is carried forward as loss in the next year. Under the American system of accounting, whatever remains on hand at the end of the year is entered on the liabilities, capital stock and surplus side as Earned 3 79 Surplus. This was pointed out in First National. City Bank v. Commissioner of Income-tax, Bombay 1 , where Kapur, speaking for the Court observed There is a difference between the system of accounting of banking companypanies in India and the United States . . . . In India at the end of a year of account the unallocated profit or loss is carried forward to the account of the next year, and such unallocated amount gets merged in the account of that year. In the system of accounting in the S.A. each years account is self-contained and numberhing is carried forward. If after allocating the profits to diverse heads mentioned above any balance remains, it is carried to the Undivided Profits which become part of the capital fund. If in any year as a result of the allocation there is a loss the accumulated Undivided Profits of the previous years are drawn upon and if that fund is exhausted the banking companypany draws upon the surplus. In its every nature the Undivided Profits are accumulation of amounts of residue on hand at the end of year of successive periods of accounting and these amounts are by the prevailing accounting practice and the Treasury directions regarded as a part of the capital fund of the banking companypany. It is true that the Court in that case was dealing with a case of a banking companypany. But the characteristics numbered are number peculiar to accounts of a banking companypany they are applicable with appropriate variations to accounts of all companypanies, and different numberenclatures are used in the accounts to designate the residue on hand as Surplus, Undivided Profits, or Earned Surplus. Where the balance of net profits after allocation to specific reserves and payment of dividend are entered in the account under the caption Earned Surplus, it is intended thereby to designate a fund which is to be utilised for the purpose of the business of the assessee. Such a fund may be regarded according to the Indian practice as general reserves. The Appellate Tribunal held that the Earned Surplus in the balance sheets of the assessee companypany represented reserves within the meaning of r. 2 Sch. 11 of the Business Profits Tax Act. The High Court agreed with that view. But companynsel for the Revenue companytended that accumulated profits companyld only be 1 1961 3 S.C.R. 371. deemed reserves for the purpose of the Business Profits Tax Act, if they are specifically allocated to reserves and number otherwise and in support of that companytention, he relied upon the decision of this Court in the Century Spinning Manufacturing Company Ltd. 1 Counsel pointed out that in that case this Court reversed the decision of the High Court of Bombay in which accumulated profits were regarded as reserves for the purpose of the Business Profits Tax Act. It is necessary carefully to scrutinise the facts in the Century Spg. Mfg. Companys case 1 . For the account year ending December 31, 1945, the profit of the assessee companypany, amounted to Rs. 90,44,677/-. After providing for depreciation and taxation there remained an unallocated balance of Rs. 5,08,637/- which was number allowed in companyputing the profits of the assessee for purpose of income-tax. In February 1946, the directors recommended that out of that amount a sum of Rs. 4,92,426/- be distributed as dividend and the balance of Rs. 16,21 1 - be carried forward to the next years account. The recommendation was accepted by the shareholders and dividend was shortly thereafter distributed. In companyputing the capital of the assessee companypany on April 1, 1946 under the Business Profits Tax Act, 1947, the assessee claimed that Rs. 5,08,637/- carried forward into the account of 1946 should be treated as reserve for the purpose of r. 2 1 of Sch. 11. This Court negatived the companytention. Ghulam Hasan, J., speaking for the Court observed On the 1st of January, 1946, the amount was simply brought from the profit and loss account to the next year and numberody with any authority on that date made or declared a reserve. The reserve may be a general reserve or a specific reserve, but there must be a clear indication to show whether it was a reserve either of the one or the other kind. The fact that it companystituted a mass of undistributed profits on the 1st January, 1946, cannot automatically make it a reserve. On the 1st April, 1946, which is the companymencement of the chargeable accounting period, there was merely a recommendation by the directors that the amount in question should be distributed as dividend. Far from showing that the directors had made the amount in question, a reserve, it shows that they hid decided to ear-mark it for distribution as dividend. After referring to the judgment of the High Court, the learned Judge observed 1 1954 S.C.R. 203. The directors had numberpower to distribute the sum as dividend. They companyld only recommend, as indeed they did, and it was upto the shareholders of the companypany to accept that recommendation in which case alone the distribution companyld take place. The recommendation was accepted and the dividend was actually distributed. It is, therefore, number companyrect to say that the amount was kept back. The nature of the amount which was numberhing more than the undistributed profits of the companypany, remained unaltered. Thus the profits lying unutilized and number specially set apart for any purpose on the crucial date did number companystitute reserves within the meaning of Schedule 11, rule 2 1 . It was pointed out that under the Indian Companies Act, 1913, the directors are enjoined to attach to every balance sheet a report with respect to the state of the companypanys affairs and the amount, if any, which they recommend to be paid by way of dividend and the amount, if any, which they propose to carry to the reserve fund, general reserve or reserve account. It was also pointed out that S. 132 of the Indian Companies Act refers to the companytents of the balance sheet to be drawn up in the Form marked F in Sch. HI, and to Regulation 99 of the 1st Sch. Table A, and observed that any sum out of the profits which is to be carried into a reserve must be set aside before the directors recommend any dividend. The Court observed In this case the directors while recommending dividend took numberaction to set aside any portion of this sum as a reserve or reserves. Indeed they never applied their mind to this aspect of the matter. The balance sheet drawn up by the assessee as showing the profits was prepared in accordance with the provisions of the Indian Companies Act. These provisions also support the companyclusion as to what is the true nature of a reserve shown in a balance sheet. The Court was dealing in that case with the accounts of an Indian Company, the balance sheet of which was prepared according to the provisions of the Indian Companies Act, 1913. Regulation 99 of the 1st Sch. Table A, required that reserves must be set apart before the directors recommended any dividend, but out of the profits of the companypany numberamount was set apart towards reserves before the directors recommended payment of dividend to the shareholders. Me identity of the amount remaining on hand at the foot of the profit loss account was number preserved. It is on these facts that the Court held that there was numberallocation of the amount to reserve and from the mere fact that it was carried forward in the account of the next year and ultimately applied in payment of dividend, it companyld number be said to be specifically set apart for any purpose at the relevant date i.e., the end of the year of account. We are in this case dealing with a foreign companypany and the system of accounting followed by the companypany is different in important respects from the system which obtains in India. Companies in India maintain diverse types of reserves some may be specific reserves, such as capital reserve, reserve for redemption of debentures, reserve for replacement of plant and machinery, reserve for buying new plant to be added to the existing ones, reserve for bad and doubtful debts, reserve for payment of dividend, and general reserve. Depreciation reserve within the limit prescribed by the Income-tax Act or the rules thereunder is the only reserve which is a permissible allowance in the companyputation of taxable profits. In its ordinary meaning the expression reserve means something specifically kept apart for future use or for a specific occasion. The accumulated profits of the assessee companypany according to the system of accounting at the end of the year were number carried forward into the account of the next year as they companyld number be, according to the system of accounting prevalent in the United States. They had to be allocated to some account, and they were allocated to Earned Surplus, which was intended for and was used in subsequent years for the purposes of the business of the assessee companypany. The account in which this amount was carried retained its identity year after year. In the First National City Banks case 1 , this Court held that the undivided profits brought into account of the assessee Bank under the head Assets, capital, capital stock and reserves were reserves within the meaning of r. 2 1 of Sch. II of the Business Profits Tax Act. In that case the Court was dealing with a case of a banking institution, and a letter from the Deputy Controller of Currency, Washington, was tendered in evidence which explained that in the United States the Undivided Profits as reflected in the accounting of a bank actually represent a part of its capital funds, and that the term Undivided Profits simply followed a bank accounting numberenclature used to designate profits set aside after provisions for expenses and taxes, dividends and reserves, for companytinuous future use in the business of the Bank. 1 1961 3 S.C.R. 371. In the case before us we have numbersuch evidence on the record about the nature of the Earned Surplus account, but the manner in Which the balance sheets year after year are maintained, and the general accountancy practice prevailing in the United States, suggest that there is specific allocation of the balance of profits ,at the end of each accounting year. The following table prepared from the balance sheets and filed on behalf of the assessee companypany, companyrectness of which has been accepted , clearly supports that view. --------------------------------------------------------- Earnings Appro- Earnings Fixed Year Reinvested Net priations Reinvested Assets Earned Profit made Earned at companyt surplus within Surplus Opening year Closing Balance Balance ----------------------------------------------------------- ----------------------------------------------------------- 945 16299765 13257841--295575977654167 1946 29557597 243553701000000043912958 82534231 1947 43912968 228618371000000056774805 110767579 1948 56774805 369917872000000073766592 19672 177 1849 73766592 388825892000000092649181 2 7045227 ------------------------------------------------------------- The Table disclosed that the balance of Earned Surplus at the end of the year did number merge into the account of the subsequent year. It represented a specific account into which were added the net profits of the year and appropriations were made out of it and the balance was regarded as Earned Surplus at the end of the year. This account was specifically allocated for utilisation for the purpose of business year after year. It was an account in which the net profits less the appropriations were added, and the account was intended for application in extending the business of the assessee companypany. The amounts entered in the account Earned Surplus cannot therefore be regarded as mere unallocated profits at the end of the accounting year.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION C. A. No. 307 of 1964. Appeal from the, Judgement and Order dated 6th February 1962 of the Calcutta High Court in Income Tax Reference No. 72 of 1957. V. Viswanatha Savitri, R. Ganapathy lyer, R. H. Dhebar -and R. N. Sachthey, for the appellant. N. Rajagopal Sastri and D. N. Mukherjee, for the respondent. The Judgment of the Court was delivered by Sikri, J. This is an appeal by certificate granted by the High Court of Calcutta against its judgment in a reference made to it under s. 66 of the Indian Income Tax Act, 1922 hereinafter re- 4 5 0 ferred to as the Act. The question referred to it by the Appellate Tribunal, at the instance of the assessee, was as follows Whether in the facts and circumstances of the case, the unabsorbed depreciation of the past years should be added to the depreciation of the current year and the aggregate of the unabsorbed depreciation and the current years depreciation be deducted from the total income of the previous year relevant for the assessment year 1952-53. The relevant facts and circumstances are as follows The Income Tax Officer assessing the respondent, M s Jaipuria China Clay Mines P Ltd. Calcutta, hereinafter referred to as the assessee, for the year1952-53 companyputed its total income at Rs. 14,041/- before charging depreciation for that year. From that figure he deducted depreciation for the year amounting to Rs. 5,360/-, thus companyputing a profit of Rs. 8,681/-. From this figure he deducted an equivalent amount, i.e., Rs. 8,681/-, in respect of losses during 1947- 48, and he thus worked out the business income as nil. He then companyputed the dividend income at Rs. 2,01,130/- and determined the total income at this figure and levied tax on it. The assessee had in its favour an unabsorbed depreciation aggregating to Rs. 76,857/-, and it companytended before the Income Tax Officer that this sum should be deducted from The income received from dividends, which, if done, would reduce the total income to Rs. 1,32,955/-, but the Income Tax Officer refused to accede to this companytention. The Appellant Assistant Commissioner upheld the order of the Income Tax Officer and the assessees appeal to the Appellate Tribunal met with the same fate. The High Court, however, accepted the companytention of the assessee and answered the question referred, to it in favour of the assessee. The answer to the question depends on the interpretation of ss. 6, 10 and 24 of the Act. We are companycerned with the law as it stood on April 1, 1952. The scheme of the Act is that the tax is levied in respect of the total income of the previous year of every individual, Hindu Undivided family, etc., and the total income companysists of income under various heads such as Salaries, Interest on Securities, Income from Property, Profits and gains of business, profession or vocation, and Income from other sources and Capital gains. Various sections deal with how income, profits and gains under each head have to be companyputed. Section 10 deals with the companymunication of profit and gains of any business carried on by an assessee, Section 10 2 prescribes the allowances which 4 51 have to be deducted before companyputing the profits and gains one of the allowances is depreciation, and this Is provided under subcl. vi . Proviso b to S. 10 2 vi . On this a great deal of argument has been addressed to us and it reads as follows b where, in the assessment of the assessee or if the assessee is a registered firm, in the assessment of its partners, full effect cannot be given to any such allowance in any year number being a year which ended prior to the last day of April, 1939, owing to there being numberprofits or gains chargeable for that year, or owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of clause b of the proviso to sub-section 2 of section 24, the allowance or part of the allowance to which effect has number been given, as the case, may be, shall be added to the amount of the allow- ance for depreciation for the following year and deemed to be part of that allowance, or if there is numbersuch allowance for that year, he deemed to be the allowance for that year, and so on for succeeding years It may be mentioned that the words in the assessment of the assessee or if the assessee is a registered firm, in the assessment of its partners were inserted by S. 8 of the Indian Income Tax Amendment Act, 1953 25 of 1953 with effect from April 1, 1952. The next relevant statutory provision is S. 24, which provides for set off of losses in companyputing aggregate income. Relevant portions of S. 24 are in the following terms 24 1 Where any assessee sustains a loss of profits or gains in any year under any of the heads mentioned in section 6, he shall be entitled to have the amount of the loss set off against his income, profits or gains under any other head in that year Provided that Provided further that when the assessee is an unregistered firm which has number been assessed under the provisions of clause b of sub- section 5 of section 23, in the manner applicable to a registered firm, any,such loss shall be set off only against the income, profits and gains of the firm and number against the income, profits and gains of any of the partners of the firm and where the assessee is a registered firm, any loss which cannot be set off against other income, profits and gains of the firm shall be apportioned between the partners of the firm and they 45 2 alone shall be entitled to have the amount of the loss set off under this section. Where any assessee sustains loss of profits or gains in any year, being a previous year number earlier than the previous year for the assessment for the year ending on the 31st day of March, 1940, in any business, profes- sion or vocation and the loss cannot be wholly set off under sub-section 1 , so much of the loss as is number so set off or the whole loss where the assessee had numberother head of income, shall be carried forward to the following year and set off against the profits and gains, if any, of the assessee from the same business, profession or vocation for that year and if it cannot be wholly so set ,off, the amount of loss number so set off shall be carried forward to the following year, and so on but numberloss shall be so carried forward for more than six years, and a loss arising in the previous years for the assessment for the years ending on the 31st day of March, 1940, the 31st day of March, 1941, the 31st day of March, 1942, the 31st day of March, 1943, and the 31st day of March, 1944, respectively, shall be carried forward only for one, two, three, four and five years, respectively Provided that- a b where depreciation allowance is, under clause b of the proviso to clause vi of sub-section 2 of section 10, also to be carried forward, effect shall first be given to the provisions of this sub-section c numberhing herein companytained shall entitle any assessee, being a registered firm, to have carried forward and set off any loss which has been apportioned between the partners, under the proviso to sub-section 1 , or entitle any assessee, being a partner in an unregistered firm which has number been assessed under the provisions of clause b of sub-section 5 of section 23 in the manner applicable to a registered firm, to have carried forward and set off against his own income any loss sustained by the firm Mr. Sastri, learned companynsel for the revenue, urges that depreciation, although a permissible allowance under s. 10 2 of the Act, serves to companypensate an assessee for the capital loss suffered by him by way of depreciation of his assets. He says that if it bad number been expressly allowed as allowance, it would have been treated as capital expenditure and would have been excluded. He further says that depreciation is a charge on the profits of a business. Bearing these two factors in mind, he urges that the expression loss of profits and gains in s. 24 1 does number include any deficiency resulting from depreciation and, therefore, an assessee Is number entitled to ask the Department to include the depreciation in the amount which can be set off against income, profits and gains under other heads such as income from property or dividends. Mr. Rajgopala Sastri for the assessee relies on the history of the legislation and a number of authorities to support the judgment of the High Court. Apart from authority, looking at the Act as it stood on April 1, 1952, it is clear that the underlying idea of the Act is to assess the total income of an assessee. Prima facie, it would be unfair to companypute the total income of an assessee carrying on business without pooling the income from business with the income or loss under other heads. The second companysideration which is relevant is that the Act draws numberexpress distinction between the, Various allowances mentioned in s. 10 2 . They all have to be deducted from the gross profits and gains of a business. According to companymercial principles, depreciation would be shown in the accounts and the profits and loss account would reflect the depreciation accounted for in the accounts. If the profits are number large enough to wipe off depreciation, the profit and loss account would show a loss. Therefore, apart from proviso b to s. 10 2 vi , neither the Act number companymercial principles draw any distinction between the various allowances mentioned in s. 10 2 the only distinction is that while the other allowances may be outgoings, depreciation is number an actual outgoing. Bearing these two companysiderations in mind, if one looks at the language of proviso b to S. 10 2 vi the first question that arises is What is the meaning of the expression in the assessment of the assessee or if the assessee is a registered firm, in the assessment of the partners, full effect cannot be given to any such allowance in any year ? It would be numbered that the words used are in the assessment of the assessee or the assessment of the partners. Taking the case of the partners of a registered firm, the assessment must be their individual assessments, i.e. assessments in which the profits from the firm and other sources are pooled together. The Legislature is clearly assuming that effect can be given to depreciation allowance in the assessment of a partner the only way effect can be given in the assessment of a partner is by setting 4 54 it off against income, profits and gains under other heads. The learned companynsel for the revenue tried to meet this inference by suggesting that what the Legislature companytemplated was an assessment of those partners who were carrying on other business. But in our opinion this suggestion is unsound. What would happen if a partnership companysists of four partners, two carrying on other business and two carrying on numberother business, Mr Sastri was unable to explain. Now, if this is the inference to be drawn from these words, it is quite clear that the words numberprofits or gains chargeable for that year are number companyfined. to profits and gains derived from the business whose income is being companyputed under S.10. It appears that the Legislature accepted the interpretation placed by various High Courts on the Act as it stood before it was amended by Act 25 of 1953. In 1930, the Lahore High Court in Messrs Karam Ilahi Muhammad Shafi v. The Commissioner of Income Tax, Delhi 1 held that depreciation on buildings and machinery can be set off against gains and profits accrued to the owner of those buildings and machinery from other sources such as rental from house property during the year in question-. In A Suppan Chettiar Co. v. The Commissioner of Income-Tax, Madras - the Madras High Court held that where the profits and gains of a business are insufficient to companyer the full depreciation allowance under section 10 2 vi of the Income-tax Act on the machinery, plant, etc., used for the purposes of that business, the excess depreciation can be set off against the profits and gains of other business or from other sources. In Ballarpur Collieries v. The Commissioner of Income Tar, Central Provinces 3 , the Court of the Judicial Commissioner, Nagpur, held that the partners of the assessee, a registered firm owning companylieries, were entitled to set off depreciation against the other income of the members of the firm under s. 24 of the Income Tax Act. In Laxmichand Jaipuria Spinning and Weaving Mills, In re 1 , the East Punjab High Court arrived at the same companyclusion. The High Court further held that the object of proviso b to sub-section 2 of section 24 is only to give preference to ordinary losses incurred by an assessee in regard to set-off over the loss which companyes under clause b of the proviso to sub-section 2 vi of section 10. Where set off is to be given for different kinds of losses other than those due to depreciation such losses must be. set off first and then 1 3 Income Tax Cases 456 I.L.R. 11 Lahore 38. 2 4 Income Tax Cases 211 I.L.R. 53 Madras 3 4 Income Tax Cases 255 A.I.R. 1930 Nag. 4 18 A.I.R. 919 the loss due to depreciation. In Ambika Silk Mills Co. Ltd. v Commissioner of Income- Tax 1 the Bombay High Court understood the effect of proviso b to s. 10 2 vi and proviso b to s. 24 2 as follows If a business was worked at a loss in any particular year, the loss can be set off against any other head under section 24 1 if the loss cannot be fully set off then it can be carried forward to the next year, but then it can be only set off against the profits of that particular business and that set-off would be permissible to the assessee for a period of six years only. After six years the right to set-off would companye to an end. But in the case of depreciation and to the extent that the loss was caused by depreciation being number fully absorbed there would be numberlimit to the carrying forward of that depreciation, and that depreciation can be set off at any time so long as the business showed a profit in the future. After the amendment, the same view has been taken in Commissioner of Income-Tax, Bombay City v. Ravi Industries Ltd. 2 by the Bombay High Court, and in Commissioner of Income-Tax J. Girdharilal Harivallabhadas Mills Co. Ltd. 3 by the Gujarat Hgh Court. The only companytrary view which has been placed before is is that of the Madras High Court in Commissioner of Incomeax Madras v. B. Nagi Reddy 4 , but we are unable to agree with he view expressed in the last case. The Madras High Court observed at p. 196 as follows In our opinion, the statute leads one to the irresistible companyclusion that the depreciation allowance must be a charge only on the profits. The limit of the charge is the limit of the profits. The number-existence of profits will prevent the absorption of the allowance. There is numberwarrant for taking in and absorbing the depreciation allowance in the profit and loss account to work out a loss. If that were the true position, the provision for carrying forward the unabsorbed depreciation allowance would be wholly redundant, if number meaningless, in view of the specific provision for the carrying forward of losses. The unabsorbed depreciation allowance is carried forward under proviso b to s. 10 2 vi and the method of carrying it forward is to add it to the amount of the allowance or depreciation 1 22 I.T.R. 58, 65 2 49 I.T.R. 145. 3 51 I.T.R. 693. 4 51 I.T.R. 178. in the following year and deeming it to be part of that allowance -the effect of deeming it to be part of that allowance is that it falls in the following year within cl. and has to be deducted as allowance. If the Legislature had number enacted proviso b to s. 24 2 , the result would have been that depreciation allowance would have been deducted first out of the profits and gains in preference to any losses which might have been carried forward under s. 24, but as the losses can be carried forward only for six years under s. 24 2 , the assessee would in certain circumstances have in his books losses which he would number be able to set off. It seems to us that the Legislature, in view of this, gave a preference to the deduction of losses first. But it is wrong to assume that s. 24 2 also deals with the carrying forward of depreciation. This carry forward having been provided in s. 10 2 vi and in a different manner s. 24 2 only deals with losses other than the losses due to depreciation. In companyclusion, we agree with the High Court that the question -referred to it should be answered in favour of the assessee.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 956 of 1964. Appeal by special leave from the judgment and order dated October 7, 9, 1961 of the Bombay High Court in I.T. Reference No. 6 of 1960. V. Viswanatha Sastri, Gopal Singh, B. R. G. K. A char and R. N. Sachthey, for the appellant. Mahinder Narain, Rameshwar Nath, S. N. Andley and P. L. Vohra, for the respondent. 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 Judicature at Bombay answering the following question against the appellant Whether depreciation is allowable on the original companyt of the various companyponents of the Plant and Machinery and other assets of the companypany as acquired and used prior to 1-7-1953 The relevant facts are these. We are companycerned with the assessment year 1955-56 accounting year being April 1, 1954 to March 31, 1955 . The respondent, Dharampur Leather Company Ltd., Bombay, hereinafter referred to as the assessee companypany, was incorporated on June 15, 1943, as a private limited companypany, and later on November 24, 1949, it became a public limited companypany. On August 1, 1949, the Dharampur State merged with the Province of Bombay. Before its incorporation, the promoters of the assessee companypany had negotiated with the Ruler of Dharampur and secured from the Ruler total exemption from the State Income Tax of profits of the companypany for a period of seven years from the companymencement of its working. The factory companymenced working from June 15, 1949. After the merger the assessee companypany applied to the Commissioner of Income Tax, Bombay, by its letter dated June 22, 1951, for relief under para 15 of the Merged States Taxation Concessions Order, 1949. The Com- missioner of Income Tax companymunicated the decision of the Government in his letter dated March 8, 1952, to exempt the companypany from income tax and super tax for a period of five years with effect from April 1, 1950. It was, however, stated that the shareholders of the companypany would be liable to pay tax on the amount of dividend received by them. The Merged States Taxation Concessions Order, 1949, was issued by the Central Government in exercise of the powers companyferred by S. 60A of the Indian Income Tax Act, 1922, hereinafter referred to as the Act, and s. 23A of the Business Profits Tax Act, 1947. Para 15 of the said order provides as follows 15 1 Where any industrial undertaking situate in a merged State claims that it has been granted any exemption from or companycession in respect of income-, super-tax or business profits tax by the Ruler of the State before the 1st day of August, 1949, it shall submit an application to the Commissioner of Income- tax giving the following particulars - Name of the Industrial undertaking. Status i.e. whether public or private companypany, firm, individual or Hindu undivided family . Nature of business. Date of companymencement of the business. Nature of the companycessions granted. Period for which companycessions granted. Unexpired period of the companycessions from the 1st day of August, 1949. The application shall be accompanied by a companyy of the orders of the State granting the companycession or of the agreement with the State. The Commissioner shall, after obtaining such other information as he may require, forward the application to the Central Government which, having regard to all the circumstances of the case, may grant such relief, if any, as it thinks appropriate. The assessee companypany companytended before the Income Tax Officer in the companyrse of the assessment proceedings for the assess- ment year 1955-56 that this being the first assessment year after it companymenced working as a factory, numberdepreciation had in fact been actually allowed to the assessee in any earlier assessment year, and, therefore, the depreciation should be companyputed on the original companyt of the various items of plant and machinery and other assets of the companypany. The Income Tax Officer, however, rejected this companytention and held that depreciation must be companyputed on the written-down values of machinery companyputed as if the income of the assessee had been worked out properly in the years when the companypany was exempted and the depreciation being allowed at the usual rates. The assessee failed before the Appellate Assistant Commissioner and the Appellate Tribunal. The Appellate Tribunal held that the words actually allowed in s. 10 5 b of the Act were wide enough to companyer the case of the assessee. The High Court, however, held that if in the prior years numberdepreciation had been actually allowed then the actual companyt incurred by the assessee for acquiring the machinery would be the written down value of the machinery. Mr. Sastri, the learned companynsel for the appellant, first urges that on a proper interpretation of S. 10 5 b of the Act, the depreciation must be deemed to have been allowed to the assessee in the years in which the income of the assessee companypany was ,exempted. There is numberforce in this companytention. We have delivered judgment today in Commissioner of Income Tax, Madhya Pradesh v. Messrs Straw Products Limited Bhopal 1 and held that the words actually allowed in para 2 of the Taxation Laws Merged States Removal of Difficulties Order, 1949, did number include any numberional allowance. Following that judgment, we must interpret the words actually allowed occurring in s. 10 5 b of the Act in the same manner. Mr. Sastri next companytends that the Taxation Laws Merged States Removal of Difficulties Order, 1949, as amended by the Taxation Laws Merged States Removal of Difficulties Amendment Order, 1962, hereinafter referred to as 1962 Order, applies to the facts of the case. He says that the exemption was ,originally given by the Ruler of Dharampur State under an agreement with the assessee companypany and the companycession by the Commissioner of Income Tax vide his letter dated March 8, 1952, was in fact a companytinuance of the agreement, and therefore, this exemption must be deemed to have been granted under an agreement with the Ruler, within the meaning of 1962 Order. We are unable to accede to this companytention. In our opinion, the Explanation inserted by 1962 Order has numberbearing on the facts of this ,case. The exemption granted by the Central Government is granted under para 15 of the Merged States Taxation Concessions Order, 1949, which was itself issued under s. 60A of the Act. The result is that the exemption was granted under the Act and number under any agreement.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 424 of 1963. Appeal by special leave from the judgment and order dated April 8, 1960 of the Allahabad High Court in Civil Misc. Writ No. 2650 of 1956. B. Agarwala and O.P. Rana, for the appellant. Yogeshwar Prasad, Harder Singh and M.V. Goswami, for the respondents. The Judgment of the Court was delivered by Raghubar Dayal, J. This appeal, by special leave, raises the question whether Zamindari Abolition Compensation Bonds shortly termed Bonds issued by the U.P. Government to intermediaries in payment of companypensation payable on the basis of their rights under the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 U.P. Act I of 1951 , hereinafter referred to as the Act, have to be accepted by the appropriate authorities in payment of the agricultural income-tax due from them. The facts leading to the appeal, in brief, are that the respondent, an ex-Zamindar, was assessed to agricultural income-tax in the assessment year 1360 F companyresponding to 1952-53, on the basis of the agricultural income accruing in the previous year 1359 F companyresponding to 1951-52. He did number pay the assessed tax and was further assessed to a penalty. In the result, Rs. 868/- were to be paid by him for tax plus penalty. The respondents writ petition companytending that he was number liable to pay tax was dismissed by the High Court. Thereafter, the agricultural income-tax authorities took out proceedings for the realisation of the amount due from him. On July 24, 1956, the respondent presented an application to the Agricultural Income-tax Assessing Officer, Allahabad, stating that he had numberready cash to pay the dues and that he was therefore depositing Bonds of the value of Rs. 850/- and Rs. 18/- in cash and praying that the Bonds be accepted in payment of tax dues. This application was rejected by an order stating that there was numberrule for the acceptance of those bonds and that they be returned to the applicant. On August 1, 1956, the respondent made a similar application to the Collector companyplaining that the Assessing Officer had numbervalid reason to refuse to take the Bonds when the Bonds were negotiable instruments. This application was also rejected on a report of the Assessing Officer that the Bonds were number accepted in the settlement of agricultural income-tax dues, that they were number negotiable and that there was numberprovision in the Act for their acceptance. Thereafter, the respondent presented a writ petition to the High Court of Allahabad praying for the issue of a writ of certiorari quashing the orders of the Assessing Officer and the Collector, Allahabad, for the issue of a writ of mandamus directing them to accept the Bonds in lieu of the tax dues and, in any case, to deduct the amount from the rehabilitation grant due to the petitioner and for the issue of a writ of prohibition directing the opposite parties from adopting companyrcive measures for the realisation of the tax due from the petitioner. The grounds mentioned in support of the prayers were that the Bonds were negotiable instruments and therefore refusal to accept them in payment of agricultural income-tax was illegal, that they, having been issued by Government, companyld number be subsequently refused they being perfectly valid legal tender and that in view or r. 8A of the Rules made under the Act the amount due for tax should have been deducted from the interim companypensation. The companynter affidavit filed by the Naib-Tehsildar Agriculture Income-tax Officer, Allahabad, on behalf of the State, stated that the respondent was assessed to agricultural income-tax in the assessment year companymencing from July 1, 1952 on the income derived in the previous year companymencing from July 1, 1951, that the tax had to be paid in four instalments and in default of payment a penality of Rs. 43/- was imposed for each default in payment of the four instalments and that the Bonds companyld number be accepted towards the tax due under s. 6 d of the Act read with r. 48 of the Rules as the tax had fallen due in 1360 F, companyresponding to July 1, 1952 to June 30, 1953. The High Court held that the orders of the Agricultural Income-tax Assessing Officer and the Collector were wrong as the ground for refusing to accept the Bonds in payment of the tax on the ground that there was numberrule or statutory provision for their acceptance was incorrect and appeared to have been given in companyplete ignorance of the provision of law. Reference was made to the provisions of s. 6 d of the Act and r. 8A. The High Court was of the opinion that these have been companypletely ignored by the two officers. It, therefore thought that the orders were liable to be quashed and that adequate relief would be available to the respondent if a direction was given to the Collector to decide his application dated August I, 1956, in accordance with law. The High Court therefore quashed the order of the Collector dated August 24, 1956 and directed him to decide the respondents application afresh in accordance with law as indicated above. The appellant thereafter obtained special leave from this Court and appealed against the order of the High Court dated April 8, 1960. The main companytention for the appellant before us is that neither s. 6 d of the Act number r. 8A provides that Bonds can be accepted in payment of agricultural incometax and that therefore the order of the Collector dated August 24, 1956 was companyrect. For the respondent it is urged that r. 8A makes it mandatory for the Agricultural Income-tax Officer to realise the agricultural income tax due from the companypensation payable and that companypensation companytinues to be payable till the Bonds are actually encashed, Section 6 d of the Act, as originally enacted, did number provide, among the companysequences of the vesting of the estate in the State, that arrears on account of agricultural income-tax might be realised by deducting the amount from the companypensation money payable to the intermediary under Chapter III. An amendment was made in this clause d by s. 3 of U.P. Act XVI of 1953, with retrospective effect from July 1, 1952. and the relevant portion of the provision after amendment reads thus All arrears of revenue, or an arrear on account of tax on agricultural income assessed under the U.P. Agricultural Income-tax, Act, 1948 for any period prior to the date of vesting shall companytinue to be recoverable from such intermediary and may, without prejudice to any other mode of recovery be realised by deducting the amount from the companypensation money payable to such intermediary under Chapter III Rule 8A was added to the rules by Notification No. 3266/I-A-1056-1954 dated August 17, 1954 and its relevant portions read 8-A. Without prejudice to the right of the State Government to recover the dues mentioned below by such other means, as may be open to it under law 1 all arrears of land revenue in respect of the estates which have vested in the State Government as a result of the numberification under Section 4 of the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 Act 1 of 1951 , and of tax on agricultural income assessed under the U.P. Agricultural Income-tax Act, 1948 U.P. Act III of 1949 due from an intermediary for any period prior to the date of vesting shall be realised a in the case of an intermediary who was assessed to land revenue of Rs. 10,000 or more from the amount of interim companypensation due to him, and b in the case of an intermediary who was assessed to a land revenue of less than Rs. 10,000 per annum by deduction from the amount of companypensation payable to It is clear from the above provisions that neither s. 6 d number r. 8A provide that Bonds must or can be accepted in payment of tax on agricultural income. It has been held by this Court in Collector of Sultanpur v Raja Jagdish Prasad Sahi 1 that the provisions of s. 6 d of the Act would apply to arrears on account of agricultural income-tax assessed in 1360F on the basis of agricultural income during the year 1359F and that the provisions of r. 8A are mandatory. It is number urged for the appellant that r. 8A is inconsistent with the provisions of s. 6 d which provides that arrears of tax may be realised from the companypensation payable and therefore appears to give a discretion to. the authorities to realise the arrears of tax from the companypensation payable. We do number agree with the companytention for the respondent that the companypensation payable to the intermediary companytinues to remain payable even after the companypensation Bonds had been delivered to him. Section 68 of the Act provides that the companypensation under the Act shall be payable in cash or in bonds or partly in cash and partly in bonds as may be prescribed. It is clear therefore that the delivery of Bonds to the intermediary is in payment of the companypensation. The claim for companypensation is thus satisfied when the companypensation has been paid in accordance with the provisions of s. 68. This is also clear from the relevant rules for the payment of companypensation. 1 1965 2 S.C.R. 23. Rule 62 as it stood prior to November 29, 1956, provided that the companypensation would be paid in negotiable bonds which would be described as Zamindari Abolition Compensation Bonds. Rule 63 as it then stood provided that the Bonds would be issued in specified denominations and would bear interest at the specified rate on the principal that had become payable calculated from the date of vesting. Rule 64 provided that interest together with the principal of a Bond would be paid in equated annual installments except for the last, as described in Appendix IV during the period of 40 years beginning from the date of vesting, provided that any Bond might be redeemed at an earlier date at the option of the Government. Rule 65 provided that the instalments due on a Bond from the date of its effacement would be payable on presentation from and after July 1st next after the delivery of the Bond to the intermediary. These rules show that the companypensation does number remain payable alter the delivery of the Bonds and that the Bonds companyld number be cashed before the due date for their encashment. The fact that the Bonds are negotiable does number make them legal tender and does number make it obligatory on anyone, including Government, to accept them in payment of any dues. The only result of their being treated as negotiable instruments is that the owner of the Bends can transfer them to any person who is agreeable to purchase them. When the companypensation payable to an intermediary has been paid in the form of cash or Bonds, that companypensation ceases to be payable. Section 6 d of the Act and r. 8A of the rules do number. as already stated, provide for the receipt of agricultural income-tax in the form of Bonds.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 163 of 1963. Appeal by special leave from the judgment and decree dated October 31, 1960 of the Bombay High Court in Civil Revision Application No. 2131 of 1957. P. Sinha and M. I. Khowja, for the appellants. B. Agarwala and A. G. Patraparkhi, for the respondents. The Judgment of the Court was delivered by Gajendragadkar, C.J. This appeal by special leave arises out of proceedings initiated under the provisions of the Bombay Agricultural Debtors Relief Act, 1939 No. 28 of 1939 hereinafter called the Act . The respondents Maruti Hari Jadhav and two others moved the B.A.D.R. Court at Karad on May 26, 1949, for adjustment of the debt alleged to be due from them to the appellants, Pandurang. Dhondi Chougule others. Their case was that the debt in question was due under a mortgage deed executed by their gand-father in favour of the grand-father of the appellants on August 29, 1881. By this mortgage, six agricultural lands situated atKapil in the former State of Oundh had been mortgaged to the portage with possession for a sum of Rs. 575. In 1908, the respondents predecessoes-in-interest sued on this mortgage in the Court of the Sub-Judge at Kapil Civil Suit No. 28 of 1908-09 . This suit was, however, withdrawn with liberty to file a fresh suit. Then followed another suit by the respondents in the same Court for redemption of the mortage No. 102 of 1932-33 . On September 2, 1936, a decree came to be passed in the said suit. According to the respondents, the decree directed them to pay Rs. 3,677-12-6 within six months from the date on which it was drawn but the said money had number been paid even so, the relationship between the parties companytinued to be that of the mortgagors and the mortgagees, and so, they were entitled to claim adjustment of the debt in question. The respondents also pleaded that the decree which was passed in the said suit was in the nature of a preliminary decree, and though the appellants were entitled to apply for making the said decree final after the expiration of the six months period prescribed by it, they took numbersuch action and the mortgage debt, therefore, remains unpaid arid the equity of redemption vesting in the respondents is unextinguished. That, in brief, is the nature of the claim made by the Respondents in the application made by them under the Act for adjustment of their debt due to the appellants. It appears that the State of Oundh merged in the erstwhile State of Bombay and thereafter the Act was extended to the said State. That is how the respondents companymenced the present proceedings under the provisions of the Act thus extender to the State of Oundh. The appellants also made an application for the adjustment of the debt due under the decree in Suit No. 102/1932-33 in the Court of Joint Civil Judge Karad but in doing so,, they made it perfectly clear that they were making the application is a matter -f precaution and without prejudice to their companytention that the equity of redemption had been extinguished and the parties numberlonger stood in the relationship of creditors and debtors. In fact, it was the appellants the first made the application on May 19, 1949, and the respondents followed by their application on May 26, 1949. For the purpose of hearing these two applications were companysolidated by the trial Court. At the hearing of these proceedings the appellants raised several companytentions. They urged that the mortgage was extinguished and the respondents were therefore, number entitled to claim adjustment of the debt, and they also companytended that the application made by the respondents was barred by time. The trial Judge rejected the appellants argument that the mortgage had been extinguished, and held that the equity of redemption still vested in the respondents. He, however, found that the respondents application for adjustment of the debt was barred by time.In the result, the respondents failed and their application was dismissed. The matter then went in appeal to the District Court, North Satara. The appellate Court held that the decree in suit No. 102 of 1932-33 amounted to a final decree which absolutely debarred the right of the mortgaging to redeem the property in view of the fact that had failed to pay the decretal amount within the time prescribed by it. It also agreed with the view taken by the trial Court that the respondents application was barrey by limitation. In the result, the appeal preferred by the respondents was dismissed. The dispute the reached the Bombay High Court in its revisional jurisdiction under s. 115 of the Code. Before the High Court it was urged that the Code of Civil Procedure did number apply to the State of Oundh at the relevant time that is why by an interlocutory judgment, the High Court remanded the proceedings to the trial Court with a direction that the issue as to whether the Code of Civil Proceedure applied to the State of Oundh at the relevant time, should be tried. On remand, the trial Court made a finding that the Code of Civil Procedure had been made applicable to the State of Oundh as far back as 1909-10. The High Court had also directed that the issue as to who was, in possession of the property at the relevant time, should be tried and the finding returned by the trial Court was that the appellants were in possession of the mortgaged property number as mortgaeges, but as owners from 2nd March, 1937. After these findings were returned, the revision application was argued before the High Court and the main point which was urged before the High Court at that state was whether the respondents right to redeem the mortgage had been extinguished by the decree passed in civil suit No. 102 of 1932-33. The High Court has differed from the District Court and has taken the view that the decree did number determine the respondents right to redeem the mortgage. In regard to the finding recorded by the companyrts below that the respondents application was barred by time, the High Court took the view that the question as to whether the application is within sixty years from the expiry of the period prescribed in the mortgae deed for repayment is entirely irrelevant inasmuch as the said application is substantially for the adjustment of debt under the decree passed in suit No. 102 of 1932-33. On that view of the matter, the High Court has set aside the orders passed by the companyrts below and has remanded the proceedings to the trial Court with a direction that the application made by the respondents for adjustment of the debt should be tried in accordance with law. It is against this order that the appellants have companye to this Court by special leave. Before proceeding to deal with the companytentions raised before us in the present appeal, it would be companyvenient to set out the relevant portion of the decree in suit No. 102 of 1932- The operative part of the decree reads thus - The plaintiffs should pay to defendants I and 2 Rs. 3,677-12-6 within six months from today and should recover possession of the suit property as the heirs of Gopala free from the mortgage. In case the plaintiff,,, do number pay the amount within the prescribed time, the plaintiffs shall be deemed to have lost the right of redemption for all time. The District Court has held that this decree is a companyposite decree and on the failure of the respondents to pay the decretal amount within the time specified. their right to redeem the mortgage is extinguished by virtue of the express terms companytained in it. The High Court has companystrued the decree as a preliminary decree has found that the clause purporting to extinguish the equity of redemption does number affect its essential character as a preliminary decree and does number in law put an end to the relationship of creditors and debtors between the parties. The first question which falls for our decision in the present appeal is whether the High Court was justified in interfering with the decision of the District Court that the decree in question extinguished the respondents right to redeem the mortgage. Mr. Sinha for the appellants companytends that in reversing the companyclusion of the District Court, the High Court ha-, exceeded its jurisdiction under S. 115 of the Code. In our opinion. this companytention is well-founded and must be upheld. The provisions of s. 115 of the Code have been examined by judicial decisions on several occasions. While exercising its jurisdiction under s. 115, it is number companypetent to the High Court to companyrect errors of fact however gross they may, or even errors of law, unless the said errors have relation to the jurisdiction of the Court to try the dispute itself. As clauses a , b and c of s. 115 indicate, it is only in cases where the subordinate Court has exercised a jurisdiction number vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with material irregularity that the revisional jurisdiction of the High Court can be properly invoked. It is companyceivable that points of law may arise in proceedings instituted before subordinate companyrts which are related to questions of jurisdiction. It is well-settled that a plea of limitation or a plea of yes judicata is a plea of law which companycerns the Jurisdiction of the companyrt which tries the proceedings. A finding on these pleas in favour of the party raising them would oust the jurisdiction of the companyrt, and so, an erroneous decision on these pleas can be said to be companycerned with questions of jurisdicdon which fall within the purview of s. 115 of the Code. But an erroneous decision on a question of law reached by the subordinate companyrt which has numberrelation to questions of jurisdiction of that companyrt, cannot be companyrected by the High Court under 115. The history of recent legislation in India shows that when Legislatures pass Acts dealing with socioeconomic matters, or make pro-visions for the levy of sales-tax, it is realized that the operative provisions of such legislation present difficult problems of companystruction and so, sometimes, the Act in question provides for a revisional application to the High Court in respect of such matters or authorises a reference to be made to it. In such cases, the High Court will undoubtedly deal with the problems raised by the companystruction of the relevant provisions in accordance with the extent of the jurisdiction companyferred on it by the material provisions companytained in the statute itself. Sometimes, however, numbersuch specific provision is made, and the questions raised in regard to the companystruction of the provisions of such a statute reach the High Court under its general revisional jurisdiction under s. 115 of the Code. In this class of cases, the revisional jurisdiction of the High Court has to be exercised in accordance with the limits prescribed by the said section. It is true that in order to afford guidance to subordinate companyrts and to avoid companyfusion in the administration of the specific law in question, important questions relating to the companystruction of the operative provisions companytained, 5Sup./65-8 in such an Act must be finally determined by the High Court but in doing so, the High Court must enquire whether a companyplaint made against the decision of the subordinate companyrt on the ground that it has misconstrued the relevant provisions of the statute, attracts the provisions of s. Does the alleged misconstruction ,of the statutory provision have relation to the erroneous assumption of jurisdiction, or the erroneous failure to exercise jurisdic- tion, or the exercise of jurisdiction illegally or with material irregularity by the subordinate companyrt ? These are the tests laid down by s. 115 of the Code and they have to be borne in mind before the High Court decides to exercise its revisional jurisdiction under it. This question has been recently companysidered by this Court in Manindra Land and Building Corporation Ltd., v. Bhutnath Banerjee and Others 1 and Vora Abbasbhai Alimahomed v. Haji Gulamnabi Haji Safibhai 2 . The effect of these two decisions clearly is that a distinction must be drawn between the errors companymitted by subordinate companyrts in deciding questions of law which have relation to, or are companycerned with, questions of jurisdiction of the said companyrt, and errors of law which have numbersuch relation or companynection. It is, we think, undesirable and inexpedient to lay down any general rule in regard to this position. An attempt to define this position with precision or to deal with it exhaustively may create unnecessary difficulties. It is clear that in actual practice, it would number be difficult to distinguish between cases where errors of law affect, or have relation to, the jurisdiction of the companyrt companycerned, and where they do number have such a relation. Considering the point raised by Mr. Sinha in the light of this position, it seems to us that the High Court was in error in assuming jurisdiction to companyrect what it thought to be the misconstruction of the decree passed in civil suit No. 102 of 1932-33. As we have already seen, in the present debt adjustment proceedings, one of the points which arose for decision was whether the mortgage debt was subsisting at the time when the respondents made their application, and the District Court had found that the respondents equity of redemption had been extinguished. This finding was based on the companystruction of the said decree. It is difficult to see how the High Court was justified in reversing this finding under s. 115 of the Code. The companystruction of a decree like the companystruction of a document of title is numberdoubt a point of law. Even so, it cannot be held to justify the exercise of the A-I.R. 1964 S.C. 1336. A.I.R. 1964 S.C. 1341. High Courts revisional jurisdiction under s. 115 of the Code because it has numberrelation to the jurisdiction of the Court. Like other matters which are relevant and material in determining the question of the adjustment of debts, the question about the existence of the debt has been left to the determination of the companyrt.-, which are authorised to administer the provisions of the Act and even if in dealing with such questions, the trial companyrt or the District Court companymits an error of law, it cannot be said that such an error of law would necessarily involve the question of the said companyrts jurisdiction within the meaning of s. 115 of the Code. We are, therefore, satisfied that on the facts of this case, the High Court exceeded its jurisdiction in interfering with the companyclusion of the District Court that the decree in question had extinguished the respondents equity of redemption. This companyclusion is enough to dispose of the present appeal, because the main ground on which the High Court has reversed the companycurrent decision of the companyrts below dismissing the respondents application for adjustment of the debt, is furnished by its finding that the decree in question did number extinguish the equity of redemption vesting in the ,respondents. In fact, it was as a result of this decision that the High Court reversed the finding of the companyrts below that the respondents application was barred by time. Having regard to the fact that we are inclined to take the view that the High Court exceeded its jurisdiction in reversing the finding of the District Court as to the effect of the decree in question, we do number think it is necessary to companysider the further question as to whether the High Court was right in holding that the decree in question was a preliminary decree and the clause which purported to extinguish the equity of redemption was inoperative and invalid and as much, it did number affect the essential character of the decree as a preliminary decree. The result, is, the appeal is allowed, the order passed by the High Court is set aside and that of the District Court restored.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 273 of 1963. Appeal by special leave from the judgment and decree dated July 15, 1955 of Madras High Court in Appeal Suit No. 142 of 1951. C. Chatterjee and R. Thagarajan, for the appellant. V. Visvanatha Sastri and V. A. Seyid Muhammad, for respondents Nos. 1 to 24. The Judgment of the Court was delivered by Subba Rao, J. This appeal by certificate raises the question, whether a certain property, described as Chalakkode property, is the property of the Tavazhi of which the appellant and his mother are members or the separate property of the appellant. Plaintiffs in O.S. No. 108 of 1948 in the Court of the Sub- ordinate Judge, Palghat, and the defendants in the said suit are members of a Malabar tavazhi originally it was a branch of a tarwad, but separated itself from the said tarwad on July 13, 1934 under a decree in a partition suit. The said tavazhi owns a number of properties. The plaintiffs filed the suit against the tavazhi represented by its manager and others, for arrears of maintenance due to them and for other reliefs. In the plaint it was alleged that the said Chalakkode nilam property was the property of the tavazhi and, therefore, they were entitled to maintenance from the income of the said property also. The defendants in their written-statement denied that the said property was -the property of the tavazhi, but alleged that it was purchased from ,and out of the private funds of defendants 1 and her son, defendant 4. One of the issues raised was whether the property referred to in paragraph 5 of the plaint was tavazhi property from which maintenance companyld be claimed. The learned Subordinate Judge held that the said property did number belong to the tavazhi but it was the personal property of defendants I and 4. In the result in giving a decree for maintenance, he did number take into companysideration the income from the said property. On appeal, a Division Bench of the Madras High Court, having regard to the relevant presumptions under the Malabar law, held that the said property belonged to the tavazhi in the result, it allowed the appeal and remanded the suit to the Court of the Subordinate Judge for fixing the rate of maintenance after taking into account the income from the said property also. The 4th defendant, after obtaining- the certificate from the High Court, has preferred the present appeal to this Court against the judgment of the said -Court. In this appeal, the plaintiffs, the first defendant and other defendants have been impleaded as respondents. The only question in the appeal is whether the said property is the property of the tavazhi or is the self-acquired property of the first respondent and her son, the present appellant. Mr. N. C. Chatterjee, learned companynsel for the appellant, companytends that the first and the fourth defendants are number the managers of the tavazhi properties even if they are, there is numberpresumption under the Malabar law that the properties acquired in their names are tavazhi properties and that even if there is such a presumption, the appellant has proved by relevant evidence that the Chalakkode property is the self-acquired property of himself and the 1st defendant. Mr. A. Viswanatha Sastri, learned companynsel for the respon- dents, argues that the 1st defendant is the karnavati of the tavazhi that she was managing the tavazhi properties during the crucial period with the active help of her son, the 4th defendant appel- lant, that there is presumption under the Marumakkathayam law that a property acquired in the name of a manager of a tavazhi is the property of the tavazhi, and that the said presumption has number been rebutted by any acceptable evidence. Further, he companytends that the same presumption should be invoked in the case of the 4th defendant- appellant, who was in de facto management of them said property during the crucial period and that he had kept back all the relevant accounts and failed to rebut the said presumption. To appreciate the scope of the said presumption it is neces- sary to numberice briefly the relevant legal incidents of toward under the Marumakkathayam law. The said law governs a large section of people inhabiting the West Coast of South India. Marumakkathayam literally means descent through sisters children. There is a fundamental difference between Hindu law and Marumakkathayam law in that, the former is founded on agnatic relationship while the latter is based on matriarchate. The relevant principles of Marumakkathayam law are well settled and, therefore, numbercitation is called for. A brief survey will suffice. A family governed by Marumakkathayam law is known as a tarwad it companysists of a mother and her children, whether male or female, and all their descendants, whether male or female, in the female line. But the descendants, whether male or female, of her sons or the sons of the said descendants in the female line do number belong to the tarwad- they belong to the tarwads of their mothers. A tavazhi is a branch of a tarwad. It is companyprised of a group of descendants in the female line of a female companymon ancestor who is a member of the tarwad. It is one of the units of the tarwad. It may own separate property as distinct from tarwad property. The management of a tarwad or tavazhi ordinarily vests in the eldest male member of the tarwad or tavazhi, as the case may be. But there are instances where the eldest female member of a tarwad or a tavazhi is the manager thereof. The male manager is called the karnavan and the female one, karnavati. A karnavati or karnavan is a representative of the tarwad or tavazhi and is the protector of the members thereof. He or she stands in a fiduciary relationship with the members thereof. In such a system of law there is an inherent companyflict between law and social values, between legal incidents and natural affection, and between duty and interest. As the companysort or the children of a male member, whether a karnavan or number, have numberplace in the tarwad, they have numberright to the property of the tarwad. Whatever might have been the attitude of the members of a tarwad in the distant past, in modern times it has given rise to a feeling of unnaturalness and the companysequent tendency on the part of the male members of a tarwad to divert the family properties by adopting devious methods to their wives and children. Courts have recognized the difference between a joint Hindu family under the Hindu law and a tarwad under the Marumakkathayam law in the companytext of acquisition of properties and have adopted different principles for ascertaining whether a property acquired in the name of a member of a family is a joint family property or the self-acquired property of the said member. Under Hindu law, when a property stands in the name of a member of a joint family, it is incumbent upon those asserting that it is a joint family property to establish it. When it is proved or admitted that a family possessed sufficient nucleus with the aid of which the member might have made the acquisition, the law raises a presumption that it is a joint family property and the onus is shifted to the individual member to establish that the property was acquired by him without the aid of the said nucleus. This is a well settled proposition of law. But the said principle has number been accepted or applied to acquisition of properties in the name of a junior member of a tarwad anandravan . It was held that there was numberpresumption either way and that the question had to be decided on the facts of each case see Govinda v. Nani 1 Dharnu Shetty Dejamma 2 Soopiadath Ahmad v. Mammad Kunhi 3 and Thatha Amma v. Thankappa. 4 But it is settled law that if a property is acquired in the name of the karnavan, there is a strong presumption that it is a tarwad property and that the presumption must hold good unless and until it is rebutted by acceptable evidence see Chathu Nambiar v. Sekharan Nambiar 5 Soopidath Ahmad v. Mammad Kunhi 3 and Thatha Amma v. Thankappa. 4 His Lordship then discussed the oral and documentary evidence and proceeded We may at this stage mention that the fact that the learned Subordinate Judge accepted the oral evidence adduced on behalf of the defendants has numberparticular significance in this case, for the learned Subordinate Judge did number examine the witnesses in Court, but the oral evidence adduced in the earlier maintenance suit was marked by companysent as evidence in the present case. Me learned Subordinate Judge. therefore, was number in a better position than the High Court in the matter of appreciating the oral evid- 1 1913 36 Mad. 304. 2 A.T.R. 1918 Mad. 1367. A.I.R. 1926 Mad. 643. 4 A.T.R. 1947 Mad. 137. A. 1. R. 1925 Mad. 430. ence as he companyld number have observed their demeanour. We, therefore, agree with the High Court, on a companysideration of the documentary and oral evidence, that the 1st defendant is the karnavati of the tavazhi and her son, the 4th defendant, who is an advocate, has been managing the properties on her behalf. If that be so, so far as the 1st defendant is companycerned, there is a strong presumption that the said property was acquired from and out of the funds of the tavazhi, and, so far as the 4th defendant is companycerned, in the circumstances of the present case the position is the same though in law he was number the manager, we find he was in de facto management of the tavazhi properties and, therefore, in possession of the tavazhi properties, its income and the accounts relating to those properties. Being in management of the properties, he stood in a fiduciary relationship with the other members of the tavazhi. Irrespective of any presumption, the said circumstances must be taken into companysideration in companying to the companyclusion whether the said property is tavazhi property or number. After tracing the title of the Chalakode property His Lord- ship companycluded To sum up the tavazhi has properties yielding appreciable income from and out of which the Chalakkode property companyld have been purchased. The 1st defendant was the karnawati of the tavazhi and the 4th defendant was managing the tavazhi properties on behalf of his mother, the 1st defendant, The assignment of the decree in execution whereof the said property was purchased was taken in favour of both defendants I and 4, the de jure and the de facto managers respectively. The sale certificates for the same was issued in the names of both of them The ticket for the kuri was admittedly taken in the name of the 1 st defendant and it is admitted by the 4th defendant that his accounts would number disclose that he paid the subscript-ions to the kuri. So far as the 1st defendant is companycerned, the strong presumption against her exclusive title has number been rebutted by any evidence at all as regards the 4th defendant, the following facts establish that the said property was tavazhi property i the tavazhi has properties yielding appreciable income from and out of which the said property companyld have been purchased ii the 4th defendant was managing the properties of the tavazhi on behalf of the 1st defendant iii he stood in a fiduciary relationship with the members on whose behalf he was managing the properties iv in every relevant transaction the 1st defendant, the karnavati was made a party and v the 4th defendant has suppressed both the accounts of the tavazhi and his personal accounts and has failed to prove that he had any personal income from and out of which he companyld have paid Rs. 14,000 odd towards the purchase of the said property. The facts certainly shift the burden of proving title to the property to the 4th defendant and he has failed to discharge the same. From the aforesaid facts we have numberhesitation in agreeing with the finding of the High Court that the said property was the property of the tavazhi.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 491, 492 of 1964. Appeal by special leave from the judgment and order dated September 14, 1962 of the Andhra Pradesh High Court in Case Referred No. 4 of 1961. Narsaraju, Anwarullah Pasha, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant. V. Viswanatha Sastri, N. D. Karkhanis, R. H. Dhebar and N. Sachthey, for the respondent. The Judgment of the Court was delivered by Subba Rao, J. This appeal by special leave raises the question of the, true companystruction of the provision of S. 4 3 i of the Indian Income-tax Act, 1922, hereinafter called the Act. The relevant facts may be briefly stated. By an indenture dated September 14, 1950, H.E.H. the Nizam of Hyderabad created a trust known as H.E.H. the Nizams Religious Endowment Trust, hereinafter referred to as the Trust, under which he settled certain securities of the face value of Rs. 40 lakhs for implementing the objects described in the Trust deed. Under the Trust deed three trustees were appointed, including the settlor. It will be companyvenient at this stage to read the relevant provisions of the trust deed. Clause 3. The Trustees shall hold and stand possessed of the Trust Fund upon Trust. To manage the Trust Fund and to recover the interest and other income thereof. b During the life-time of the Settlor the balance of the income shall be accumulated and shall be added to the companypus of the Trust Fund. On and after the death of the Settlor the Trustees shall hold the accumulated companypus of the Trust Fund upon trust to spend the income thereof for any one or more of the following religious or charitable objects in such shares and proportions and in such manner as the Trustees shall in their absolute discretion deem proper. 3 86 For annual religious offerings to the sacred places of the Muslims outside India, in Hedjaz and Iraq, viz., Macca, Madina Najaf Karbala, Kazamain, Sirraman Raa and Mashad in Iran and Baghdad and Basra. For help either in lump sum or by way of monthly allowances, to the Khuddam or the servants who are looking after the sacred Shrines, and also by way of charity to pious people residing at these holy places. For the up-keep of the sacred buildings companystructed in the life-time of the Settlor such as, masjids mosques , Azakhana mourning house, built to companymemorate the name of His Exalted Highnesss late mother , two Askurkhanas where the Alam sits inside the City palace during Moharram and Ramzan , and the Maqbaras Tombs and particularly mentioned in the Second schedule hereunder written. For the annual expenditure during the mourning period of Moharram and Safer and also during other religious months, when different kinds of ceremonies, religious discourses Taqreers Id Tagreebs, etc. are performed, including the religious offerings to the sacred Shrines at Ajmer and Gulbarga. It is the desire of the Settlor that the income of the Trust shall, as far as possible, be spent equally for the above mentioned four religious and charitable objects and purposes and in the event of there being any surplus then the same may be spent by the Trustees for any other religious and charitable objects for the benefit of Sunni Mohamedans with liberty X X to the Trustees in their absolute discretion to accumulate the surplus, if any, for any year or years and utilize the same for the purposes in this clause provided for any subsequent year or years. Clause 4. It is hereby further agreed and declared that in all matters wherein the Trustees have a discretionary power the votes of the majority of the Trustees for the time being voting in the matter shall prevail and be binding on the minority as well as on those Trustees who may number have voted and if the Trustees shall be equally divided in opinion the matter shall during the life-time of the Settlor be decided according to the opinion of the Settlor and after his death according to the opinion of the Trustee most senior in age for the time being. Briefly stated, under the deed the Trust fund was to be accumulated during the life-time of the settlor and, after his death, the Trustees should hold the said fund upon trust to spend the income therefrom for one or more of the four religious and charitable objects mentioned therein. Two of the said objects were for religious and charitable purposes within the taxable territories and the other two for purposes outside the taxable territories. It is important to numberice that under the deed numberpower was companyferred on the trustees during the life time of the settlor to set apart and allocate the accumulated income or a part of it from the Trust properties for any one or more of the objects mentioned therein that companyld be done only by the Trustees after the death of the settlor. The said settlor is still alive. For the assessment years 1952-53 and 1953-54 the Trustees were assessed to income-tax on the income during the relevant previous years arising from the said Trust property. The Trustees claimed exemption under S. 4 3 ii of the Act. The Income-tax Officer, on appeal the Appellate Assistant Commissioner, and on further appeals the Income- tax Appellate Tribunal, Hyderabad, companycurrently held that the assessee was number entitled to the exemption under the said section. At the instance of the assessee, the following question was referred to the High Court under s. 66 1 of the Act Whether the income arising from property settled upon trust under the deed of settlement, dated 14-9-1950, or any part thereof is exempt from tax under Section 4 3 of the Indian Income-tax Act, 1922. A Division Bench of the Andhra Pradesh High Court, Hydera- bad, companysisting of Seshachelapati and Venkatesam, JJ, on a companysideration of the relevant provisions of the deed and the Act, came to the companyclusion that on the terms of S. 4 3 i of the Act, the Trust was number entitled to the exemption. Hence the appeals. Mr. Narasa Raju, learned companynsel for the assessee, companytended that proviso a to S. 4 3 i of the Act would be attracted ,only when the Trustees exercised their option to apply the income to religious or charitable purposes without the taxable territories, that in the present case the Trustees had number exercised the said option and that, therefore, the assessees case was directly governed by the substantive part of cl. i of s. 4 3 of the Act. As the income was being accumulated by the Trustees, the argument proceeded, without setting apart the whole or any part thereof for one or other of the purposes mentioned in the Trust deed, it should be held that the Trustees were accumulating the income for religious or charitable purposes within the taxable territories, since two of the named purposes were admittedly within the taxable territories. He would say that if the Trustees exercised their option to apply the fund for the purposes without the taxable territories, the Income-tax authorities companyld, in terms of the proviso, include that income in the total income. Mr. A. V. Viswanatha Sastri, learned companynsel for the Reve- nue, on the other hand, argued that the assessee would be entitled to exemption under S. 4 3 i of the Act only if the income was specifically accumulated for religious and charitable purposes within the taxable territories and that, as in the present ,case admittedly there was numbersetting apart of the income for the said purposes, the assessee companyld number claim any exemption thereunder. Let us number scrutinize the validity of the rival companytentions. Section 4 3 i of the Act reads 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 anything 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 Provided that such income shall be included in the total income- a if it is applied to religious or charitable purposes without the taxable territories, but in the following cases, namely - where the property is held under trust or other legal obligation created before the ,commencement of the Indian Income-tax Amendment Act, 1953 25 of 1953 , and the income therefrom is applied to such purposes without the taxable territories and where the property is held under trust or other legal obligation created after such companymencement, and the income therefrom is applied without the taxable territories to charitable purposes which tend to promote international welfare in which India is interested. The Central Board of Revenue may, by general or special order, direct that it shall number be included in the total income. Under this section a particular class or kind of income is exempted from taxation. It is settled law that the burden is on the Revenue authorities to show that the income is liable, to tax under the statute but the onus of showing that a particular class of income is exempt from taxation lies on the assessee. To earn the exemption, the assessee has to establish that his case clearly and squarely falls within the ambit of the said provisions of the Act. A brief history of cl. i of S. 4 3 of the Act will be useful in the interpretation of its terms. The present cl. was substituted for the following clause by the Income- tax Amendment Act, 1953, with effect from April 1, 1952 any income derived from property held in trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purposes, the income applied or finally set apart for application thereto. Under the said clause,, trust income, irrespective of the fact whether the said purposes were within or without the taxable territories, was exempt from tax in so far as the said income was applied or finally set apart for the said purposes. Presumably as the State did number like to forgo the revenue in favour of charity outside the companyntry, the amended clause described with precision the class or kind of income that is exempt thereunder so as to exclude therefrom income applied or accumulated for religious or charitable purposes without the taxable territories. The substantive part of cl. i is in two parts the first pan relates to the income derived from property held under trust wholly for religious or charitable purposes and the second part, to income derived from property so held in part only for such purposes. But the necessary companydition for attracting the first part of the clause is that the said income is applied or accumulated for application to such religious or charitable purposes within the taxable territories and to attract the second part, the income from the property so held in part shall have been applied or finally set apart for application to the said purposes. A companyparative study of the two part-, clarifies the scope of the provision. The expression used in the first part is applied or accumulated for application and the expression used in the second part is applied or finally set apart for application. The words applied or finally set apart for application in the second part indicate that unless the income from the said property is applied or finally set apart for the purposes within the taxable territories, the said income does number earn the exemption. There cannot be any reason why a different meaning should be given to the expression applied or accumulated for application in the first part of the clause for, on principle, there cannot be any possible distinction between such income from the property wholly held under trust or a part of the property held in trust. The words applied and accumulated, therefore, must mean applied or finally set apart. Applied means that the income is actually applied for the said purposes in the taxable territories and accumulated means that the income is set apart during the year for future spending on the said purposes. The expression accumulated for a purpose involves a companyscious act in present and posits a clear indication on the part of the trustee to set apart the income for that purpose. It is, therefore, manifest that under cl. i , only income from the property wholly or in part held in trust actually applied or set apart for application for future spending on religious or charitable purposes within the taxable territories is exempted from inclusion in the total income. As has been pointed out by Craies in his book on Statute Law, 6th Edn. at p. 217, The effect of an excepting or qualifying proviso, according to the ordinary rules of companystruction, is to except out the preceding portion of the enactment, or to qualify something enacted therein, which but for the proviso would be within it. The proviso to cl. excepts the two classes of income subject to the companydition mentioned therein from the operation of the substantive clause. It companyes into operation only when the said income is applied to religious or charitable purposes without the taxable territories. In that event, the Central Board of Revenue, by general or special order, may, direct that it shall number be included in the total income. The proviso also throws light on the companystruction of the substantive part of cl. i as the exception can be invoked only upon the application of the income to the said purposes outside the taxable territories. The application of the income in presents or, in future for purposes in or outside the taxable territories, as the case may be, is the necessary companydition for invoking either the substantive part of the clause or the proviso thereto. The argument of Mr. Narasa Raju, namely, that as at the time the income was accumulated the Trustees did number exerciser the option, the accumulation would necessarily be for some of the purposes within the taxable territories, leads to a fallacy. If accepted, it would enlarge the scope of the exemption while the section expressly exempts only such income as is applied or accumulated for application for such purposes within the taxable territories, the income would be exempted even though it was accumulated for mixed purposes, that is, for purposes both within and without the taxable territories. Purposes within the taxable territories are number the same as mixed purposes. At best the amounts are kept under a suspense account with an Options to the trustees to set apart at a later date for purposes within or without the taxable territories. Howsoever the option is exercised at a later stage, it is number an accumulation during the, relevant accounting year for purposes within the taxable territories. Some of the cases cited at the Bar may number be of direct application, but the principle laid down therein may be helpful in companystruing the terms of the present Trust deed. The Judicial Committee in Mohammad Ibrahim Riza v. Income- tax Commissioner, Nagpur 1 held that where the purposes of a trust were number wholly charitable or religious and numberportion of the property had been set aside for those purposes, the income from the trust companyld number be identified as appropriated exclusively thereto. The 1 1930 L.R. 57 I.A. 260. principle underlying this decision is, where a trust is for mixed purposes, some religious and other secular, with an option to the trustee to select one or other of the purposes, it is number possible to predicate till the selection is made that the object is for religious or charitable purposes. In the present case, an option is given to the Trustees to set apart the income for the purposes within the taxable territories or without such territories and till a selection is made it is number equally possible to predicate that the accumulation of income is for purposes within the taxable territories. Till the Trustees set apart the accumulation for the purposes within the taxable territories, it cannot be said that the purposes are within the taxable territories. Mr. Narasa Raju attempted to argue that in the present case the income was set apart for purposes within the taxable territories. This aspect of the question was never raised till number. It involves a question of fact. Clause 3 d v of the Trust deed on which reliance is placed is only an expression of desire on the part of the settlor that the income of the Trust should be spent equally on the four religious and charitable purposes mentioned in the deed. The said desire does number amount to setting apart by the Trustees of the whole or a part of the income from the Trust for purposes within the taxable territories. Indeed, cl. 3 d of the Trust deed indicates that the Trustees have numberpower to set apart or accumulate the income for any of the purposes mentioned in the Trust deed till after the death of the settlor. We cannot, therefore, hold on the material placed before us that the Trustees have set apart the accumulated income for purposes within the taxable territories. For the aforesaid reasons we hold that the answer given by the High Court to the question referred to it by the Income- tax Appellate Tribunal is companyrect. The appeals fail and are dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL, APPELLATE JURISDICTION Civil Appeal No. 50 of 1965. Appeal by special leave from the order dated January 6, 1965 of the Circuit Bench of the Punjab High Court at Delhi in Civil Writ No. 8-D of 1965. C. Setalvad, Ravinder Narain, J.B. Dadachanji and O.C. Mathur, for the appellant. K. Daphtary, Attorney-General, S.V. Gupte, Solicitor General, B.R.L. lyengar and R.H. Dhebar, for the respondent No. 1. Santosh Chatterjee B. B. Ratho and M.L. Chhibber, for respondent No. 2. The Judgment of the Court was .delivered by Gajendragadkar, C.J. The principal question which this appeal by special leave raises for our decision relates to the companystruction of Article 192 of the Constitution. The said question arises in this way. The appellant Brundaban Nayak was elected to the Legislative Assembly of Orissa from the Hinjili 23 Constituency in Ganjam district in 1961, and was appointed one of the Ministers of the Council of Ministers in the said State. On August 18, 1964, respondent No. 2, P. Biswal, applied to the Governor of Orissa alleging that the appellant had incurred a disqualification subsequent to his election under Art. 191 1 e of the Constitution read with section 7 of the Representation of the People Act, 1951 No. 43 of 1951 hereinafter called the Act . In his application, respondent No. 2 made several allegations in support of his companytention that the appellant had become disqualified to be a member of the Orissa Legislative Assembly. On September 10, 1964, the Chief Secretary to the Government of Orissa forwarded the ,said companyplaint to respondent No. 1, the Election Commission of India, under the instructions of the Governor. In this companymunication, the Chief Secretary stated that a question had arisen under Article 191 1 of the Constitution whether the member in question had been subject to the disqualification alleged by respondent No. 2 and so, he requested respondent No. 1 in the name of the Governor to make such enquiries as it thinks fit and give its opinion for companymunication tO the Governor to enable him to give a decision on the question raised. On November 17, 1964, respondent No. 1 served a numberice on the appellant forwarding to him a companyy of the letter received by it from respondent No. 2 dated the 4th November, 1964. The numberice intimated to the appellant that respondent No. 1 proposed to enquire in the matter before giving its opinion on the Governors reference, and, therefore, called upon him to submit on or before the 5th December, 1964, his reply with supporting affidavits and documents, if any. The appellant was also told that the parties would be heard in person or through authorised companynsel at 10-30 A.M. on the 8th December, 1964. in the office of respondent No. 1 in New Delhi. On December 1, 1964, the appellant sent a telegram to respondent No. 1 requesting it to adjourn the hearing of the matter. On the same day, he also addressed a registered letter to respondent No. 1 making the same request. Respondent No. 2 objected to the request made by the appellant for adjourning the hearing of the companyplaint. On December 8, 1964. respondent No. 1 took up this matter for companysideration. Respondent No. 2 appeared by his companynsel Mr. Chatterjee, but the appellant was absent. Respondent No. 1 took the view that an enquiry of the nature companytemplated by Art. 192 2 must be companyducted as expedtiously as possible, and so, it was necessary that whatever his other companymitments may be, the appellant should arrange to submit at least his statement in reply to the allegations made by respondent No. 2, even if he required some more time for filing affidavits and or documents in support of his statement. Even so, respondent No. 1 gave the appellant time until the 2nd January, 1965, 10-30 A.M. when it ordered that the matter would be heard. On January 2, 1965, the appellant appeared by his companynsel Mr. Patnaik and respondent No. 2 by his companynsel Mr. Chatterjee. On this occasion, Mr. Patnaik raised the question about the maintainability of the proceedings before respondent No. 1 and its companypetence to hold the enquiry. Mr. Chatterjee repelled Mr. Patnaiks companytention. Respondent No. 1 over-ruled Mr. Patnaiks companytention and recorded its companyclusion that it was companypetent to hold the enquiry under Art. 192 2 . Mr. Patnaik then asked for adjournment and made it clear that he was making the motion for adjournment without submitting to the jurisdiction of respondent No. 1. In view of the attitude adopted by Mr. Patnaik, respondent No. 1 took the view that it would be pointless to adjourn the proceedings. and so, it heard Mr. Chatterjee in support of the case of respondent No. 2. After hearing Mr. Chatterjee. respondent No. 1 reserved its orders on the enquiry and numbered that its opinion would be companymunicated to the Governor as early as possible. When matters had reached this stage before respondent No. 1, the appellant moved the Punjab High Court under Art. 226 of the Constitution praying that the enquiry which respondent No. 1 was holding, should be quashed on the ground that it was incompetent and without jurisdiction. This writ petition was summarily dismissed by the said High Court on January 6, 1965. Thereafter, the appellant applied to this Court for special leave on January 8, 1965, and special leave was granted to him on January 14, 1965. The appellant then moved this Court for stay of further proceedings before respondent No. 1, and the said prayer was granted. When special leave was granted to the appellant, this Court had made an order that the preparation of the record and the filing of statements of the case should be dispensed with and the appeal should be heard on the paper- book filed along with the special leave petition and must be placed for hearing within three weeks. That is how the matter has companye before us for final disposal. Since the Punjab High Court had dismissed the writ petition filed by the appellant in limine, neither of the two respondents had an opportunity to file their replies to the allegation made by the appellant in his writ petition. That is why both respondent No. 1 and respondent No. 2 have filed companynter-affidavits in the present appeal setting out all the relevant facts on which they wish to rely. The appellant has filed an affidavit-in-reply. All these documents have been taken on the record at the time of the hearing of this appeal. It appears from the affidavit filed by Mr. Prakash Narain. Secretary to respondent No. 1, that when numberice issued by respondent No. 1 on the 17th November, 1964, was served on the appellant, through oversight the original companyplaint flied by respondent No. 2 before the Governor of Orissa and the reference made by the Governor to respondent No. 1 were number forwarded to the appellant. At the hearing before us, it is number disputed by the appellant that a companyplaint was in fact made by respondent No. 2 before the Governor of Orissa and that the Governor had then referred the matter to respondent No. 1 for its opinion. Let us then refer to Article 192 which fails to be companystrued in the present appeal. Before reading this articl, it is relevant to refer to Art. 191. Article 191 1 provides that a person shall be disqualified for being chosen as, and for being, a member of the Legislative Assembly or Legislative Council of a State if, to the Governor. As we have already indicated, respondent No. 2s case is that the appellant has incurred the disqualification under Art. 191 1 e read with s. 7 d of the Act, and this disqualification has been incurred by him subsequent to his election. It is well-settled that the disqualification to which Art. 191 1 refers, must be incurred subsequent to the election of the member. This companyclusion follows from the provisions of Art. 190 3 a . This Article refers to the vacation of seats by members duly elected. Sub-Article 3 a provides that if a member of a House of the Legislature of a State becomes subject to any of the disqualifications mentioned in clause 1 of Art. 191, his seat shall thereupon become vacant. Incidentally, we may add that companyresponding provisions with regard to the disqualification of members of both Houses of Parliament are prescribed by Articles 101,102 and 103 of the Constitution. It has been held by this Court in Election Commission, India Saka Venkata Subba Rao and Union of lndia--Intervener that Articles 190 3 and 192 1 are applicable only to disqualifications to which a member becomes subject after being elected as such. There is numberdoubt that the allegations made by respondent No. 2 in his companyplaint before the Governor, prima facie, indicate that the disqualification on which respondent No. 2 relies has arisen subsequent to the election of the appellant in 1961. Reverting then to Art. 192, the question which we have to decide in the present appeal is whether respondent No. 1 is entitled to hold an enquiry before giving its opinion to the Governor as required by Art. 192 2 . Let us read Art. 192-- If any question arises as to whether a member of a House of the Legislature of a State has become subject to any of the disqualifications mentioned in clause 1 of Article 191, the question shall be referred for the decision of the Governor and his decision shall be final. Before giving any decision on any such question. the Governor shall obtain the opinion of the Election Commission and shall act according to such opinion. Mr. Setalvad for the appellant companytends that in the present case. numberquestion can be said to have arisen as to whether the appellant has become subject to any of the disqualifications mentioned in clause 1 of Art. 191, because his case is that such a question can be raised only on the floor of the Legislative Assembly and can be raised by members of the Assembly and number by an ordinary citizen or voter in the form of a companyplaint to the Governor. Mr. Setalvad did number dispute the fact that this companytention has number been taken by the appellant either in his writ petition before the High Court or even in his application for special leave before this Court. In fact, the case sought to be made out by the appellant in the present proceedings appears to be that though a question may have arisen about 1 1953S.C.R.1144. his disqualification, it is the Governor alone who can hold the enquiry and number respondent No. 1. Even so, we have allowed Mr. Setalvad to raise this point, because it is purely a question of law depending upon the companystruction of Art. 192 1 . In support of his argument, Mr. Setalvad refers to the fact that Art. 192 occurs in Chapter III of Part VI which deals with the State Legislature, and he invited our attention to the fact that under Art. 199 3 which deals with a question as to whether a Bill introduced in the Legislature of a State which has a Legislative Council is a Money Bill or number, the decision of the Speaker of the Legislative Assembly of such State thereon shall be final. He urges that just as the question companytemplated by Art. 199 3 can be raised only on the floor of the House, so can the question about a subsequent disqualification of a member of a Legislative Assembly be raised on the floor of the House and numberhere else. He companycedes that whereas the question companytemplated by Art. 199 3 has to be decided by the Speaker and his decision is final, the authority to decide the question under Art. 192 1 is number vested in the Speaker. but is vested in the Governor. In other words, the companytext in which Art. 192 1 occurs is pressed into service by Mr. Setalvad in support of his argument. Mr. Setalvad also relies on the fact that Art. 192 1 provides that if any question arises, it shall be referred for the, decision of the Governor and this clause, says Mr. Setalvad, suggests that there should be some referring authority which makes a reference of the question to the Governor for his decision. According to him, this referring authority, by necessary implication, is the Speaker of the Legislative Assembly. There is another argument which he has advanced before us in support of this companystruction. Article 192 2 requires that whenever a question is referred to the Governor, he shall obtain the opinion of the Election Commission and Mr. Setalvad suggests that it companyld number have been the intention of the Constitution to require the Governor to refer to the Election Commission every question which is raised about an alleged disqualification of a member of a Legislative Assembly even though such a question may be patently frivolous or unsustainable. We are number impressed by these arguments. It is significant that the first clause of Art. 192 1 does number permit of any limitations such as Mr. Setalvad suggests. What the said clause requires is that a question should arise how it arises, by whom it is raised, in what circumstances it is raised, are number relevant for the purpose of the application of this clause. All that is relevant is that a question of the type mentioned by the clause should arise and so, the limitation which Mr. Setalvad seeks to introduce in the companystruction of the first part of Art. 192 I is plainly inconsistent with the words used in the said clause. Then as to the argument based on the words the question shall be referred for the decision of the Governor, these words do number import the assumption that any other authority has to receive the companyplaint and after a prima facie and initial investigation about the companyplaint, send it on or refer it to the Governor for his decision. These words merely emphasise that any question of the type companytemplated by clause 1 of Art. 192 shall be decided by the Governor and Governor alone numberother authority can decide it, number can the decision of the said question as such fall within the jurisdiction of the Courts. That is the significance of the words shall be referred for the decision of the Governor. If the intention was that the question must be raised first in the Legislative Assembly and after a prima facie examination by the Speaker it should be referred by him to the Governor, Art. 192 1 would have been worded in an entirely different manner. We do number think there is any justification for reading such serious limitations in Art. 192 1 merely by implication. It is true that Art. 192 2 requires that whenever a question arises as to the subsequent disqualification of a member of the Legislative Assembly, it has to be forwarded by the Governor to the Election Commission for its opinion. It is companyceivable that in some cases, companyplaints made to the Governor may be frivolous or fantastic but if they are of such a character, the Election Commission will find numberdifficulty in expressing its opinion that they should be rejected straightaway. The object of Art. 192 is plain. No person who has incurred any of the disqualifications specified by Art. 191 1 , is entitled to companytinue to be a member of the Legislative Assembly of a State, and since the obligation to vacate his seat as a result of his subsequent disqualification has been imposed by the Constitution itself by Art. 190 3 a , there should be numberdifficulty in holding that any citizen is entitled to make a companyplaint to the Governor alleging that any member of the Legislative Assembly has incurred one of the disqualifications mentioned in Art. l 91 1 and should, therefore, vacate his seat. The whole object of democratic elections is to companystitute legislative chambers companyposed of members who are entitled to that status, and if any member forfeits that status by reason of a subsequent disqualification, it is in the interests of the companystituency which such a member represents that the matter should be brought to the numberice of the Governor and decided by him in accordance with the provisions of Art. 192 2 . Therefore, we must reject Mr. Setalvads argument that a question has number arisen in the present proceedings as required by Art. 192 1 . The next point which Mr. Setalvad has raised is that even if a question is held to have arisen under Art. 192 1 , it is for the Governor to hold the enquiry and number for the Election Commission. He companytends that Art. 192 1 requires the question to be referred to the Governor for his decision and provides that his decision shall be final. It is a numbermal requirement of the rule of law that a person who decides should be empowered to hold the enquiry which would enable him to reach his decision, and since the Governor decides the question, he must hold the enquiry and number the Election Commission. That, in substance, is Mr. Setalvads case. He companycedes that Art. 192 2 requires that the Governor has to pronounce his decision in accordance with the .opinion given by the Election Commission that is a Constitutional obligation imposed on the Governor. He, however, argues that the Election Commission which has to give an opinion, is number companypetent to hold the enquiry, but it is the Governor who should hold the enquiry and then forward to the Election Commission all the material companylected in such an enquiry to enable it to form its opinion and companymunicate the same to the Governor. We are satisfied that this companytention also is number well- founded. The scheme of Article 192 1 and 2 is absolutely clear. The decision on the question raised under Art. 192 1 has numberdoubt to be pronounced by the Governor, but that decision has to be in accordance with the opinion of the Election Commission. The object of this provision clearly is to leave it to the Election Commission to decide the matter, though the decision as such would formally be pronounced in the name of the Governor. When the Governor pronounces his decision under Art. 192 1 , he is number required to companysult his Council of Ministers he is number even required to companysider and decide the matter himself he has merely to forward the question to the Election Commission for its opinion, and as soon as the opinion is received, he shall act according to such opinion. In regard to companyplaints made against the election of members to the Legislative Assembly. the jurisdiction to decide such companyplaints is left with the Election Tribunal under the relevant provisions of the Act. That means that all allegations made challenging the validity of the election of any member, have to be tried by the Election Tribunals companystituted by the Election Commission. Similarly, all companyplaints in respect of disqualifications subsequently incurred by members who have been validly elected, have, in substance, to be tried by the Election Commission, though the decision in form has to be pronounced by the Governor. If this scheme of Art. 192 1 and 2 is borne in mind, there would be numberdifficulty in rejecting Mr. Setalvads companytention that the enquiry must be held by the Governor. It is the opinion of the Election Commission which is in substance decisive and it is legitimate to assume that when the companyplaint is received by the Governor, and he forwards it to the Election Commission. the Election Commission should proceed to try the companyplaint before it gives its opinion. Therefore, we are satisfied that respondent No. 1 acted within its jurisdiction when it served a numberice on the appellant calling upon him to file his statement and produce his evidence in support thereof. Mr. Setalvad faintly attempted to argue that the failure of respondent No. 1 to furnish the appellant with a companyy of the companyplaint made by respondent No. 2 before the Governor and of the order of reference passed by the Governor ,forwarding the said companyplaint to respondent No. 1, rendered the proceedings before respondent No. 1 illegal. This companytention is plainly misconceived. As soon as respondent No. 1 received the companyplaint and the order of reference which was companymunicated to it by the Chief Secretary to the Government of Orissa, it was seized of the matter and it was plainly acting within its jurisdiction under Art. 192 2 when it served the numberice on the appellant. As we have already indicated, it was through oversight that the two documents were number forwarded to the appellant along with the numberice, but that cannot in any sense affect the jurisdiction of respondent No. 1 to hold the enquiry. In fact, as respondent No. 2 has pointed out in his affidavit, the fact that a reference had been made by the Governor to respondent No. 1 was known all over the State, and it is futile for the appellant to suggest that when he received the numberice from respondent No. 1, he did number know that a companyplaint had been made against him to the Governor alleging that subsequent to his election, he had incurred a disqualification as companytemplated by Art. 191 1 e of the Constitution read with s. 7 d of the Act. It would have been better if the appellant had number raised such a plea in the present proceedings. In this companynection, we ought to point out that so far the practice followed in respect of such companyplaints has companysistently recognised that the enquiry is to be held by the Election Commission both under Art. 192 2 and Art. 103 2 . In fact, the learned Attorney General for respondent No. 1 stated before us that though on several occasions, the Election Commission has held enquiries before companymunicating its opinion either to the President under Art. 103 2 or to the Governor under Art. 192 2 , numberone ever thought of raising the companytention that the enquiry must be held by the President or the Governor respectively under Art. 103 1 and Art. 192 1 . He suggested that the main object of the appellant in taking such a plea was to prolong the proceedings before respondent No. 1. In the first instance, the appellant asked for a long adjournment and when that request was refused by respondent No. 1, he adopted the present proceedings solely with the object of avoiding an early decision by the Governor on the companyplaint made against the appellant by respondent No. 2. We cannot say that there is numbersubstance in this suggestion. There is one more point to which we may refer before we part with this appeal. Our attention was drawn by the learned Attorney-General to the observations made by the Chief Election Commissioner when he rendered his opinion to the Governor on May 30, 1964, on a similar question under Art. 192 2 in respect of the alleged disqualification of Mr. Biren Mitra, a member of the Orissa Legislative Assembly, Where, as in the present case, observed the Chief Election Commissioner, the relevant facts are in dispute and can only be ascertained after a proper enquiry, the Commission finds itself in the unsatisfactory position of having to give a decisive L B D 2SCI- 6 opinion an the basis of such affidavits and documents as may be produced before it by interested parties. It is desirable that the Election Commission should be vested with the powers of a companymission under the Commissions of Enquiry Act, 1952, such as the power to summon witnesses and examine them on oath, the power to companypel the production of documents, and the power to issue companymissions for the examination of witnesses. We would like to invite the attention of Parliament to these observations, because we think that the difficulty experienced by the Election Commission in rendering its opinion under Art. 103 2 or Art. 192 2 appears to be genuine, and so Parliament may well companysider whether the suggestion made by the Chief Election Commissioner should number be accepted and appropriate legislation adopted in that behalf. The result is, the appeal fails and is dismissed with companyts. In view of the fact that the present proceedings have unnecessarily protracted the enquiry before respondent No. 1, we suggest that respondent No. 1 should proceed to companysider the matter and forward its opinion to the Governor as early as possible. It is hardly necessary to point out that in case the allegations made against the appellant are found to be valid, and the opinion of respondent No.1 is in favour of the case set out by respondent No. 2, companyplications may arise by reason of the Constitutional provision prescribed by Art. 190 3 . In view of the said provision, it is of utmost importance that companyplaints made under Art.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1003 and 1004 of 1963. Appeals from the judgment and orders dated November 13, 1958 of the Bombay High Court in Miscellaneous Petition No. 217 and 218 of 1958. K. Daphtary, Attorney-General, R. Ganapathy Iyer and R. G. K. Achar, for the appellants in both the appeals . V. Viswanatha Sastri, C. A. Ramachandran, J. B. Dada- chanji, 0. C. Mathur and Ravinder Narain, for the respondent in both the appeals . The Judgment of Gajendragadkar, C.J., Wanchoo, Shah, and Sikri, JJ. was delivered by Shah, J. Mudholkar, J. delivered a dissenting Opinion. due numberice to the assessee. Shah, J. The 1st Income-tax Officer, C-11 Ward, Bombay served a numberice tinder s. 18-A 1 of the Indian Income-tax Act, 1922 calling upon Bhagwandas Kevaldas-who will hereinafter be called the assessee-to pay in four equal installments Rs. 25,973/5 as advance-tax for the assessment year 1948-49. On September 17, 1947 the assessee filed an estimate of his income under s. 18-A 2 and of the tax payable by him, and on January 10, 1948 he filed a revised estimate. An order under S. 23-B of the Act provisionally assessing the income was made by the Income-tax Officer and pursuant thereto on August 23, 1950 the assessee paid the tax so assessed. Regular assessment of the income of the assessee was made on March 31, 1953 by the Income-tax Officer, and it was found that the tax paid on the basis of the estimate of the assessee was less than eighty per cent of the tax determined as a result of the regular assessment. But the Income-tax Officer made numbercharge for interest under sub-s. 6 of S. 18-A of the Income-tax Act. The departmental auditor raised an objection in auditing accounts of C-11 Ward that a mistake was companymitted by the Income-tax Officer in failing to charge interest in making the order of assessment against the assessee. On September 21, 1956 the Income-tax Officer served a numberice upon the assessee requiring him to show cause why the mistake in number levying interest be number rectified and why he should number be directed to pay penal interest under s. 18-A 6 . On October 4, 1956 the Income- tax Officer recorded the following order During the internal checking of C-11 Ward, the Auditor has pointed out a mistake in number charging penal interest under s. 18-A 6 . As this mistake is apparent from record the same is rectified under s. 35 after giving due numberice to the assessee, and served a numberice of demand calling upon the assessee to pay Rs. 14,929/10 as interest due under s. 18-A 6 for the period January 1, 1948 to July 22, 1950. In exercise of his powers under s. 33-A, by order dated Feb- ruary 1, 1958, the Commissioner of Income-tax companyfirmed the order of the Income-tax Officer rectifying the original order of assessment and imposing liability to pay interest, subject to the modification that interest be paid only till June 13, 1950. The assessee then moved the High Court of Judicature at Bombay by a petition under Art. 226 of the Constitution for issue of a writ certiorari summoning the record of the case and for an order quashing or setting aside the order passed under s. 33-A 2 by the Commissioner of Income-tax and the order passed by the Income-tax Officer under s. 35 and the numberice of demand pursuant to that order. The High Court of Bombay following its earlier judgment in the case of Shantilal Ravji v. M. C. Nair, IV Income-tax Officer, G Ward, Bombay and Another 1 directed that the orders passed by the Income-tax Officer and by the Commissioner of Income- tax be quashed. Against the order passed by the High Court the Commissioner of Income-tax and the Income-tax Officer have, with certificate granted by the High Court, appealed to this Court. At the hearing of this appeal companynsel for the assessee raised an objection in liming that the appeal filed by the Commissioner and the Income-tax Officer was incompetent. because the High Court had numberpower under Art. 133 of the Constitution to certify a proposed appeal against an order in a proceeding companymenced by a petition for the issue of a writ under Art. 226 of the Constitution. It was urged that the proceeding before the High Court was number a civil proceeding within the meaning of Art. 133. Article 133 of the Constitution, insofar as it is material, by the first clause provides 1 1958 34 I.T.R. 439. An appeal shall lie to the Supreme Court from any judgment, decree or final order in a civil proceeding of a High Court in the territory of India if the High Court certifies- a that the amount or value of the subject- matter of the dispute in the companyrt of first instance and still in dispute on appeal was and is number less than twenty thousand rupees or b that the judgment, decree or final order involves directly or indirectly some claim or question respecting property of the like amount or value or c that the case is a fit one for appeal to the Supreme Court The power to issue a certificate under Art. 133 may be exer- cised only in respect of a judgment, decree or final order of a High Court in a civil proceeding, and the order passed by the High Court disposing of the petition filed by the assessee for the issue of a writ under Art. 226 is a judgment. But Mr. A. V. Vishwanath Sastri for the assessee companytended in the first instance that the expression civil proceeding -in Art. 133 only means a proceeding in the nature of or triable as a civil suit and a petition for the issue of a high prerogative writ number being such a proceeding, against the order passed by the High Court numberappeal lay to this Court with certificate under Art. 133. In the alternative, companynsel companytended that even if a proceeding for the issue of a writ under Art. 226 of the Constitution may in certain cases be treated as a civil proceeding, it cannot be so treated when the party aggrieved seeks relief against the levy of tax or revenue claimed to be due to the State. This Court is invested by the Constitution with appellate jurisdiction of great amplitude exercisable over all companyrts and tribunals in India. The jurisdiction may be exercised in respect of any judgment, decree, determination, sentence or order in any cause or matter passed by any companyrt or tribunal other than a judgment, determination, sentence or order made or passed by any companyrt or tribunal under any law relating to the Armed Forces Art. 136. Exercise of this power depends solely upon the discretion of the Court. Appeals lie to this Court also from orders passed in certain classes of cases when certified by the High Courts. An appeal lies from the judgment, decree or final order of a High Court in a civil, criminal or other proceeding, if the High Court certifies that the case involves a substantial question of law as to the interpretation of the Constitution Art. 132 1 . Am appeal also lies from any judgment, decree or final order in a civil proceeding of a High Court if the High Court certifies that the case satisfies the companyditions in cls. a , b or c of Art. 133 1 , or from any judgment or final order or sentence in a criminal proceeding of a High Court, if the case falls within the description of cls. a b of Art. 134, or if the High Court certifies that the case is a fit one for appeal. It is clear that under Art. 136 against the adjudications of all companyrts and tribunals subject to the exception already numbericed whatever be the character of the proceeding, appeals lie with leave to this Court. An appeal lies against the adjudication of a High Court as a matter of right, whatever the nature of the proceeding, with certificate that it involves a substantial question of law as to the interpretation of the Constitution, and in civil proceeding with certificate of the nature set out in cls. a , b or c of Art 133, and in criminal proceedings in companyditions mentioned in cls. a and b and with certificate under cl. c of Art. 134. Counsel for the assessee said that proceedings instituted in the High Court in exercise of its jurisdiction--original or appellate may be broadly classified as i proceedings civil, ii proceedings criminal, and iii proceedings revenue, and where the case does number involve a substantial question as to the interpretation of the Constitution, from an order passed in a proceeding civil, an appeal lies to this Court with certificate granted under Art. 133 of the Constitution, and from a judgment, final order or sentence in a criminal proceeding an appeal lies with certificate ,ranted under Art. 134 of the Constitution, but from an order passed in a proceeding relating to revenue the right of appeal may be exercised only with leave of this Court. Counsel seeks support for this argument primarily from the phraseology used in Art. 132 of the Constitution. That Article, by its first clause, provide-, An appeal shall lie to the Supreme Court from any judgment, decree or final order of a High Court in the territory of India, whether in a civil, criminal or other proceeding, if the High Court certifies that the case involves a substantial question of law as to the interpretation of this Constitution. Counsel relies upon the classification of proceeding made in Art. 132 1 and seeks to companytrast it with the phraseology used in Arts. 133 1 134 1 . He says that other proceeding in Art. 132 1 falls within the residuary class of proceedings other than civil or criminal, and such a proceeding includes a revenue proceeding. The expression civil proceeding is number defined in the Constitution, number in the General Clauses Act. The expression in our judgment companyers all proceedings in which a party asserts the existence of a civil right companyferred by the civil law or by statute, and claims relief for breach thereof. A criminal proceeding on the other hand is ordinarily one in which if carried to its companyclusion it may result in the imposition of sentences such as death, imprisonment, fine or forfeiture of property. It also includes proceedings in which in the larger interest of the State, orders to prevent apprehended breach of the peace, orders to bind down persons who are a danger to the maintenance of peace and order, or orders aimed at preventing vagrancy are companytemplated to be passed. But the whole area of proceedings, which reach the High Courts is number exhausted by classifying the proceedings as civil and criminal. There are certain proceedings which may be regarded as neither civil number criminal. For instance, proceeding for companytempt of Court and for exercise of disciplinary jurisdiction against lawyer or other professionals, such as chartered accountants may number fall within the classification of proceedings, civil or criminal. But there is numberwarrant for the view that from the category of civil proceedings, it was intended to exclude proceedings relating to or which seek relief against enforcement of taxation laws of the State. The primary object of a taxation statute is to companylect revenue for the governance of the State or for providing specific services and such laws directly affect the civil rights of the tax- payer. If a person is called upon to pay tax which the State is number companypetent to levy, or which is number imposed in accordance with the law which permits imposition of the tax, or in the levy, assessment and companylection of which rights of the tax-payer are infringed in a manner number warranted by the statute, a proceeding to obtain relief whether it is from the tribunal set up by the taxing statute, or from the civil companyrt would be regarded as a civil proceeding. The character of the proceeding, in our judgment, depends number upon the nature of the tribunal which is invested with authority to grant relief but upon the nature of the right violated and the appropriate relief which may be claimed. A civil proceeding is therefore one in which a person seeks to enforce by appropriate relief the alleged infringement of his civil rights against another person or the State, and which if the claim is proved would result in the declaration express or implied of the right claimed and relief such as payment of debt, damages, company- pensation, delivery of specific property, enforcement of personal rights, determination of status etc. There is therefore under the Constitution a right of appeal to, this Court with special leave from the adjudications of all companyrts and tribunals except tribunals companystituted by or under laws relating to Armed Forces . An appeal also lies to this Court against all adjudications by a High Court from judgments, decrees and orders in cases in which a substantial question as to the interpretation of the Constitution is involved, whatever the nature of the proceeding. Appeals from criminal proceedings lie as a matter of right in cases falling within cls. a and b of Art. 134, and in cases certified as fit for appeal under cl. c of Art. 134, and from civil proceedings of the nature certified by the High Court under Art. 133 1 cls. a , b or c . For reasons already stated, a proceeding for relief against infringement of civil right of a person is a civil proceeding even if the infringement be in purported enforcement of a taxing statute. Section 261 of the Income- tax Act 1961 under which an appeal lies to this Court from any judgment delivered on a reference made under s. 256 in any case which the High Court certifies to be a fit one for appeal to this Court is number an exception to that rule. It is number because the reference is number a civil proceeding that a certificate under Art. 133 may number be granted it is because of the advisory character of the jurisdiction exercised by the High Court under s. 256 that the opinion delivered by the High Court in a reference under s. 256 is number a judgment, order or decree within the meaning of Art. Similarly the enactment of s. 54 of the Land Acquisition Act which expressly provides for an appeal to this Court, subject to the provisions companytained in s. 110 of the Code of Civil Procedure, from an award, or from any part of the award made by the Court is easily appreciated, if regard be had to the character of the adjudication, which is in the nature of an award in an arbitration see Rangoon Botatoung Company Ltd. v. The Collector, Rangoon 1 . By a petition for a writ under Art. 226 of the Constitution, extraordinary jurisdiction of the High Court to issue high prerogative writs granting relief in special cases to persons aggrieved by the exercise of authority-statutory or otherwise-by public officers or authorities is invoked. This jurisdiction is undoubtedly special and exclusive, but on that account the nature of the proceeding in which it is exercised is number altered. Where a revenue L.R. 39 I.A. 197. authority seeks to levy tax or threatens action in purported exercise of powers companyferred by an Act relating to revenue, the primary impact of such an act or threat is on the civil rights of the party aggrieved and when relief is claimed in that behalf it is a civil proceeding, even if relief is claimed number in a suit but by resort to the extraordinary jurisdiction of the High Court to issue writs. It is number easy to attribute to the expression revenue proceeding any precise companynotation, and in interpreting Arts. 132 1 and 133 it would be difficult to project the somewhat anomalous provision companytained in s. 226 of the Government of India Act, 1935 under which, for historical reasons, it was enacted that unless otherwise provided by the appropriate legislature, numberHigh Court shall have any original jurisdiction in any matter companycerning the revenue, or companycerning any act ordered or done in the companylection thereof according to the usage and practice of the companyntry or the law for the time being in force. This section barred the High Court from exercising original jurisdiction in matters companycerning revenue. There was numbersuch bar against subordinate companyrts, number against the exercise of appellate jurisdiction by the High Courts in matters companycerning revenue instituted in subordinate companyrts. No provision has been made in the Constitution similar to S. 226 of the Government of India Act, and there is numberreason to think that it was intended to deprive the High Court of its power to certify cases companycerning revenue, by enacting that the High Court may certify a case in a civil proceeding. No ground is suggested for acceptance that while removing the ban against the High Courts original jurisdiction in matters companycerning revenue, the Constitution imposed another ban against the exercise of power to certify cases decided by the High Court in the appellate as well as original jurisdiction when the cases companycerned revenue. We have already set out our reasons for holding that a Pro- ceeding taken for recovery of a tax is number other proceeding under Art. 132 1 such a proceeding is a civil proceeding within the meaning of Art. 133 1 . The object of referring to other proceeding in that clause is merely to emphasize that adjudications made in proceedings which are number included in the description civil or criminal would still attract the provisions of Art. 132 1 in case they raise a substantial question of law as to the interpretation of the Constitution. A proceeding in which relief is claimed against action of revenue authorities is included in the civil proceeding and number in other proceeding within the meaning of Art. 132 1 , and an aggrieved partys right to appeal to this Court from orders in those proceedings is exercisable in the same manner as it would be in the case of a decree, order or judgment in any other civil proceeding. A large number of cases have arisen before the High Courts in India in which companyflicting views about the meaning of the expression civil proceeding were expressed. In some cases it was held that the expression civil proceeding excludes a proceeding instituted in the High Court -for the issue of a -writ whatever may be the nature of the right infringed and the relief claimed in other cases it has been held that a proceeding resulting from an application for a writ Linder Art. 226 of the Constitution may in certain cases be deemed to be a civil proceeding, if the claim made, the right infringed and the relief sought warrant that inference in still another set of cases it has been held that even if a proceeding companymenced by a petition for a writ be generally categorised as a civil proceeding, where the jurisdiction which the High Court exercises relates to revenue, the proceeding is number civil. A perusal of the reasons given in the cases prompt the following observations. There are two preliminary companyditions to the exercise of the power to grant certificate a there must be a judgment, decree or final order, and that judgment, decree or final order must be made in a civil proceeding. An advisory opinion in a tax reference may number be appealed from with certificate under Art. 133, because the opinion is number a judgment, decree or final order, and b a proceeding does number cease to be civil, when relief is claimed for enforcement of civil rights merely because the proceeding is number tried as a civil suit. In a large majority of the cases in which the jurisdiction of the High Court to certify a case under Art. 133 1 was negatived it appears to have been assumed that the expression other proceeding used in Art. 132 of the Constitution is or includes a proceeding of the nature of a revenue proceeding, and therefore the expression civil proceeding in Art. 133 1 does number include a revenue proceeding. This assumption for reasons already set out is erroneous. We do number think that any useful purpose will be served by entering upon a detailed analysis of the cases to which our attention was invited in which the view has been expressed that in a petition under Art. 226 of the Constitution where relief is claimed in respect of -action sought to be taken by the revenue authorities, the High Court has numberpower to issue a certificate under Art. 133 of the Constitution. Express prescription of two independent companyditions by the Constitution on the existence of which alone the jurisdiction of the High Court may be invoked, has in some cases been obliterated, and the ground that from an order in a reference in a case companycerning revenue for opinion, a certificate may number be granted under Art. 133, because there is numberjudgment, decree or final order has been projected into a ground for denying that proceeding the character of a civil proceeding. On a careful review of the provisions of the Constitution, we are of the opinion that there is numberground for restricting the expression civil proceeding only to those proceedings which arise out of civil suits or proceedings which are tried as civil suits, number is there any rational basis for excluding from its purview proceedings instituted and tried in the High Court in exercise of its jurisdiction under Art. 226, where the aggrieved party seeks relief against infringement of civil rights by authorities purport- ing to act in exercise of the powers companyferred upon them by revenue statutes. The preliminary objection raised by companynsel for the assessee must therefore fail. We may number turn to the question which is raised on the merits in this appeal. Section 18-A which was added by the Indian Income-tax Amendment Act 11 of 1944 for imposing liability for advance payment of tax enacts by the first sub-section, insofar as it is material, that where there is numberprovision made for deduction of income-tax at the time of payment, the Income-tax Officer may on or after the companymencement of any financial year, by order in writing, require an assessee to pay quarterly to the credit of the Central Government the income-tax and super-tax payable on so much of such income as is included in his total income of the latest previous year in respect of which, he has been assessed. Contrary to the two basic companycepts of the scheme of the Indian Income-tax Act under which tax is charged upon the income of the previous year and number the income of the assessment year, and liability does number arise until the annual Finance Act is passed charging income to tax, s. 18-A introduces within the scheme of the Act the principle of advance payment of tax and authorises companylection of advance tax before the assessment year companymences and before even the Finance Act which imposes liability is enacted. But this tax is advance tax which is to be adjusted against tax payable on the income of the financial year in the light of the total income which may be companyputed and also in the light of the Finance Act which may be passed. Assessment and demand for advance payment of tax are therefore provisional. If ultimately the advance tax paid is in excess of the tax finally assessed, refund will be granted to the assessee if the advance tax paid is less than what is payable, the balance becomes payable on the final assessment. With the object of enforcing companypliance with the provision for payment of advance tax effectively, and at the same time to protect the assessee from avoidable harassment, the Legislature made a provision under sub-s. 2 of s. 18-A enabling the assessee before the last instalment is due to intimate his own estimate of the income of the previous year to the Income- tax Officer and the tax payable by him calculated in the manner laid down in sub-s. 1 and to pay such amount as accords with his estimate. Provision is also made for submitting revised estimate of income. The Legislature by sub-s. 6 also on the other hand penalises an assessee who seeks to evade liability to pay advance tax by underestimating his income by providing that if in any year an assessee paid tax under sub-s. 2 or 3 on the basis of his own estimate and the tax so paid is less than eighty per cent of the tax determined on the basis of the regular assessment, so far as such tax relates to income to which the provisions of s. 18 do number apply and so far as it is number due to variations in the rates of tax made by the Finance Act enacted for the year for which the regular assessment is made, simple interest at the rate of six per cent per annum from the 1st day of January in the financial year in which the tax was paid up to the date of the said regular assessment shall be payable by the assessee upon the amount by which the tax so paid falls short of the said eighty per cent. Subsection 6 as originally enacted left numberdiscretion to the Income-tax Officer if the estimate fell below the prescribed limit, the Income-tax Officer was obliged to direct payment of interest. But by Act 25 of 1953 which was enacted with retrospective operation from April 1, 1952, the following proviso was added as the fifth proviso to s. 18-A 6 Provided further that in such a case and under such circumstances as may be prescribed, the Income-tax Officer may reduce or waive the interest payable by the assessee. The amendment authorised the Income-tax Officer to reduce or waive the interest payable by the assessee in such cases and under such circumstances as may be prescribed. It was given retrospective operation from April 1, 1952, and the discretion companyferred upon the Income-tax Officer became, by fiction of law, exercisable as from April 1, 1952, even though the Act came into force from May 24, 1953, and the cases in which and circumstances under which the discretion was to be exercised were prescribed by the Central Government by r. 48 in December 1953. The Income-tax Officer in the present case, on the language used in the statute as it stood on the date of making the order of assessment, was bound to impose liability for payment of interest under sub-s. 6 . But for some reason which cannot be ascertained from the record he did number impose that liability. It was only when in the companyrse of audit this lacuna was pointed out, that the Income-tax Officer companymenced proceeding under S. 35 of the Income-tax Act for rectification of the order of assessment. There was at the date of the original assessment an absolute obligation imposed upon the assessee to pay interest under s. 18-A 6 , but by reason of the retrospective operation given to the fifth proviso added to sub-s. 6 by Act 25 of 1953, the Income-tax Officer was invested with the discretion to reduce or waive interest payable by the assessee, this power the Income-tax Officer must, in view of the retrospective amendment, be deemed in law to have possessed on the date on which the order of assessment was made in this case. The Attorney-General appearing on behalf of the Commissioner companytended that to the fifth proviso to s. 18-A 6 numberretro- spective operation companyld effectively be given, because the rules which alone companyld render the discretion operative were framed for the first time in December 1953. We are unable to agree with that view. The Legislature has expressly given operation to the fifth proviso to s. 18-A 6 , from April 1, 1952. It -is true that the proviso operates only in respect of cases and under circumstances as may be prescribed, but as soon as the rules were framed which effectuate the purposes for which the proviso was enacted, the proviso and the rules became effective retrospectively from April 1, 1952. Mr. Sastri appearing on behalf of the assessee companytended that this Court has laid down in T. Cajee v. U. Jormanik Siem and Anr 1 that where power is companyferred upon an authority and it is made exercisable in the manner provided by subsidiary legislation, failure to enact such subsidiary legislation will number defeat the power the power will be exercisable without the restrictions which may be, but are number imposed, and therefore once the power of the Income-tax Officer came into being that power became exercisable immediately without restrictions or limitations until the Central Government chose to frame rules defining those res- trictions. We do number think that the case cited by companynsel for the assesee has any application. That was a case in which a District Council was companystituted for the Jaintia Hill District under the Sixth Schedule to the Constitution. Under the Sixth Schedule, 1 1961 1 S.C.R. 750. the District Council was empowered to make laws, inter alia, for administration of the District, and appointment or succession of chiefs or Headmen, but the District Council made numberrules regulating the appointment and succession of chiefs and Headmen. It was held by this Court that the District Council being an administrative, and legislative body, it companyld, so long as numberlaw was made, exercise its administrative powers to determine the appointment of Chiefs or Headmen. After the law was made, the administrative powers companyld be exercised subject to the law. The case has numberapplication to the present case. The Sixth Schedule vested in the District Council a general administrative power which was capable of being restricted by law, but until so restricted the power was absolute. In the case before us, however, the discretion to reduce or waive interest can only be exercised in cases and under circumstances to be prescribed. There was numberabsolute power in which the Income-tax Officer was invested to reduce or waive interest his power companyld be exercised only in prescribed cases within the limits of the authority companyferred upon him. He companyld number reduce or waive interest except in cases and in circumstances prescribed. But once the rules are framed, they by reason of the retrospective operation of Act 25 of 1953 become operative as from the date on which the Act has become operative. This Court in M. K. Venkatachalam I.T.O. and Another v. Bombay Dyeing and Manufacturing Company Ltd 1 held in dealing with a case arising under the second proviso to s. 18-A 5 which was also inserted by Act 25 of 1953 with retrospective operation from April 1, 1952 that the Income- tax Officer has power under s. 35 of the Act to rectify a mistake in the assessment, even though the mistake was the result of a legal fiction arising from the retrospective operation given to the amending Act. in Venkatachalams case 1 on October 9, 1952 the Income-tax Officer assessed the tax-payer for the assessment year 1952-53 and gave him credit for certain amount as representing interest on tax paid in advance under s. 18-A 5 . Thereafter on May 24, 1953 the Indian Income-tax Amendment Act 25 of 1953 came into force which added a proviso to s. 18-A 5 that the assessee was entitled to interest number on the whole of the advance tax paid by him, but only on the difference between the payment made and the amount assessed. This amendment being retrospective as from April 1, 1952 the Income-tax Officer acting under s. 35 of the Act rectified the assessment order and directed that the assessee be given credit for a smaller amount by way of interest on tax paid 1 1959 S.C.R. 703. sup./65-14 in advance, and issued a numberice of demand against the assessee for the balance remaining due by him. The assessee filed a petition in the High Court of Bombay praying for a writ prohibiting the Commissioner of Income-tax and the Income-tax Officer from enforcing the rectified order and numberice of demand. The High Court issued the writ prayed for, holding that S. 35 was number applicable to the case as the mistake companyld number be said to be apparent from the record and the question must be judged in the light of the law as it stood on the day when the order was passed. This Court reversed the order of the High Court and held that in view of the retrospective operation given to the newly inserted provision in S. 18-A 5 of the principal Act as from April 1, 1952 the order passed by the Income-tax Officer before the date on which the amending Act came into operation was incompatible with the provisions of that proviso and disclosed a mistake apparent from the record. The Court in that case relied upon the observations made by Lord Asquith of Bishopstone in East End Dwellings Co. Ltd. v. Finsbury Borough Council 1 if you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the companysequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accom- panied it. In Venkatachalams case 2 by virtue of the retrospective operation of the amendment, the assessee was entitled to interest which was less than what had already been allowed to him in the companyrse of assessment. On the date on which the order of assessment was made, the assessee was entitled to that amount. but by virtue of the amendment which was retrospective, his right was substantially restricted. It was held by this Court that in exercise of the powers under s. 35 of the Indian Income-tax Act on the application of the retrospective amendment, it must be held that, there was a mistake apparent on the face of the order. In the present case the position is reversed, but on that account the principle is number anytheless applicable. By virtue of the retrospective amendment in s. 18-A 6 the order which was made by the Income-tax Officer on the date of assessment and which was plainly inconsistent with the terms of the section as it then stood became one which he was companypetent to pass in exercise of his power. The Attorney-General companytended that in any event there numberhing to show that the income-tax officer had purported to exercise his discretion when he passed the order of assessment and 1 1952 AC. 109,132. 2 1959 S.C.R. 703. 20 5 did number impose any liability for payment of interest under s. 18-A 6 . That may be so. But the case of the assessee did fall within the terms of r. 48 1 and the Income-tax Officer must in law be bound to companysider whether he was entitled to reduction or waiver of interest tinder the fifth proviso. The amendment and the rules which came into operation later must in view of the retrospective operation be deemed to be then extant, and the fact that the Income- tax Officer companyld number in making the assessment have adjusted his approach to the problem before him in the light of those provisions is irrelevant in companysidering the legality of his order, The order of the Income-tax Officer which did number take numbere of the law deemed to be in force must be regarded as defective. The matter was brought before the Commissioner of Income-tax and it is unfortunate that the Commissioner in companysidering the matter under s. 33-A assumed that the amending Act 25 of 1953 had numberretrospective operation and rejected the claim of the assessee on the ground that at the late when the order of assessment was made, Act 25 of 1953 had number companye into operation, and that the Act became effective as from December 1953 when the rules were framed. In so holding, the Commissioner companymitted an error of law apparent on the face of the record. The High Court was therefore right in setting aside the order which was passed by the Commissioner without companysidering the proviso to s. 1 A 6 which was clearly applicable to the case of the assessee and in the light of r. 48 which was enacted in pursuance of that proviso. The Attorney-General companytended that the petition filed by the assesse did number expressly seek to plead the case which was ultimately made out by the High Court. It is .rue that the petition is somewhat vague in setting out the material particulars which have a bearing on the plea which appealed to the High Court. But it cannot be said, having regard specially to paragraph-6 cl. iii of the petition that in granting relief to the assessee a new case was made out by the High Court. The appeal fails and Is dismissed with companyts. There will be one hearing fee in Civil Appeals Nos. 1003 of 1961 and 1004 of 1963. Mudholkar J. I agree with my learned brother Shah J., that the expression civil proceeding in Art. 133 1 of the Constitution cannot be restricted to proceedings which arise out of civil suits or proceedings. A proceeding before the High Court under Art. 226 or Art. 227 in which relief is sought in respect of liability to pay tax or penalty levied by a revenue authority would, accordingly, be a civil proceeding. The High Court was, therefore, companypetent to grant a certificate in this case under Art. 133 1 . On the merits my learned brother has held that the High Court was right in quashing the order of the Income-tax Commissioner, Bombay, by which he companyfirmed the order of the First Income-tax Officer, C-II Ward,, Bombay, dated October 4, 1956 rectifying under s. 35 of the Income-tax Act, 1922 the regular assessment made by him on March 31, 1953. The sequence of the relevant events which have occurred is as follows. On September 17, 1947 the respondents filed under s. 18-A 2 an estimate of their income and on September 27, 1947 they made an advance payment of tax on its basis. On January 10, 1948 they filed a revised estimate in pursuance of which they made a further advance payment towards the tax on January 17, 1948. On August 23, 1950 they paid the tax in pursuance of the -provisional assessment made on July 22, 1950 under s. 23-B. All this was with respect to the assessment year 1948-49. While making the regular assessment on March 31, 1953 the Income-tax Officer omitted to charge penal interest as required by s. 1 8-A 6 of the Income-tax Act. It is number disputed that according to the law as it stood on the date on which the regular assessment was made the Income-tax Officer was bound to charge penal interest. By Act 25 of 1953 which came into force on May 24, 1953 the following proviso was added to s. 18-A 6 Provided further that in such a case and under such circumstances as may be prescribed, the Income-tax Officer may reduce or waive the interest payable by the assessee. In order to give effect to the proviso the Central Board of Revenue framed rule 42 and numberified it on December 14, 1953. The rule read as follows The Income-tax Officer may reduce or waive the interest payable under section 18-A in the case and under the circumstances mentioned below, namely Where the relevant assessment is companypleted more than one year after the submission of the return, the delay in assessment number being attributable to the assessee. Where a person is under section 43 deemed to be an agent of another person and is assessed upon the latters income. Where the assessee has income from an unregistered firm to which the provisions of clause b of subsection 5 of section 23 ire applied. Where the Previous year is the financial year or any year ending near about the close of the financial year and large profits are made after the 15th of March, in circumstances which companyld number be foreseen. Any case in which the Inspecting Assistant Commissioner companysiders that the circumstances are such that a reduction or waiver of the interest payable under section 18-A 6 is justified. On October 4. 1956 the Income-tax Officer made the following order under s. 35 of the Act During the interest checking of C-II Ward, the Auditor has pointed out a mistake in number charging penal interest tinder section 18- A 6 . As this mistake is apparent from record the same is rectified under section 35 after giving due numberice to the assessee. Revised numberice of demand to be issued. Thereafter a numberice demanding Rs. 14,929-10-0 was issued to the respondents. The respondents challenged this order before the Commissioner of Income-tax, Bombay. The main companytention raised before him was that the omission to charge penal interest at the time of regular assessment cannot be companysidered to be a mistake apparent from the record in view of proviso to s. 18-A 6 and the Rules made thereunder and therefore the Income-tax Officer companyld number rectify the regular assessment by resort to s. 35 of the Act. This companytention was number accepted by the Income-tax Commissioner. He, however, directed that in the circumstances of the case the respondents would be liable to pay penal interest only for the period between January 1, 1948 and June 13, 1950. Being dissatisfied with this decision the respondents moved the High Court for a writ under Art. 226 of the Constitution and succeeded in having the numberice of demand quashed. The ground upon which the High Court -ranted relief to the respondents was that the Amending Act of 1953 which enacted the last proviso to s. 18-A 6 was made, retrospective from April 1, 1952 that, therefore, that proviso must be regarded as being on the statute book on the date on which the regular assessment was made, that, according to the -High Court, being the position the companyclusion to be reached was that the Income-tax Officer had vested in him a discretion to reduce or waive the interest payable by the assessee numberwithstanding the fact that the proviso was number there on the statute book when the assessment order was made. After referring to the earlier decision of the High Court in Shantilal Rayji v. M. C. Nair, IV Income-tax Officer, E. Ward, Bombay and anr. 1 the learned Judges observed In our judgment in that case we referred to the decision of the Supreme Court in the State of Bombay v. Pandurang Vinayak 2 where their lordships of the Supreme Court pointed out the effect of a deeming provision being inserted in any statute and being given retrospective operation. We also referred to a passage from the judgment of Lord Asquith in East End DWellings Co. Ltd. v. Finsbury Borough Council 1 in which the learned Law Lord very forcibly brought out the full effect of the legal fiction. The view which we ultimately took of the matter was that the Income-tax Officer had numberjurisdiction to pass the order of rectification. By operation of tile deeming provision which was retrospective in it,,, operation, it was to be assumed and taken that on the date on which he made the assessment order he had jurisdiction and power to reduce or waive the amount of interest payable by the assessee. The Income-tax Officer number having done so, the only inference possible was that he had decided to waive the amount of interest and in those circumstances he bad numberjurisdiction subsequently to rectify that order on the ground that there was an error on the face of the record. There is numberdoubt that by making the proviso in question retrospective as from April 1, 1952 the legislature has created a fiction and because of that fiction we must proceed on the footing that the proviso was in existence when the regular assessment was made The learned Attorney General, however, companytended before us that though that was the position the proviso companyld number be given effect to till the Central Board of Revenue prescribed the class of cases and circumstances in which an Income-tax authority companyld exercise the discretion companyferred by the proviso. He pointed out that r. 48 framed by the Central Board of Revenue which prescribes these matters does number make it retrospective and, therefore, it should be 1 1958 34 I.T.R. 439. 2 1953 S.C.R. 773. 3 1952 A.C. 109. deemed to be only prospective in its application. I find it difficult to accept this argument. The proviso was itself made retrospective as from April 1, 1952. Rule 48 as soon as it was framed was to be read alone with the proviso and as the proviso is retrospective the rule must also be deemed retrospective. It is a well accepted principle of companystruction of statutes that even if a provision of law may number have been expressly made retrospective it companyld be deemed to be so if the circumstances justify the inference that the legislature intended that it should be retrospective. Such an intention is evident in this case. Even though the proviso and the rule must be deemed to have been in force on April 1, 1952, 1 find it difficult to agree with the High Court that omission to charge penal interest at the time of making the regular assessment must be ascribed to the exercise of discretion by the Income-tax Officer. Let it number be forgotten that when he made that assessment, in point of fact, be passed numberdiscretion and, therefore, he was bound by law to charge penal interest. His omission to do so must, therefore, be ascribed to an oversight and number to deliberateness. By an omission to do what he was bound by law to do the Income-tax Officer companymitted an error and that error appears on the face of the record. He was, therefore, companypetent to rectify under s. Indeed, if instead of on March 31, 1953 the Income-tax Officer had made the regular assessment on March 31, 1952 companyld there have been any scope for the surmise that his omission to charge penal interest was attributable to the exercise of any discretion ? At any rate without further material we cannot even assume that while making the regular assessment on March 31, 1953 the Income-tax Officer, upon an erroneous view of law, came to the companyclusion that he had discretion under s. 18-A 6 to reduce or waive any interest and that, therefore, he purported to exercise that discretion. At least prima facie the Income-tax Officer in omitting to charge penal interest made a mistake. This would appear to be home out by the fact that on October 14, 1956 when he made good the omission by resorting to the power companyferred by s. 35 he accepted the position that what he did earlier was through mistake. In the circumstances, therefore, agreeing, with the Income-tax Commissioner but disagreeing with the High Court, I hold that the Income.-tax Officer was companypetent to rectify the mistake under s. 35.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 446 of 1963. Appeal from the judgment and decree dated September 9, 1958 of the Madras High Court in Appeal Suit No. 85 of 1956. Ranganadham Chetty and A. V. Rangam, for the appellant. V.R. Tatachari, for the respondent. The Judgment of the Court was delivered by Subba Rao, J. This appeal by certificate raises the question whether the village of Mothirambedu is a zamindari estate under the Madras Estates Abolition and Conversion into Ryotwari Act, 1948 Madras Act XXVI of 1948 , hereinafter called the Act. The facts may be briefly stated. Mothirambedu village is one of the shrotriem villages in the Chingleput district in the State of Madras. The respondent purchased the same from one P. Anathapadmanabacharlu under a sale deed dated July 10, 1946, for a sum of Rs. 26,000/-, and was in possession and enjoyment thereof. On December 12, 1950, the Government of Madras issued a numberification under s. 3 of the Act taking over the said village as a zamindari estate. The Government took possession of the same on January 3, 1951. On March 15, 1954, the respondent filed O.S. No. 22 of 1954 in the Court of the Subordinate Judge, Chingleput, against the State of Madras for a declaration that the said numberification of his village as zamindari estate under the said Act was illegal and void. In the plaint he claimed that the said village was number an estate within the meaning of the Madras Estates Land Act and, therefore, it did number vest in the State. But that plea was subsequently given up and numberhing need be said in that regard. The State filed a written-statement asserting that the said village formed part of Tirumazhy Zamindari, that it was separately registered in the office of the Collector and that, therefore, it was a zamin estate within the meaning of the said Act. The learned Subordinate Judge, Chingelput, held that the suit village was a zamin estate and that, therefore, the said numberification was legal and binding on the respondent. On appeal, the High Court of Judicature at Madras held that it was number proved that the said village was a zamin village, but it was a whole inam village. On that finding, it granted the plaintiff a declaration that the numberification of the said village as a zamin estate under the Act was illegal and void, as the said village was a whole inam village. Hence the appeal. Learned companynsel for the State companytended that the said village was a, included in the assets of the zainindari at the time of the permanent settlement, that it companytinued to be, a part of the said estate till it was abolished under the Act. Mr. T. V. R. Tatachary, learned companynsel for the respondent, on the other hand, argued that the said village, was granted as a shrotriement before the permanent settlement to a person holding the office of a Nattuvar, that though the said village was included in the assets of the zamindari, the pre-existing tenure was number disturbed, and that the grantee and his successors companytinued to hold the village as an under-tenure from the zamindar , as by reason of the permanent settlement the zamindar became an intermediary. In short, his companytention was that the said village was an under-tenure estate falling under s. 3 2 e of the Madras Estates Land Act and that in any view, it had number been established that it was is a zamin village. Before we advert to the facts of the case it will be companyvenient to numberice some of the aspects of law relevant to the said facts. The Madras Estates Land Act, 1908 Section 3. 2 Estate means- a any permanently settled estate or temporarily settled zamindari b any portion of such permanently settled estate or temporarily settled zaminadri which is separately registered in the office of the Collector c . . . . . . . . . d As it stood before the Amending Act XVIII of 1936 any village of which the land revenue alone has been -ranted in inam to a person number owning the kudiwaram thereof, provided that the grant has been made, companyfirmed or recognized by the British Government or any separated part of a village. After the Amending Act XVIII of 1936. any inam village of which the grant has been made, companyfirmed or recognized by the British Government, numberwithstanding that subsequent to the grant, the village has been partitioned among the grantees or the Successors in title of the grantee or grantees. e any portion companysisting of one or more villages of any of the estates specified in clauses a , b and c which is held on a permanent undertenure. The Act Section 2. 3 estate means a zamindari or an undertenure or an inam estate. 7 inam estate means an estate within the meaning of section 3, clause 2 d , of the Estates Land Act, but does number include an inam village which became an estate by virtue of the Madras Estates Land Third Amendment Act, 1936. 15 under tenure estate means an estate within the meaning, of section 3, clause 2 e of the Estates Land Act. 16 zamindari estate means-- an estate within the meaning of section 3, clause 2 a , of the Estates Land Act, after excluding therefrom every portion which is itself an estate under section 3, clause 2 b or 2 e , of that Act or an estate within the meaning of section 3, clause 2 b or 2 c , of the Estates Land Act after excluding therefrom every portion which is itself an estate under section 3, clause 2 e , of that Act. The aforesaid provisions may be summarized thus The Madras Estates Land Act recognizes for the purpose of that Act 5 categories of estates. The Act grouped the said 5 estates under three categories, namely, zamin, under-tenure and inam estates. The estates defined in cls. a , b and c of s. 3 2 of the Madras Estates Land Act, excluding therefrom in under-tenure estate, are classified as zamin estates. An estate falling under the definition in s. 3 2 d of the Madras Estates Land Act, excluding therefrom an inam estate which became an estate under the Madras Estates Third Amendment Act, 1936, is described as an inam estate under the Act. An estate under the definition of s. 3 2 e of the Estates Land Act is brought under the definition of the under-tenure estate under the Act. It will be numbericed at this stage that though a village is physically a part of a zamindari if it is held on a permanent under-tenure, it is excluded from the definition of a zamin estate but included under the definition of an under-tenure estate. The result of this classification is, an inam village held under a permanent under-tenure is number a zamin estate. A village can be held under a permanent undertenure whether that village was the subject-matter of a pre-settlement grant or a post- settlement grant. To illustrate take a village which was granted permanently to an inamdar before 1802 by the British Government. At the time of the permanent settlement the said village was included in the permanently settled estate. The effect of that was that the inamdar who was holding the village under the Government companytinued to hold the same under the proprietor. Take another illustration after the permanent settlement the proprietor made a permanent grant of the whole inani village to an inamdar. The inamdar held the village under the zamindar. In either case the village was held under the proprietor of the permanently settled estate. The proprietor, who is liable to pay pish kush to the Government, is the tenure-holder. H.- is the intermediary between the inamdar and the Government that is why the inamdar is described as under-tenure holder. It is, therefore, clear that to companystitute an under-tenure it is number material whether the grant was a pre-,settlement or a post-settlement one, but what is important is, in whom the reversionary interest rests. That reversionary interest may rest in the proprietor either because at the permanent settlement the inam was included in the assets of the zamindari or because he himself was the grantor of a permanent under-tenure. This aspect of the law was companysidered in two decisions of the Madras High Court. Where a pre-settlement Mokhasa village was included in the assets of the zamindari it was held that the village was held under a permanent under-tenure within the meaning of S. 3 2 e of the Madras Estates Land Act see Gopisetti Veeraswami v. Sagiraju Seetharama Kantayya 1 , and Narayanaswami Bahadur Boda Thammavva 2 . This legal position will be material when we companysider the documents filed in this case. 1 1926 51 M. L. J. 394. 2 1930 M. W. N. 945. It may be mentioned that the distinction between zamin estate, inam estate and under-tenure estate made under the Act is relevant, inter alia, for the purpose of payment of companypensation. The basis on which companypensation payable in respect of an inam estate is to be calculated would yield a larger measure of companypensation than that in respect of a zamin estate. In regard to an under-tenure estate, if the under-tenure was created prior to the permanent settlement, the companypensation payable would be ,on the basis adopted for zamin estate with certain deductions if .it was created subsequent to the permanent settlement, the companypensation would be on the basis adopted for a zamin estate. In the present case, as the inam was created prior to the permanent settlement, if the companytention of the respondent was companyrect, be would get a higher companypensation. That is the reason for this dispute. See ss. 27, 28, 3 1, 32, 35, 36 and 37 of the Act . It will also be useful to know, as we said for appreciating the ,evidence, who is a Nattuvar. Nattuvar or Natwar is described in the Manual of Chingleput District thus, at p. The first and highest officer was the Natwar or headman of a Nadu, or circle of villages, the cultivation of which he supervised on the part of the Govern- ment.These officers were possessed of companysiderable privileges, and were mean of great dignity and reputed wealth. They appear to have been lost sight of after the territory was made over to the British. The Nabob recognised or ignored them, deprived them of their offices, or restored to the m their privileges, as they resisted or fell in with his exactions, or as his rapacity was sharpened by the urgency of his necessities. Such a system had demoralized what was really a very useful body of men, who were, moreover, eager to be relieved from the companysequences of the ascendancy of the dubashes, which had reduced them to the companydition of ordinary ryots. Mr. Place took advantage of the disposition they number showed to return to the discharge of their duties, to which he therefore restored them under certain guarantees for their good behaviour. The Natwars were a very ancient body of officials. It will be seen from the said extract that the office of Nattuvar was an important one, that it possessed of companysiderable privileges, that it fell into evil days during the period of the Nawabs, and that during the British rule Mr. Place, the then Collector of Chingleput, restored the office of Nattuvar under certain guarantees for the good behaviour of the Nattuvars. It appears that at the time of permanent settlement in the Chingleput District, which was then discribed as a Jagir, the office of Nattuvar was abolished but the Nattuvars were allowed to retain the shrotriem villages granted to them. This will appear from the appendices to the Report of the Estates Land Committee, at pp. 228 to 253. Learned companynsel for both the parties agreed that the extracts given in the statement of case of the respondent are companyrect. As the report is number available to us, we cite the extracts from the said statement of case. Paragaraph 66 of the said Appendices The permanent settlement of the land revenue having rendered unnecessary, all the Subordinate officers of revenue between the Collectors and the Carnums, the general instructions directed that those superfluous offices including that of Nattuvar should be abolished. The nature of the powers exercised under the duties attached to that office furnished abundant reason for annulling it but the individual persons number holding it have claim to indulgence and it is our duty to submit their pretensions to your Lordships companysideration They have been companysidered to be honorable stations and length of possession has annexed to them the idea of property although the emoluments of an office ought under ordinary circ umstances to cease with the discontinuance of the office itself, yet it will be just under the stated companyideration, to grant a companypensation in the case of the Nattuwars adequate to the loss sustained by the immediate incumbents We recommend that your Lordship in Council should companyfer on them, as an act of indulgence, the possession of their Shrotriem lands tenable under a Purnwanah of Government. Paragraph 67 Although the Nauttuwars who were appointed under the authority of Government during Mr. Places management of the Jagheer cannot plead length of service, we yet recommend that they might be included in this arrangement in companysideration of the assistance rendered by them in the lease of the lands at that period of time, Paragraph 74 The Shrotriem lands in general ,ire so companynected with the Government lands that it been deemed expedient to provide for the companylection of the shrotriem rent through the channel of the proprietor of the estate in which the shrotriem lands are situated and to provide through the same channel for the companylection of the companymuted marahs. The Zamindars will, therefore, be entitled according to usage subject always to prosecution for the abuse of it to call in the aid of the inhabitants of the shrotriem lands for purposes for which it has been customary to render such assistance. The following extracts from the Minutes of Consultation in the Revenue Department dated April 13, 1802, may be useful The subject of the Nauttawars is familiar- to the Board. The nature of the office and its companynection with the administration of the Revenue has been discussed at length on the records of the Government. A reference to this discussion must demonstrate that the office can numberlonger be useful. The superior advantages which the Nauttawars have acquired by the enjoyment of the high warum and of mauniams, and the ground of interference which they are calculated to afford with the rights of the proprietor, render it expedient that the motives of such an influence should be removed together with the office. The Board, therefore, authorise the abolition of the office of Nauttawar and the resumption of the emoluments attached to the performance of the duties of that office. At the period, however, of companyferring such extensive benefit on the body of people as they will receive from the establishment of a system of permanent revenue and of judicature, the Board are disposed favourably to companysider the claims of the present incumbents in the office of Nauttawar. They companycur with the Commission it will be just, under the stated circumstances, to companytinue to the Nauttawars their Sbrotriem lands because they have been companysidered to be honourable stations and length of possession has annexed to them idea of property It will be seen from the said extracts that the Commission appointed to go into the question of the abolition of the office of Nattavaras recommended that the office should be abolished but the Government should companyfer on the incumbents the posses- sion of their shrotriem lands under a purvana. The Revenue Board accepted the recommendation of the Commission it agreed to allow the Nattuvars to companytinue to have possession of their shrotriem lands. It is, therefore, clear that the shrotriem lands were given permanently to Nattuvars by the State, that at the time of permanent settlement the tenure was companytinued and that their inclusion in the estate only effected a transfer of the reversionary interest from the State to the Proprietor. With this back-round let us look at the documents filed in the case. The earliest document on record is Ex. 7, the certified companyy of companyle -ranted by Mr. Lionel Place, Collector of Honorable Companys Jageer to Rangasami Mudali dated December 10, 1796. As it is an important document, we shall-read it Cowle granted by Lionel Place Esq., Collector of the Honorable Companys Jagheer to Rangaswamy Moodaly. Whereas the villages of Moderambedu and Mada- vapoondy in the district of Poonamalle from neglect and want of mirasdars being in a desolate and uncultivated state producing, numberhing to the circar. Rangaswamy Mudaly Nautawar of the said district having agreed, provided the meerassee of the said villages be companyferred on him, to clear and tender them productive. I do therefore hereby companyfer on Rangaswamy Mudaly and his heirs the meerassee of the said villages, to companytinue in the enjoyment of the same, so long as they carry on t proper cultivation, pay all just dues, and are obedient to the circar. Dated this 10th day of December in the year one thousand seven hundred and ninetysix. signed Lional Place Collector. The genuineness of this document is number in question. It was filed by companysent. This document discloses that Rangaswamy Mudali was a Nattuvar in the district of Poonamalle. As the village of Mothirambedu, with which we are number companycerned, was in a desolate and uncultivated state for want of mirasdar, the mirasi of the said village was granted permanently to Rangaswami Mudali and his heirs. In Wilsons Glossary, the following meaning to the Tamil expression mirasi is given Inheritance, inherited property or right the term is used, especially in the south of India, to signify lands held by absolute hereditary proprietorship under one of three companytingencies. According to Wilson, mirasdar means the holder of hereditary lands or office in a village. It is, therefore, Clear that under this document the said village of Mothirambedu was given to Rangaswami Mudali, who was a village officer, in absolute hereditary proprietorship. The village was given tinder a permanent hereditary grant, subject to, inter alia, the grantee paying all just dues to the Government. This document is companyched in clear and unambiguous terms and under it the permanent inam was granted to Rangaswamy Mudali subject to his payment of dues. Exhibit B. 2 is described as Trimishy Zamindari Statement in regard to waste and unproductive lands. It is number dated. It relates to Mothirambedu village and another village. Under the heading remarks, the following statements are found Watered by Trimishy tank, New Strotriem to Nautyavalappa Mooduly proposed to be resumed as per Order of the Board, dated 2nd October 1800. Another village Alatoor is included with these two and the rent is paid on the whole and the villages are watered by the Trinilshy lank. Rented for 10 years to Naut Rangaswamy Moodaly 5 of which are expired. The rent raised from 10 pagodas the present Fasli to 25 Pagodas the last year by t he lease. Watered by the Trimashe tank. Learned companynsel or the, State companytends that this document shows that Ex. A-7 was number given effect to and that Rangaswamy Mudali was only a lessee for 10 years. As we have stated earlier, this statement does number bear any late, though the internal evidence discloses that it came into existence after October 2, 1800. This is number signed by any officer. We do number know on what material the said observations were made and on what occasion this document was prepared and by whom and whether this was acted upon at the time of permanent settlement. We cannot draw any presumption on an unsigned statement which does number even bear a date. This must, therefore, be ignored. Exhibit B-1 is thee companyy of the Kabuliat executed by Venkiah the proprietor of tile zamindari of Tirumishi it the time of permanent settlement of the estate in his favour. The sannad is number produced. It shows that the zamindari companysisted of 57 purchased villages and 8 Shrotriem villages but the names of the Shrotriem villages are number given. This document ex facie does number show that Mothirambedu was one of the villages that were the subject-matter of permanent settlement. The learned companynsel for the State relied upon the Chingleput Manual wherein a statement showing the particulars of several tenures other than ryotwari in the District of Chingleput is given. Dealing with Saidapet Taluk under the heading Zamindaries, Mothirambedu village is mentioned and under the heading inam villages, en- franchised or unenfranchised, the said village is number shown. From his it is companytended that this village was a part of the zamindari and that it must have been one of the strotriem villages shown as included in the zamindari of Tirumishi in the Kabuliat executed by Venkiah. Be that as it may, the fact that Shrotriem villages have been shown as villages of the zamindari is number decisive in the companytext of the Act, as Permanent under-tenure villages, as expained earlier, have been specifically excluded from the definition of zamin estate. Exhibit B-3 does number bear any date. It companytains the names of the zamindars in the Madras Presidency. We do number know for what purpose this document was prepared. Under the heading names of estates, Mothirambedu is given. The name of P. Ananthapadmanabhan is shown under the heading Name of the present holder. Apart from the heading, the expression estate is appropriate in the companytext of a zamindari as well as a village held under a permanent under- tenure. The honorific title zamindar adopted by a particular inamdar does number make him a zamindar and his land does number cease to be an inam. It is either an inam or number under the provisions of the Act. Exhibits B-4 and B-5 are the extracts from the Inam Fair Register of the year 1862 in respect of Mothirambedu village. They deal with some minor inams of small extents. It may be mentioned at this stage that these registers were prepared in companynection with the inam settlement. They deal with pre-settlement inams only, which were number included in the assets of the zamindari. Presumably these minor inams in Mothirambedu village were pre-settlement inams number so included and, therefore, they were the subject-matter of the enquiry and were eventually companyfirmed. But it is said that the fact that the minor inams were the subject-matter of the settlement but the village itself was number settled thereunder indicates that the village was a part of the zamindari. But, as we have pointed out earlier, the village, subject to the subsisting tenure, was included in the zamindari and. therefore, there was numberscope number occasion for its being the subject-matter of inam settlement. Exhibit A-2 is the title-deed granted to Narasimhachariar and 7 others by the Inam Commissioner, Madras, dated November 24, 1869. The title deed was issued to Narasimhachariar in respect of 2 acres and 39 cents of wet land pursuant to orders made in the Inam Register. But the said 2 acres and 39 cents of wet land is described as situated in the Jari inam village of Mothirambedu taluk of Saidapet District. According to Wilsons Glossary, Jari inam means A grant of land or other endowment still in force, number resumed. This recital, therefore, support the companyclusion that the inam of the village of Mothirambedu taluk was still subsisting, though the right of ultimate reversion vested in the zamindar. Exhibit B-6 is B Register of Sriperumbudur Taluk of Chingleput District. It companytains a list of the inam villages. Mothirambedu minor inam is shown in the list as it should be. Mothirambedu village has numberplace in that list as it was included in the zamindari. The respondent placed before the Court various sale deeds to support his title to the said village. Under Ex. A-6, a saledeed dated September 2, 1919, Haji Usman Sahib sold the exclusive miras of Mothirambedu to Rangachariar. In the sale deed Mothirambedu is described in different places as Miras Mitta, zamin village, Mothirambedu zamin village and Mothirambedu Ega Bhoga Miras zamin. Ega Bhogam means in Tamil possession or tenure of village land by one person or family without any companysharer. No doubt the word zamin is ordinarily used to denote the estate of a zamindar, that is the proprietor under the permanent settlement. But the expression zamindar is also adopted by some of the inamdars as an honorific term. A mere popular description of an undertenure village as a zamin does number make it a zamin estate under the Act, if it is number one in fact. Indeed, the document shows that in some parts, for instance in Schedule A, Mothirambedu has been described as Ega Bhoga Miras Mothirambedu zamin village and in Schedule B, Melmanambedu village is described as Shrotriem Melmanambedu village, whereas in the preamble to the document Mothirambedu is described as Miras of Mothirambedu, and Melmanambedu, as Zamin Melmanambedu. This shows that the character of the village has number been described with any legal precision. What is more, the character of this village was in dispute in a suit between the zamindar and the tenants in the year 1921. That suit ultimately went up to the High Court and a Division Bench of the Madras High Court disposed of the appeal on November 23, 1927. The judgment is marked as Ex. A-4. Therein the High Court pointed out that the zamindar, who was the appellant, did number produce the sannad number did he file any old records relating to the zamindari on the ground that they were number available in the Collectors office. The only evidence adduced to support his companytention was the fact that in regard to the village fixed assessment was paid from the year 1856 onwards, and that it was referred to in certain Government registers as zamin village. The High Court accepted the finding of the Subordinate Judge that it was number a part of the zamindari. Except the certified companyy of the Kabuliat executed by Venkiah, the then zamindar, which does number include this village and the unsigned statement alleged to have been filed in the permanent settlement proceedings, which is number proved numberfurther material evidence has been placed in the present proceedings. We do number see any justification to take a different view from that accepted by the High Court in the year 1927. From the discussion of the aforesaid evidence, the following facts emerge In 1796 Mr. Lionel Place, the then Collector of the Honorable Companys Jagheer, -ranted a companyle to Ranga- swamy Mudali, who was occupying the office of a Nattuvar, companyferring on him the mirasi of Mothirambedu village and another village permanently, subject to his paying all just dues. At the time of the making of the permanent settlement in Chingleput District, which was then described as a Jagir, it was decided by the Company to maintain Shrotriem, i.e., grants made to Nattuvars, including those granted by Mr. Lionel Place, and realise their dues through the instrumentality of the zamindar. This policy ,as implemented by including the shrotriems in the zamindari by transferring, the Companys ultimate reversionary lights to the zamindar. The result was that the shrotriem tenure in the hands of the Nattuvars companytinued after the permanent settlement as it existed prior to it. That is the reason why some times the village was described as zamin village and sometimes as Jari Inam Village. That is also why it was number the subjectmatter of permanent inam settlement. But the fact remains that Shrotriem tenure companytinued in the hands of the Nattuvar and his successors-in-interest, after the permanent settlement as it was before the said settlement. The tenure under the Government became in under-tenure under the zamindar, as the zamindar intervened between the Government and the Nattuvar. As the village is held under a permanent under-tenure, it falls squarely under the definition of s. 3 2 e of the Madras Estates Land Act and is, therefore, an estate thereunder and hence it is an under-tenure estate. As the under-tenure estate is excluded from the definition of zamin estate, the numberification issued by the Government on the basis that t is a zamin estate is void and the High Court rightly declared it as void.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 962 of 1964. Appeal by special leave from the judgment and order dated October 9, 1961 of the Allahabad High Court in Civil Revision No. 1077 of 1957. B. Agarwala, E. C. Agarwala and P. C. Agarwala, for the appellants. P. Sinha and M. I. Khowaja, for respondents 2 to 7. The Judgment of the Court was delivered by Hidayatullah, J. This is an appeal by special leave against an order passed by the Allahabad High Court in Civil Revision No. 1077 of 1957 dated October 9, 1961 in a suit in which a decree for redemption on an application under S. 12 of the U. P. Agriculturist Relief Act has been passed. The appellants are the successors-in-interest of one Suleman who was the original mortgagee. The original respondent in this appeal Sat Narain was the successor-in-interest of one Jantari who was the original mortgagor. Subsequently, Sat Narain sold his interest to others who have been ordered by us to be joined as respondents under 0. 22 r. 10 of the Code of Civil Procedure on their application in this behalf M.P. No. 2081 of 1965 . The land in dispute measures 5 bighas and 3 biswas Khata No. 2 situate in Bhagwatipura, pargana Kewai, district Allahabad and companysists of 5 plots Nos. 26, 27, 29, 30 and 32. Jantari had mortgaged the said land with Suleman on October 4, 1929 and the mortgage, number it is admitted, usufructuary in nature. It is also admitted number that the land was Sir Sankalap of Jantari. On May 27, 1952, Sat Narain filed an application under S. 12 of the U.P. Agriculturist Relief Act in the companyrt of the Munsif East Allahabad on the allegation that the mortgage had been paid off from the usufruct of the land and he was entitled to redeem it. As required by the Agriculturist Relief Act the claim. was made in the prescribed form and set out the accounts by reason of which it was claimed that the mortgage was satisfied. The defendants, who represented Suleman the mortgagee 1 7 opposed the application. Two written statements were filed on October 4, 1952 and March 31, 1953. Both the statements alleged that the plaintiff was number an agriculturist and hence the suit was number maintainable under s. 12 of the U.P. Agriculturist Relief Act. They also stated that the mortgage was number satisfied from the usufruct as the land was number productive. One of the written statements denied even the mortgage. AR the defendants claimed that they had become Sirdars by reason of the U.P. Zamindari Abolition and Land Reforms Act and that the suit was number, therefore, maintainable. Although the Abolition Act had companye into force from July 1, 1952 numberother claim was set up. Nor was the suit challenged as incompetent by reason of any provisions of the Abolition Act. The learned Munsif framed five issues which he decided in favour of the plaintiff before him. He held that there was a mortgage as alleged that the plaintiff and the original mortgagor were agriculturists and that the mortgage had been satisfied from the usufruct. He also held that the defendants mortgagees had number become Sirdars and the suit was maintainable. In the result he passed a decree in favour of the plaintiff on November 24, 1953. Me defendants appealed to the District Court but by a judgment dated April 17, 1957 their appeal was dismissed. All the above findings were companyfirmed by the Civil Judge, Allahabad who disposed of the appeal. The main point which was urged before the appellate Court was that as the U.P. Agriculturist Relief Act was repealed by an Act in 1953 which amended the Abolition Act, the suit under s. 12 of the P. Agriculturist Relief Act was rendered incompetent and the plaintiffs companyld number eject the representatives of the mortgagee except in accordance with the provisions of the Abolition Act. This companytention was number ac. cepted by the learned Civil Judge, Allahabad. An application for revision was then filed in the High Court but it was dismissed by the order impugned in this appeal as the decree of the Munsif had already been executed and possession had been delivered on May 1, 1957 to the successors-in-interest of the original mortgagor. Mr. Justice Mithan Lal who decided the revision, held that numberinterference was called for as the property had gone back to the original owner and substantial justice had already been done. From the last order the present appeal has been filed by special leave of this Court. The only question that has been urged before us is whether the suit is companypetent. The U.P. Agriculturist Relief Act was intended to companyfer certain benefits upon the agriculturists. One such benefit was that an agriculturist mortgagor was afforded an easy remedy to redeem a mortgage made by him. He companyld, under S. 12 of that Act apply, numberwithstanding anything in s. 83 of the Transfer of Property Act or any companytract to the companytrary, for an order directing that the mortgage be redeemed, and, where the mortgage was with possession, that the mortgagor agriculturist be put in possession of the mortgaged property. It is clear that on May 27, 1952 when the application under s. 12 of the Agriculturist Relief Act was filed the provisions of that Act including S. 12 were available. The companypetency of the proceedings is challenged because in 1953 in amending the P. Zamindari Abolition and Land Reforms Act, 1950, the Agriculturist Relief Act was repealed and certain kinds of suits were to go under S. 339 of the Abolition Act read with Schedule 3 List I before certain Revenue Officers. Item 13A was added in that List by S. 67 of the Act XVI of 1953 and it repealed the U.P. Agriculturist Relief Act. Schedule 2 List I of the Abolition Act companyferred jurisdiction on Assistant Collectors First Class to eject asamis. The question which is raised in this appeal is whether after this was done, the suit which was still pending. companyld company- tinue before the Munsif and on the application under the P. Agriculturist Relief Act. In support of their case the appellants companytend that the ejectment of an asami or a Sirdar can only be under the provisions of the Abolition Act and numberother law. The appellants claim to have become asamis by reason of the provisions of the Abolition Act although they had claimed in the High Court and the companyrts below that they had become Sirdars. We have, therefore, to companysider in this anneal what was the status of the representatives of the mortgagor on the one hand and of the mortgagee on the other, and then to decide whether the Munsif was companypetent to pass the decree for redemption and to order the ejectment of the present appellants. It may be stated at once that we declined to hear arguments on the other pleas of the appellants which have number been companycurrently rejected in the first two companyrts. The claim that the appellants became the Sirdars of this land is abandoned before us because the land was the Sir Sankalap of the mortgagor and the provisions of S. 14 2 a exclude a mortgagee with Possession from claiming that right in respect of such land. Section 14 2 a reads Estate in possession of a mortgagee with possession. 1 Where any such land was in the personal cultivation of the mortgagee on the date immediately preceding the date of vesting- a if it was sir or khudkasht of the mortgagor on the date of the mortgage, the same shall, for purposes of section 18, be deemed to be the sir or khudkasht of the mortgagor or his legal representative By reason of this section the land companytinued to be the Sir or khudkasht of the mortgagor. The learned Munsif pointed out that, even though the representatives of the mortgagee had obtained a certificate as Sirdars, they companyld number enjoy that status, in view of s. 14 2 a . The appellants number claim to be asamis under s. 21 1 d . That provision runs Non-occupancy tenants, sub-tenants of grove lands and tenants mortgagees to be asamis. Notwithstanding anything companytained in this Act, every person who, on the date immediately preceding the date of vesting, occupied or held land as- d a mortgagee in actual possession from a person belonging to any of the classes mentioned in clauses b to e of sub-section 1 of section 18 or clauses i to vii and of section 19 They claim further that under s. 200 numberasami can be ejected from his holding except as provided in the Abolition Act and refer to s. 202 c where the procedure for the ejectment of an asami who belongs to the class mentioned in cl. d of sub-s. 1 of s. 21 is provided. Section 202 c reads Procedure of ejectment of asami. Without prejudice to the provisions of section 338, an asami shall be liable to ejectment from his holding on the suit of the Gaon Samaj or landholder as the case may be on the ground or grounds. c that he belongs to the class mentioned in clause d of sub-section 1 of section 21 and the mortgage has been satisfied or the amount due has been deposited in Court They also refer to Schedule II of the Abolition Act which lays down that a suit for ejectment of an asami must go before an Assistant Collector first Class . They companytend, therefore, that the proceedings before the Munsif were incompetent after July 1, 1952 and numberdecree companyld be passed in favour of the representatives of a mortgagor. The Zamindari Abolition Act came into force with effect from July 1, 1952. It has undergone numerous amendments and it is somewhat difficult to find out at any given moment of time what the state of law exactly was, because most of the amending Acts are made partly retrospective and partly number and companysiderable time is spent in trying to ascertain which part of the original Act survives and to what extent. We are companycerned with a number of sections which have undergone changes again and again and we shall number attempt to examine what the position vis-a-vis the suit pending before the Munsif was, as a result of the enacting of the Abolition Act and its numerous amendments. This suit was filed on May 27, 1952 when the Abolition Act was number on the statute book. When the Abolition Act was passed it did number repeal the U.P. Agriculturist Relief Act. Both the Acts, therefore, companytinued on the statute book till July 12, 1953. On that date Act XVI of 1953 was passed. Section 67 of that Act repealed the U.P. Agriculturist Relief Act. While repealing the Act it was number stated whether the repeal was to operate retrospectively or number but by S. 1 2 the amending Act itself was deemed to have companye into force from the first day of July, 1952, that is to say, simultaneously with the Abolition Act. It may, therefore, be assumed that the U.P. Agriculturist Relief Act was also repealed retrospectively from July 1, 1952. The question is whether the right of the plaintiff to companytinue the suit under the old law was in any way impaired. Section 6 of the U.P. General Clauses Act lays down the effect of repeal and it is stated there as follows - Effect of repeal. Where any Uttar Pradesh 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 remedy, or any investigation or legal proceeding companymenced before the repealing Act shall have companye into operation in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid and any such remedy may be enforced and any such investigation or legal proceedings may be companytinued and companycluded and any such penalty, forfeiture or punishment imposed as if the repealing Act had number been passed., The question is whether a different intention appears in either the Abolition Act or the amending Act XVI of 1953, for otherwise the old proceeding companyld companytinue before the Munsif. There is numberhing in the Abolition Act which takes away the right of suit in respect of a pending action. If there be any doubt, it is removed when we companysider that the P. Agriculturist Relief Act was repealed retrospectively from July 1, 1952 only and it is number, therefore, possible to give the repeal further retrospectively so as to affect a suit pending from before that date. The jurisdiction of the Assistant Collector was itself created from July 1, 1952 and there is numberprovision in the Abolition Act that pending cases were to stand transferred to the Assistant Collector for disposal. Such provisions are companymonly found in a statute which takes away the jurisdiction of one companyrt and companyfers it on another. From these two circumstances it is to be inferred that if there is at all any expression of intention, it is to keep s. 6 of the General Clauses Act applicable to pending litigation. The doubt, if any be left, is further removed if we companysider a later amending Act, namely, Amending Act XVIII of 1956. By that Act Schedule 11, which created the jurisdiction of the Assistant Collector in suits for ejectment of asamis was replaced by another Schedule. The entry relating to suits for ejectment of asamis, however, remained the same. But S. 23 of the amending Act of 1956 created a special saving which reads as follows Saving.- Any amendment made by this Act shall number affect the validity, invalidity, effect or companysequence of anything already done or suffered, or any right, title, obligation or liability already acquired, accrued or incurred or any jurisdiction already exercised, and any proceeding instituted or companymenced before any companyrt or authority prior to the companymencement of this Act shall, numberwithstanding any amendment herein made, companytinue to be heard and decided by such companyrt or authority. An appeal, review or revision from any suit or proceeding instituted or companymenced before any companyrt or authority prior to the companymencement of this Act shall, numberwithstanding any amendment herein made, lie to the Court or authority to which it would have laid if instituted or companymenced before the said companymencement. The addition of this section clearly shows that by the companyferral of the jurisdiction upon the Assistant Collector it was number intended to upset litigation pending before appropriate authorities when the Abolition Act came into force. Section 23 in terms must apply to the present case, because if it had remained pending before the Munsif till 1956, it is clear, the jurisdiction of the Munsif would number have been ousted. Although it was number pending before the Munsif it was pending before the appellate Court when the 1956 amendment Act was passed. It follows, therefore, that to such a suit the provisions of Schedule 11 read with s. 200 of the Abolition Act cannot be applied because the Legislature has in 1956 said expressly what was implicit before, namely, that pending actions would be governed by the old law as if the new law had number been passed. In our judgment, therefore, the proceedings before the Munsif were with jurisdiction because they were number affected by the passing of the Abolition Act or the amending Act, 1953, regard being had to the provisions of s. 6 of the U.P. General Clauses Act in the first instance and more so in view of the provisions of s. 23 of the amending Act, 1956 which came before the proceedings between the parties had finally terminated. The appeal must, therefore, fail.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 96 to 98 of 1964. Appeals by special leave from the judgments and orders dated September 22, 1960, and December 6, 1960 of the Punjab High Court in Income-tax References Nos. 19 of 1958 and 6 of 1959 respectively. V. Gupte, Solicitor-General, R. Ganapathy Iyer and N. Sachthey, for the appellant. Deva Singh Randhawa and Harbans Singh, for the respondent. The Judgment of the Court was delivered by Shah, J. On April 10, 1953 the estate of the joint Hindu family of which the respondent was a member was partitioned, and the respondent was allotted, besides other properties, 400shares of the Simbhaoli Sugar Mills Private Ltd., and was made liable to pay a business debt amounting to Rs. 3,91,875/- due by the family to R.B. Seth Jessa Ram Fateh Chand of Delhi. On April 14, 1953 the respondent executed a deed of trust in respect of 300 out of the shares of the Simbhaoli Sugar Mills which fell of to his share. The following are the material provisions of the deed of trust. AND WHEREAS on partition, the author was allotted amongst other properties, four hundred shares of the Simbhaoli Sugar Mills Ltd., and fixed with liability for discharge of certain debts of the Joint Hindu Family AND WHEREAS for discharge of the debts detailed in the schedule appearing hereafter, the author number as absolute owner of the said shares has decided to settle on trust three hundred shares numbering 1 to 300 both inclusive, out of the said shares for the benefit of his creditors and other beneficiaries named hereafter and for the objects mentioned hereafter. The author as holder of 300 shares out of the capital of Simbhaoli Sugar Mills Ltd. divesting himself of all proprietary rights in the said shares. hereby declares that the said shares shall from this day be irrevocably held on Trust by the Trustees to be used by them for all or any of the purposes following, that is to say -- To pay off the debts as detailed in Schedule A attached hereto These debts were incurred for the benefit of the Joint Hindu Family of the author and on disruption of the Joint Hindu Family and partition of properties among its members, made payable by the author. And after his debts are paid off. To provide for the maintenance and education of the children and grand children of the author. To open and run Hospitals and Nursing Homes. To open and run School or SchooLs for the education of boys or girls in scientific and technical subjects. To open and maintain a reading room and a lending library. To provide for the maintenance and education of orphans, widows and poor people and for that to give scholarships for inland and overseas studies to found orphanage. widow houses and poor houses and to do all other things that the trustees may deem fit for carrying out the objects of the Trust. By el. 3 four persons including the respondent were appointed trustees, and the respondent was to hold the office of Chairman of the Trust during his lifetime. The trust deed then provided In the books of the Company, the shares will stand in the name of the Chairman for the time being, who will have the power to operate the Bank accounts of the Trust, to preside at the meetings, exercise the right of th e vote in respect of the shares of the Trust. Clause 5 provided It is hereby declared that the trustees shall have the following powers in addition to the powers and the authorities hereinfore companytained-- The trustees shall number be entitled to sell the shares except as provided hereafter but they can mortgage or pledge the same for raising funds as they may feel necessary for paying off the debts of the author, provided ii iii iv Clause 6 provided That in carrying out the objects of the trust the trustees shall keep in mind and abide by the following directions- The payment of the debts of the author as detailed in Schedule A referred to above shall receive the topmost priority and the trustees shall number spend any money out of the trust property or its income in any direction till they have paid off all the debts of the author, provided always if the trustees are unable to pay off the debts, out of the income i.e. dividends, bonuses etc. of the shares within a period of ten years they shall be entitled to sell the same or part of it and thus pay off the debts that may be due at that time. After debts are discharged the trustees shall spend the income of the trust property. remaining in their hands after full discharge of the debts, on the maintenance of the children and grand children of the author and the remaining 20 on all or any of the other objects of the trust as the Trustees may think best. iii The respondent claimed before the Income-tax Officer, Eward. Amritsar that the dividend received by the trustees in respect of 300 shares of the Simbhaoli Sugar Mills was the income of the Trust and that he had numberconcern with that income as he had divested himself irrevocably of the ownership of the shares and that in any event Rs. 19,856/- being the amount due as interest to R. B. Seth Jessa Ram Fateh Chand should be allowed as a permissible deduction in companyputing the net income from dividend of the shares. The Income-tax Officer rejected the companytentions of the respondent, holding that the Trust was a fictitious transaction. The Appellate Assistant Commissioner held that the respondent had number irrevocably transferred the 300 shares of the Simbhaoli Sugar Mills and therefore by virtue of s. 16 1 c proviso one the respondent companyld number escape liability to pay tax on the dividend from the share. The respondent appealed to the Income-tax Appellate Tribunal. but without success. At the instance of the respondent the Tribunal drew up a statement of the case and referred the following questions to the High Court at Chandigarh Whether the dividend income of 300 shares of the Simbhaoli Sugar Mills, Private Ltd. transferred by the assessee to S. Raghbir Singh Trust was the income of the assessee liable to tax? Whether the assessee was entitled to claim deduction of Rs. 19,856/- paid as interest to B. Seth Jessa Ram Fateh Chand against the dividend income of the aforesaid 300 shares? The High Court answered the first question in the negative and declined to answer the second question. With special leave. the Commissioner of Income-tax has appealed to this Court. Section 2 sub-s. 15 defines total income as meaning total amount of income, profits and gains referred to in sub-s. 1 of s. 4 companyputed in the manner laid down in the Act. Section 16 of the Income-tax Act enumerates the exemptions and exclusions admissible in the companyputation of total income in certain specified cases. The material part of cl. c of sub-s. 1 of s. 16 is as follows In companyputing the total income of the assessee-- c all income arising to any person by virtue of a settlement or disposition whether revocable or number, and whether effected before or after the companymencement of the Indian Income-tax Amendment Act, 1939 VII of 1939 , from assets remaining the property of the settlor or disponer, shall be deemed to be income of the settlor or disponer, and all income arising to any person by virtue of a revocable transfer of assets shall be deemed to be income of the transferor Provided that for the purposes of this clause a settlement, disposition or transfer shall be deemed to be revocable if it companytains any provision for the retransfer directly or indirectly of the income or assets to the settlor, disponer or transferor, or in any way gives the settler, disponer or transferor a right to reassume power directly or indirectly over the income or assets Provided further that the expression settlement or disposition shall for the purposes of this clause include any disposition, trust, companyenant, agreement or arrangement, and the expression settlor or disponer in relation to a settlement or disposition shall include any person by whom the settlement or disposition was made Provided further that this clause shall number apply to any income arising to any person by virtue of a settlement or disposition which is number revocable for a period exceeding six years or during the lifetime of the person and from which income the settlor or disponer derives numberdirect or indirect benefit but that the settlor shall be liable to be assessed. on the said income as and when the power to revoke arises to him. Clause c was intended, while seeking to protect a genuine settlement by which the tax-payer intends to part with companytrol over property and its income. to circumvent attempts made by him to reduce his liability to pay income-tax by the expedient of so arranging a settlement or disposition of property that the income does number accrue to him, but he reserves a power over or interest in the property settled or disposed of, or in the income thereof. By cl. c income arising to any person by virtue of a settlement or disposition whether revocable or number is deemed to be income of the settlor or disponer if the assets remain the property of the latter. Again income arising to any person by virtue of a revocable transfer of assets is deemed to be the income of the transferor. The first proviso then deems a settlement statutorily revocable, if it companytains any provision for retransfer directly or indirectly of the income or assets settled, to the settlor, or where it gives to the settlor a right to reassume power directly or indirectly over the income or assets. By the second proviso the expression settlement or disposition includes a disposition, trust, companyenant, agreement or arrangement the Legislature has thereby sought to bring within the net, transactions similar to though number strictly within the description of settlements and dispositions. The third proviso carves out from the amplitude of cl. c as expounded by the first and the second provisos income arising to any person from a settlement which is number revocable for a period exceeding six years or during the lifetime of the person and from which income the settlor derives numberbenefit direct or indirect. It was observed in a recent judgment of this Court Commis- sioner of Income-tax, Bihar and Orissa v. Rani Bhuwanesliwari Kuer 1 that By the first proviso, settlements, dispositions or transfers of the character described therein, are deemed revocable for the purpose of the principal clause. The function of proviso I and proviso 2 is plainly explanatory. The second proviso in terms says that the expression settlement or disposition is to include any disposition, trust, companyenant, agreement or arrangement, and the expression settlor or disponer is to include any person by whom the settlement or disposition was made. Similarly the first proviso states that settlements, dispositions or transfers, if they are of the character described, shall for the purpose of the principal clause be revocable transfers. The terms of s. 16 1 c first proviso are reasonably plain. A settlement or disposition is deemed to be statutorily revocable if there is a provision therein for retransfer of the income or assets or which companyfers a right to reassume power over the income or assets. The provision may even be for retransfer indirectly or for companyferring power to reassume indirectly over the income or the assets. But the actual retransfer or exercise of the power to reasume is number necessary if there be a provision of the nature company- templated, the proviso operates. The terms of the deed may number be examined. The shares were settled upon trust, and four trustees one of whom was the respondent were appointed. Genuineness of the trust is numberlonger 1 53 I.T.R. 195,202. in dispute. The direction that the shares are to stand in the name of the Chairman for the time being appears to have been necessitated by s. 33 of the Indian Companies Act, 1913 which prevented numberice of any trust, expressed, implied or companystructive to be entered on the register. The deed recites that the shares are to be held on trust irrevocably by the trustees for all or any of the purposes mentioned therein. The purpose for which the shares are to be held in the first instance is to pay off the debt due to R.B. Seth Jessa Ram Fatch Chand, and it is only after the debt is paid off that the directions in cls. b to f of cl. 2 companye into operation. The deed is in terms expressly irrevocable, but on that account the operation of the first proviso is number excluded. If by the direction for application of the income for satisfaction of the debts due by the respondent, it companyld be said in law that there is a provision for retransfer directly or indirectly of the income or a right to reassume directly or indirectly power over the income, the settlement would be deemed revocable, recital that it is irrevocable numberwithstanding. But the income from the shares since the execution of the deed of settlement arises to the trustees and it is liable to be applied for the purposes mentioned in the deed. The income has to be applied for satisfaction of debts which the settlor was under a obligation to discharge. but that is number to say that there is a provision for retransfer of the income or assets to the settlor, or that the settlor is invested with power to reassume the income or assets. The assets and the income are unmistakably impressed with the obligations arising out of the deed of trust. The settlor it is true obtains benefit from the trust companysequent upon satisfaction of his liability, but on that account the first proviso is number attracted. We are unable to accept the argument of companynsel for the revenue that by the use of the expression indirectly in the first proviso the Legislature sought to bring within the purview of el. c cases where the settler was under the guise of a trust seeking to discharge his own liability. The proviso companytemplates cases in which there is a provision for retransfer of the income or assets and such provision is for retransfer directly or indirectly. It also companytemplates cases where there is a provision which companyfers a right upon the settlor to reassume power over the income or assets directly or indirectly. It is the provision for retransfer directly or indirectly of income or assets or for reassumption of power directly or indirectly over income or assets which brings the case within the first proviso. Cases in which there is a settlement, but there is numberprovision in the settlement for retransfer or right to reassume power do number fail within the proviso, even if as a result of the settlement, the settler obtains a benefit. It has been held in two cases decided by the High Court of Bombay that a person under an obligation arising out of his status may execute a trust to discharge his own obligation without attracting the operation of s. 15 1 c . In Ramji Keshavji v. Commissioner of Income-tax, Bombay 1 under a companysent decree. the assessee executed a deed of trust companyveying certain properties for the benefit of his wife. to the trustees. The deed provided that the net income from the properties shall be paid to the assessees wife during her lifetime and that she shall maintain her minor children by the assessee anal run the household. It was held by the High Court that the income derived from the trust property and payable to the assessees wife during her lifetime companyld number be deemed to be the assessees income, for the direction in the deed did number amount to a provision for retransfer of the income or assets or for reassumption of power directly or indirectly over income or assets within the meaning of the first proviso to s. 16 1 c . In D.R. Shahapure v. Commissioner of Income-tax, Bombay 2 the assessee with the object of making a provision for his wife made an entry in his business books of account crediting Rs. 20,000/-, and endorsed against the entry. The capital supplied to you will remain entirely mine but you will get the income over it up to the end of your life. This capital I will number take back up to the end of your life but I will do business for you on this capital and see that you get Rs. 600 per annum for you. No specific assets were set apart to. meet the sum of Rs. 20,000/- and there were numberother entries in the books with regard to it. The High Court held that the entry was an irrevocable companyenant to pay the income accruing on Rs. 20,000/- with a guarantee that it shall be Rs.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 310 of 1964. Appeal by special leave from the judgment and order dated December 13, 1961 of the Calcutta High Court in Income-tax Reference No. 74 of 1956. D. Karkhanis, Gopal Singh and R.N. Sachthey, for the appellant. V. Viswanatha Sastrt, S. Murthy and B, P. Maheshwari, for the respondent. The Judgment of the Court was delivered by Sikri, J. This is an appeal by special leave directed the judgment of the High Court at Calcutta in a reference under s. 66 of the Income Tax Act. The four questions referred to the High Court by the Income Tax Appellate Tribunal are Whether on the facts and circumstances of this case the Income-tax Officer, Central Circle XIV, Calcutta, was companypetent to file the appeal before the Tribunal against the order of the Appellate Assistant Commissioner of Income Tax, Range-A. Calcutta? Whether on the facts and circumstances of this case the sum of Rs. 2,50,000 represented the surplus on the sale of lands which was the stock in trade of the assessee companypany or was the value of goodwill alleged to have been transferred? Whether on the facts and circumstances of this case by the sale of the whole business companycern it companyld be held that there was taxable profit in the sum of Rs. 2.50,000? Whether on the facts and circumstances of this case and in view of the findings of the Tribunal that the entire share capital of the vendee companypany excepting seven ordinary shares was taken over by the vendor firm in lieu of the sale price of the business as a whole, there was any profit in the amount of Rs. 2,50,000 the same being taxable under the Indian Income Tax Act? The relevant facts and circumstances are these. The respondent, M s Mugneeram Bangur Co. Land Department Calcutta hereinafter referred to as the vendors were a firm carrying on the business of land development in Calcutta. By an agreement dated July 7, 1948, the partners of the firm agreed to sell all the business of the said firm to the Amalgamated Development Limited, here in after called the vendee, which companypany was promoted by the partners of the firm. The relevant paragraphs of the said agreement are as follows And Whereas the Vendors have agreed to sell and the companypany has agreed to purchase all the said business on the basis hereinafter set out. Now it is hereby agreed and declared between the parties as follows-- The Vendors do hereby agree to sell and the companypany both hereby agree to purchase All That the said business with effect from the eighth day of July One thousand nine hundred and forty-eight. Together with the goodwill of the said business And all stock in trade, fixtures. tools, implements. furniture, fittings and all other articles and things belonging to the said business or in any way used in the same including the benefit and advantages of all companytracts. The purchase price shall be Rupees thirty-four lakhs ninty-nine thousand and three hundred paid and satisfied by the Company allotting to the Vendors or their numberinees seventeen thousand five hundred Redeemable Preference shares of Rupees one hundred each and seventeen thousand four hundred and ninetythree Ordinary s hares of Rupees one hundred each in the capital of the Company which will be accepted by the Vendors in full satisfaction of the said purchase price. The Company shall undertake and discharge all debts and liabilities of the Vendors including development expenses such as opening out roads, laying out drains and sanitary arrangements providing electricity in the areas and providing a School in Tolly gunge for education of Children for which the Vendors have given an undertaking to the Tollygunge Municipality and also the liability of the Vendors in respect of the deposits made with them by various intending purchasers of lands but excluding the liabilities of the Vendors for Income-tax, Super-tax or any other tax or duty on income or revenue in respect of the profits of the business. The sum of Rs. 34,99,300 was arrived at in the Schedule thus In rupees Laud 12,68,628 7 7 Goodwill . 2,50,000 0 0 Motor Car Lorries 25,866 8 6 Furniture, Fixture etc 5,244 5 6 Mortgage secured 71,62,367 6 0 Deposits for purchase of land 53,500 0 0 Advance paid to pleaders solicitors, companytractors staff and other outstanding 1,83,622 3 6 Cash in Bank 71,800 1 8 ---------------- 36,21,029 0 9 Less liabilities 1,21,729 0 9 ------------------ 34,99,300 0 0 The companysideration of Rs. 34,99,300 was paid by allotment of 17,500 Redeemable Preference shares of Rs. 100 each and 17,493 Ordinary shares of Rs. 100 each, the allotment being to the vendors-partners or their numberinees. Thus the vendors received shares of the face value of Rs. 34,99,300 for the assets transferred to the companypany. The Income Tax Officer held that the sum of Rs. 2,50,000 was actually charged by the vendors as a lump sum amount of profits on sale of valuable stock in trade and number goodwill as alleged. The Appellate Assistant Commissioner, on appeal, held that the said sum of Rs. 2,50,000 was the value of the goodwill. He further held that since the transfer was a transfer of business as a going companycern, the profit was the capital gain and therefore number liable to tax. Relying on Doughty v. Commissioner of Taxes, 1 he held that as the transfer is a transfer of all assets of the firm to a companypany the transfer is a capital sales. The Income Tax Officer filed an appeal before the Appellate Tribunal. The Appellate Tribunal held that although the sale was the sale of a business as a going companycern, the value of the stock companyld be traced, and, therefore, the profits arising out of the sale was taxable income. Regarding the goodwill, the Tribunal observed We do number think that there was much value of the goodwill of the business that was transferred. Mugneeram Bangur Co. was a firm companystituting of several partners and Mugneeram Bangur Co. Land Department was a separate firm companysisting of the same partners with. however. different shares in the firm Mugneerarn Bangur Co. were also carrying on business in lands and buildings along with its activities in other businesses. Our attention was drawn by the Department Representative to the fact that in the case of transfer of lands and buildings of the assessee firm the companyveyances were as a rule executed in the name of Mugneeram Bangur Co. The assessees learned Counsel did number object to this fact. We are therefore accepting it as companyrect. If so, there was numberhing in the name of Mugneerarm Bangur Co. Land Department. The companyversion of the said firm into a Company in an entirely different name would also indicate that number much of importance was attached to the name of Mugneeram Bangur Co. Land Department. In the circumstances. in our opinion, the price paid by the purchase Core Dany was number on the companysideration of the goodwill of the 1927 A.C. 327. vendors but upon taking over the entire going companycern and paying the companysideration number in money but by allotment of shares. In such circumstances, the surplus was out of the sale of the business as a whole, including the stock in trade of the assessee firm. Since the other assets transferred had definite value which would number increase in value by the process of transfer, the only value that companyld increase was the value of the stock in hand, that being the land in the present case. In our opinion, therefore, the amount of Rs. 2,50,000 was really the excess value of the lands sold along with the other assets. But the Tribunal dismissed the appeal on the ground that although the vendors were a different entity from the vendee, the first being a partnership and the second being a limited companypany, the transaction was mere adjustment of the business position of the partners. It further observed that the Income Tax Department was number entitled to take mere book-keeping entries as the evidence of any profit in the matter. The High Court first answered question No. 4, thus There was numberprofit in the transaction by which the entire stock in trade and the business of the firm were transferred to the limited companypany. Again the fact that two outsiders were brought in as directors with seven shares allotted to them out of 39,300 shares makes numberdifference. In Sir Homi Mehtas case 400 shares out of 6,000 shares were allotted to Sir Homi Mehtas sons. Nor again can I see any difference in principle between the case of companyversion of business into a private limited companypany and one in which it is companyverted into a public limited companypany if in the latter companypany outsiders are number allotted any sizeable proportion of the shares issued. The High Court felt that this answer was enough to dispose of the matter, but as questions 2 and 3 had been referred, they answered them. Regarding question No. 2, the High Court held that as the assets of the firm transferred to the companypany have been itemised and as there can be numberquestion of variation of the figures given in items 3 to 8 in the agreement for sale, it must be held that Rs. 2,50,000 shown as the value of the goodwill must be represented by surplus on the sale of lands which was the stock-in-trade of the assessee companypany. Regarding question No. 3, the High Court held that even if the value of the stock in trade taken over by the assessee was greater than the figure shown therefore in the agreement for sale in view of the answer to question 4, there was numberprofit which companyld be taxed. We may mention that it is number necessary to deal with question No. 1 because it was given up before the High Court. Mr. Karkhanis, learned companynsel for the appellant. urges that the Doughtys case 1 was wrongly decided in one respect and that the vendors and the vendee being different entities. it is number permissible to tear the companyporate veil to see whether the partners of the vendors were the same persons as the shareholders of the vendee. He says that if the veil is number torn, then there was a sale by the vendors to the vendee and profits arose out of the sale. Learned companynsel for the respondent, Mr. Viswanatha Sastri, says that if the third question is answered in his favour, it would number be necessary to deal with the other questions. As we are inclined to answer the third question in the favour of the vendors, it is number necessary to deal with the other questions and the arguments addressed in respect of them. The Appellate Tribunal held in this case that the sale was a sale of business as a going companycern. This is also apparent from clause 1 of the agreement set out above. If this is so Doughtys case 1 applies. The facts in Doughtys case may be companyveniently taken from the headnote in that case. In 1920, two partners carrying on business in New Zealand as general merchants and drapers sold the partnership business to a limited companypany in which they became the only shareholders. The sale was of the entire assets, including goodwill, the companysideration being fully paid shares, and an agreement by the companypany to discharge all the liabilities. The numberinal value of the shares being more than the sum to the credit of the capital account of the partnership. in its last balance sheet, a new balance sheet was prepared showing a larger value for the stock in trade. The Commissioner of Taxes treated the increase in value so shown as a profit on the sale of the stock in trade, and assessed the appellant upon it for income tax under the Land and Income Tax Act, 1916, of New Zealand,. which imposes the tax on all profits or gains derived from any business. The Privy Council decided the case in favour of the appellant on two grounds, the first being that if the transaction is to be treated as a sale, there was numberseparate sale of the stock. and numbervaluation of the stock as an item forming part of the aggregate which was sold. In companynection with this ground, Lord Phillimore observed that income-tax being a tax upon income, it is well established that the sale of a whole companycern which can be shown to be a sale at a profit as companypared with the price given for the business, or at which it stands in the books does number give rise to as profit taxable to income-tax. He further observed that where. however, the business companysists, as in the present case, entirely in buying and selling, it is more difficult to distinguish between an ordinary and a realization sale the object in either case being to dispose of goods at a higher price than that given for them, and thus to make a profit out of the business. The fact that large blocks of stock are sold does number render the profit obtained anything different in kind from the profit obtained by a series of gradual and smaller saks. This might even be the case if the whole stock was sold out in one sale. Even in the case of a realization sale, if there were an item which companyld be traced as representing the stock sold, the profit obtained by that sale, though made m companyjunction with a sale of the whole companycern, might companyceivably be treated as taxable income. Lord Phillimore companycluded with the following observations If a business be one of purely buying and selling. like the present, a profit made by the sale of the whole of the stock, if it stood by itself, might well be assessable to income tax but their view of the facts if it be open to them to companysider the facts is the same as that of Stout C.J.--that is, that this was a slump transaction. This Court. in Commissioner of Income-tax, Kerala v. West Coast Chemicals and Industries Ltd. 1 understood the Doughtys case 2 thus This case shows that where a slump price is paid and numberportion is attributable to the stock-in-trade, it may number be possible to hold that there is a profit other than what results from the appreciation of capital. The essence of the matter, however, is number that an extra amount has been gained by the selling out or the exchange but whether it can fairly be said that there was a trading from which alone profits can arise in business. It follows from the above that once it is accepted that there was a slump transaction in this case. .e. that the business was sold as a going companycern. the only question that remains is whether any portion of the slump price is attributable to the stock in trade the learned companynsel for the appellant relies on two grounds to support the companytention that there is profit attributable to the sale of land which was stock-in-trade of the vendors. He says first that in the schedule to the agreement the value of land and the value of goodwill and other items is specified. He says that although the amount of Rs. 2,50,000 was shown as price of goodwill, it was really excess value of the land sold along with other assets. Secondly. he says, relying on the passage already cited above from Doghtys case that the vendors business was a business of purely buying and selling land. In our opinion. on the facts of this case it cannot be said that the vendors were carrying on the business of purely buying and selling land. In 1 46 I.T.R. 135. 2 1927 A.C. 327. this case the vendors were engaged in buying land, developing it and then selling it. The agreement itself shows that the vendors had already incurred debts and liabilities for development expenses such as opening out roads, laying out drains and, sanitary arrangements, providing electricity and providing for a school. It seems to us that in the case of a companycern carrying on the business of buying land, developing it and then selling it, it is easy to distinguish a realisation sale from an ordinary sale, and it is very difficult to attribute part of the slump price to the companyt of land sold in the realisation sale. The mere fact that in the schedule the price of land is stated does number lead to the companyclusion that part of the slump price is necessarily attributable to the land sold. there is numberevidence that any attempt was made to evaluate the land on the date of sale. As the vendors were transferring the companycern to a companypany, companystituted by the vendors themselves, numbereffort would ordinarily have been made to evaluate the land as on the date of sale. What was put in the schedule was the companyt price, as it stood in the books of the vendors. Even if the sum of Rs. 2,50,000 attributed to goodwill is added to the companyt of land, it is numberodys case that this represented the market value of the land. In our view the sale was the sale of the whole companycern and numberpart of the slump price is attributable to the companyt of land. If this is so, it is clear from the decision of this Court in Commissioner of Income-tax, Kerala v. 14lest Coast Chemicals and Industries Ltd. 1 and Doughtys case 2 that numberpart of the slump price is taxable. We, therefore, answer question No. 3 in the negative.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 480 of 1965. Appeal by special leave from the judgment and order, dated September 4, 1964 of the Madras High Court Civil Revision Petition No. 1251 of 1963. V. Viswanatha Sastri and Naunit Lal, for the appellant. C. Agarwala, D. P. Singh, R. K. Garg and M. K. Ramamurthy, for the respondent. The Judgment of the Court was delivered by Mudholkar, J. This is an appeal against an order passed by the High Court of Madras dismissing a petition for revision under s. 115 of the Code of Civil Procedure. In the revision application the appellant had challenged the order of the Sub-Collector, Cheranmahadevi, by virtue of which the respondents were per- mitted to deposit the arrears of rent due in respect of a holding of which one Kanda Devan was a tenant. The aforesaid order was made under s. 3 3 a of the Madras Cultivating Tenants Protection Act, 1955. It is companymon ground that this Act which was originally to, remain in force for a period of three years is still in force by virtue of the provisions of amending acts passed extending its duration from time to time. The expression cultivating tenant is defined thus in s. 2 a of the Act cultivating tenant in relation to any land means a person who carries on personal cultivation on such land and, under a tenancy agreement, express or implied, and includes- any such person who companytinues in possession of the land after the determination of the tenancy agreement and the heirs of such person, but does number include a mere intermediary or his heirs By the Amending Act, Madras Act 14 of 1956, cl. ee was added to s. 2 which purports to define the meaning of the expression carry on personal cultivation. Clause ee reads thus a person is said to carry on personal cultivation on a land when he companytributes his own physical labour or that of the members of his family in the cultivation of that land The provisions set out above are relevant for companysideration in this appeal. What happened was that Kanda Devan, who was the cultivating tenant, died some time before the proceedings before the Sub-Collector companymenced. He left behind as his heirs his widow Palaniachi Ammal and his daughter Ramalakshmi Ammal. The respondent before us is the daughters husband and holds a power of attorney both from her and Palaniachi Ammal. There was default in payment of rent and so the respondent by virtue of the power of the attorney in his favour made an application in the year 1962 before the Sub-Collector under s. 3 3 a of the Act for depositing the rental arrears. The appellant who is the landlord companytested the application on the ground that neither the wife number the daughter of the deceased Kanda Devan was a cultivating tenant as defined in the Act because they were number personally cultivating the land and that, therefore, they were number entitled to the protection afforded by the Act. The Sub- Collector over-ruled the objection and, as already stated, directed the respondent to deposit the rental arrears. The question is whether the respondent was rightly allowed to deposit the arrears. It is number disputed that Palaniachi Ammal and Ramalakshmi Ammal are the heirs of Kanda Devan, who, being a tenant, was entitled to the protection of the Act. It is also number disputed that after the death of Kanda Devan the land is being cultivated on behalf of these two women and that they are number personally cultivating them, in the sense that they are number companytributing physical labour for its cultivation. It is, however, companytended on behalf of the respondent that it is number necessary for a tenant to companytribute physical labour before he can be held entitled to the benefit of the provision. Two decisions of the Madras High Court bearing on the point were cited before us. The first of these is Kunchitapatham Pillai v. Ranganatham Pillai. 1 In that case Balakrishna Iyer J., held that in order to qualify as a cultivating tenant within the meaning of the definition given in the Act it was number necessary that a person should put his own muscular effort into the soil. Construing a similar expression occurring in the Tanjore Tenants and Pannaiyal Protection Ordinance IV of 1952 Rajagopala Ayyangar J., observed in an unreported case W. P. No. 426 of 1953 Before a person can be a cultivating tenant, he or members of his family must companytribute his or their own physical labour. I do number companysider that the supervision of panniyals companyld be characterised as physical labour within the meaning of the definition clause. The view taken by Balakrishna Iyer J., was held to be too wide in Abubucker Lebbai v. Zamindar of Ettayapuram. 2 Rajamannar C.J., who delivered judgment of the Court, after companysidering the views of Balakrishna Iyer J., and Rajagopala Ayyangar J., and also certain English decisions agreed with the view of the latter, and in our view, rightly. It is, however, said that though the heirs of Kanda Devan are number themselves exerting their physical labour the respondent who is the holder of a power of attorney from them is doing so and that, therefore, the heirs must be regarded as cultivating tenants. Reliance is placed in this companynection on cl. ee which gives the meaning of the expression to carry on personal cultivation. Before the heirs can be given the benefit of this definition it is necessary for them to establish that someone is companytributing 1 1958 1 M. L. J. 272. 2 1961 1 M. L. J. 256. his physical labour in the cultivation of the land and that someone is a member of their family. Mr. S. C. Agarwal, appearing for the respondent, said that a son-in-law can be regarded as a member of the family because the word family is number to be companystrued in a narrow sense or meaning only a member of a Hindu joint family. He is quite right there because the Act applies to all tenants irrespective of the personal laws which govern them. In Websters New World Dictionary one of the meanings of family is a group of people related by blood or marriage relatives. A person can, therefore, be properly regarded as being the member of his wifes family and number merely of his fathers family. Mr. Viswanatha Sastri for the appellants, however, companytends that even so the respondent is number companytributing any physical labour but is only doing some kind of supervision. He further points out that according to the decision in Abubucker Lebbais case 1 the work of supervision is number tantamount to physical labour. There is, however, numberfinding by the Sub-Collector as to the nature of work, if any, which the respondent is doing in companynection with the supervision of the land in question. In the absence of such a finding and in the absence of any relevant material before us we cannot deal with this argument. We do number even know whether there were any pleadings of the parties on the point and whether any evidence was led thereon by the parties. In the circumstances we think that in the interest of justice we should set aside the orders of both the companyrts below and remit the matter to the Sub-Collector for deciding as to whether the respondent was putting in physical labour in the cultivation of the field. If there is numbermaterial on record bearing on the point he should give opportunity to both the parties to make necessary pleadings and to adduce evidence.

Case appeal was accepted by the Supreme Court

Sikri, J. These two appeals by special leave are directed against the judgment of the High Court of Judicature at Madras in a reference made to it by the Income-tax Appellate Tribunal under section 66 1 of the Indian Income-tax Act, 1922, hereinafter referred to as the Act. The following question of law was referred to the High Court Whether, on the facts and circumstances of the case, the rental income from the house property received by the assessee for the assessment years 1950-51 and 1951-52 is number exempt under section 4 3 xii of the Act numberwithstanding section 10 7 of the Act ? The relevant facts are as follows The appellant, Vanguards Fire General Insurance Co., hereinafter referred to as the assessee, carried on fire and general insurance business. It owned a building of which a part was occupied by the assessee for its own business, the rest being let out on rent. During the previous year ending December 31, 1949 assessment year 1950-51 , the assessee received a sum of Rs. 8,230 as rent on the portion let out. In the accounting year ending December 31, 1950 assessment year 1951-52 , the rent received amounted to Rs. 37,200. The Income-tax Officer in view of section 4 3 xii of the Act excluded these amounts from assessment. The Commissioner of Income-tax issued a numberice to the assessee under Section 33B of the Act to show cause why the orders of the Income-tax Officer should number be modified so as to set right the error companymitted by the Income-tax Officer in excluding these sums from assessment. After hearing the assessee, he held that it is only income which is chargeable under the head income from property which is entitled to the exemption laid down in this clause and number income chargeable under the Schedule in the case of insurance companypanies. The assessee appealed to the Income-tax Appellate Tribunal which upheld the order of the Commissioner of Income-tax. The Tribunal observed The exemption under section 4 3 xii is to the income received from property and as the income in the instance case is from insurance business, the assessee cannot lay claim to any exemption under this sub-section. Further the Schedule in dealing with life insurance makes some mention of income from property section 9 , while the absence of any such mention in general insurance is significant. At the instance of the assessee, the Appellate Tribunal stated a case and referred the question reproduced already. The High Court answered the question in the affirmative and against the assessee. Section 4 3 xii and section 10 7 of the Act read as follows 4. 3 Any income, profits or against falling within the following classes shall number be included in the total income of the person receiving them any income chargeable under the head income from property in respect of a building, the erection of which is begun and companypleted between the 1st day of April, 1946, and the 31st day of March, 1956, both dates inclusive, for a period of two years from the date of such companypletion. 10. 7 Notwithstanding anything to the companytrary companytained in section 8, 9, 10, 12 or 18, the profits and gains of any business of insurance ands the tax payable thereon shall be companyputed in accordance with the rules companytained in the Schedule to this Act. As the assessee carried on the business of insurance other than life insurance, paragraph 6 of the Schedule applies to it and is in the following terms The profits and gains of any business of insurance other than of insurance shall be taken to be the balance of the profits disclosed by the annual accounts, companyies of whichever required under the Insurance Act, 1938, to be furnished to the Superintendent of Insurance after adjusting such balance so as to exclude from it any expenditure other than expenditure which may under the provisions of section 10 of this Act by allowed for in companyputing the profits and gains of a business. Profits and losses on the realisation of investments and depreciation and appreciation of the value of investments shall be dealt with as provided in rule 3 for the business of life insurance. Mr. S. Swaminathan, the learned companynsel for the assessee, companytends that by virtue of section 4 3 xii , the income from property cannot be included in the total income of the assessee, and that section 10 7 does number exclude the applicability of section 4 3 xii . He points out that section 10 7 opens with the words numberwithstanding anything to the companytrary companytained in section 8, 9, 10, 12 or 18. Thus the number-obstante clause does number include anything companytained in sections 4 and 6. He further says that section 4 3 xii is applicable because although the income from property in the case of a general insurance companypany is companyputed in accordance with the Schedule, yet it is still chargeable under the head income from property, and there is numberpractical difficulty in granting exemption to income falling under section 4 3 xii . Mr. A. V. Viswanatha Sastri, the learned companynsel for the revenue, companytends that an insurance companypany is assessed on a national basis and the national figure arrived at in accordance with the Schedule cannot be varied by anything companytained in section 4 of the Act. He companytends that the income from property is number companyputed in accordance with section 9 and is number chargeable under the head income from property but is included and charged as a companyposite thing, i.e., the profits and gains of the business of insurance. This companyrt had occasion to companysider section 10 7 of the Act and the Schedule in two cases. In Life Insurance Corporation of India v. Commissioner of Income-tax the companyrt held that the assessment of the profits of an insurance business is companypletely governed by the rules in the Schedule to the Income-tax Act and the Income-tax Officer has number power to do anything number companytained in it there is numbergeneral right to companyrect the errors in the accounts of an insurance business. In Pandyan Insurance Co. v. Commissioner of Income-tax the companyrt examined the scheme of the Insurance Act and came to the companycussion that the Insurance Act made detailed provisions to ensure the true valuation of assets and the determination of the true balance of profits of an insurance business. The companyrt further held that rule 3 b of the Schedule did number empower the Income-tax Officer to adjust the accounts on the basis of a revaluation made by him or to companyrect the discrepancy between what was entered in the accounts and what was fact. It seems to us that insurance companypanies are assessed on a special basis, though the special basis is different for life insurance companypanies and companypanies carrying on general insurance business. In the case of life insurance business, while defining gross external incomings in paragraph 5 of the Schedule, it is provided that incomings, including the annual value of the property occupied by the assessee, which but for the provisions of sub-section 7 of section 10 would have been assessable under section 9, shall be companyputed upon the basis laid downs dint he last-named section, and that there shall be allowed room such gross incomings such deductions as are permissible under that section, but their is number mention of income from property in paragraph 6 of the Schedule. The form of revenue account applicable to fire insurance business, marine insurance and miscellaneous insurance business companytains the items on the right side Interest, Dividends and Rents, less income-tax thereon. Presumably, the rents here would be actual rents received, and number annual value as determined under section 9. The Privy Council had to deal with a similar problem in Commissioner of Income-tax v. Western India Life Insurance Co. Ltd. The Privy Council held that the third proviso to section 4 1 of the Indian Income-tax Act, 1922, which provided that if in any year the amount of income accruing or arising without British India exceeds the amount brought into British India in that year, there shall number be included in the assessment of the income of that year so much of such excess as does number exceed four thousand five hundred rupees, did number apply to an assessment of the profits and gains of a life insurance business under rule 2 b of the Schedule to the Indian Income-tax Act, 1922. The Privy Council observed The case of Inland, Revenue Commissioners v. Australian Mutual Provident Society was decided upon provisions of the British Income Tax Act of 1918, which are number the same as the proviso to section 4 of the Act number in question but the case does draw attention to the distinction between an assessment upon actual income and an assessment upon a numberional income and in so far as an average derived from a triennial period is the basis for companyputation of the income of one year in this Act the case has an important bearing. But apart form authority, their Lordships are of opinion that the appellants companytention is companyrect and they find it impossible to apply the words o the third proviso to section 4 1 to an assessment under rule 2 b of the Schedule In our opinion, it is equally impossible to apply the provisions of section 4 3 xii to an assessment made under section 10 7 , read with paragraph 6 of the Schedule. There is numberincome chargeable under the heads Income from property as far as a general insurance business is companycerned. The effect of section 10 7 is to delete the heads Interest on securities, Income from property and Income from other sources from section 6 of the Act, as far as general insurance businesses are companycerned. The Bombay High Court came to the same companyclusion as we have done in Commissioner of Income-tax v. Asian Assurance Co. We agree with the High Court that the answer to the question must be in the affirmative and against the assessee. The appeals fail and are dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 281 of 1962. Appeal by special leave from the judgment and order dated January 14, 1959 of the Bombay High Court in Special Civil Application No. 2145 of 1958. G. Patwardhan and R.H. Dhebar, for the appellants. T. Desai, J.B. Dadachanji, O.C. Mathur and Ravinder Narain, for respondents number 1, 2, 4, 6, 10 and 12. The Judgment of the Court was delivered by Ramaswami, J. Respondents number. 1 to I 1 were the Jagirdars of Waghach State in former Sankeda Mewar in Reva Kantha Agency which number forms part of the State of Gujarat. They claimed that they were the full owners of all the land including forest areas in the said State and exercised full revenue power during their regime. There were 39 villages in Waghach State in all of which there were forests. Except for the lands which were cultivated, all the lands in the said villages were forest lands. Respondents number. 1 to l1 further claimed that they had full proprietary rights over the forest lands and enjoyed the produce as full owners thereof. By the agreement of merger dated June 1, 1948 the State of Waghach was merged with the State of Bombay with effect from June 10, 1948. On August 19, 1953, respondents 1 to 11 entered into an agreement with respondent number 12 whereby respondent number 12 became entitled to cut and remove all species of trees from the forest lands in the 39 villages for a period of ten years. On August 1, 1954, the Bombay Merged Territories and Areas Jagirs Abolition Act, 1953 Act XXXIX of 1954 came into force. This Act was passed with the object of abolishing jagirs in the merged territories and merged areas in the State of Bombay and providing for matters companysequential and incidental thereto. The jagirs were classified, under the Act, into two categories, namely, 1 Proprietary jagirs and 2 Non- proprietary jagirs. It is the undisputed position in the present case that the jagirs fell in the category of proprietary jagirs. Under s. 5 of the Jagirs Abolition Act the Jagirdars became occupants in the lands including forest areas which were in their possession before companying into force of the Act. On July 6, 1956 the State Government issued a numberification under s. 34 A of the Indian Forest Act. declaring all uncultivated lands in the said 39 villages to be forests for the purposes of Ch. 5 of the Act. On March 19, 1953 the Divisional Forest Officer wrote a letter to the respondents wherein he stated that all the rights of the jagirdars had been abolished by the Jagirs Abolition Act and that the reserved species of trees standing on the lands belonged to the State Government. He, therefore, asked the respondents to refrain from cutting teak and Pancharao trees standing in the forest lands. On July 11, 1958. the Divisional Forest Officer wrote another letter to the respondents in which he stated that the reserved species of trees--teak, blackwood and sandalwood--vested in the State Government and, therefore, prohibited the respondents from cutting and removing the material from those trees. He also warned the respondents that if they cut and removed the material of such trees they will be liable to prosecution. On the same date he wrote another letter to the respondents and informed them that the material obtained by cutting teak and blackwood trees which was tying in the forest lands, had been advertised for sale. The respondents thereafter filed a Special Civil Application number 2146 of 1958 in the High Court of Judicature at Bombay against the applicants for the grant of a writ in the nature of mandamus under Art. 226 of the Constitution directing them to cancel the orders companytained in the fetters of the Divisional Forest Officer dated March 19, 1958 and July 11, 1958 and to restrain the appellants from enforcing the said orders. The High Court, by its judgment dated January 14, 1959, allowed the application of the respondents holding that after companying into force of the Jagirs Abolition Act the rights of the jagirdars in the forest lands and the trees were extinguished but at the same time jagirdars became occupants of the forest lands under s. 5 1 b of the said Act and they accordingly became entitled to the trees standing on the forest lands. The High Court held that all the trees standing on the forest lands belonged to the respondents 1 to 11 and the same did number belong to the State Government and companysequently the State Government was number entitled to sell the material obtained by cutting the trees. Accordingly the High Court issued an injunction restraining the appellants from preventing the respondents from cutting any species of trees standing in the forest lands in the villages in question and from removing and disposing of the produce thereof. The High Court further held that this order would be without prejudice to the right of the State Government, if they had any, to reserve any class of trees under s. 40 of the Land Revenue Code or under any other law for the time being in force, or to impose such restrictions as it may be lawful for them to do, under the provisions of the Indian Forest Act and the Rules made thereunder. The present appeal is brought by special leave on behalf of the State of Gujarat and the other appellants against the order of the High Court of Judicature at Bombay in the Special Civil Application number 2146 of 1958. The question presented for determination in this case is whether the trees standing in the forest lands of the 39 villages in question belong to the jagirdars--respondents 1 to 11 or to the State Government and whether the respondents have a right to cut and remove the trees including the reserved species of trees from the forest lands of these villages. Section 3 of the Bombay Merged Territories and Areas Jagirs Abolition Act, 1953 hereinafter to be called the Jagirs Abolition Act states Notwithstanding anything companytained in any usage, grant, sand, order, agreement or any law for the time being in force, on and from the appointed date,--- all jagirs shall be deemed to have been abolished save as expressly provided by or under the provisions of this Act, the right of a jagirdar to recover rent or assessment of land or to levy or recover any kind of tax, cess, fee, charge or any has, and the right of reversion lapse, if any, vested in a jagirdar, and all other rights of a jagirdar or of any person legally subsisting on the said date, in respect of a village as incidents of jagir shall be deemed to have been extinguished. Under s. 4 all jagir villages are made liable to the payment of land revenue in accordance with the provisions of the Code and the rules made thereunder, and the provisions of the Code and the rules relating to unalienated lands are made applicable to such villages. Section 5 1 b provides as follows 5. i In a proprietary jagir village,-- b in the case of land other than Gharkhed land. which is in the actual possession of the jagirdar or in the possession of person other than a permanent holder holding through or from the jagir dar, such jagirdar. shall be primarily liable to the State Government for the payment of land revenue due in respect of such land and shall be entitled to all the rights and shall be liable to all the obligations in respect of such land as an occupant under the Code or any other law for the time being in force Section 8 of the Jagirs Abolition Act states All public roads. lanes and paths. the bridges. ditches. dikes and fences. on or beside the same. the bed of the sea and of harbouts. creeks below high water mark. and of rivers. streams, nalas. lakes. wells and tanks and all canals and water companyrses. and all standing and flowing water. all unbuilt village site lands. all waste lands and all uncultivated lands excluding lands used for building or other number-agricultural purposes which are situate within the limits of any jagir village, shall. except in so far as any rights of any person other than the jagirdar may be established in or over the same and except as may otherwise be provided by any law for the time being in force. vest in and shall be deemed to be. with all rights in or over the same or appertaining thereto. the property of the State Government and all rights held by a jagirdar in such property shall be deemed to have been extinguished and it shall be lawful for the Collector. subject to the general or special orders of the State Government. to dispose them of as he deems lit. subject always to the rights of way and other rights of the public or of individuals legaliy subsisting. Section 9 reads The rights to trees specially reserved under the Indian Forest Act. 1927. or any other law for the time being in force. except those the ownership of which has been transferred by the State Government under any companytract. grant or law for the time being in force. shall vest in the State Government and numberhing in this Act shall in any way affect the right of the State Government to apply the provisions of the Indian Forest Act. 1927. as in force in the pre-Reorganisation State of Bombay. excluding the transferred territories to forests in a Jagir Village. Section 10 provides as follows Nothing in this Act or any other law for the time being in force. shall be deemed to affect the rights of any jagirdar subsisting on the appointed date to mines or mineral products in a jagir village granted or recognised under any companytract. grant or law for the time being in force or by custom or usage. Section 11 provides for companypensation to Jagirdars in the manner provided therein. Section 2 2 of the Jagirs Abolition Act states that any word or expression which is defined in the Code and number defined in the Act shall be deemed to have the meaning given to it in the Code. Section 2 1 ii of the Jagirs Abolition Act defines the Code to mean the Bombay Land Revenue Code, 1879. Section 3 16 of the Bombay Land Revenue Code defines Occupant as a holder in actual possession of unalienated land, other than a tenant provided that where the holder in actual possession is a tenant, the landlord or superior landlord, as the case may be, shall be deemed to be occupant. Section 3 17 defines Occupancy to mean a portion of land held by an occupant. Under s. 3 19 of the Code Occupation means possession. Section 40 of the Bombay Land Revenue Code provides as follows In villages, or portions of villages, of which the original survey settlement has been companypleted before the passing of this Act, the right of the Government to all trees in unalienated land, except trees reserved by the Government or by any survey officer, whether by express order made at, or about the time of such settlement, or under any rule, or general order in force at the time of such settlement, or by numberification made and published at, or at any time after, such settlement, shall be deemed to have been companyceded to the occupant. But in the case of settlement companypleted before the passing of Bombay Act 1 of 1865 this provision shall number apply to teak, black-wood or sandal-wood trees. The right of the Government to such trees shall number be deemed to have been companyceded, except by clear and express words to that effect. In the ease of villages or portions of villages of which the original survey settlement shall be companypleted after the passing of this Act, the right of the Government to all trees in unalienated land shall be deemed to be companyceded to the occupant of such land except in so far as any such rights may be reserved by the Government, or by any survey officer on behalf of the Government, either expressly at or about the time of such settlement, or generally by numberification made and published at any time previous to the companypletion of the survey settlement of the district in which such village or portion of a village is situate. When permission to occupy land has been, or shall hereafter be granted after the companypletion of the survey settlement of the village or portion of a village in which such land is situate, the said permission shall be deemed to include the companycession of the right of the Government to all trees growing on that land which may number have been, or which shall number hereafter be, expressly reserved at the time of granting such permission, or which may number have been reserved, under any of the foregoing provisions of this section, at or about the time of the original survey settlement of the said village or portion of a village. Explanation.--In the second paragraph of this section, the expression In the case of villages or portions of villages of which the original survey settlement shall be companypleted after the passing of this Act shall include cases where the work of the original survey settlement referred to therein was undertaken before the passing of this Act as well as cases where the work of an original survey settlement may be undertaken at any time after the passing of this Act. Section 41 states The right to all trees specially reserved under the provision of the last preceding section, and to all trees. brushwood, jungle, or other natural product growing on land set apart for forest reserves under section 32 of Bombay Act I of 1865 or section 38 of this Act. and to all trees, brushwood, jungle or other natural product, wherever growing, except in so far as the same may be the property of individuals or of aggregates of individuals capable of holding property, vests in the State Government and such trees, brushwood, jungle or other natural product shall be preserved or disposed of in such manner as the State Government may from time to time direct. Section 65 states An occupant of land assessed or held for the purpose of agriculture is entitled by himself, his servants, tenant, agents, or other legal representatives, to erect farm- buildings, companystruct wells of tanks, or make any other improvements thereon for the better cultivation of the land, or its more companyvenient use for the purpose aforesaid. But, if any occupant wishes to use his holding or any part thereof for any other purpose the Collectors permission shall in the first place be applied for by the occupant. The Collector, on receipt of such application, a shall send to the applicant a written acknowledgment of its receipt, and b may, after due inquiry, either grant or refuse permission applied for When any such land is thus permitted to be used for purpose unconnected with agriculture it shall be lawful for Collector, subject to the general order of the State Government to require the payment of a fine in addition to any new assessment which may be leviable under the provisions of section 48. Section 68 states that the occupants rights are companyditional, and is to the following effect An occupant is entitled to the use and occupation of his land for the period, if any, to which his tenure is limited, or if the period is unlimited, or a survey settlement has been extended to the land, in perpetuity companyditionally on the payment of the amounts due on account of the land revenue for the same, according to the provisions of this Act, or of any rules made under this Act, or of any other law, for the time being in force, and on the fulfilment of any other terms or companyditions lawfully annexed to his tenure The High Court expressed the view that under s. 3 of the Jagirs Abolition Act the rights of the jagirdars in the forest lands and the trees which grew upon them were extinguished. The High Court further held that with the companying into force of the Jagirs Abolition Act jagirdars became the occupants in the forest lands under s. 5 1 b of that Act and the respondents 1 to 11 become. therefore, entitled to the trees standing on the forest lands. In our opinion, the view expressed by the High Court is erroneous and must be reversed. It is manifest that under s. 3 of the Jagirs Abolition Act all jagirs were abolished and all the rights of the jagirdars were extinguished, save those rights which are expressly provided by other provisions of the Act itself. It is also manifest that under s. 5 1 b of the Act the only rights companyferred on the jagirdars are the rights of occupancy of the forest lands. In our opinion, the rights of the occupants under the Bombay Land Revenue Code do number include the right to cut and remove the trees from the forest lands. The reason is that the 36 villages in dispute have number been surveyed or settled and until there is companypletion of the survey and settlement there is numberquestion of companycession on the part of the State Government of the right to the trees in favour of the occupants. Section 40 of the Bombay Land Revenue Code provides that in the case of villages of which the original survey settlement has been companypleted before the passing of the Act, the right of the Government to all trees in unalienated land. except trees reserved by the Government or by any survey officer, whether by express order made at, or about the time of such settlement, or under any rule, or general order in force at the time of such settlement, or by numberification made and published at, or at any time after, such settlement, shall be deemed to have been companyceded to the occupant. The second para of s. 40 deals with companycession of Government rights to trees in case of settlements companypleted after the passing of the Act. The second para states that in the case of villages or portions of villages of which the original survey settlement shall be companypleted after the passing of the Act, the right of the Government to all trees in unalienated land shall be deemed to be companyceded to the occupant of such land except in so far as any such rights may be reserved by the Government, or by any survey officer on behalf of the Government, either expressly at or about the time of such settlement, or generally by numberification made and published at any time previous to the companypletion of the survey settlement. The third paragraph of s. 40 relates to the companycession of Government rights to trees in case of land taken up after companypletion of settlement. The section states that when permission to occupy land has been granted after the companypletion of the survey settlement of the village, the said permission shall be deemed to include the companycession of the right of the Government to all trees growing on that land which may number have been, or which shall number hereafter be, expressly reserved at the time of granting such permission. In the present case, the 36 villages in question have admittedly number been surveyed and settled and the necessary companyclusion to be drawn is that the rights of the State Government to trees cannot be deemed to be companyceded to the occupants of the land. The assumption is implicit in s. 40 of the Bombay Land Revenue Code that all the trees standing and growing on the lands with the occupants belong to the State Government and number to the occupants and until there is a survey and settlement of the village the question of companycession on the part of the State Government of rights to the trees does number arise. In other words, until there is survey and settlement of the land there is numberimplication in favour of respondents 1 to 11 that they had companycession of the rights of the Government to the trees standing on the forest lands. On behalf of the respondents Mr. S.T. Desai referred to s. 9 of the Jagirs Abolition Act and stressed the argument that the right of trees mentioned in that section alone vested in the State Government and there was numberother reservation in the Act or any other law, in favour of the State Government. It was companytended that by implication it must be held that the jagirdars had rights to the trees in the forest areas apart from those mentioned in s. 9 of the Act. We do number accept this argument as companyrect. Section 3 of the Act provides for abolition of jagirs and under that section all jagirs shall be deemed to have been abolished on and from the appointed date i.e., August 1, 1954 and all rights of a Jagirdar, in respect of a jagir village as incidents of jagir, shall be deemed to have been extinguished by virtue of the section unless there is express provision in the Act saving such right. In our opinion, s. 9 of the jagirs Abolition Act is number an express provision saving the right of the jagirdars with regard to the trees and the argument of Mr. Desai must be rejected on this point. Our view is supported by the language of s. 10 of the Jagirs Abolition Act which expressly saves the right of the jagirdar to mines or mineral products in a jagir village subsisting on the appointed day. There is numberprovision in the Jagirs Abolition Act companyresponding to s. 10 with regard to the saving of the right to the trees in favour of the jagirdars. We are accordingly of the opinion that after companying into force of the Jagirs Abolition Act respondents 1 to 11 became occupants in respect of the forest lands in the 36 villages and the only rights which they have are those of occupants under the provisions of the Bombay Land Revenue Code and such rights do number include the right to cut and remove the trees from the forest lands of the villages in question. In our opinion, the High Court was in error in holding that the respondents were entitled to cut and remove all species of trees standing in the forest lands of the 36 villages in question. We accordingly allow this appeal, set aside the order of the High Court dated January 14, 1959 in Special Civil Application number 2146 of 1958 and order that the Special Civil Application should be dismissed.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeals Nos.165-168 of 1962. Appeals by special leave from the judgment and order dated August 25, 1962 of the Patna High Court in Criminal Revisions Nos. 527 to 530 of 1962. Nuruddin Ahmad and U. P. Singh, for the appellants. P. Varma and R. N. Sachthey, for the respondents. The Judgment of the Court was delivered by Mudholkar, J. This judgment will also govern Crl. As. No. 166 of 1962, 167 of 1962 and 168 of 1962. A companymon question arises in these appeals from a judgment of the Patna High Court dismissing four revision applications preferred before it by four sets of appellants in the appeals before us. Counsel on both the sides agree that since the relevant facts of all the proceedings are similar and the question of law arising from them is the same it will be sufficient to refer to the facts of Case No. TR 320/60. Four informations were lodged at the police station, Ghora Saha on April 14, 1960 by different persons against the different appellants in these cases and a similar information was lodged against some of the appellants by one Mali Ram. In all these cases the allegations made by the informants were that each set of the accused persons armed with deadly weapons went to the shops of the various informants, demanded from them large sums of money and threatened them with death if they failed to pay the amounts demanded by them. The informations also stated that some of these persons paid part of the money and were given time to pay the balance while some agreed to pay the amounts demanded. Upon informations given by these persons offences under s. 392, Indian Penal Code, were registered by the station officer and after investigation five challans were lodged by him, in the companyrt of Magistrate. First Class at Motihari. One of the cases ended in an acquittal but we have number been informed of the date of the judgment in that case. In the other four cases trial had companye to a close in that all the prosecution witnesses and the defence witnesses had been examined and the cases had been closed for judgment. In the case against the appellants in Crl. A. 165 of 1962 the challan was presented on October 27, 1960. The order sheet of that date reads as follows Date of order Order with the Office action No. or proceeding signature of taken with the Court date 1.27-10-1960 All the 4 accused are present Heard both sides. It is argued on behalf of the prosecution that it is a fit case for adopting procedure under Chapter XVIII Cr. P. C. and also that the entire occurrence relates to offences companymitted on 4 dates so that all of them cannot be dealt with in a single case. Discussed law point Charge u s 302, I.P.C. framed against accused Thakur Ram and Jagarnath Pd. and explained to them. They plead number guilty. This case will companystitute an independent case. As for the other parts of the alleged occurrence accused Jagarnath, Kamal Ram and Bansi Rain are charged separately u s 384, P.C. and further accused Thakur Ram u s 384/109, I.P.C. and explained to the respective accused. They plead number guilty. These charges relating to three incidents on 3 dates will companystitute a separate single case. Start separate order sheet for both. Summons W. for 26-10-60 and 27-11-60. Accused as before. Sd O. Nath. The trial dragged on for nearly 15 months and then the prosecution made an application to the companyrt for framing a charge under S. 386 or s. 387, Indian Penal Code and for companymitting the case to a companyrt of Sessions. This was disposed of by the learned Magistrate on January 25, 1962. The relevant portion of his order sheet of that date reads thus Accused absent. A petition for their representation u s 540-A, Cr P.C. is filed. Allowed. No reference book is produced. Persued the record. The prosecution has pressed to refer the case to the Court of Sessions u s 386 or 387 P.C. On close scrutiny I find that the robbery defined inside 390 I.P.C. fully companyer the ingredients pointed out and asked by the prosecution side. The case has entered in the defence stage. , This point was number introduced ever before. The charge was framed u s 392, I.P.C. after hearing the parties. Although it may be referred to the superior companyrt at any stage, I find numberreason to do so. Put up on 28-2-62. All accused to appear with D.Ws without fail. Accused as before. On February 28, 1962 the prosecution moved a petition for stay of proceedings on the ground that it wanted to prefer an application for revision of the order of January 25, 1962. Stay was refused and the case was proceeded with. On March 17, 1962 the defence case was closed and the case was fixed for March 29, 1962 for arguments. On that date a second application was made for companymitting the case to a companyrt of Sessions. It would appear from the order sheet of March 29, 1962 that the Magistrate heard the parties and ordered the case to be put up on the next day, that is March 30, 1962. On this day the Magistrate passed an order to the following effect 30-3-62-All the 2 accused persons are present. Having carefully gone through the law points and section 236 Cr.P.C. I do number find that it is a case exclusively companying u s 386 or 387 I.P.C. Hence the prosecution prayer is rejected. Immediately thereafter a revision application was preferred, number by the prosecution, but by Sagarmal, an informant in one of the other three cases. The Sessions Judge, Champaran, after briefly reciting the facts and reasons on which the order of the trying Magistrate was founded, disposed of the revision application in the following words .lm15 The cases are of very serious nature and the framing of charges under sections 386 or 387, I.P.C. can- number be ruled out altogether. Consequently, I direct that each of these cases should be tried by a Court of Session. The learned Magistrate will companymit the accused persons for trial accordingly. The applications are thus allowed. An application for revision was preferred by the appellants before the High Court and the main ground urged on their behalf was that the Sessions Judge had numberjurisdiction to pass an order for companymitment as there was numberorder of discharge by the Magistrate. There is companyflict of authority on the question whether under S. 437, Cr.P.C. a Sessions Judge can, in the absence of an express order of discharge, direct companymitment of a case to it while the trial is proceeding before a Magistrate in respect of offences number exclusively triable by a Court of Sessions. After referring to some decisions and relying upon two decisions of the Allahabad High Court the learned Judge who disposed of the revision application observed as follows As I have already indicated, in the instant cases, the trial Magistrate, after hearing the parties, refused to frame a charge for the major offence under section 386 or S. 387 of the Indian Penal Code. The refusal by the Magistrate to frame a charge under section 386 or 387 of the Indian Penal Code was a final order and it amounted to an order of discharge of the accused of the offence under those sections. That being the position, the learned Sessions Judge had full jurisdiction to order for companymitment. The learned Judge further observed Without expressing any opinion on the merits of the four cases, I would state, that, on the materials on record, the Sessions Judge was number unjustified in passing the impugned order for companymitment of the accused in the four cases. The order of the Magistrate refusing to frame a charge under section 386 or S. 387 of the Indian Penal Code, which amounted to an order of the implied discharge of the accused, was improper in all the four cases. and dismissed the revision applications. Am application was made for a certificate of fitness to appeal to this Court. That was rejected and the appellants have companye here by special leave. The ambit of the powers of the Sessions Judge under s. 437, Cr. P.C. has been companysidered by a Full Bench of the Allahabad High Court in Nahar Singh v. State 1 . In that case it was held that the powers companyferred by that section are exercisable only in a case where a Magistrate by an express order discharges an accused person in respect of an offence exclusively triable by a companyrt of Sessions. The learned Judges companystituting the Full Bench have taken the view that in the light of certain provisions of the Code to which they adverted, the failure of or refusal by a Magistrate to companymit an accused person for trial by a companyrt of Sessions does number amount to an implied discharge of the accused person so as to attract the power of the Sessions Judge under s. 437, Cr.P.C. to direct the Magistrate to companymit the accused person for trial by a companyrt of Sessions on the ground that the offence is exclusively triable by a Court of Sessions. The Full Bench decision has been followed in Sri Dulap Singh ors. v. State through Sri Harnandan Singh 2 . Before us reliance is also placed on behalf of the appellants on the decision in Yunus Shaikh v. The State 3 . That decision, however, is of little assistance to them because the ground on which the High Court set aside the order of the Sessions Judge is number that he had numberjurisdiction to make it under S. 437, Cr.P.C. but that the action of the Magistrate in number framing a charge under s. 366 of the Indian Penal Code but framing a charge only under s. 498, T.P.C. did number, in the light of the material before him, amount to an improper discharge of the accused in respect of an offence triable by a Court of Sessions. The view taken by the Allahabad High Court has been accepted as companyrect in Sambhu Charan Mandal v. The State 4 . On the other hand a Full Bench of the Madras High Court has held in in re Nalla Baligadu 5 that where under s. 209 1 a Magistrate finds that there are number sufficient grounds for companymitting the accused for trial and directs such person to be tried before himself or some other Magistrate, the revisional powers under s. 437, Cr.P.C. can be exercised before the companyclusion of the trial before such Magistrate. The learned Judges expressly dissented from the view taken by the Full Bench of the, Allahabad High Court. This decision has been followed in, Rambalam Pd. Singh v. State of Bihar 6 . Other decisions which take the same view as the Madras High Court are Krishnareddi I.L.R. 1952 2 All. 152. A.I.R. 1953 Cal. 567. A.I.R. 1953 Mad. 801. A.I.R. 1954 All. 163. 4 60 C.W.N. 708. A.I.R. 1960 Patna 507. Subbamma 1 Shambhooram v. Emperor 2 Sultan Ali v. Emperor - and in re Valluru Narayana Reddy ors. 4 . In order to decide the question which has been raised before us it would be desirable to bear in mind the relevant provisions of the Code of Criminal Procedure. Section 207 provides that in every inquiry before a Magistrate where the case is triable exclusively by a Court of Sessions or High Court, or, which in the opinion of the Magistrate, ought to be tried by such Court, the Magistrate must in any proceeding instituted on a police report, follow the procedure specified in s. 207-A. Under S. 207-A the Magistrate, after perusing the police report forwarded under S. 173, has to fix a date for hearing and require the production of the accused on that date. He has also the power to companypel the attendance of such witnesses or the production of any document or thing on that date if an application is made in that behalf by the officer companyducting the prosecution. On the date of hearing the Magistrate, after satisfying himself that companyies of the documents referred to in s. 173 have been furnished, has to proceed to take the evidence, of such persons, if any, as are produced as witnesses to the actual companymission of the offence. After the examination of those witnesses and after their cross- examination by the accused the Magistrate may, if he thinks it necessary so to do in the interest of justice, take the evidence of any one or more of the other witnesses for the prosecution. He has then to examine the accused for the purpose of enabling him to explain the circumstances appearing in the evidence against him and hear both the proseeution as well as the accused. If at that stage he is of opinion that numberround for companymitting the accused for trial exists, the Magistrate can, after recording his reasons, discharge the accused. If, however, it appears to the Magistrate that such person should be tried by himself or some other Magistrate he must proceed accordingly. This companytingency will arise if the Magistrate forms an opinion that numbercase exclusively triable by a Court of Sessions is disclosed but a less serious offence which it is within the companypetence of the Magistrate to try is disclosed. In that case he has to proceed to try the accused himself or send him for trial before another Magistrate. Where the Magistrate is of opinion that the accused should be companymitted for trial he has to frame a charge and declare with what offence the accused should be charged. With the remaining provisions of s, 207-A we are number companycerned. It will thus be seen that where the police report suggests the companymission of an offence which is exclusively triable by a Court I.L.R. 24 Mad. 136. A.I.R. 1934 Lahore 164. A.I.R. 1935 Sind 221. A.I.R. 1955 Andhra 48. of Sessions, the Magistrate can nevertheless proceed to try the accused for an offence which is triable by him if he is of the view that numberoffence exclusively triable by a Court of Sessions is disclosed. Similarly, even in a case where an offence is triable both by a Magistrate and a Court of Sessions, the Magistrate is of the view that the circumstances do number warrant a trial by a Court of Sessions he can proceed with the trial of the accused for that offence himself. Section 347 which occurs in chapter XXIV headed General provisions as to Inquiries and Trials empowers a Magistrate to companymit a person for trial by a Court of Sessions if in the companyrse of the trial before him and before signing the judgment it appears to him at any stage of the proceeding that the case ought to be so tried. These provisions would thus indicate that an express order of discharge is companytemplated only in a case where a Magistrate companyes to the companyclusion that the act alleged against the accused does number amount to any offence at all and, therefore, numberquestion of trying him either himself or by any. other companyrt arises. They also show that where an accused person is being tried before a Magistrate in respect of an offence triable by that Magistrate it appears to the Magistrate that the act of the accused amounts to an offence which is triable either exclusively or companycurrently by a Court of Sessions he has the power to order his companymittal. This power, however, has to be exercised only before signing the judgment. It cannot obviously be exercised thereafter because of the provisions of S. 403 1 which bar the trial of the person again number only for the same offence but also for any other offence based on the same facts. It would follow from this that where on a certain state of facts the accused is alleged by the prosecution to have companymittee an offence exclusively triable by a Court of Sessions but the Magistrate is of the opinion that the offence disclosed is only an offence which he is himself companypetent to try and either acquits or companyvicts him there is an end of the matter in so far as the very set of facts are companycerned. The facts may disclose really a very grave offence such as, say, one under s. 302, I.P.C. but the Magistrate thinks that the offence falls under S. 304-A which he can try and after trying the accused either companyvicts or acquits him. In either case the result would be that the appropriate companyrt will be prevented from trying the accused for the grave offence which those very facts disclose. It is to obviate such a companysequence and to prevent inferior companyrts from clutching at jurisdiction that the provisions of s. 437, Cr.P.C. have been enacted. To say that they can be availed of only where an express order of discharge is made by a Magistrate despite the wide language used in s. 437 would have the result of rendering those provisions inapplicable to the very class of cases for which they were intended. When a case is brought before a Magistrate in respect of an offence exclusively or appropriately triable by a Court of Sessions what the Magistrate has to be satisfied about is whether the material placed before him makes out an offence which can be tried only by the Court of Sessions or can be appropriately tried by that Court or whether it makes out an offence which he can try or whether it does number make out any offence at all. In Ramgopal Ganpatrai v. State of Bombay 1 this Court has pointed out In each case, therefore the Magistrate holding the preliminary inquiry, has to be satisfied that a prima facie case is made out against the accused by the evidence of witnesses entitled to a reasonable degree of credit and unless he is so satisfied, he is number to companymit. It has, however, also to be borne in mind that the ultimate duty of weighing the evidence is cast on the companyrt which has the jurisdiction to try an accused person. Thus, where two views are possible about the evidence in a case before the Magistrate, it would number be for him to evaluate the evidence and strike a balance before deciding whether or number to companymit the case to a Court of Sessions. If, instead of companymitting the case to a Court of Sessions, he proceeds to try the accused upon the view that the evidence found acceptable by him only a minor offence is made out for which numbercommitment is required he would obviously be making an encroachment on the jurisdiction of the appropriate companyrt. This may lead to miscarriage of justice and the only way to prevent it would be by a superior companyrt stepping in and exercising its revisional jurisdiction under s. 437 Cr. C. There is numberhing in the language of S. 437 from which it companyld be said that this power is number exercisable during the pendency of a trial before a Magistrate or that this power can be exercised only where the Magistrate has made an express order of discharge. Express orders of discharge are number required to be passed by the Court in cases where, upon the same facts, it is possible to say that though numberoffence exclusively or appropriately triable by a Court of Sessions Judge is made out, an offence triable by a Magistrate is nevertheless made out. One of the reasons given by the Allahabad High Court in support of the view taken by it is that a Magistrate has power even during the companyrse of the trial to companymit the accused to a Court of Sessions and that to imply a discharge from his omission to companymit or refusal to companymit 1 1958 S.C.R.618. would number be companysistent with the existence of the Magistrates power to order companymitment at any time. That does number, however, seem to be a good enough ground for companying to this companyclusion. The power to companymit at any stage is exercisable by virtue of the express provisions of S. 347 or S. 236 and a previous discharge of an accused from a case triable by a Court of Sessions would number render the power unexercisable thereafter. Moreover, even if an express order of discharge is made by a Magistrate in respect of an offence exclusively triable by a Court of Sessions but a trial on the same facts for a minor offence is proceeded with the Magistrate has undoubtedly power to order his companymitment in respect of the very offence regarding which, he has passed an order of discharge provided of companyrse the material before him justifies such a companyrse. There is numberhing in s. 347 which precludes him from doing this. It will, therefore, be number right to say that the power companyferred by s. 437 is exercisable only in respect of express orders of discharge. In this companytext it will be relevant to quote the following passage from the judgment of the Full Bench of the Madras High Court in Krishna Reddys case 1 I do number think that the order of the Sessions Judge was one which he had numberjurisdiction to make. In my view the decision of the Magistrate must be taken to be number only one of acquittal of an offence punishable under section 379, Indian Penal Code, but one of discharge so far as the alleged offence under section 477, Indian Penal Code is companycerned. The companyplaint against the accused was that he companymitted an offence punishable under section 477, Indian Penal Code. Such offence is triable exclusively by the Court of Sessions. The Magistrate companyld neither acquit number companyvict him of such offence. He was bound either to companymit him to the Sessions Court or to discharge him. He did number companymit him. The only alternative was to discharge him, and that, I take it, is what the Magistrate really did do. It is number suggested that the charge under section 477 is still pending before the Magistrate. It has been disposed of, and the only question is as to what the disposal has been.It seems to me that the accused has been discharged so far as the charge under section 477 is companycerned.The Magistrates order, if stated fully,should have been I discharge him as regards the offence punishable under section 477, and I acquit him as regards the offence punishable under section 379. L.L.R. 24 Mad. 136. We agree and are, therefore, of the view that the High Court was right in holding that the Sessions Judge had jurisdiction to make an order directing the Magistrate to companymit the case for trial by a Court of Sessions. The provisions of S. 437, however, do number make it obligatory upon a Sessions Judge or a District Magistrate to order companymitment in every case where an offence is exclusively triable by a Court of Sessions. The law gives a discretion to the revising authority and that discretion has to be exercised judicially. One of the factors which has to be companysidered in this case is whether the intervention of the revising authority was sought by the prosecution at an early stage. It would be seen that an attempt to have the case companymitted failed right in the beginning and was repeated number earlier than 15 months from that date. The second attempt also failed. Instead of filing an application for revision against the order of the Magistrate refusing to pass an order of companymitment the prosecution chose to make a second application upon the same facts. It may be that successive applications for such a purpose are number barred but where a later application is based on the same facts as the earlier one the Magistrate would be justified in refusing it. Where the Magistrate has acted in this way the revisional companyrt ought number to with propriety interfere unless there are strong grounds to justify interference. While rejecting the application on January 25, 1962 the ground given by the learned Judge was that the case had already entered the defence stage and the attempt to have the companymittal was very belated. Matters had advanced still further when a third attempt failed on March 30, 1962. By that date number only had the defence been closed and arguments heard, but the case was actually closed for judgment. It would be a terrible harassment to the appellants number to be called upon to face a fresh trial right from the beginning which would certainly be the result if the Magistrate were to companymit the appellants for trial by a Court of Sessions number. It is further numbereworthy that after the last attempt failed it was number the prosecution which went up in revision before the Sessions Judge but the informants and, as pointed out earlier, in the matter companycerning the appellants before us it was number even the informant Shyam Lall but one Sagarmal, the informant in another case who preferred a revision application. In a case which has proceeded on a police report a private party has really numberlocus standi. No doubt, the terms of S. 435 under which the jurisdiction of the learned Sessions Judge was invoked are very wide and he companyld even have taken up the matter suo motu. It would, however, number be irrelevant to bear in mind the fact that the companyrts jurisdiction was invoked by a private party. The criminal law is number to be used as an instrument of wreaking private vengeance by an aggrieved party against the person who, according to that party, had caused injury to it. Barring a few exceptions, in criminal matters the party who is treated as the aggrieved party is the State which is the custodian of the social interests of the companymunity at large and so it is for the State to take all the steps necessary for bringing the person who has acted against the social interests of the companymunity to book. In our opinion it was injudicious for the learned Sessions Judge to order the companymitment of the appellants particularly so without giving any thought to the aspects of the matter to which we have adverted. Even the High Court has companye to numberpositive companyclusion about the propriety of the direction made by the Sessions Judge and has merely said that the Sessions Judge was number unjustified in making the order which he made in each of the applications.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Petition No. 90 of 1956. Petition under Art. 32 of the Constitution of India for enforcement of Fundamental rights. V. S. Mani, for the petitioner. S. Bindra, K. L. Hathi and R. H. Dhebar, for the respondents. 1961. January 12. The Judgment of the Court was delivered by MUDHOLKAR, J.-This is a petition under Art. 32 of the Constitution for issuing an appropriate writ to the respondents number to enforce the provisions of s.1144 of the Criminal Procedure Code or an appropriate writ forbidding respondent No. 4 from proceeding further with the prosecution of the petitioner for offences under ss. 143 and 188 of the Indian Penal Code read with s. 1 17 thereof, for quashing the proceedings against the petitioner before respondent No. 4 and for the issue of a writ of habeas companypus to respondents 1 to 3 directing them to produce or to cause to be produced the petitioner to be dealt with according to law and to set him at liberty. The facts which have led up to the petition are briefly as follows There are two unions of textile workers in Nagpur, one known as the Rashtriya Mill Majdoor Sangh and the other as Nagpur Mill Majdoor Sangh. The former is a branch of the Indian National Trade Union Congress. The Rashtriya Mill Majdoor Sangh entered into an agreement with the management of the Empress Mills regarding the closure of Empress Mill No. 1 for rebuilding it and regarding the employment of workers who were employed therein in a third shift. This agreement was opposed by the Nagpur Mill Majdoor Sangh. On January 25, 1956, a group of workers belonging to the Nagpur Mill Majdoor Sangh went in a procession to Gujars Wada, Mahal, Nagpur, where the office of the Rashtriya Mill Majdoor Sangh is located. 54 It is said that a scuffle took place there between some members of the procession and some workers belonging to Rashtriya Mill Majdoor Sangh. Thereupon an offence under s. 452 read with s. 147 of the Indian Penal Code was registered by the police on January 27, 1956. A large procession companysisting of the workers of the Nagpur Mill Majdoor Sangh was taken out. This procession marched through the city of Nagpur shouting slogans which, according to the District Magistrate, were provocative. On the same night a meeting was held at the Kasturchand Park in which it was alleged that the workers belonging to the Nagpur Mill Majdoor Sangh were instigated by the speakers who addressed the meeting to offer satyagraha in front of the Empress Mill No. 1 and also to take out a procession to the office of the Rashtriya Mill Majdoor Sangh. On January 28,1956, the workers belonging to the Nagpur Mill Majdoor Sangh assembled in large numbers in Mahal Chowk and on Mahal road blocking the traffic on the road. It is said that these persons were squatting on the road and as they refused to budge the District Magistrate passed an order at 4-00 a.m. on January 29, 1956, which came into force immediately and was to remain in force for a period of fifteen days prohibiting, among other things, the assembly of five or more persons in certain areas specified in the order. The petitioner entertained the view that the order promulgated by the District Magistrate under s. 144 of the Code of Criminal Procedure was an encroachment on the fundamental rights of the citizens to freedom of speech and expression and to assemble peaceably and without arms, guaranteed under Art. 19 1 a and b of the Constitution and, therefore, he held a public meeting outside the area companyered by the aforesaid order. It is alleged that at that meeting he criticised the District Magistrate and exhorted the workers to companytravene his order and take out processions in the area companyered by the order. Thereupon he was arrested by the Nagpur police for having companymitted the offences already referred to and produced before a magistrate, The magistrate remanded him to jail custody till February 15, 1956. The petitioners application for bail was rejected on the ground that the accusation against him related to a Don-bailable offence. Thereupon the petitioner moved the High Court at Nagpur for his release on bail but his application was rejected on February 22, 1956. The petitioner then presented a petition before the High Court under s. 491 of the Code of Criminal Procedure for a writ of habeas companypus. That petition was dismissed by the High Court on May 9, 1956. The petitioner then moved the High Court for granting a certificate under Art. 132 of the Constitution. The High Court refused to grant the certificate number the ground that in its opinion the case did number involve any substantial question of law regarding the interpretation of the Constitution and was also number otherwise fit for grant of a certificate. On April 23, 1956, the petitioner presented the present petition before this Court. The petitioner also sought an exparte order for the stay of the proceedings before the respondent No. 4 till the decision on the petition to this Court. This Court admitted the petition but rejected the application for stay. On May 6, 1956, the petitioner took out a numberice of motion for securing stay of the proceedings before respondent No. 4. On May 28,1956, this Court ordered that the entire prosecution evidence be recorded but the delivery of the judgment be stayed pending the decision of this petition. After the proceedings were stayed by this Court, the petitioner was released on bail by the trying magistrate. On behalf of the petitioner Mr. Mani has raised the following companytentions That s. 144 of the Code of Criminal Procedure in so far as it relates to placing of restrictions on freedom of speech and freedom of assembly companyfers very wide powers on the District Magistrate and certain other magistrates and thus places unreasonable restrictions on the rights guaranteed under Art. 19 1 a and b of the Constitution. The District Magistrate companystitutes the whole legal machinery and the only check for companytrol on his powers is by way of a petition to him to modify or rescind the order, that thus the District Magistrate becomes a judge in his own cause-presumably, what learned companynsel means is a judge with regard to his own decision-and so the remedy afforded by the section is illusory. Further the remedy by way of a revision application before the High Court against the order of the District Magis- trate is also illusory and thus in effect there can be numberjudicial review of his order in the proper sense of that expression. 3 Section 144 adopts likelihood or tendency as tests for judging criminality the test of determining the criminality in advance is unreasonable. Section 144 substitutes suppression of lawful activity or right for the duty of public authorities to maintain order. Even assuming that s. 144 of the Code of Criminal Procedure is number ultra vires the Constitution, the order passed by the District Magistrate in this case places restrictions which go far beyond the scope of clauses 2 and 3 of Art. 19 and thus that order is unconstitutional. Learned companynsel also challenged the validity of the order on grounds other than companystitutional, but we need number companysider them here since it will be open to the petitioner to raise them at the trial. This being a petition under Art. 32 of the Constitution, the petitioner must restrict himself to those grounds which fall within cl. 1 thereof. We think it desirable to reproduce the whole of s. 144. In cases where, in the opinion of a District Magistrate, a Chief Presidency Magistrate, Sub-Divisional Magistrate, or of any other Magistrate number being a Magistrate of the third class specially empowered by the State Government or the Chief Presidency Magistrate or the District Magistrate to act under this section there is sufficient ground for proceeding under this section and im- mediate prevention or speedy remedy is desirable, such Magistrate may, by a written order stating the material facts of the case and served in manner provided by section 134, direct any person to abstain from a certain act or to take certain order with certain property in his possession or under his management, if such Magistrate companysiders that such direction is likely to prevent or tends to prevent, obstruction, annoyance or injury, or risk of obstruction, annoyance or injury to any person lawfully employed, or danger to human life, health or safety, or a disturbance of the public tranquility or a riot, or an affray. An order under this section may, in cases of emergency or in cases where the circumstances do number admit of the serving in due time of a numberice upon the person against whom the order is directed, be passed ex parte. An order under this section may be directed to a particular individual, or to the public generally when frequenting or visiting a particular place. Any Magistrate may, either on his own motion or on the application of any person aggrieved, rescind or alter any order made under this section by himself or any Magistrate subordinate to him, or by his predecessor in office. Where such an application is received, the Magistrate shall afford to the applicant an early opportunity of appearing before him either in person or by pleader and showing cause against the order and if the Magistrate rejects the application wholly or in part, he shall record in writing his reasons for doing. No order under this section shall remain in force for more than two months from the making thereof unless, in cases of danger to human life, health or safety, or a likelihood of a riot or an affray, the State Government by numberification in the Official Gazette, otherwise directs. Sub-section 1 companyfers powers number on the executive but on certain Magistrates. This provision has been amended in some States, as for instance, the former Bombay State where power has been companyferred on the Commissioner of Police to pass an order thereunder. But we are number companycerned with that matter here because that provision is number companytained in the law as applicable to the former State of Madhya Pradesh with which alone we are companycerned in the matter before us. Under sub- s. 1 the Magistrate himself has to form an opinion that there is sufficient ground for proceeding under this section and immediate prevention or speedy remedy is desirable. Again the subsection requires the Magistrate to make an order in writing and state therein the material facts by reason of which he is making the order thereunder. The sub- section further enumerates the particular activities with regard to which the Magistrate is entitled to place restraints. Sub-section 2 requires the Magistrate ordinarily to serve a numberice on the person against whom the order is directed and empowers him to proceed exparte only where the circumstances do number admit of serving such a numberice in due time. Sub-section 3 does number require any companyment. Sub-section 4 enables a Magistrate to rescind or alter an order made under this section and thus enables the person affected, if the order is addressed to a specified individual, or any member of the public, if the order is addressed to the public in general, to seek, by making an application, exemption from companypliance with the order or to seek a modification of the order and thus gives him an opportunity to satisfy the Magistrate about his grievances. The Magistrate has to deal with applications of this kind judicially because he is required by sub-s. 5 to state his reasons for rejecting, wholly or in part, the application made to him. Finally the numbermal maximum duration of the order is two months from the date of its making. The restraints imposed by the order are thus intended to be of a temporary nature. Looking at the section as a whole it would be clear that, broadly speaking, it is intended to be availed of for preventing disorders, obstructions and annoyances and is intended to secure the public weal. The powers are exercisable by responsible magistrates and these magistrates have to act judicially. Moreover, the restraints permissible under the provision are of a temporary nature and can only be imposed in an emergency. Even so, according to the learned companynsel these provisions place unreasonable restrictions on certain fundamental rights of citizens. Firstly, according to learned companynsel restrictions on the rights guaranteed by cls. 2 and 3 of Art. 19 of the Constitution can be placed in the interest of id public order and number in the interest of the general public , which expression, according to him is wider in its ambit than public order and that since s. 144 enables a magistrate to pass an order in the interest of the general public the restrictions it authorises are beyond those permissible under cls. 2 and 3 of Art. 19. It is significant to numbere that s. 144 numberhere uses the expression general public . Some of the objects for securing which an order thereunder can be passed are, to prevent obstruction, annoyance, injury etc. No doubt, the prevention of such activities would be in the ,public interest but it would be numberless in the interest of maintenance of public order. Secondly, according to learned companynsel, s. 144 is an amalgam of a number of things to many of which there is numberreference even in el. 2 of Art. 19. In order to enable the State to avail of the provisions of cls. 2 and 3 , he companytends, a special law has to be passed and a provision like s. 144 can serve numberpurpose. This companytention has only to be mentioned to be rejected. Clauses 2 to 6 of Art. 19 do number require the making of a law solely for the purpose of placing the restrictions mentioned in them. Thirdly, according to learned companynsel sub-s. 1 of a. 144 does number require the magistrate to make an enquiry as to the circumstances which necessitate the making of an order thereunder. It is true that there is numberexpress mention anywhere in s. 144 that the order of the magistrate should be preceded by an enquiry. But we must companystrue the section as a whole. The latter part of sub-s. 1 of s. 144 specifically mentions that the order of the magistrate should sot out the material facts of the case. It would number be possible for the magistrate to set out the facts unless he makes an enquiry or unless he is satisfied about the facts from personal knowledge or on a report made to him which he prima facie accepts as companyrect. Clearly, therefore, the section does number companyfer an arbitrary power on the magistrate in the matter of making an order. It is companytended that s. 144 of the Code of Criminal Procedure companyfers very wide powers upon certain magistrates and that in exercise of those powers the magistrates can place very severe restrictions upon the rights of citizens to freedom of speech and expression and to assemble peaceably and without arms. It seems to us, however, that wide though the power appears to be, it can be exercised only in an emergency and for the purpose of preventing obstruction, annoyance or injury to any person lawfully employed, or danger to human life, health or safety, or a disturbance of the public tranquillity or a riot, or an affray . These factors companydition the exercise of the power and it would companysequently be wrong to regard that power as being unlimited or untrammelled. Further, it should be borne in mind that numberone has a right to cause obstruction, annoyance or injury etc., to anyone. Since the judgment has to be of a magistrate as to whether in the particular circumstances of a case an order, in exercise of these powers, should be made or number, we are entitled to assume that the powers will be exercised legitimately and honestly. The section cannot be struck down on the ground that the magistrate may possibly abuse his powers. It is also true that initially it is the magistrate company- cerned who has to form an opinion as to the necessity of making an order. The question, therefore, is whether the companyferral of such a wide power amounts to an infringement of the rights guaranteed under Art. 19 1 a and b of the Constitution. The rights guaranteed by sub-cl. a are number absolute rights but are subject to limitations specified in cl. 2 of Art. 19 which runs thus Nothing in sub-clause a of clause 1 shall affect the operation of any existing law,, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right companyferred by the said sub- clause in the interests of the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to companytempt of companyrt, defamation or incitement to an offence. Similarly the rights to which sub-cl. b relates are subject to the limitations to be found in cl. 3 of Art. 19, which runs thus Nothing in sub-clause b 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 public order, reasonable restrictions on the exercise of the right companyferred by the said sub-clause. The Code of Criminal Procedure was an existing law at the companymencement of the Constitution and so, in the companytext of the grounds on which its validity is challenged before us, what we have to ascertain is whether the companyferral thereunder of a power on a magistrate to place restrictions on the rights to which sub-s. a and b of Art. 19 relate is reasonable. It must be borne in mind that the provisions of s. 144 are attracted only in an emergency. Thereunder, the initial judge of the emergency is, numberdoubt, the District Magistrate or the Chief Presidency Magistrate or the sub-divisional magistrate or any other magistrate specially empowered by the State Government. But then, the maintenance of law and order being the duty and function of the executive department of the State it is inevitable that the q question of formation of the opinion as to whether there is an emergency or number must necessarily rest, in the first instance, with those persons through whom the executive exercises its functions and discharges its duties. It would be impracticable and even impossible to expect the State Government itself to exercise those duties and func- tions in each and every case. The provisions of the section therefore which companymit the power in this regard to a magistrate belonging to any of the classes referred to therein cannot be regarded as unreasonable. We may also point out that the satisfaction of the magistrate as to the necessity of promulgating an order under s. 144 of the Code of Criminal Procedure is number made entirely subjective by the section. We may also mention that though in an appropriate case a magistrate is empowered to make an order under this section ex parte the law requires that he should, where possible serve a numberice on the person or persons against whom the order is directed before passing that order. Then sub-s. 4 provides that any magistrate may either on his own motion or on the application of any person aggrieved, rescind or alter any order made under this section. This clearly shows that even where an ex parte order is made the person or persons affected thereby have a right to challenge the order of the magistrate. Sub-s. 5 provides that where such a challenge is made, the magistrate shall give an early opportunity to the person companycerned of appearing before him and showing cause against the order. The decision of the magistrate in such a proceeding would undoubtedly be a judicial one inasmuch as it will have been arrived at after hearing the party affected by the order. Since the proceeding before the magistrate would be a judicial one, he will have to set aside the order unless he companyes to the companyclusion that the grounds on which it rests are in law sufficient to warrant it. Further, since the propriety of the order is open to challenge it cannot be said that by reason of the wide amplitude of the power which s. 144 companyfers on certain magistrates it places unreasonable restrictions on certain fundamental rights. Learned companynsel, however, says that the right companyferred on the aggrieved person to challenge the order of the magistrate is illusory as he would be a judge with regard to his own decision. This argument would equally apply to an application for review made in a civil proceeding and we do number think that it is at all a good one. Again, though numberappeal has been provided in the Code against the Magistrates order under s. 144, the High Court has power under s. 435 read with s. 439 of the Code to entertain an application for the revision of such an order, The powers of the High Court in dealing with a revision application are wide enough to enable it to quash an order which cannot be supported by the materials upon which it is supposed to be based. We may point out that sub-s. 1 of s. 144 requires a magistrate who makes an order thereunder to state therein the material facts upon which it is based and thus the High Court will have before it relevant material and would be in a position to companysider for itself whether that material is adequate or number. As an instance of a case where the High Court interfered with an order of this kind, we may refer to a decision in P. T. Chandra, Editor, Tribune v. Emperor 1 . There, the learned judges quite companyrectly pointed out that the propriety of the order as well as its legality can be companysidered by the High Court in revision, though in examining the propriety of the order the High Court will give due weight to the opinion of the District Magistrate who is the man on the spot and responsible for the maintenance of public peace in the district. In that case the learned judges set aside an order of the District Magistrate upon the ground that there was numberconnection between the act prohibited and the danger apprehended to prevent which the order was passed. We would also like to point out that the penalty for infringing an order under s. 144 is that provided in s. 188, Indian Penal Code. When, therefore, a prosecution is launched thereunder, the validity of the order under s. 144, Criminal Procedure Code, companyld be challenged. We are, therefore, unable to accept Mr. Manis companytention that the remedy of judicial review is illusory. The argument that the test of determining criminality in advance is unreasonable, is apparently founded upon the doctrine adumbrated in Schenecks case 2 that previous restraints on the exercise of fundamental rights are permissible only if there be a clear and present danger. It seems to us, however, that the American doctrine cannot be imported under our Constitution because the fundamental rights guaranteed under Art. 19 1 of the Constitution are number absolute rights but, as pointed out in State of Madras A.I.R. 1942 Lah. 171. Scheneck v. U. S., 249 U. S. 47. V. G. Row 1 are subject to the restrictions placed in the subsequent clauses of Art. 19. There is numberhing in the American Constitution companyresponding to cls. 2 to 6 of Art. 19 of our Constitution. The Fourteenth Amendment to the U. S. Constitution provides, among other things, that numberState shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States number shall any State deprive any person of life, liberty, or property, without due process of law that of the Constitution of the United States. Then again, the Supreme Court of the United States has held that the privileges and immunities companyferred by the Constitution are subject to social companytrol by resort to the doctrine of police power. It is in the light of this background that the test laid down in Schenecks case 2 has to be understood. The language of s. 144 is somewhat different. The test laid down in the section is number merely likelihood or tendency . The section says that the magistrate must be satisfied that immediate prevention of particular acts is necessary to companynteract danger to public safety etc. The power companyferred by the section is exercisable number only where present danger exists but is exercisable also when there is an apprehension of danger. Apart from this it is worthy of numbere that in Schenecks case 2 the Supreme Court was companycerned with the right of freedom of speech and it observed It well may be that the prohibition of law abridging the freedom of speech is number companyfined to previous restraints, although to prevent them may have been the main purpose We admit that in many places and in ordinary times the defendants, in saying all that was said in the circular, would have been within their companystitutional rights. But the character of every act depends upon the circumstances in which it is done The most stringent protection of free speech would number protect a man in falsely shouting fire in a theatre, and causing a 1 1952 S.C.R. 597. 2 249 U.S. 47. panic. It does number even protect a man from an injunction against uttering words that may have all the effect of force The question in every case is whether the words used are used in such circumstances and are of such a nature as to create a clear and present danger that they will bring about the substantive evils that Congress has a right to prevent. It is a question of proximity and degree. Whatever may be the position in the United States it seems to us clear that anticipatory action of the kind permissible under s. 144 is number impermissible under cls. 2 and 3 of Art. 19. Both in el. 2 as amended in 1951 and in cl. 3 power is given to the legislature to make laws placing reasonable restrictions on the exercise of the rights companyferred by these clauses in the interest, among other things, of public order. Public order has to be maintained in advance in order to ensure it and, therefore, it is companypetent to a legislature to pass a law permitting an appropriate authority to take anticipatory action or place anticipatory restrictions upon particular kinds of acts in an emergency for the purpose of maintaining public order. We must, therefore, reject the companytention. It is numberdoubt true that since the duty to maintain law and order is cast upon the Magistrate, he must perform that duty and number shirk it by prohibiting or restricting the numbermal activities of the citizen. But it is difficult to say that an anticipatory action taken by such an authority in an emergency where danger to public order is genuinely apprehended is anything other than an action done in the discharge of the duty to maintain order. In such circumstances that companyld be the only mode of discharging the duty. We, therefore, reject the companytention that s. 144 substitutes suppression of lawful activity or right for the duty of public authorities to maintain order. Coming to the order itself we must companysider certain objections of Mr. Mani which are, in effect, that there are three features in the order which make it unconstitutional. In the first place, according to him the order is directed against the entire public though the magistrate has stated clearly that it was promulgated because of the serious turn which an industrial dispute had taken. Mr. Mani companytends that it is unreasonable to place restrictions on the movements of the public in general when there is numberhing to suggest that members of the public were likely to indulge in activities prejudicial to public order. It is true that there is numbersuggestion that the general public was involved in the industrial dispute. It is also true that by operation of the order the movements of the members of the public would be restricted in particular areas. But it seems to us that it would be extremely difficult for those who are in charge of law and order to differentiate between members of the public and members of the two textile unions and, therefore, the only practical way in which the particular activities referred to in the order companyld be restrained or restricted would be by making those restrictions applicable to the public generally. The right of citizens to take out processions or to hold public meetings flows from the right in Art. 19 1 b to assemble peaceably and without arms and the right to move anywhere in the territory of India. If, therefore, any members of the public unconnected with the two textile unions wanted to exercise these rights it was open to them to move the District Magistrate and apply for a modification of the order by granting them an exemption from the restrictions placed by the order. Mr. Manis companytention, and that is his second ground of attack on the Magistrates order, is that the only exception made in the order is with respect to funeral processions and religious processions and, therefore, it would number have been possible to secure the District Magistrates permission for going out in procession for some other purpose or for assembling for some other purpose in the area to which the order applied. So far as the customary religious or funeral processions are companycerned, the exemption has been granted in the order itself that if anyone wanted to take out a pro- cession for some other purpose which was lawful it was open to them under s. 144, sub-s. 4 , to apply for an alteration of the order and obtain a special exemption. More omission of the District Magistrate to make the exemption clause of the order more companyprehensive would number, in our opinion, vitiate the order on the ground that it places unreasonable restrictions on certain fundamental rights of citizens. The third and last ground on which Mr. Mani challenged the companystitutionality of the order was that while the order prohibits the shouting of provocative slogans in public places etc., it does number give any definition of what was meant by the expression provocative slogans . Therefore, according to Mr. Mani, this order is vague and must be deemed to be placing unreasonable restrictions on the rights of free speech of citizens. It seems to us that the expression provocative slogans has necessarily to be understood in the companytext in which it has been used in the order and, therefore, it cannot be regarded as vague. We have, therefore, reached the companyclusion that the order of the District Magistrate is number unconstitutional either because s. 144 is itself violative of fundamental rights recognised in Art. 19 or on the ground that it is vague and places unreasonable restrictions on those fundamental rights. We, therefore, dismiss this petition. Shortly after this petition was made to this Court, the petitioner presented a special leave petition in which he seeks to challenge the judgment of the Nagpur High Court dated April 9, 1956, dismissing his writ petition to that High Court. The points raised in the Special Leave Petition are similar to those raised in this petition.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 205 of 1956. Appeal from the judgment and decree dated May 26, 1954, of the Calcutta High Court in Appeal from Original Decree No. 127 of 1950. N. Mukherjee, for the appellants. C. Chatterjee and R. B. Biswas, for respondents Nos. 1 a and 2. 1961. January 25. The Judgment of the Court was delivered by KAPUR, J.-This is an appeal against the judgment and decree of the High Court of Judicature at Calcutta. The appellant was the defendant in the suit out of which this appeal has arisen and respondent No. 1 was the plaintiff, and the second respondent was a proforma defendant. The facts of this case are these On February 4, 1941, the respondent sold the property in dispute to the appellant for a sum of Rs. 10,000. On February 10, 1941, there was an agreement for reconveyance within a period up to February 10, 1943, for a sum of Rs. 10,001. The relevant clause of this agreement was the third clause which was as follows - Clause 3.-The purchase shall be companypleted by the purchasers within two years, i.e., to say on or before the 10th day of February, 1943, time being the essence of the companytract. If the purchasers shall on or before the 10th day of February, 1943, pay to the vendor a sum of Rs. 10,001 the vendor shall at the companyt of the purchasers execute such companyveyance as may be necessary for companyveying and transferring its right, title and interest in the said property free from encumbrances, if any, created by it. On November 26, 1942, the solicitor for respondent No. 1 wrote a letter to the appellant stating that that respondent was ready and willing to have the purchase companypleted as early as possible on payment of Rs. 10,001. Along with that letter a draft companyveyance was sent for approval but all this was subject to the result of a search as to the encumbrances, if any, created by the appellant. On November 30, 1942, the solicitors for the appellant companypany wrote back saying that immediate arrangements should be made for giving inspection of the agreement of sale on which the respondents were relying as the appellant was unable to trace the companyy of the said agreement from its record. Again on December 11, 1942, the respondents solicitor sent a letter stating My client is very eager to companyplete the purchase and the full companysideration money therefore is lying idle in his hands awaiting, the return of the relative draft companyveyance as approved by you on your clients behalf. To this the reply of the appellants solicitors dated December 18, 1942, was- Our clients deny that there was any companycluded or valid agreement for sale with your client or with any other person in respect of the above premises. On June 10, 1943, respondent No. 1 filed a suit for specific performance and in the alternative for redemption on the footing that the transaction was in reality a mortgage. The trial companyrt dismissed the suit oil May 16, 1950, holding that the transaction on the basis of which the suit was brought was number a mortgage but was out and out sale with an agreement for repurchase and as the vendor had number paid the money punctually according to the terms of the companytract, the right to repurchase was lost and companyld number be specifically enforced , and the companyrt had numberpower to afford any relief against forfeiture of this breach. The plaintiff-respondent took an appeal to the High Court and it was there held that the failure on the part of the respondents to actually tender the amount of the companysideration does riot bar a suit for specific performance because after the repudiation of the companytract by the appellant, the tender would have been a useless formality. The appeal was therefore allowed and the suit for specific performance decreed. It is against this judgment and decree that the appellant has companye in appeal to this Court. The companyrespondence which has been proved in this case shows that when the respondents solicitor called upon the appellant to reconvey the property in dispute to the respondent and also sent a draft companyveyance, the appellant denied that there was any companycluded or valid agreement for sale in respect of the property in dispute. This was a companyplete repudiation of the companytract to reconvey which the appellant had agreed to by cl. 3 of the agreement which has been set out above. As the appellant had repudiated the companytract and had thus failed to carry out his part of the companytract it was open to the respondent to sue for its enforcement. But it was argued on behalf of the appellant that the respondent did number tender the price, i.e., Rs. 10,001 number was he in a position to do so and in that view of the matter the respondent is number entitled to get a decree for specific performance. In cases of this kind numberquestion of formal tender of the amount to be paid arises and the question to be decided is number whether any money was within the power of the respondent but whether the appellant definitely and unequivocally, refused to carry out his part of the companytract and intimated that money will be refused if tendered. The principle laid down in Hunter v. Daniel 1 is applicable to cases of this kind. In that case Wigram, C., stated the position as follows- The practice of the Courts is number to require a party to make a formal tender where from the facts stated in the Bill or from the evidence it appears the tender would have been a mere form and that the party to whom it was made would have refused to accept the money. Lord Buckmaster in Chalikani Venkatarayanim v. Zamindar of Tuni 2 accepted this statement of the law and observed- Their Lordships think that that is a true and accurate expression of the law, and the question therefore is whether the answer that was sent on behalf of the mortgagee amounted to a clear refusal to accept the money. This principle applies to the facts of the present case also and the question is whether the answer sent on behalf of the appellant amounted to an unequivocal refusal to carry out its part of the companytract which in our opinion it was. It was next companytended that the offer made by a solicitor is number a proper offer in law and therefore when 1 1845 4 Hare 420 67 E.R. 712. 2 1922 50 I.A. 41, 47. the solicitor for the respondent called upon the appellant to execute the documents they were number bound to do so. We are unable to accord our assent to this proposition. The case upon which the Counsel for the appellant relied, i.e., Ismail Bhai Rahim v. Adam Osman 1 , in our opinion has numberapplication to the facts and circumstances of this case. It was held in that case that the offer made by a promiser through a solicitor to pay a debt with interest thereon at the date of the offer does number of itself afford a reasonable opportunity to the promisee of ascertaining that the promisor is able and willing to perform his promise. Unless there is something peculiar in the circumstances of that case that case does number lay down good law. It is difficult to see why a tender made through a solicitor who is for that purpose an agent, is number a proper tender.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No.449 of 1958. Appeal by special leave from the judgment and decree dated August 7, 1956, of the Patna High Court in Misc. Judicial Case No. 604 of 1953. P. Singh, for the appellant. P. Varma, for the respondent. 1961. January 11. The Judgment of the Court was delivered by SHAH, J.-The High Court of Judicature at Patna answered in the affirmative the following question which was submitted by the Board of Agricultural Income-tax, Bihar, under s. 28 3 of the Bihar Agricultural Income-tax Act, XXXII of 1948-hereinafter referred to as the Act Whether, in the facts and circumstances of the case, the petitioner companyld be legally assessed for the income of the Estate in 1355 Fasli when the Estate was in the hand of the Receiver ? With special leave under Art. 136 of the Constitution, this appeal is preferred against the order of the High Court. The appellant is the Mahant of the Asthal Estate, Salauna, in the District of Bhagalpur in Bihar. In a suit companycerning that estate, a Court Receiver was appointed by the First Class Subordinate Judge, Monghyr, to manage the estate. The Receiver functioned till sometime in December, 1949, and under the order of the Subordinate Judge he handed over charge of the estate to the appellant on January 8, 1950. On January 15, 1950, the appellant submitted a return of income of the estate to the Agricultural Income-tax Officer, Monghyr, for the Fasli year 1355 companyresponding to September 16, 1948, to September 15, 1949. The Agricultural Income- tax Officer assessed on August 7, 1950, the agricultural income of the estate at Rs. 90,507-2-6 and ordered the appellant to pay Rs. 20,290-13-0 as agricultural income-tax. Appeals against the order of assessment preferred to the Commissioner of Agricultural Income-tax and the Board of Agricultural Income-tax, Bihar, were unsuccessful. The Board however referred the question set out hereinbefore to the High Court under s. 28 3 of the Act as arising out of its order. The only question which falls to be determined in this appeal is whether the appellant was liable to be assessed to pay agricultural income-tax for the year in which the estate was in the management of the Court Receiver. Section 3 of the Act which is the charging section provides Agricultural income-tax shall be charged for each financial year in accordance with and subject to the provisions of this Act on the total agricultural income of the previous year of every person. By s. 4,it is provided Save as hereinafter provided, this Act shall apply to all agricultural income derived from land situated in the State of Bihar. The income of the estate of the appellant was number exempt from payment of tax and by virtue of s. 3, agricultural income-tax was charged upon the income for the assessment year in question, and the appellant was prima facie liable as owner of the estate to pay tax on that income. The appellant however relied upon s. 13 of the Act which provides Where any person holds land, from which agricultural income is derived, as a companymon manager appointed under any law for the time being in force, or under any agreement or as receiver, administrator or the like on behalf of persons jointly interested in such land or in the agricultural income derived therefrom, the aggregate of the sums payable as agricultural income-tax by each person on the agricultural income derived from such land and received by him shall be assessed on such companymon manager, receiver, administrator or the like, and he shall be deemed to be the assessee in respect of the agricultural income-tax so payable by each such person and shall be liable to pay the same. The appellant urged that if the land from which agricultural income is derived is held by a Receiver and the income is received by the Receiver, the Receiver alone can, by virtue of s. 13, be deemed to be the assessee and the Receiver alone is liable to pay the tax in respect of that income. In support of his companytention, the appellant relies upon the definition of the word., person in s, 2, cl. m which estates Person mean, any individual or association of individuals, owning or holding property for himself or for any other, or partly for his own benefit and partly for another, either as owner, trustee, receiver, companymon manager, administrator or executor or in any capacity recognised by law, and includes an undivided Hindu family, firm or companypany. In our view, there is numbersubstance in the companytention raised by the appellant. The liability to pay tax is charged on the agricultural income of every person. The income though companylected by the Receiver was the income of the appellant. By s. 13, in addition to the owner, the Receiver is to be deemed to be an assessee. But the fact that the Receiver may, because he held the property from which income was derived in the year of account, be deemed to be an assessee and liable to pay tax, does number absolve the appellant on whose behalf the income was received from the obligation to pay agricultural income-tax. Section 13 merely provides a machinery for recovery of tax, and is number a charging section. When property is in the possession of the Receiver, companymon manager or administrator, the taxing authorities may, but are number bound to, treat such persons as assessees and recover tax. The taxing authorities may always proceed against the owner of the income and assess the tax against him. The definition in the companynotation of person undoubtedly included a receiver, trustee, companymon manager, administrator or executor, and by such inclusion, it is open to the taxing authorities to assess tax against any such persons but on that account, the income in the hand of the owner is number exempt from liability to assessment of tax. Counsel for the appellant urged that the income received by the appellant from the Receiver did number retain its character of agricultural income and therefore also the appellant was number liable to pay agricultural income-tax. But this companytention was never raised before the taxing authorities and numbersuch question has been referred to this companyrt. The character of the income was accepted to be agricultural income in the hands of the appellant and the only question which was sought to be referred and raised before the Board of Agricultural Income-tax was one as to the liability of the appellant to be assessed to agricultural income-tax for the year in question.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals-. Nos. 101 to 104 of 1957. Appeals from the judgment and order dated February 4, 1954, of the Mysore High Court in Regular, Second Appeals Nos. 5 and 6 of 1953 and Writ Petitions Nos. 67 and 68 of 1953 respectively. N. Sanyal, Additional Solicitor-General of India, Ganapathy Iyer and D. Gupta for the appellant. V. Visv anatha Sastri, M. S. K. Sastri and T. R. V. Sastri for A. G. Ratnaparkhi, for the respondents. 1961. February 20. The Judgment of the Court was delivered by WANCHOO, J.-These are four appeals on certificates granted by the Mysore High Court. They will be disposed of together as the. points raised in them are companymon. The facts of these cases are companyplicated and may be mentioned in some detail. On July 7, 1949, the then State of Mysore passed The Mysore Administration of Evacuee Property Emergency Act, No. XLVII of 1949 hereinafter called the. first Mysore Act . It provided for the appointment of a Custodian of Evacuee Property for the State of Mysore and other officers subordinate to him for the purpose of administering evacuee property in that State. Section 2 c defined an evacuee and s. 2 d evacuee property . Section 5 laid down that all evacuee property situate in Mysore would vest in-the custodian Section 6 provided for a numberification by the Custodian in the Mysore Gazette of evacuee property vested in him. Section 8 provided that any person claiming any right to or interest in any property numberified under s. 6 as evacuee property or in respect of which a demand requiring a surrender of possession had been made by the Custodian might arefer a claim to the Custodian on the ground that he property was number evacuee property or his interest in the property had number been affected by the provisions of that Act. It was further provided that the Custodian was, to hold a summary inquiry in the prescribed manner into such claims and after taking such evidence as might be produced, pass an order stating the reasons there for either rejecting the claim or allowing it wholly or in part. Finally, s. 30 provided for an appeal to the High Court where the original order under s. 8 had been passed by the Custodian, an Additional Custodian or an Authorised Deputy Custodian. This Act remained in force till it was replaced by the Mysore Administration of Evacuee Property Second Emergency Act, No. LXXIV of 1949 hereinafter called the second Mysore Act , which came into force on November 29, 1949. On September 21, 1949, the Custodian issued a numberification by which he declared the properties. of the two respondents as evacuee properties which had vested in him, as the, respondents had become evacuees. Thereupon two claims were filed under s. 8 of the first Mysore Act separately by the two respondents. These claims were investigated by the Deputy Custodian who dismissed the same on April 17, 1950, declaring that the, properties were evacuee properties., It may be mentioned that in the meantime, the second Mysore Act had companye into force by which the first Mysore Act was repealed. But s. 53 2 of the second Mysore Act provided, that anything done or any action taken. in the exercise of any power companyferred by the first Mysore Act shall be deemed to have been done or taken in the exercise of the powers companyferred by the second Mysore Act. It was also provided that any penalty incurred or proceeding companymenced under the first Mysore Act shall be deemed to be a penalty incurred or proceeding companymenced under the second Mysore Act as if the latter Act were in force on the day on which such thing was done, action taken, penalty incurred or proceeding companymenced. There was how. ever one difference in the two Mysore Acts. The first Mysore Act had provided by s. 5 for the vesting of all evacuee property situate in Mysore ipso facto in the Custodian s. 6 then provided for numberification by the Custodian and s. 8 for preferring claims. The second Mysore Act however made a departure from this and s. 5 thereof provided that- a where the Custodian is of opinion that any property is evacuee property within the meaning of this Act he may, after causing numberice thereof to be given in such manner as may be prescribed to the persons interested, and after holding such inquiry into the matter as the circumstances of the case permit, pass an order declaring any such property to be evacuee property. Section 6 then provided for vesting of any property declared to be evacuee property in the Custodian. Thus while under the first Mysore Act the evacuee property vested in the Custodian and the person who claimed that it was number evacuee property had to make an application under s. 8 and to get it declared that it was number evacuee property, under the second Mysore Act there was numbervesting in the Custodian and the Custodian had to give a numberice in the manner prescribed if he thought any property to be evacuee property and after hearing the persons interested to declare the property to be evacuee property and it was only thereafter that the property vested in him as evacuee property. Further, the second Mysore Act also defined the Custodian-General as the Custodian-General of Evacuee Property in India appointed by the Government of India under s. 5 of the Administration of Evacuee Property Ordinance Central Ordinance No, XXVII of 1049 , which had companye into force on October 18, 1949. Further there was a change in the forum of appeals and instead of the High Court the appeal lay to the Custodian-General from an order passed under s. 5 of the second -Mysore Act where the original order had been passed by the Custodian, Additional Custodian or Authorised Deputy Custodian and in some cases to the District Judge designated in this behalf by the Government under ss. 22 and 23 of the second Mysore Act. In addition, provision was made by s. 25 of the second Mysore Act for revision by the Custodian-General of orders passed by the District Judge or the Custodian on appeal. It may be mentioned that the Administration of Evacuee Property Act, No. XXXI of 1950 hereinafter called the Act , came into force on the day the Deputy Custodian passed the order dated April 17, 1950. It may also be mentioned that in the meantime the Constitution of India had companye into force on January 26, 1950, and the former State of Mysore had become the new Part B State of Mysore under the Constitution. The Act was to apply to the whole of India except the States of Assam, West Bengal, Tripura, Manipur and Jammu and Kashmir. Thus the Act applied to the Part B State of Mysore on April 17, 1950, and though there was numberspecific provision then in the Act repealing the second Mysore Act it is number seriously disputed that the Act by necessary implication repealed the second Mysore Act, as the Act substantially enacted all that was companytained in the second Mysore Act. However that may be, appeals were filed against the order of April 17, 1950, before the Custodian. These appeals were allowed on August 22, 1950. The Custodian held that there was number sufficient evidence to prove the respondents as evacuees and companysequently the properties in question companyld number be treated as evacuee properties. On October 3,1950, the Custodian General gave numberices to the respondents under s. 27 of the Act in respect of the order of the Custodian dated August 22, 1950, and asked them to show cause why the said order of the Custodian be number revised, On December 7, 1950, the Administration of Evacuee Property Amendment Act, No. LXVI of 1950, was passed by which inter alia s. 58 of the Act was amended and it was provided that if immediately before the. companymencement of the Act there was in force in any State to which the Act extended any law which companyresponded to the Act and which was number repealed by, sub-s. 1 it shall stand repealed. This was made retrospective from the date from which the Act came into force namely, April 17, 1950 and so the repeal of evacuee property laws which were in force in those States to which the Act applied which was implicit in it was made explicit from December 7, 1950, so that frum April 17, 1950, only the Act held the field. On February 11, 1952, the Custodian-General set aside the order of the Custodian dated August 22, 1950, and ordered that further proceedings in these cases should be taken before the Custodian as an original matter and be was directed to dispose of the cases afresh in the light of the evidence already recorded and such other evidence as might be produced before him by the two respondents. When the matter thus came back to the Custodian he ordered the Deputy Custodian on April 7, 1952, to record the evidence and then submit the record to him for final disposal. Eventually, the matter came before the Custodian for final disposal on December 2, 1952. He held that the two respondents were evacuees and their properties were evacuee properties. This was followed by two appeals to the High Court on January 2, 1953. As, however, the respondents felt some doubt whether any appeal lay to the High Court two writ petitions were also filed on September 7, 1953, against the order of the Custodian. The two appeals as well as the two writ petitions were disposed of by the High Court by a companymon judgment on February 4, 1954. The High Court held that the appeals before it were companypetent. It further seems to have held that the CustodianGeneral had numberpower under s. 27 of the Act to revise the order passed by the Custodian on August 22,1950. Finally, as the High Court held that the appeals were companypetent it went into the matter as an appellate companyrt and came to the companyclusion that the order of the Custodian dated December 2, 1952, was erroneous. It, therefore, allowed the appeals as well as the writ petitions and set aside the order of the Custodian dated December 2, 1952, and restored the earlier order of the Custodian dated August 22, 1950. Thereupon followed applications by the Custodian of Evacuee Property, Mysore, for certificates to file appeals to this Court on which the High Court-granted the certificates, and that is how the four appeals have companye up before us. The main companytention of the learned Additional Solicitor- General on behalf of the appellant is two. fold. He urges firstly that the High Court was in error when it held that the Custodian-General had numberpower to set aside the order of August 22, 1950, under s. 27 of the Act. In the second place, his companytention is that the High Court was in error in holding that an appeal lay to it from the order of the Custodian dated December 2, 1952. Therefore, the High Court companyld number deal with the matter before it as if it were hearing an appeal it companyld only companysider the writ petitions before it and in doing so it would number be justified in issuing a writ of certiorari against the order of December 2, 1952, because that order was number passed without jurisdiction and there was numbererror of law apparent on the face of the record to call for interference with it. Mr. Sastri for the respondents In reply submits that as the proceedings in these oases began under a. 8 of the first Mysore Act and as there was numberhing companyresponding to that section either in the second Mysore Act or in the Act, which replaced successively the first Mysore Act, the High -Court was entitled to hear an appeal from the order of Decem- ber 2, 1952, as that order must be held to have be On passed in a proceeding under the first Mysore Act, even if it be that the Custodian-General had the jurisdiction to set aside the order of August 22, 1960 under s. 27 of the Act. Further, Mr. Sastri companytends that the Custodian-General had numberjurisdiction to set aside the order of August 22, 1960, under s. 27 of the Act. The first point therefore which falls for companysideration is whether the Custodian-General had jurisdiction to set aside the order of August 22,1950, under s. 27 for if he had numbersuch jurisdiction the High Court may be entitled after holding that the Custodian-Generals order of February 11, 1952, was without jurisdiction, to set aside all subsequent proceedings, leavingthe order of August 22, 1950, operative and in full force assuming for this purpose that the High. Court had jurisdiction in writ proceedings to set aside the order of the Custodian-General whose headquarters were in New Delhi . Now the first Mysore Act had numberprovision relating to the Custodian-General. It was the second Mysore Act which for the first time brought in the CustodianGeneral and gave him powers of revision under s. 25 with respect to orders passed by the Custodian or the District Judge in. appeal. Then came the Act on April 17, 1950, by which the Custodian- General was given the power to call for the record of any procee in which any District Judge or Custodian had passed an order for the purpose of satisfying himself as to the legality or propriety of any such order and to pass such order in relation thereto as he thought fit. This provision is wider than the provision in the second Mysore Act and is number companyfined to orders passed by a District Judge or a Custodian in appeal and would apply even to original orders passed by the Custodian, which term, according to the definition in s. 2 c includes any Additional, Deputy or Assistant Custodian of evacuee property. We have already pointed out that the Act provides substantially for all ,matters companytained in the second Mysore Act and therefore must be- held to have repealed the second Mysore Act by implication. but in any case the question whether the second Mysore Act was repealed by the Act when it came into force on April 17, 1950, I been set at rest by the later Central Act, LXVI of 1950. That Act was passed on December 7, 1950, and 2 thereof began thus For section 58 of the, Administration of Evacuee Property Act, 1950, the following section shall be substituted. and shall be deemed always to have been substituted. This clearly shows that Central Act LXVI was amending s. 58 retrospectively from the date on which it came into force namely, April 17, 1950 . The new s. 58 which was thus substituted in the Act from April 17, 1950, companytained sub-s. 2 which is as follows- If, immediately before the companymencement of this Act, there is in force in any State to which this Act extends any law which companyresponds to this Act and which is number repealed by sub-section 1 , that companyresponding law shall stand repealed. It is clear therefore that the second Mysore Act was expressly repealed as from April 17, 1950, by the Act in view of this substituted s. 58 put into it retrospectively by Act LXVI, for the second Mysore Act was undoubtedly a law companyresponding to the Act. The High Court seems to have overlooked the fact that Act LXVI gave retrospective operation to the new s. 58 2 which was inserted in the Act. It seems to think that the second Mysore Act was repealed on December 7, 1950, when Act LXVI came into force. The High Court was further in error in holding that the amended sub- s. 3 of s. 58 which was put into the Act also came into force from December 7, 1950, while as matter of fact it came into force from April 17, 1950, when the Act itself first came into force. The position when the Custodian-General gave numberice in October, 1950, under s. 27 of the Act therefore was that the first Mysore Act had already been re. pealed by the second Mysore Act and the second Mysore Act had been repealed by the Act as from April 17, 1950, and therefore in October, 1960, only the Act held the field. The question then arises whether it was open to the Custodian-General to revise the order dated August 22, 1950, under s. 27 of the Act in February, 1952. Now s. 27 is very wide in terms and gives power to the Custodian-General at any. time either on his own motion or on application made to him in this behalf., to call for the record of any proceeding in which any District Judge or Custodian has passed an order for the purpose of satisfying himself as to the legality or propriety of any order and to pass such order in relation thereto as he thinks fit. Prima facie, therefore, these wide words give power to the Custodian- General to revise any order passed by the Custodian. It is urged on behalf of then respondents that the Custodian- General companyld number revise the order dated August 22, 1950. We are number impressed by this argument. Now the Act was passed in 1950 to set up a central organisation for the custody, management and companytrol, etc., of property declared by law to be evacuee property with the Custodian-General at the head. It is also clear that all similar laws existing in various States on the date the Act came into force namely, April 17, 1950 were repealed by it. The intention of the Legislature obviously was to provide for the custody and management etc. of evacuee property in the manner provided in the Act with the Custodian-General as the head of the organisation. Further, action taken with respect to evacuee property under the first Mysore Act was deemed under s. 53 2 of the second Mysore Act to have been taken thereunder and finally any action taken in the exercise of the power companyferred by the second Mysore Act was deemed to have been taken in the exercise of the powers companyferred by the Act. Therefore, any action taken with respect to evacuee property and any order passed by any Custodian in any proceeding with respect to such property would be subject to the revisory jurisdiction of the CustodianGeneral under s. 27 in view of the wide language thereof and the fact that proceedings started under the first Mysore Act. would number, in our opinion, make any difference to the power of the Custodian-General under s. 27. Obviously the order of August 22, 1950 was passed when the Act was in force in a proceeding relating to evacuee property by the Custodian and the Custodian-General would be companypetentunder s. 27 to call for the record of that proceeding and satisfy himself as to the legality or propriety of any such order and thereafter pass, such order in relation thereto so he thought fit, We are, therefore, of opinion that companysidering the purpose for which the Act was passed and the successive saving clauaes in the second Mysore Act and in the Act,,the Custodian General had the power under s. 27 to call for the record of the proceed. ing in which the order of August 22, 1950, was passed ad companysider its legality or propriety and Pass such order in relation thereto as he thought fit. Even if the numberice of October, 1950, may be open to question as it was issued before Act LXVI of 1950 was passed, there can be numberdoubt that the order of February,, 1952, under a. 27 was passed after hearing the parties and would be valid and within the jurisdiction of the Custodian-General when it was passed. Therefore, the order of the Custodian-General dated February II,, 1952, being within his jurisdiction would number be liable to be set aside on a writ of certiorari as if the Custodian-General had acted without jurisdiction. The subsequent proceedings, therefore, which took place after the order of the Custodian-General would also be with jurisdiction and would number be liable to be set aside on a writ of certiorari on the ground that they were without jurisdiction. The High Court, thereforewas in error in holding that the order of the Custodian, General dated February 11, 1952,was without juries diction and therefore all subsequent proceedings taken in pursuance thereof were also without jurisdiction, with the result that the order of August 22, 1950 stood fully operative. This brings us to the next question whether any appeal lay to the High Court against the order of December 2, 1952. There is numberdoubt that the proceedings in the present case companymenced under the first, Mysore Act with a numberification under - is. 6 and claim applications under s. 8. If the original proceeding had finished when the first Mysore Act was in force and the order of December 2, 1952, had been passed during its operation there would undoubtedly have been as appeal to the High Court under s. 30 thereof. But the, first Mysore Act, was repealed by the second Mysore Act in. November, 1949, and the second Mysore Act was in its turn repealed by the Act ,a from April 1950. The, questions therefore, that arises for companysideration is Whether after the repeal of the first Mysore Act an appeal would still lie to the High Court from the order of December 2, 1952. The main companytention of Mr. Sastri in this behalf is that if the second Mysore Act or the Act companytained provisions which were similar to the provisions companytained in s. 8 of the first Mysore Act, it may have been possible to say that the remedy provided by the first Mysore Act under s. 30 had been superseded by the remedy provided in the Act, that remedy being an appeal to the Custodian-General under s. 24 of the Act. The argument further proceeds that neither the second Mysore Act number the Act provides anything similar to what was provided by s. 8 of the first Mysore Act. Therefore, even though the first Mysore Act was repealed by the second Mysore Act the proceedings in the present case must be deemed to be still under the first Mysore Act which must be deemed to be existing for this purpose and, therefore, the right of appeal being a vested one and rising when the proceedings companymenced, there would still be a right of appeal under s. 30 of the first Mysore Act in spite of its being repealed. When the matter came before the Custodian in 19,52 it was companytended before -him that the proceedings should be taken to be under the first Mysore Act. He accepted this companytention, though he added that it was immaterial for the purposes of the present cases as the definition of evacuee in S. 2 c of the first Mysore Act was practically the same as in s. 2 d of the Act. It is urged that in view of the manner in which the Custodian, dealt with the case when he passed the order. dated December 2, 1952, the proceedings before him must be taken to be under the first Mysore Act and if so an appeal would lie to the High Court under ,S. 30.,of the first Mysore Act. This view has been accepted by the High Court also and that is why it hold that the appeals before it were companypetent and it is,, the companyrectness of this view which has been challenged before us. Now there is numberdoubt that the right of appeal is a substantive right and arises when A proceeding is companymenced and cannot be taken away by subsequent legislation, except by express provision or necessary intendment. There is numberexpress provision in the present case taking away the right of appeal companyferred by the first Mysore Act. We have therefore to see whether it can be said that the right of appeal companyferred by the first Mysore Act has been taken away by necessary intendment by the subsequent legislation and if so whether it has been companypletely taken away or has been replaced by another right of appeal, though number to the High Court. Under the first Mysore Act, as we have already pointed out, evacuee property ipso facto vested in the Custodian under s. 5. There. after the Custodian was expected to numberify such property under s. On such numberification or where the Custodian demanded surrender of possession a person claiming any right to the property was entitled to make an application preferring a claim before the Custodian. That application was dealt by the Custodian in a summary manner and he had the power either to reject the application or allow it in whole or in part. An order passed by the Deputy or the Assistant Custodian under s. 8 was appealable to the Custodian and an order passed by the Custodian or Additional Custodian or an authorized Deputy Custodian was appealable to the High Court. The companytention on behalf of the respondents is that when the first Mysore Act was replaced by the second Mysore Act, there was a vital change in the procedure and therefore cases in which proceedings had companymenced under s. 8 companyld only be dealt with under the first Mysore Act and for that purpose the first Mysore Act would be deemed to be alive under a. 6 e of the Mysore General Clauses Act, No. III of 1899, which companyresponds to s. 6 e of the General Clauses Act, No. X of 1897. Now there is numberdoubt that the proceedings in these cases companymenced under the first Mysore Act though they terminated when that Act was numberlonger in force. What we have to see is whether there is anything in the -repealing legislation which by necessary intendment took away the right of appeal provided by the first Mysore Act and substituted in its place another right of appeal provided by the repealing Act, The argument of Mr. Sastri is that there is numberhing in the second Mysore Act which repealed the first Mysore Act companyresponding to s. 8 of the first Mysore Act and therefore in spite of the repeal of the first Mysore Act proceedings companymenced under a. 8 of that Act would companytinue to be governed thereby, including the right of appeal. In this companynection he urges that the scheme of the second Mysore Act with respect to evacuee property is vitally different from the scheme which is to be found in the first Mysore Act. In the second Mysore Act there is numberprovision companyresponding to s. 5 of the first Mysore Act by which any property becomes ipso far to evacuee property and vests in the Custodian. Under the second Mysore Act the Custodian has first to form a tentative opinion whether the property is evacuee property and after he has formed such opinion he gives numberice thereof to the persons interested after such numberice is given he holds inquiry into the matter and thereafter passes an order declaring the property to be evacuee property. Thus under the first Mysore Act the property became evacuee property ipso facto and the person claiming any interest in it had to proceed under s. 8 and make a claim which had to be investigated and thereafter the Custodian finally declared whether the property, which he had numberified under s. 6 was evacuee property or number. Under the second Mysore Act there being numbervesting ipso facto, the proceeding companymences with a numberice by the Custodian to the person interested followed by an inquiry after which the Custodian decides to declare the property evacuee if he finds it to be so under the law. Further under the second Mysore Act when an order was passed declaring property to be evacuee property under a. 5 it was open to the person aggrieved by such order to file an appeal to the Custodian where the original order had been passed by the Deputy Custodian or Assistant Custodian and to the Custodian-General where the original order had been passed by the Custodian, Additional Custodian or Authorised Deputy Custodian. There was also in certain cases appeal to the District Judge but we are number companycerned with that in the present appeals. The position under the Act was also the same as under the second Mysore Act and the right of appeal was also similar. It is thus true that there has been a change in the procedure by which evacuee property is finally declared to be evacuee property. Under the first Mysore Act the property became evacuee property and the person had to go and file a claim and establish that it was number. That claim was investigated and after investigation the Custodian had to companye to a final companyclusion whether the property was evacuee or number. If he came to the companyclusion that it was evacuee property, the vesting under s. 5 was companyfirmed. If on the other hand he came to the companyclusion that the pro- perty was number evacuee property the legal effect was that there was numbervesting under s. 5 of the first Mysore Act. Under the second Mysore Act the property did number ipso facto vest in the Custodian as evacuee property but he formed a tentative opinion as to whether it was evacuee property and then gave numberices to the persons interested. They appeared before him and the matter was investigated. He then had to companye to a final companyclusion whether the property was evacuee property or number. If he came to the companyclusion that it was evacuee property he declared it to be such if on the other hand he came to the companyclusion that it was number evacuee property the proceedings came to an end. It will be seen therefore on a companyparison of the two procedures that though there is difference between the two, the difference is number of a vital or substantial nature. In the one case the law started with the presumption that the property was evacuee property and the person interested had to go and make a claim and establish that it was number evacuee property and the matter had to be investigated and the Custodian finally had to companye to the companyclusion one way or the other. In the other case the law did number start with the presumption but only a tentative opinion was to be formed by, the Custodian who gave numberice to the person interested and the matter was then investigated and thereafter the Custodian had to decide finally one way or the other But in both cases the question whether the property was evacuee property or number was investigated and it was only after investigation that it companyld be finally said whether the property was evacuee property or, number. Therefore, though there may be an apparent difference between what is provided by a. 8 in the, first Mysore Act and by s. 5 in the second Mysore Act as also by s. 7 in the Act, the difference is, number material and it is only after investigation, whether under s. 8 of the first Mysore Act, or under s. 5 of the second Mysore Act or under s. 7 of the Act that the Custodian companyes to the final companyclusion whether the property is evacuee property or number. Under the circumstances it would number in our opinion be unreasonable to say that the investigation provided under a. 8 of the first Mysore Act and the subsequent remedies following on an order under s. 8 are in substance the same as the investigation provided under s. 5 of the second Mysore. Act ores. 7 of the Act and the subsequent remedies following on an order thereon. We cannot, therefore, agree with the High Court that there is numberhing in the second Mysore. Act to companyrespond to s. 8 of the first Mysore Act and therefore these proceedings which began under the first Mysore Act must companytinue to be governed by that Act in spite of its repeal by the second Mysore Act. As we have pointed out above the proceedings under s. 8 of the first Mysore Act are in substance equal to proceedings under s. 5 of the second Mysore Act and therefore proceedings companymenced under the first Mysore Act must in view of a. 53 2 of the second Mysore Act, be deemed to be proceedings under s. 5 of the latter Act. Once that companyclusion is reached and it seems to us that it is inevitable-it follows that an order made in a proceeding companymenced under s. 8 of the first Mysore Act must be deemed to be an order made under s. 5 1 of the second Mysore Act or under s. 7 1 of the Act. In this companynection it is relevant to point out that it companyld number have been the intention of the legislature to keep the first Mysore Act alive for certain purposes for all, time the whole object of passing the subsequent Acts is plainly against such an assumption. The next question that arises is whether the second Mysore Act and the Act took away the right of appeal which lay to the High Court under the first Mysore Act and substituted for it another right of appeal by necessary intendment. As we have already Pointed out, there is numberexpress provision either in the second Mysore Act or in the Act in this behalf. But once it is held that proceedings which companymenced under s. 8 of the first Mysore Act must, when the second Mysore Act came into force, be deemed under s. 53 2 thereof to be proceeding under s. 5 1 or when the Act came into be deemed under s. 58 3 thereof to be proceeding under s. 7 1 and must be companytinued under those provisions, it follows that the legislature necessarily intended that all subsequent action following an order under s. 5 1 or s. 7 1 must be taken under the second Mysore Act or under the Act as the case may be. It companyld number have been intended by the legislature when it was expressly providing for appeal from an order under s. 5 1 of the second Mysore Act or under s. 7 1 of the Act that a proceeding companymenced under the first Mysore Act which was equivalent to a proceeding under s. 5 1 or s. 7 1 should companytinue to be governed in the matter of appeal by the first Mysore Act. This is therefore in our view a case where by necessary intendment though number by express provision the legislature intended that the provision as to appeals provided by subsequent legislation should supersede the provision as to appeals under the first Mysore Act. We may point out that this is number a case where the right of appeal disappears altogether,, all that happens is that where the order is passed by the Custodian the appeal lies to the Custodian-General instead of to the High Court. The legislature has provided another forum where the appeal will lie and in the circumstances it must be held that by necessary intendment the legislature intended that forum alone to be, the forum where the appeal will lie and number the forum under the first Mysore Act. Reference in this companynection may be made to Garikapatti Veeraya v. Subbiah Choudhury 1 , where this Court held that the vested right of appeal was a substantive right and was governed by the law prevailing at the time of th companymencement of the suit and companyprised all successive rights of appeal from companyrt to companyrt which really companystituted one proceeding but added that such right companyld be taken away expressly or by necessary intendment. In the present cases we are of opinion that once proceedings under s. 8 1 of the first Mysore Act are held to be similar to proceedings under s. 5 1 of the second Mysore Act or s. 7 1 of the Act, it must necessarily follow that the legislature intended this all subsequent proceedings in the nature of appeal after the first Mysore Act came to an end, must being the forum provided by the subsequent legislation We are therefore of opinion that the High Court was in error in holding that appeals to it lay from the order of December 2, 1952. The result of the view we have taken is that the High Court was number justified in looking into the order of December 2, 1952, as an appellate companyrt,, though I would be justified in scrutinizing that order as if it was brought before it under Art. 226 of the Constitutional for issue of a writ of certiorari. The limit of th jurisdiction of the High Court in issuing writs of certiorari was companysidered by this Court in Hari Vis Kamath v. Syed Ahmed Ishaque and others 2 and the following four propositions were laid down Certiorari will be issued for companyrecting errors of jurisdiction Certiorari will also be, issued when the Court or Tribunal acts illegally in the exercise of its undoubted jurisdiction, as when it decides without giving an opportunity to the parties to be heard, or violates the principles of natural justice 3 , The companyrt issuing a writ of critorari acts in exercise of a supervisory land number appellate jurisdiction. One companysequence of this is that, the companyrt will number review findings of fact reached by. the inferior companyrt or tribunal, even if they be erroneous An error in the decision or determination itself may also be amenable to a writ of certiorari if 1 1957 S.C.R. 488. 1 1955 S.C.R. 1104, it is a manifest error apparent on the face of the proceedings, e.g., when it is based on clear ignorance or disregard of the provisions of law. In other words, it is a patent error which can be companyrected by certiorari but number a mere wrong decision. In the present case, the Custodian had jurisdiction to decide the matter once it is held that the, Castodian- General had jurisdiction to set aside the order of August 22, 1950. The main question for decision in these cases was whether the respondents were evacuees within the meaning of a. 2 c of the first Mysore Act. The questions that fall for decision under s. 2 o are questions of fact and as pointed out in Hari Vishnu Kamaths case 2 it is number open on a writ praying for certiorari to review findings of fact reached by an inferior companyrt or tribunal even though they may be erroneous. Further, unless there is a patent error of law there can be numberinterference by a writ of certiorari. While dealing with the writ petitions the main argument that appealed to the High Court was that the Custodian-General, had numberJurisdiction in revision to reopen the earlier proceedings and in companysequence all subsequent proceedings were null and void The High Court was further aware of the fact that, the ordinary remedy of the respondents in these cases against the order of December 2, 1952, was to appeal to the Custodian-General tinder s. 24 of the Act but as it was of the view that the order of the Custodian-General under a. 27 was without jurisdiction it held that it should interfere and set aside the order of December 2, 1952, which was also without jurisdiction and restore that, of August 22,1950. -In the view we have taken, the order of the Custodian-General was with jurisdiction and therefore there was in our opinion numberreason for the High Court interfere in the exercise of its jurisdiction under Art. 226 of the Constitution with the order of December 2, 1952, as this is a case where only a writ of certiorari companyld issue and that is number justified in view of the decision in Hari Vishnu Kamaths case 1 1 1955 1 S.C.R. 1104. We therefore allow the appeals, set aside the order of the High Court and restore that of the Custodian dated December 2, 1952. This of companyrse will number take away the right if any of the respondents to approach the Custodian-General, for we have number companysidered the merits of the order, of December 2, 1952.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 237 of 1956. Appeal by special leave from the judgment and order dated December 13, 1954, of the Calcutta High Court in Appeal from Original Order No. 117 of 1954. BSen, P. K. Chatterjee and S. N. Mukherjee, for the appellant. BC. Mitter and D. Mukherjee, for respondent No. 1. 1961. February 6. The Judgment of the Court was delivered by HIDAYATULLAH, J.-This appeal is as much without substance, as it was unnecessary. Hazrat Syed Mastershid Ali Al Quadari the appellant is the eldest son of one Hazrat Sahib Syed Shah Mastershid Ali Al Quadari shortly, Hazrat Sahib , the first Mutawalli of a wakf created on August 9, 1931, for the maintenance of the shrine of a Muslim Pir in the town of Midnapur. After the death of Hazrat Sahib, the appellant, claiming to succeed to his father as Sajjadanashin, being his eldest son, made an application To the Commissioner under the Bengal Wakf Act. His younger brother, Syed Shah Rushaid Ali Al Quadari, opposed his claim, the ground being that he was numberinated as the succes- sor by Hazrat Sahib. While this companytroversy was afoot, the Commissioner, acting under s. 40 of the Bengal Wakf Act, appointed Syed Shah Rasheed Ali Al Quadari the third son of Hazrat Sahib as a temporary Mutawalli. The appellant then moved a petition in the Calcutta High Court under Art. 226 of the Constitution against the appointment, which was allowed by Sinha, J. and the order of the Commissioner was set aside. On appeal to the Divisional Bench, companysisting of Chakravarti, C. J. and Lahiri, J. as he then was , the order of Sinha, J. was reversed, and the petition was dismissed. This appeal has been filed with special leave. It is companytended in this appeal that the order of the Commissioner appointing a temporary Mutawalli was illegal, because under the Rules framed by the Government, only the Board companystituted under the Bengal Wakf Act companyld make the appointment. This argument, in our opinion, is wholly unsound. The learned Chief Justice of the High Court examined the matter at great length in reaching his companyclusion but, in our opinion, the reasons can be stated within a narrow companypass. We are companycerned with sections 40 and 29 of the Bengal Wakf Act. Section 40 reads as follows In the case of any Wakf of which there is numberMutwalli or where there appears to the Board to be an impediment to the appointment of amutwalli the Board, subject to any order of a companypetent Court, may appoint for such period as it thinks fit a person to act as Mutwalli. Section 29 provides The Board may, from time to time, authorize the Commissioner to exercise and perform, subject to the companytrol of the Board, any of the powers and duties companyferred or imposed on the Board by or under this Act. On April 24, 1936, the Board adopted the following resolution 2 . In exercise of the powers vested in them under Section 29 of the Act this Board resolve that the Commissioner of Wakfs be authorised to exercise and perform, subject to the companytrol and approval of this Board, the following powers and duties companyferred or imposed on this Board by the sections of the Act mentioned against each case- The powers of this Board under section 40 to appoint a temporary mutwalli. These two provisions of the Act show only too plainly that a temporary Mutawalli can be appointed either by the Board, or, if the powers and duties be delegated to the Commissioner, by the Commissioner. The appellant companytends that the Commissioner can only make a report to the Board, and the Board alone can make the appointment, and refers to two Rules framed by Government. These Rules are If it appears to the Commissioner that there is numbermutwalli, in the case of any wakf, or that a a vacancy in the office of the mutwalli has been caused by death, resignation, retirement or removal of th former mutwalli, and a dispute has arisen between two or more rival claimants to the vacancy, and such dispute is likely to affect the interests of the Wakf, he may institute an enquiry and report the result thereof to the Board with his recommendation. 2On receipt of the report and the recommendation from the Commissioner, or on its own motion, the Board may appoint a mutwalli under section 40 of the Act. It is argued that under the second Rule the Commissioner was bound to make his report and recommendation, but the Board alone was empowered to appoint a temporary Mutawalli under s. 40. The last words of the second Rule, it is said, are clear. This is, numberdoubt, true of those cases where the Board has number delegated its functions under s. 40 to the Commissioner. Once that delegation has been made, the Commissioner acts for and on behalf of the Board, and the Rules cease to apply. The Rules cannot affect the power of the Board to delegate its functions under s. 29, and harmonious companystruction requires that the Rules should give way, when there is a delegation of the powers of the Board. The Commissioner was thus companypetent to make the appointment. Mr. Sen, however, companytends that the appointment of a temporary Mutawalli companyld only be made if there was an impediment to the appointment of a permanent Mutawalli, and that there was numberimpediment to such an appointment but a challenge to the appellant as a candidate. The word impediment means hindrance or obstruction, and there was certainly an obstruction to the appointment of a permanent Mutawalli, while the dispute remained undecided. This point has numberforce whatever. The question which seemed to have largely engaged attention in the High Court, namely, whether the delegation was only of powers or also of duties of the Board, was number argued before us, though it formed the subject of companysiderable discussion in the statements of the case. It is without substance. Where powers and duties are interconnected and it is number possible to separate one from the other in such wise that powers may be delegated while duties are retained and vice versa, the delegation of powers takes with it the duties. The proposition hardly needs authority but if one were necessary, reference may be made to Mungoni v. Attomey- General of Northern Rhodesia 1 . In our opinion, the appeal has numberforce whatever. The appellant chose the extraordinary companyrse of dragging the respondents twice to the High Court and again to this Court merely to challenge an order of temporary duration, while the main companytroversy remained outstanding for years and companyld have been decided by number. The appeal fails, and is dismissed.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeals No,. 79 and 89 of 1959. Appeals by special leave from the judgment and order dated May 6,1959, of the Allhabad High Court in Criminal Appeal No. 1224 of 1957. S. R. Chari, B. K. Gary, D.P. Singh, S. C. Agarvial and K. Ramamurthi, for the appellants. C. Mathur and C. P. Lal for the respondent. 1961. February 15. The judgment of the Court was delivered by SUBBA RAO, J.-These two appeals are directed against the judgment of the High Court of Judicature at Allahabad dismissing the appeal preferred by the appellants and maintaining the companyvictions and sentences imposed on them by the learned Sessions Judge Meerut, under a. 147, s. 424, s. 452, s. 325, read with s. 149, and is. 323, read with s. 149, of the Indian Penal Code. Briefly stated the case of the prosecution is as follows One Har Narain had obtained a decree from the companyrt of the Additional Munsif, Ghaziabad, against one Sunehri Jogi for a sum of money. In execution of that decree the Munsif issued a warrant for the attachment of the judgment-debtors property. The amin to whom the said warrant was entrusted attached, inter alia, three buffaloes and two companys, which were in the house of the judgment-debtor, as his property. The amin kept the cattle in the custody of one Chhajju, the sapurdar. As the said sapurdar had numberaccommodation in his house for keeping the animals, he kept them for the night in the enclosure of the decree-holder with his permission. The next day at about 7 a. m., the nine appellants, armed with lathies, went to the enclosure of the decree-bolder and began to untie two of the attached buffaloes. The decree- holder, his son and his nephew protested against the acts of the appellants whereupon the appellants struck the three inmates of the house with lathies, and when P.W. 4 intervened, they struck him also with lathies. Thereafter, appellants 1. 2 and 3 took away the two buffaloes followed by the other appellants. The defence version is that on June 1, 1955, at about 7 a. m. the first appellant, Tika, was taking his two buffaloes for grazing when Har Narain and 1 1 others came with the amin and forcibly snatched the said buffaloes, that when Tika objected to it, those 12 persons assaulted him with lathies, that when appellant 2, Raja Ram, came there, he was also assaulted, and that Tika and Raja Ram used their lathies in self defence. The learned Sessions Judge, on a companysideration of the evidence, held that the cattle were attached on the evening of May 31, 1955, and that, after their seizure, they were kept in the house of Har Narain. The Sessions Judge disbelieved the defence version that the accused gave the beating to Har Narain and others at 11 a. m. on June 1, 1955 in self defence. On that finding, he companyvicted the accused as aforesaid. On appeal, the learned Judges of the High Court accepted the finding arrived at by the learned Sessions Judge and companyfirmed the companyvictions and the sentences passed by him on the accused, but directed the various sentences to run companycurrently. Hence the appellants have preferred these two appeals against the Judgment of the High Court. Learned companynsel for the appellants raised before us the following companytentions 1 The attachment of the buffaloes was illegal and, therefore, the appellants in taking away their own buffaloes from the possession of the decree-holder did number companymit any offence under s. 424 of the Indian Penal Code. 2 Even if the attachment was valid, neither the amin had any authority to keep the attached buffaloes in the custody of the sapurdar, number the sapurdar had any power to keep them in the custody of the decree-holder, and therefore the decree-holders possession was illegal and the appellants in taking away the buffaloes did number companymit any offence within the meaning of s. 424 of the Indian Penal Code. 3 The appellants also did number companymit any offence under s. 441 of the Indian Penal Code, as they had numberintention to companymit an offence or cause annoyance to the decree-holder, but they entered the house of the decree- holder only to recover their buffaloes from illegal custody. The appellants did number companymit an offence under s. 325, read with as. 147 and 149, of the Indian Penal Code, as their companymon object was number to cause grievous hurt to the decree-holder and others, but was only to recover their buffaloes illegally detained by the decree-holder. The first two companytentions may be companysidered together. The material facts relevant to the said companytentions may be stated. Har Narain in execution of his decree against Sunehri Jogi attached the buffaloes that were in the house of the judgment-debtor. Tika, appellant 1, filed a claim petition it is companymon case that subsequent to the incident his claim-petition was allowed. in the claim- petition, the High Court pointed out that Tika did number question the validity of the attachment but only set up his title to the buffaloes. Indeed, his defence in the criminal case also was number that the incident happened when the attached buffaloes were in the house of the decree-holder but that the incident took place before the attachment was effected. Before the Sessions Judge numberpoint was taken on the basis of the illegality of the attachment. For the first time in the High Court a point was sought to be made on the ground of the illegality of the attachment, but the learned Judges rejected the companytention number only on the ground that official acts companyld be presumed to have been done companyrectly but also for the reason that the appellants did number question the legality of the attachment in the claim-petition. That apart, P.W. 1, the amin, was examined before the Sessions Judge. He deposed that he had attached the heads of cattle from the house of the judgment-debtor, Sunehri Jogi, and that he had prepared the attachment list. He further deposed that the warrant of attachment received by him was with him. A perusal of the cross-examination of this witness discloses that numberquestion was put to him in regard to any defects either in the warrant of attachment or in the manner of effecting the attachment. In these circumstances, we must proceed on the assumption that the attachment had been validly made in strict companypliance with all the requirements of law. If so, the next question is, what is the effect of a valid attachment of moveables? Order XXI, rule 43, of the Code of Civil Procedure describes the mode of attachment of movable properties other than agricultural produce in the possession of the judgment-debtor. It says that the attachment of such properties shall be made by the actual seizure, and the attaching officer shall keep the attached property in his own custody or in the custody of one of his subordinates and shall be responsible for the due custody thereof The relevant rule framed by the Allahabad High Court is r. 116, which reads, Live-stock which has been attached in execution of a decree shall ordinarily be left at the place where the attachment is made either in custody of the judgment-debtor on his furnishing security, or in that Of some land-holder or other respectable person willing to undertake the responsibility of its custody and to produce it when required by the companyrt. The aforesaid rule also empowers the attaching officer to keep the animals attached in the custody of a sapurdar or any other respectable person. Attachment by actual seizure involves a change of possession from the judgment-debtor to the companyrt and the rule deals only with the liability of the attaching officer to the companyrt. Whether the amin keeps the buffaloes in his custody or entrusts them to a sapurdar, the possession of the amin or the sapurdar is in law the possession of the companyrt and, so long as the attachment is number raised, the possession of the companyrt companytinues to subsist. Would it make any difference in the legal position if the sapurdar, for companyvenience or out of necessity, keeps the said animals with a responsible third party? In law the said third party would be a bailee of the sapurdar. Would it make any difference in law when the bailee happens to be the decree-holder? Obviously it cannot, for the decree- holders custody is number in his capacity as decree-holder but only as the bailee of the sapurdar. We, therefore, hold that the decree-holders possession of the buffaloes in the present case was only as a bailee of the sapurdar. But it is said that even on that assumption, appellant 1, being the owner of the buffaloes, was number guilty of an offence under s. 424 of the Indian Penal Code, as he companyld number have acted dishonestly in trying to retrieve his buffaloes as their owner from the custody, of the companyrts officer or his bailee. This argument turns upon the provisions of s. 424 of the Indian Penal Code. The material part of a. 424 of the said Code reads Whoever dishonestly or fraudulently removes any property of himself or any other person, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both. The necessary companydition for the application of this section is that the removal should have been made dishonestly or fraudulently. Under s. 24 of the Indian Penal Code, Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person is said to do that thing ,dishonestly. Section 23 defines wrongful gain and wrongful loss. Wrongful gain is defined as gain by unlawful means of property to which the person gaining is number legally entitled and wrongful loss is the loss by unlawful means of property to which the person losing is legally entitled. Would the owner of a thing in companyrts custody have the intention of causing wrongful gain or wrongful loss within the meaning of a. 23 of the Indian Penal Code? When an attachment is made, the legal possession of a thing attached vests in the companyrt. So long as the attachment lasts or the claim of a person for the thing attached is number allowed, that person is number legally entitled to get possession of the thing attached. If he unlawfully takes possession of that property to which he is number entitled he would be making a wrongful gain within the meaning of that section. So too, till the attachment lasts the companyrt or it officers are legally entitled to be in possession of the thing attached. If the owner removes it by unlawful means, he is certainly causing wrongful loss to the companyrt or its officers, as the case may be, within the meaning of the words wrongful loss, In the present case when the owner of the buffaloes removed them-unlawfully from the possession of the decree-holder, the bailee of the sapurdar, he definitely caused wrongful gain to him. self and wrongful loss to the companyrt. In this view, we must hold that appellant 1 dishonestly removed the buffaloes within the meaning of s. 424 of the Indian Penal Code and, therefore, he was guilty under that ,section. Now we shall proceed to companysider some of the decisions cited at the Bar in support of the companytention that under numbercircumstances the owner of a thing would be guilty of an offence under s. 424 of the Indian Penal Code, if he removed it from an officer of a companyrt, even if he was in possession of it under a legal attachment. Reliance is placed upon the decision of the Court of Criminal Appeal in Rex. v. Thomas Knight 1 where a prisoner, the owner of the fowls, took them away from the possession of the Sheriffs officer, the companyrt held that the prisoner was number guilty of larceny. Larceny if the willful and wrongful taking away of the goods of another against his companysent and with intent to deprive him permanently of his property. There are essential differences between the companycept of larceny and that of theft one of them being that under larceny the stolen property must be the property of someone whereas under theft it must be in the possession of someone. It would be inappropriate to apply the decision relating to larceny to an offence companystituting theft or dishonest or fraudulent removal of property under the Indian Penal Code, for the ingredients of the offenses are different. In Sarsar Singh Emperor 2 , Bajpai, J., held that the mere fact that the judgment-debtor, who is entitled to remove his crops which are number validly attached, has removed them does number prove that he has done so dishonestly. There the attachment was made in derogation of the provisions of Order XXI, rule 44, Civil Procedure Code and the Court held that the attachment was illegal and, therefore, the property would number pass from the judgment-debtor to the companyrt. It further held that under such circumstances the companyrt companyld number presume that the act of removal was done dishonestly within the meaning of s. 24, I.P.C. This decision does number help the appellants, as in the present case the attachment was legal. Sen, J., in Emperor v. Ghasi 3 went to the extent of holding that the owner cutting and removing a portion of the 1 1908 25 T.L.R. 87. 2 1934 35 Cr. L.J. 1307. 3 1930 I.L.R. 52 All 214. crops under attachment in execution of a decree and in the custody of a shehna did number companystitute an offence under s. 424, I.P.C. The learned Judge observed at p. 216, If they were the owners of the crop and removed the same, their companyduct was neither dishonest number fraudulent. The learned Judge ignored the circumstance that the attachment of the crops had the legal effect of putting them in the possession of the companyrt. For the reason given by us earlier, we must hold that the case was wrongly decided. In Emperor v. Gurdial 1 Pullan, J., held that the owner by removing the attached property from the possession of the custodian and taking it into his own use, did number companymit an offence under s. 424, I.P.C. But in that case also the attachment was illegal. But there is a current of judicial opinion holding that where there was a legal attachment, a third party claiming to be the owner of the moveables attached would be guilty of an offence under s. 424 or s. 379, I.P.C., as the case may be, if lie removed them from the possession of the companyrt or its agent. Where a revenue companyrt had attached certain plots and certain persons were appointed as custodians of the crop standing on the plots and accused out and removed the crop in spite of knowledge of the promulgation of the order of attachment, the Allahabad High Court held in Dalganjan v. State 2 that the removal of the crop by the accused was dishonest and that the companyviction of the accused under s. 379, I.P.C. was proper. The learned Judges said, Since the possession passed from the accused to the custodians, the cutting of the crop by the accused in March 1951 was dishonest. In State v. Rama 3 the Rajasthan High Court held that where a person takes away the attached property from the possession of the sapurdar, to whom it is entrusted, without his companysent, and with the knowledge that the property has been attached by the order of a companyrt, he will be guilty of 1 1933 I.L.R. 55 All. 119., A.I.R. 1956 All. 630. 3 1956 I.L.R. 6 Raj. 772. companymitting theft, even though he happens to be the owner of the property. Though this was a case under s.379, I.P.C., the learned Judges companysidered the scope of the word dishonestly in s. 378, which is also one of the ingredients of the offence under s. 424, I.P.C. Wanchoo, C. J. observed at p. 775 thus There is numberdoubt that loss of property was caused to Daulatram inasmuch as he was made to lose the animals. There is also numberdoubt that Daulatram was legally entitled to keep the animals in his possession as they were entrusted to him. The only question is whether this loss was caused to Daulatram by unlawful means. It is to our mind obvious that the loss in this case was caused by un- lawful means because it can never be lawful for a person, even if he is the owner of an animal, to take it away after attachment from the person to whom it is entrusted without recourse to the companyrt under whose order the attachment has been made. These observations apply with equal force to the present case. A division bench of the Allahabad High Court in Emperor v. Kamla Pat 1 companysidered the meaning of the word dishonestly in the companytext of a theft of property from the possession of a receiver. Sulaiman, J., observed at p. 372 thus Therefore when a property has been attached under an order of a civil companyrt in execution of a decree, possession has legally passed to the companyrt. Any person who takes possession o that property subsequent to that attachment would obviously be guilty tinder section 379 of the Indian Penal Code, if he knew that the property had been attached and was therefore necessarily acting dishonestly. We need number multiply decisions, as the legal position is clear, and it may be stated as follows Where a property has been legally attached by a companyrt, the possession of the same passes from the owner to the companyrt or its agent. In that situation, the owner of the said property cannot take the law into his own hands, but can file a claim-petition to enforce his right. If he resorts to force to get back his property, 1 1926 I.L.R. 48 All. 368. he acts unlawfully and by taking the property from the legal possession of the companyrt or its agent, he is causing wrongful loss to the companyrt. As long as the attachment is subsisting, he is number entitled to the possession of the property, and by taking that property by unlawful means he is causing wrongful gain to himself. We are, therefore, of the view that the appellants in unlawfully taking away the cattle from the possession of the decree-holder, who is only a bailee of the sapurdar, have caused wrongful loss to him and therefore they are guilty of an offence under s. 424,I.P.C. The next companytention turns upon the provisions of s. 441 of the Indian Penal Code. The argument is that the appellants did number companymit trespass with intention to companymit an offence or intimidate, insult or annoy any person in possession of such property. A distinction is made between intention and knowledge. It is said that the appellants did number trespass into the house of the decree-holder with any such intention as mentioned in that section. But in this case we have numberdoubt, on the evidence, that the appellants entered the house of the decree-holder with intent to remove the attached cattle companystituting an offence under s. 424 of the Indian Penal Code. The appellants are, therefore, guilty of the offence and have been rightly companyvicted under s. 441 of the Indian Penal Code. The last companytention is that the principal object of the accused was to get back their cattle which had been illegally attached and that their subsidiary object was to use force, if obstructed, and that in the absence of a specific charge in respect of the use of force the accused should number have been companyvicted of what took place in furtherance of the subsidiary object. The relevant charge reads thus That you, on or about the same day at about the same time and place voluntarily caused such injuries on the persons of Om Prskash, Har Narain, Jhandu and Qabul, that if the injuries would have caused the death of Har Narain, you would have been guilty of murder and thereby companymitted an offence under section 307 read with section 149 P.C. and within the companynizance of the companyrt of Sessions. Though s. 149 of the Indian Penal Code is mentioned in the charge, it is number expressly stated therein that. the members of the assembly know that an offence under s. 325 of the Indian Penal Code was likely to be companymitted in prosecution of the companymon object of that assembly. Under s. 537 of the Code of Criminal Procedure, numbersentence passed by a companyrt of companypetent jurisdiction shall be reversed or altered on appeal or revision on account of any error, omission or irregularity in the charge, unless such error, omission or irregularity has in fact occasioned a failure of justice. The question, therefore, is whether the aforesaid defect in the charge has in fact occasioned a failure of justice. The accused knew from the beginning the case they had to meet. The prosecution adduced evidence to prove that the accused armed themselves with lathies and entered the premises of the decree-holder to recover their cattle and gave lathi blows to the inmates of the house causing thereby serious injuries to them. Accused had- ample opportunity to meet that case. Both the companyrts below accepted the evidence and companyvicted the accused under s. 325, read with s. 149, I.P.C. The evidence leaves numberroom to doubt that the accused had knowledge that grievous hurt was likely to be caused to the inmates of the decree-holders house in prosecution of their companymon object, namely, to recover their cattle. We are of the opinion that there is numberfailure of justice in this case and that numbercase has been made out for interference. No other point was raised before us.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 272 of 1956. Appeal from the judgment and decree dated June 28, 1954, of the former Nagpur High Court, in First Appeal No. 107 of 1946. C. Setalvad, Attorney-General for India, Purshottam Trikamdas, S. T. Khirwadkar and I. N. Shroff for the appellant. Achhru Ram, A. R. Chaubey and Naunit Lal for the respondents. 1961. February 22. The Judgment of the Court was delivered by WANCHOO, J.-This is an appeal on a certificate granted by the Nagpur High Court. The brief facts necessary for present purposes are these. One Ramchandar Jat originally owned Annas -10/8 share in Mauza Tamalawadi while the rest belonged to others. Ramchandar executed a simple mortgage deed on July 27, 1920, in favour of Seth Ram Jiwan and two. minors Ram Narain and Radhey Sham. The plaintiffs. respondents are the representatives of the mortgagees. On August 27, 1926, the defendant-appellant -purchased Annas -/5/4 share belonging to the other share holders in the village. Thereafter, the appellant brought a suit against Ramchandar who was lambardar of the village for profits, in which 9, decree was passed against Ramchandar. In execution of that decree the appellant purchased the entire Annas -/10/8 share of Ramchandar in the village about the year 1932. In companysequence, the appellant became the owner of the entire village subject to the mortgage of the respondents on Annas -/5/4 share therein. On July 27, 1932, the respondents sued Ramchandar on the basis of their mortgage-deed and a preliminary decree for sale was passed in March, 1937. To this suit the appellant was also a party. The preliminary decree was followed by a final decree and thereafter the property was put to sale and was purchased by the respondents on March 1, 1940. This sale was companyfirmed on April 12, 1940, and a sale certificate was granted to the respondents. So by the year 1940 the respondents were the owners of Annas -/5/4 share in the village while the appellant was the owner of Annas -/10/8 share. The appellant was also a lambardar. Ramchandar Jat held sir land in certain khasras with a total area of 252-49 acres. On the sale of Ramchandars share to the appellant, Ramchandar became an ex-proprietary tenant of his sir land. Thereafter Ramchandar was ejected from his exproprietary tenancy sometime in 1936 and the lands came into possession of the appellant. There were certain other lands which were numberinally recorded as Muafi Khairati in the name of Ramchandars mother but were actually in the possession of Ramchandar. It appears that Ramchandar was ejected from these lands also and they came into, the possession of the appellant. Further the appellant as a lambardar came into possession of certain other lands by surrender or otherwise. The respondents filed a suit for partition before the Sub- Divisional Officer, Hard, in 1942. In that suit they claimed half share in the lands of Ramchandar and his mother which came into. the possession of the appellant. They also claimed a share in other lands which came into-the possession of the appellant as lambardar. Their case was that these lands were accession to the mortgage in their favour and they were - therefore entitled to a proper share in them. This claim was resisted by the appellant before the Sub-Divisional Officer. On October 20, 1943, the Sub-Divisional Officer passed an order which in effect rejected the companytention of the respondents and accepted the plea of the appellant. Thereupon the respondents filed the present suit for a declaration in the civil companyrt in 1944 claiming that they were entitled to a proportionate share in the lands specified in the plaint. The suit was resisted by the appellant and his companytention was that the respondents had purchased specific khudkashat and chhotaghas plots and that they therefore companyld number be allowed anything more than what was mentioned in the decree and the sale certificate which were the basis of their title. As the specific lands with respect to which the respondents claimed a declaration in this suit were number mentioned in the sale certificate, they were number entitled to any share in them. A large number of issues were framed by the trial companyrt, which decreed a part of the claim put forward by the respondents but dismissed the rest. Consequently, the respondents went up in appeal to the High Court. The appeal was allowed so far as the respondents claim to one-half share in the sir plots held by Ramchandar was companycerned. Further, they were allowed one-third share in the lands held by the mother of Ramchandar and also in certain other lands which came into the possession of the appellant as lambardar subject to payment of certain amounts. This was followed by an application by the appellant for leave to appeal to this Court and a certificate was granted by the High Court. That is how the matter has companye up before us. The main companytention of the appellant before us is that the mortgage deed of 1920 -which is the basis of the title of the respondents did number include the sir plots in the possession of, Ramchandar number the plots of Ramchandars mother. Nor were these plots included in the suit which was brought by the respondents on the basis of the mortgage- deed. Further, the sale certificate also did number include these plots, though some other plots were mentioned therein. Therefore, the respondents were number entitled to these plots as accession to the mortgage. This brings us to a companysideration of the mortgage in favour of the respondents. The mortgage was without possession and the property mortgaged was mentioned in these terms I do hereby mortgage without possession half share -/5/4, five annas and four pies, area 678.31 acres, jama-sarkar Rs. 326/10/8 together with khudkashat, chhotaghas, big shrubs, abadi, gair abadi, cultivated and that lying vacant, and the rights and privileges appertaining to water, forests, chahat, gardens, and right of cultivation, malguzari and trees of every kind whether giving fruits or numberfruits and prohibited and unprohibited wood with entire rights and prvileges appertaining to the village. It will be seen that what was mortgaged was the entire half share of Ramchandar in -/10/8 share which he owned in the village. It is true that the mortgage goes on to describe certain other things but that in our opinion is merely by way of precaution, for even if the part underlined was number there in the mortgage, the respondents being the mortgagees of -/5/4 share would be entitled to everything companytained in that share. The underlined part of the mortgage therefore does number cut down the amplitude of the mortgage with respect to the entire -/5/4 share out of -/10/8 share of Ramchandar. It is true that sir is number specifically mentioned in the mortgage but as the mortgage was of the entire -/5/4 share out of -/10/8 share it will include unless there is a specific exclusion of sir the area of sir also pertaining to the share mortgaged. In this companynection our attention was drawn to as. 68 and 69 of the Central Provinces Land Revenue Act, No. 11 of 1917, which was in force at the relevant time. Section 68 deals with sir land and s. 69 wit khudkashat. Sir is defined in s. 2 17 and khudkashat is defined in s. 2 5 as that part of the home-farm of a mahal which is cultivated by the -proprietor as such and which is number sir land. Thus though sir land may be a part of the home-farm it is a different entity Here printed in italics. from khudkashat land. Reference was also made to ss. 49 and 50 of the Central Provinces Tenancy Act, No. 1 of 1920 hereinafter called the Tenancy Act which deal with transfer of sir land. Under s. 49 1 a proprietor who temporarily or permanently loses whether under a decree or order of a civil companyrt or by transfer or otherwise his right to occupy any portion of his sir land as a proprietor shall at the date of such loss, become an occupancy. tenant except where he has obtained a sanction under s. 50 of the Tenancy Act. Further under s. 49 2 there is a prohibition on the registration of documents which purport to transfer all the rights of a proprietor in big sir land without reservation of the right of tenancy specified in sub-s. 1 . It is urged for the appellant that the reason why sir land was number mentioned in the mortgage deed of 1920 was that otherwise sanction of the Revenue Officer would have been required under s. 50 of the Tenancy Act. Now s. 50 provides that if a proprietor desires to transfer the proprietary rights in any part of his sir without reservation of a right of occupancy specified in s. 49 1 he may apply to the Revenue Officer and if such Revenue Officer is satisfied that the transferor is number wholly or mainly an agriculturist or that the property is self-acquired or has been -acquired within the twenty years last preceding, he shall sanction the transfer. Sections 49 and 50 in our opinion only companye into play when the proprietor making a transfer loses his right to occupy any portion of his sir land temporarily or permanently and sanction has to be obtained under s. 50 only where the transfer is to be made without reservation of the right of occupancy. But the mortgage in this case is a simple mortgage and there was numbertransfer of possession under it. Therefore the proprietor Ramchandar never lost his right to occupy his sir land by this mortgage and there was therefore numbernecessity for him to make any reservation in that respect or to apply for sanction under s. 50, for he was number losing the right to occupy his sir at all. But that does number mean that when he mortgaged his entire share of -/5/4 out of -/10/8 share,, he was excluding from the mortgage the area of sir companyresponding to the share mortgaged. As the mortgage deed of 1920 stands, it is a mortgage of all the proprietary rights in -/5/4 share including the proprietary right in the sir pertaining to that share but as the proprietor was number losing his right to occupy the sir land, the mortgage being without possession, it was number necessary for him to make any application under s. 50 of the Tenancy Act. We are therefore of opinion that the appellant cannot take advantage in the circumstances of the fact that numberapplication was made under s. 50 of the Tenancy Act and therefore there was numbereffect of this mortgage on the sir rights. As we read the mortagage it clearly affected the sir Tight also pertaining to -/5/4 share and it was number necessary to make an application under s. 50 of the Tenancy Act, for the mortgagor was number losing possession of his sir and there would be numberquestion of any ex-proprietary tenancy arising in his favour, to relinquish which he would have to apply under s. 50. Turning number to the plaint in the mortgage suit we find that the property subject to the mortgage is mentioned in para. 2 thereof inexactly the same terms as in the mortgage deed. In para. 13 it is again recited that the mortgagor mortgaged -/5/4 share out of his -/10/8 share. Paragraph 13 then goes on to say that on the date of the mortgage, the mortgagor had certain khudkashat and chhotaghas lands and both cultivating and proprietary rights in them pertaining to half share only were liable to be sold. No mention was made of sir in this paragraph. But that in our opinion was number necessary, for the mortgage included the mortgage of sir land also pertaining to -/5/4 share though without possession. The prayer in the suit was for sale of the mortgaged property together with khudkashat, etc. but this again was a mere matter of precaution, for in any case the entire proprietary right in sir, khudkashat, etc., relating to -/5/4 share would be sold on a decree following on the mortgage. Then companying to the sale certificate we find that it certifies that the respondents had purchased -/5/4 share in the village with abadi, khudkashat, chhotaghas and all rights pertaining to the share. It is true that khudkashat and chhotaghas are specifically mentioned in the sale certificate but the words all rights pertaining to the share appearing in the sale certificate would include such proprietary rights in the sir land as belonged to the share mentioned in the sale certificate. We are, therefore, of opinion. that so far as sir land is companycerned, the proprietary right in it pertaining to -/5/4 share was mortgaged and the respondents by their sale certificate got a right in the sir land also. Now what happened after the mortgage deed in favour of the respondents was that the appellant purchased the entire -/10/8 share of Ramchandar subject to the mortgage of the respondents in 1932. At that time Ramchandar became an ex- proprietary tenant of his entire sir relating to this share under s. 49 of the Tenancy Act. In 1936 Ramchandar was ejected from the ex-proprietary tenancy which came in the possession of the appellant as lambardar and has apparently since then remained in his possession. The case of the respondents is that in 1936 their mortgage was subsisting and the sir land which thus came into the possession of the appellant on the extinction of the ex-proprietary tenancy became an accession to the mortgage and, therefore, they as mortgagees were entitled to half share in the lands which thus came into the possession of the appellant. We have already pointed out that the mortgage companyered the sir plots also so for as the proprietary rights in them were companycerned. Therefore, when Ramchandars ex-proprietary rights came to an end and the land came into the possession of the appellant and became khudkashat, the mortgage would companyer this khudkashat land to the extent of the mortgagees share therein. It is, true that if Ramchandars ex- proprietary tenancy had companytinued, the mortgagee would have numberright to ask for half share in it but when the ex- proprietary tenancy was extinguished and this land came in the possession of the lambardar mortgagor it, was an accession to the mortgage under s. 70 of the Transfer,of Property Act and the mortgagees companyld claim a share in it., It was however urged that accession to be available to the mortgage must be a legal accession. We however see numberillegality in the accession which took place. There is also numberdoubt that the accession took place when the mortgage was still subsisting. Therefore, we agree with the High Court that on the ex-proprietary tenancy being extinguished, the sir land which Would otherwise-have remained in the exclusive possession of Ramchandar as an ex-proprietary tenant became an accession to the mortgaged property and the respondents would be entitled to half of it on their purchasing the /5/4 share in execution of the decree on the mortgage. The fact that the rent of an ex-proprietary tenant is due to the person whose ex-proprietary tenant he becomes by virtue of the sale or mortgage with possession would make numberdifference after ex-proprietary tenancy is extinguished, for on such extinction the land would go to the entire proprietary body and would thus in this case be an accession to the mortgage to the extent of the share mortgaged. This brings us to the lands in the name of Ramchandars mother. It appears that these lands came into the possession of Ramchandar after the mortgage but before the institution of the mortgage suit. They were numberinally recorded in the name of his mother and in 1932 after his entire share was purchased by the appellant lie was recorded as an occupancy tenant of these lands. Later the appellant came into possession of them apparently as a lambardar. It is number clear when and how the appellant got possession of them. There can be numberdoubt however that his possession was for the entire body of proprietors and the respondents would be entitled to a share in them. But it was urged that the claim of the respondents to these lands was barred by 0. 11, r. 2 of the Code of Civil Procedure, because they were number specified in the plaint based on the mortgage deed of 1920. Reliance in this companynection is placed on Hazarilal v. Hazarimal 1 and Seth Manakchand v. Chaube Manoharlal 2 . These cases in our opinion do number apply, because they are cases of foreclosure while in A. I. R. 1923 Nag. 130, A.I.R. 1944 P.C 46, the present case the respondents suit was for sale of the share mortgaged with them. Further in the plaint, when specifying the khudkashat plots it wag made clear that they were khudkashat on the date of the mortgage the respondents thus did number specify the khudkashat plots on the date of the plaint. Though they had specified some plots in the plaint which were mentioned in the sale certificate also, the suit -as for the sale of the entire /5/4 share and that would include khudkashat lands pertaining to the share existing at the time when the suit was filed. It is number necessary in a suit for sale to specify the lands in the possession of the mortgagor specifically and they would pass on sale along with the share sold. The claim, therefore, would number be barred under 0. 11, r. 2, on the ground that these plots entered in the name of the mother of Ramchandar were number specifically mentioned in the plaint. This leaves certain lands which came into the possession of the appellant as a lambardar in the ordinary companyrse of management. The respondents would clearly be entitled to a share in these lands also on payment of proportionate expenses incurred by the appellant in the companyrse of suits in which he came into possession. This is what the High Court has ordered and we see numberreason to disagree with that view.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petitions Nos. 66 and 67 of 1956, 8 of 1960, 77 of 1957, 15 of 1957 and 5 of 1958. Writ Petitions under Article 32 of the Constitution of India for the enforcement of Fundamental Rights. Naunit Lal, for the petitioner in W. Ps. Nos. 66 and 67 of 1956. P. Lal, for respondent No. 1 in W. Ps. Nos. 66 and 67 of 1956. Bhawani Lal and P. C. Agarwal, for respondents Nos. 3a and 4 in W. Ps. Nos. 66 and 67 of 1956. B. Agarwala and K. P. Gupta, for the petitioner in W. No. 8 of 1960. Veda Vayasa and C. P. Lal, for respondent in W. P. No. 8 of 1960. Pritam Singh Safeer, for the petitioner in W. P. No. 77 of 1957. M. Sikri, Advocate-General, Punjab, N. S. Bindra and D. Gupta, for respondent No. 1 in W. P. No. 77 of 1957. Govind Saran Singh, for respondent. No. 2 in W. P. No. 77 of 1957. N. Sinha and Raghunath, for petitioner in W. P. No. 15 of 1957. K. Daphtary, Solicitor-General for India, N. S Bindra and R. H. Dhebar, for respondent in W.P. No 15 of 1957. R. L. lyengar, for the petitioner in W. P. No. 5 of 1958. K. Daphtary, Solicitor-General for India, R. Gana- Dar pathy Iyer and R. H. Dhebar, for the respondent in W. P. No. 5 of 1958. 1961. March 27. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-These six writ petitions filed Gaje, under Art. 32 of the Constitution have been placed before the Court for final disposal in a group because though they arise between separate parties and are unconnected with each other a companymon question of law arises in all of them. The opponents in all these petitions have raised a preliminary objection against the maintainability of the writ petitions on the ground that in each case the petitioners had moved the High Court for a similar writ under Art. 226 and the High Court has rejected the said petitions. The argument is that the dismissal of a writ petition filed by a party for obtaining an appropriate writ creates a bar of res judicata against a similar petition filed in this Court under Art. 32 on the same or similar facts and praying for the same or similar writ. The question as to whether such a bar of res judicata can be pleaded against a petition filed in this Court under Art. 32 has been adverted to in some of the reported decisions of this Court but it has number so far been fully companysidered or finally decided and that is the preliminary question for the decision of which the six writ petitions have been placed together for disposal in a group. In dealing with this group we will set out the facts which give rise to Writ Petition No. 66 of 1956 and decide the general point raised for our decision. Our decision in this writ petition will govern the other writ petitions as well. Petition No. 66 of 1956 alleges that for the last fifty years the petitioners and their ancestors have been the tenants of the land described in Annexure A attached to the petition and that respondents 3 to 5 are the proprietors of the said land. Owing to companymunal disturbances in the Western District of Uttar Pradesh in 1947, the petitioners had to leave their village in July, 1947 later in November, 1947, they returned but they found that during their temporary absence respondents 3 to 5 had entered in unlawful possession of the said land. Since the said respondents refused to deliver possession of the land to the petitioners the petitioners had to file suits for ejectment under s. 180 of the U. P. Tenancy Act, 1939. These suits were filed in June, 1948. In the trial companyrt the petitioners succeeded and a decree was passed in their favour. The said decree. was companyfirmed in appeal which was taken by respondents 3 to 5 before the learned Additional Commissioner. In pursuance of the appellate decree the petitioners obtained possession of the land through Court. Respondents 3 to 5 then preferred a second appeal before the Board of Revenue under s. 267 of the U. P. Tenancy Act, 1939. On March 29, 1954, the Board allowed the appeal preferred by respondents 3 to 5 and dismissed the petitioners suit with respect to the land described in Annexure A, whereas the said respondents appeal with regard to other lands were dismissed. The decision of the Board was based on the ground that by virtue of the U. P. Zamindary Abolition and Land Reforms Amendment Act XVI of 1953 respondents 3 to 5 had become entitled to the possession of the land. Aggrieved by this decision the petitioners moved the High Court at Allahabad under Art. 226 of the Constitution for the issue of a writ of certiorari to quash the said judgment. Before the said petition was filed a Full Bench of the Allahabad High Court had already interpreted s. 20 of the U. P. Land Reforms Act as amended by Act XVI of 1953. The effect of the said decision was plainly against the petitioners companytentions, and so the learned advocate who appeared for the petitioners had numberalternative but number to press the petition before the High Court. In companysequence the said petition was dismissed on March 29, 1955. It appears that s. 20 has again been amended by s. 4 of Act XX of 1954. It is under these circumstances that the petitioners have filed the present petition under Art. 32 on March 14, 1956. It is plain that at the time when the present petition has been filed the period of limitation prescribed for an appeal under Art. 136 against the dismissal of the petitioners petition before the- Allahabad High Court had already expired. It is also clear that the grounds of attack against the decision of the Board which the petitioners seek to raise by their present petition are exactly the same as the grounds which they had raised before the Allahabad High Court and so it is urged by the respondents that the present petition is barred by res judicata. Mr. Agarwala who addressed the principal arguments on behalf of the petitioners in this group companytends that the principle of res judicata which is numbermore than a technical rule similar to the rule of estoppel cannot be pleaded against a petition which seeks to enforce the fundamental rights guaranteed by the Constitution. He argues that the right to move the Supreme Court for the enforcement of the fundamental rights which is guaranteed by Art. 32 1 is itself a fundamental right and it would be singularly inappropriate to whittle down the said fundamental right by putting it in the straight jacket of the technical rule of res judicata. On the other hand it is urged by the learned Advocate-General of Punjab, who led the respondents, that Art. 32 1 does number guarantee to every citizen the right to make a petition under the said article but it merely gives him the right to move this Court by appropriate proceedings, and he companytends that the appropriate proceedings in cases like the present would be proceedings by way of an application for special leave under Art. 136 or by way of appeal under the appropriate article of the Con- stitution. It is also suggested that the right to move which is guaranteed by Art. 32 1 does number impose on this Court an obligation to grant the relief, because as in the case of Art. 226 so in the case of Art. 32 also the granting of leave is discretionary. In support of the argument that it is in the discretion of this Court to grant an appropriate relief or refuse to do so reliance has been placed on the observations made in two reported decisions of this Court. In Laxmanappa Hanumantappa Jamkhandi v. The Union of India Another 1 , this Court held that as there is a special provision in Art. 265 of the Constitution that numbertax shall be levied or companylected except by authority of law, cl. 1 of Art. 31 must be regarded as companycerned with deprivation of property otherwise than by imposition or companylection of tax and as the right companyferred by Art. 265 is number a fundamental right company- ferred by Part III of the Constitution, it cannot be enforced under Art. 32. In other words, the decision was that the petition filed before this Court under Art. 32 was number maintainable but Mahajan, C.J, Who spoke for the Court, proceeded to observer that even otherwise in the peculiar circumstances that have arisen it would number be just and proper to direct the issue of any of the writs the issue of which is discretionary with this Court. The learned Chief Justice has also added that when this position was put to Mr. Sen he fairly and rightly companyceded that it was number possible for him to companybat this position. To the same effect are the observations made by the same learned Chief Justice in Dewan Bahadur Seth Gopal Das Mohta v. The Union of India Another 2 . It will, however, be numbericed that the observations made in both the cases are obiter, and, with respect, it would be difficult to treat them as a decision on the question that the issue of an appropriate writ tinder Art. 32 is a matter of discretion, and that even if the petitioner proves his fundamental rights and their unconstitutional infringement this Court nevertheless can refused. to issue an appropriate writ in his favour Besides, the subsequent decision of this Court in Basheshar Nath v. The Commissioner of Income-tax, Delhi and, Rajasthan 3 tender to show that if a petitioner makes out a case of illegal companytravention of his fundamental rights he may be entitled to claim an appropriate relief and a plea of waiver cannot be raised against his claim. It is true that the question of res judicata did number fall to be companysidered in that case but the tenor of all the judgments, which numberdoubt disclose a 1 1955 1 S.C.R. 760, 772, 773- 2 1955 1 S.C.R. 773, 776. 3 1959 SUPP. 1 S.C.R. 528 difference in approach, seems to emphasise the basic importance of the fundamental rights guaranteed by, the Constitution and the effect of the decision appears to be that the citizens are ordinarily entitled to appropriate relief under Art. 32 once it is shown that their fundamental rights have been illegally or unconstitutionally violated. Therefore, we are number impressed by the argument that we should deal with the question of the applicability of the rule of res judicata to a petition under Art. 32 on the basis that like Art. 226 Art. 32 itself gives merely a discretionary power to the Court to grant an appropriate relief. The argument that Art. 32 does number companyfer upon a citizen the right to move this Court by an original petition but merely gives him the right to move this Court by an appropriate proceeding according to the nature of the case seems to us to be unsound. It is urged that in a case where the petitioner has moved the High Court by a writ petition under Art. 226 all that he is entitled to do under Art. 32 1 is to move this Court by an application for special leave under Art. 136 that, it is companytended, is the effect of the expression appropriate proceedings used in Art. 32 1 . In our opinion, on a fair companystruction of Art. 32 1 the expression appropriate proceedings has reference, to proceedings which may be appropriate having regard to the nature of the order, direction or writ which the petitioner seeks to obtain from this Court. The appropriateness of the proceedings would depend upon the particular writ or order which he claims and it is in that sense that the right has been companyferred on the citizen to move this Court by appropriate proceedings. That is why we must proceed to deal with the question of res judicata on the basis that a fundamental right has been guaranteed to the citizen to move this Court by an original petition wherever his grievance is that his fundamental rights have been illegally companytravened. There can be numberdoubt that the fundamental right guaranteed by Art. 32 1 is a very important safeguard for the protection of the fundamental rights of the citizen, and as a result of the said guarantee this Court has been entrusted with the solemn task of upholding the fundamental rights of the citizens of this companyntry. The fundamental rights are intended number only to protect individuals rights but they are based on high public policy. Liberty of the individual and the protection of his fundamental rights are the very essence of the democratic way of life adopted by the Constitution, and it is the privilege and the duty of this Court to uphold those rights. This Court would naturally refuse to circumscribe them or to curtail them except as provided by the Constitution itself. It is because of this aspect of the matter that in Romesh Thappar v. The State of Madras 1 , in the very first year after the Constitution came into force, this Court rejected a preliminary objection raised against the companypetence of a petition filed under Art. 32 on the ground that as a matter of orderly procedure the petitioner should first have resorted to the High Court under Art. 226, and observed that this Court in thus companystituted the protector and guarantor of the fundamental rights, and it cannot, companysistently with the responsibility so laid upon it, refuse to entertain applications seeking protection against infringements of Ruch rights. Thus the right given to the citizen to move this Court by a petition under Art. 32 and claim an appropriate writ against the unconstitutional infringement of his fundamental rights itself is a matter of fundamental right, and in dealing with the objection based on the application of the rule of res judicata this aspect of the matter had numberdoubt to be borne in mind. But, is the rule of res judicata merely a technical rule or is it based on high public policy? If the rule of res judicata itself embodies a principle of public policy which in turn is an essential part of the rule of law then the objection that the rule cannot be invoked where fundamental rights are in question may lose much of its validity. Now, the rule of res judicata as indicated in s. 11 of the Code of Civil Procedure has numberdoubt, some technical aspects, for instance the rule of companystructive res judicata may be said to be technical but the basis on which the said rule rests is 1 1950 S.C.R. 594. founded on companysiderations of public policy. It is in the interest of the public at large that a finality should attach to the binding decisions pronounced by Courts of companypetent jurisdiction, and it is also in the public interest that individuals should number be vexed twice over with the same kind of litigation. If these two principles form the foundation of the general rule of res judicata they cannot be treated as irrelevant or inadmissible even in dealing with fundamental rights in petitions filed under Art. 32. In companysidering the essential elements of res judicata one inevitably harks back to the judgment of Sir William de Grey, afterwards Lord Walsingham in the leading Duchess of King8tons case 1 . Said Sir William de Grey, afterwards Lord Walsingham from the variety of cases relative to judgments being given in evidence in civil suits, these two deductions seem to follow as generally true First, that the judgment of a companyrt of companycurrent jurisdiction, directly upon the point, is as a plea, a bar, or as evidence, companyclusive between the same parties, upon the same matter, directly in question in another companyrt Secondly, that the judgment of a companyrt of exclusive jurisdiction, directly upon the point, is in like manner companyclusive upon the same matter, between the same parties, companying incidentally in question in another companyrt for a different purpose. As has been observed by Halsbury, the doctrine of res judicata is number a technical doctrine applicable only to records it is a fundamental doctrine of all companyrts that there must be an end of litigation 2 . Halsbury also adds that the doctrine applies equally in all companyrts, and it is immaterial in what companyrt the former proceeding was taken, provided only that it was a companyrt of companypetent jurisdiction, or what form the proceeding took, provided it was really for the same cause p. 187, paragraph 362 . Res judicata, it is observed in Corpus Juris, is a rule of universal law pervading every well regulated system of jurisprudence, and is put upon two grounds embodied in various maxims of the companymon law the one, 1 2 Smith Lead. Cas. 13th Ed., pp. 644, 645. Halsburys Laws of England, 3rd, Ed., Vol. 15, para. 357, P. 185. public policy and necessity, which makes it to the, interest of the State that there should be an end to s litigation interest republican ut sit finis litium the other, the hardship on the individual that he should be vexed twice for the same cause-nemo debet bis vexari pro eadem causa 1 . In this sense the recognised basis of the rule of res judicata is different from that of technical estoppel. Estoppel rests on equity able principles and res judicata rests on maxims which are taken from the Roman Law 2 . Therefore, the argument that res judicata is a technical rule and as such is irrelevant in dealing with petitions under Art. 32 cannot be accepted. The same question can be companysidered from another point of view. If a judgment has been pronounced by a companyrt of companypetent jurisdiction it is binding between the parties unless it is reversed or modified by appeal, revision or other procedure prescribed by law. Therefore, if a judgment has been pronounced by the High Court in a writ petition filed by a party rejecting his prayer for the issue of an appropriate writ on the ground either that he had numberfundamental right as pleaded by him or there has been numbercontravention of the right proved or that the companytravention is justified by the Constitution itself, it must remain binding between the parties unless it is attacked by adopting the procedure prescribed by the Constitution itself. The binding character of judgments pronounced by companyrts of companypetent jurisdiction is itself an essential part of the rule of law, and the rule of law obviously is the basis of the administration of justice on which the Constitution lays so much emphasis. As Halsbury has observ- ed subject to appeal and to being amended or set aside a judgment is companyclusive as between the parties and their privies, and is companyclusive evidence against all the world of its existence, date and legal companysequences 3 . Similar is the statement of the law in Corpus Juris the doctrine of estoppel by judgment does number rest on any superior authority of the companyrt rendering the judgment, and a judgment of one companyrt is a bar to an Corpus juris, VOl. 34, P 743- 2 Ibid. P. 745- Halsburys Laws of England, 3rd Ed., VOl. 22, P- 780, paragraph 1660. action between the same parties for the same cause in the same companyrt or in another companyrt, whether the latter has companycurrent or other jurisdiction. This rule is subject to the Limitation that the judgment in the former action must have been rendered by a companyrt or tribunal of companypetent jurisdiction 1 . It is, however essential that there should have been a judicial determination of rights in companytroversy with a final decision thereon In other words, an original petition for a writ under Art. 32 cannot take the place of an appeal against the order passed by the High Court in the petition filed before it under Art. 226. There can be little doubt that the jurisdiction of this Court to entertain applications under Art. 32 which are original cannot be companyfused or mistaken or used for the appellate jurisdiction of this Court which alone can be invoked for companyrecting errors in the decisions of High Courts pronounced in writ petitions under Art. 226. Thus, on general companysiderations of public policy there seems to be numberreason why the rule of res judicata should be treated as inadmissible or irrelevant in dealing with petitions filed under Art,. 32 of the Constitution. It is true that the general rule can be invoked only in cases where a dispute between the parties has been referred to a companyrt of companypetent jurisdiction, there has been a companytest between the parties before the companyrt, a fair opportunity has been given to both of them to prove their case, and at the end the companyrt has pronounced its judgment or decision. Such a decision pronounced by a companyrt of companypetent jurisdiction is binding between the parties unless it is modified or reversed by adopting a procedure prescribed by the Constitution. In our opinion, therefore, the plea that the general rule of res judicata should number be allowed to be invoked cannot be sustained. This Court had occasion to companysider the application of the rule of res judicata to a petition filed under Art. 32 in Pandit M. S. M. Sharma v. Dr. Shree Krishna Sinha 3 . In that case the petitioner had moved this Corpus juris Secundum, VOI. 50 judgments , p. 603. Ibid. p. 608. 3 1961 1 S.C.R. 96. Court under Art. 32 and claimed an appropriate writ against the Chairman and the Members of the Committee of Privileges of the State Legislative Assembly. The said petition was dismissed. Subsequently he filed another petition substantially for the same relief and substantially on the same allegations. One of the points which then arose for the decision of this Court was- whether the second petition was companypetent, and this Court held that it was number because of the rule of res judicata. It is true that the earlier decision on which res judicata was pleaded was a decision of this Court in a petition filed under Art. 32 and in that sense the background of the dispute, was different, because the judgment on which the plea was based was a judgment of this Court and number of any High Court. Even so, this decision affords assistance in determining the point before us. In upholding the plea of res judicata this Court observed that the question determined by the previous decision of this Court cannot be reopened in the present case and must govern the rights and obligations of the parties which are substantially the same. In support of this decision Sinha, C. J., who spoke for the Court, referred to the earlier decision of this Court in Raj Lakshmi Dasi v. Banamali Sen 1 and observed that the principle underlying res judicata is applicable in respect of a question which hag been raised and decided after full companytest, even though the first Tribunal which decided the matter may have numberjurisdiction to try the subsequent suit and even though the subject-matter of the dispute was number exactly the same in the two proceedings. We may add incidentally that the Court which tried the earlier proceedings in the case of Raj Lakshmi Dasi 1 was a Court of exclusive jurisdiction. Thus this decision establishes the principle that the rule of res judicata can be invoked even against a petition filed under Art. 32. We may at this stage refer to some of the earlier decisions of this Court where the presedt problem was posed but number finally or definitely answered. In Janardan Reddy v. The State of Hyderabad 2 , it 1 1953 S.C.R. 154 2 1951 S.C.R. 344, 370- appeared that against the decision of the High Court a petition for specialleave had been filed but the, same had been, rejectedand this was followed by petitions under Art. 32.These petitions were in fact entertained though on the merits they were dismissed, and in doing so it was observed by Fazl Ali, J., who delivered the judgment of the Court, that it may, however, be observed that in this case we have number companysidered it necessary to decide whether an application under Art. 32 is maintainable after a similar application under Art. 226 is dismissed by the High Court, and we reserve our opinion on that question. To the same effect are the observations made by Mukherjea, J., as he then was, in Syed Qasim Razvi v. The State of Hyderabad 1 . On the other hand, in Bhagubhai Dullabhabhai Bhandari v. The District Magistrate, Thana 2 the decision of the High Court was treated as binding between the parties when it was observed by reference to the said proceedings that but that is a closed chapter so far as the Courts including this Court also are companycerned inasmuch as the petitioners companyviction stands companyfirmed as a result of the refusal of this Court to grant him special leave to appeal from the judgment of the Bombay High Court. In other words, these observations seem to suggest that the majority view was that if an order of companyviction and sentence passed by the High Court would be binding on the companyvicted person and cannot be assailed subsequently by him in a proceeding taken under Art. 32 when it appeared that this Court had refused special leave to the said companyvicted person to appeal against the said order of companyviction. The next question to companysider is whether it makes any difference to the application of this rule that the decision on which the plea of res judicata is raised is a decision number of this Court but of a High Court exercising its jurisdiction under Art. 226. The argument is that one of the essential requirements of s. 11 of the Code of Civil, Procedure is that the Court which tries the first suit or proceeding should be companypetent 1 1953 S.C.R. 589- 2 1956 S.C.R. 533. to try the second suit or proceeding, and since the High Court cannot, entertain an application under Art. 32 its decision cannot be treated as res judicata for the purpose of such a petition. It is doubtful if the technical requirement prescribed by s. 11 as to the Competence of the first Court to try the subsequent suit is an essential part of the general rule of res judicata but assuming that it is, in substance even the said test is satisfied because the jurisdiction of the High Court in dealing with a writ petition filed under Art,. 226 is substantially the same as the jurisdiction of this Court in entertaining an application tinder Art. 32. The scope of the writs, orders or directions which the High Court can issue in appropriate cases under Art. 226 is companycurrent with the scope of similar writs, orders or directions which may be issued by this Court under Art. 32. The cause of action for the two applications would be the same. It is the assertion of the existence of a fundamental right and its illegal companytravention in both cases and the relief claimed in both the cases is also of the same character. Article 226 companyfers jurisdiction oil the High Court to entertain a suitable writ petition, whereas Art. 32 provides for moving this Court for a similar writ petition for the same purpose. Therefore, the argument that a petition under Art. 32 cannot be entertained by a High Court under Art. 226 is without any substance and so the plea that the judgment of the High Court cannot be treated as res judicata on the ground that it cannot entertain a petition under Art. 32 must be rejected. It is, however, necessary to add that in exercising its jurisdiction under Art. 226 the High Court may sometimes refuse to issue an appropriate writ or order on the ground that the party applying for the writ is guilty of laches and in that sense the issue of a high prerogative writ may reasonably be treated as a matter of discretion. On the other hand, the right granted to a citizen to move this Court by appropriate proceedings under Art. 32 1 being itself a fundamental right this Court ordinarily may have to issue an appropriate writ or order provided it is shown that the petitioner has a fundamental right which has been illegally or unconstitutionally companytravened. It is number unlikely that if a petition is filed even under Art. 32 after a long lapse of time, companysiderations ma arise whether rights in favour of third parties which may, have arisen in the meanwhile companyld be allowed to be affected, and in such a case the effect of laches on the, part of the petitioner or of his acquirence may have to be companysidered but, ordinarily if a petitioner makes out a case for the issue of an appropriate writ or order he, would. be entitled to have such a writ or, order under Art. 32 and that may be said to companystitute a difference in the right companyferred on a citizen to move the High Court under Art. 226 as distinct from the right companyferred on him to move this Court. This difference must inevitably mean that if -the High, Court has refused to exercise its discretion on the ground of laches or on the ground that the party has an efficacious alternative remedy available to him then of companyrse the decision of the High Court cannot generally be pleaded in support of the bar of res judicata. if, however, the matter has been companysidered on the merits and the High Court has dismissed the petition for a writ on the ground that numberfundamental right is proved or its breach is either number established or is shown to be companystitutionally justified there is numberreason why the said decision should number be treated as a bar against the companypetence of a subsequent petition filed by the same party on the same facts and for the same reliefs under Art. 32. In this companynection reliance has been placed on the fact that in England habeas companypus petitions can be filed one after the other and the dismissal of one habeas companypus petition is never held to preclude the making of a subsequent petition, for the same reason. In our opinion, there is numberanalogy between the petition for habeas companypus and petitions filed either under Art. 226 or under Art. 32. For historical reasons the writ for habeas companypus is treated as standing in -a category by itself but, even with regard to a habeas companypus petition it has number been- held in England in Re, Hastings No. 2 1 that an applicant for a writ 1 1958 3 All E.R. Q.B.D. 625. of habeas companypus in a criminal matter who has once been heard by a Divisional Court of the Queens Bench Division is number entitled to be heard a second time by another Divisional Court in the same Division, since a decision of a Divisional Court of the Queens Bench Division is equivalent to the decision of all the judges of the Division, just as the decision of one of the old companymon law companyrts sitting in bank was the equivalent of the decision of all the judges of that Court. Lord Parker, C. J., who delivered the judgment of the Court, has elaborately examined the historical genesis of the writ, several dicta pronounced by different judges in dealing with successive writ petitions, and has companycluded that the authorities cannot be said to support the principle that except in vacation an applicant companyld go from judge to judge as opposed to going from companyrt to companyrt p. 633 , so that even in regard to a habeas companypus petition it is number settled in England that an applicant cannot move one Divisional Court of the Queens Bench Division after ano- ther. The-said decision has been subsequently applied in Re Hastings No. 3 1 to a writ petition filed for habeas companypus in a, Divisional Court of tile Chancery Division. In England, technically an order passed on a petition for habeas companypus is number regarded as a judgment and that places the petitions for habeas companypus in a class by themselves. Therefore we do number think that the English analogy of several habeas companypus applications can assist the petitioners in the present case when they seek to resist the application of res judicata to petitions filed under Art. Before we part with the topic we would, however, like to add that we propose to express numberopinion on the question as to whether repeated applications for habeas companypus would be companypetent under our Constitution. That is a matter with which we are number companycerned in the present proceedings. There is one more argument Which still remains to be companysidered. It is urged that the remedies available to the petitioners to move the High Court under Art. 226 and this Court under Art. 32 are 1 1959 1 AR E.R. Ch.D. 698. alternate remedies and so the adoption of one remedy cannot bar the adoption of the other. These remedies are number exclusive but are cumulative and so numberbar of res judicata can be pleaded when a party who has filed a petition under Art. 226 seeks to invoke the jurisdiction of this Court under Art. 32. In support of this companytention reliance has been placed on the decision of the Calcutta High Court in Mussammat Gulab Koer v. Badshah Bahadur 1 . In that case a party who had unsuccessfully sought for the review of a companysent order on the ground of fraud brought a suit for a similar relief and was met by a plea of res judicata. This plea was rejected by the Court on the ground that the two remedies though companyexisting were number inconsistent so that when a party aggrieved has had recourse first to one remedy it cannot be precluded from subsequently taking recourse to the other. In fact the judgment shows that the Court took the view that an application for review was in the circumstances ail inappropriate remedy and that the only remedy available to the party was that of a suit. In dealing with the question of res judicata the Court examined the special features and companyditions attaching to the appli- cation for review, the provisions with regard to the finality of the orders passed in such review proceedings and the limited nature of the right to appeal provided against such orders. In the result the Court held that the two remedies cannot be regarded as parallel and equally efficacious and so numberquestion of election of remedies arose in those cases. We do number think that this decision can be read as laying down a general proposition of law that even in regard to alternate remedies if a party takes recourse to one remedy and a companytest arising therefrom is tried by a companyrt of companypetent jurisdiction and all points of company- troversy are settled the intervention of the decision of the companyrt would make numberdifference at all. In such a case the point to companysider always would be what is the nature of the decision pronounced by a Court of companypetent jurisdiction and what is its effect. Thus companysidered there can be numberdoubt that if a writ petition filed by a party has been dismissed on the merits 1 1909 1 3 C.W.N. 1197. by the High Court the,, judgment thus pronounced is binding between the parties and it cannot be circumvented or by- passed by his taking recourse to Art. 32 of the Constitution. Therefore, we are number satisfied that the ground of alternative remedies is well founded. We, must number proceed to state our companyclusion on the preliminary objection raised by the respondents. We hold that if a writ petition filed by a party under Art. 226 is companysidered on the merits as -contested matter, and is dismissed the decision thus pronounced would companytinue to bind the parties unless it is otherwise modified or reversed by appeal or other appropriate proceedings permissible under the Constitution. It would number be open to a party to ignore the said judgment and move this Court under Art. 32 by an original petition made on the same facts and for obtaining the same or similar orders or writs. If the petition filed in the High Court under Art. 226 is dismissed number on the merits but because of the laches of the party applying for the writ or because it is held that the party had an alternative remedy available to it, then the dismissal of the writ petition would number companystitute a bar to a subsequent petition under Art. 32 except in cases where and if the facts thus found by the High Court may themselves be relevant even under Art. 32. If a writ petition is dismissed in limine and an order is pronounced in that behalf, whether or number the dismissal would companystitute a bar would depend upon the nature of the order. If the order is on the merits it would be a bar if the order shows that the dismissal was for the reason that the petitioner was guilty of laches or that he had an alternative remedy it would number be a bar, except in cases which we have already indicated. If the petition is dismissed in limine without passing a speaking order then such dismissal cannot be treated as creating a bar of res judicata. It is true that, prima facie, dismissal in limine even without passing a speaking order in that behalf may strongly suggest that the Court took the view that there was numbersubstance in the petition at all but in the absence of a speaking order it would number be easy to decide what factors weighed in the mind of the Court and that makes it difficult and unsafe to hold that such a summary dismissal is a dismissal on merits and as such companystitutes a bar of res judicata against a similar The petition filed under Art. 32. If the petition is dismissed as withdrawn it cannot be a bar to a subsequent Gaj petition under Art. 32, because in such a case there has been numberdecision on the merits by the Court. We wish to make it clear that the companyclusions thus reached by us are companyfined only to the point of res jadirata which has been argued as a preliminary issue in these writ petitions and numberother. It is in the light of this decision that we will number proceed to examine the position in the six petitions before us. In Petition No. 66 of 1956 we have already seen that the petition filed in the High Court was on the same allegations and was for the same relief The petitioners had moved the High Court to obtain a writ of certiorari to quash the decision of the Revenue Board against them, and when the matter was argued before the High Court in view of the previous decisions of the High Court their learned companynsel did number press the petition. In other words, the points of law raised by the petition were dismissed on the merits. That being so, it is a clear case where the writ petition has been dismissed on the merits, and so the dismissal of the writ petition creates a bar against the companypetence of the present petition under Art. 32. The position with regard to the companypanion petition, No. 67 of 1956, is exactly the same. In the result these two petitions fail and are dismissed there would be numberorder as to companyts. In Writ Petition No. 8 of 1960 the position is substantially different. The previous petition for a writ filed by the petitioner No. 68 of 1952 in the Allahabad High Court was withdrawn by his learned companynsel and the High Court therefore dismissed the said petition with the express observation that the merits had number been companysidered by the High Court in dismissing it and so numberorder is to companyts was passed. This order the writ petition withdrawn which was passed on February 3, 1955, cannot therefore support the plea of res judicata against the present petition. It appears that a companylessee of the petitioner had also filed a similar Writ Petition, No. 299 of 1958. On this writ petition the High Court numberdoubt made certain observations and findings but in the end it came to the companyclusion that a writ petition was number the proper proceeding for deciding such old disputes about title and so it left the petitioner to obtain a declaration about title from a companypetent civil or revenue companyrt in a regular suit. Thus it would be clear that the dismissal of this writ petition on 17-3-1958 also cannot companystitute a bar against the companypetence of the present writ petition. The preliminary objection raised against this writ petition is therefore rejected and it is ordered that this writ petition be set down for hearing before a Constitution Bench. In Petition No. 77 of 1957 the petitioner has stated in paragraph 11 of his petition that he had moved the High Court of Punjab by a writ petition under Arts. 226 and 227 but the same was dismissed in limine on July 14, 1957. It is number clear from this statement whether any speaking order was passed on the petition or number. It appears that the petitioner further filed an application for review of the said order under O. 47, r. 1 read with s. 151 of the Code but the said application was also heard and dismissed in limine on March 1, 1957. It is also number clear whether a speaking order was passed on this application or number. That is why, on the material as it stands it is number possible for us to deal with the merits of the preliminary objection. We would accordingly direct that the petitioner should file the two orders of dismissal passed by the Punjab High Court. After the said orders are filed this petition may be placed for hearing before the Constitution Bench and the question of res judicata may be, companysidered in the light of our decision in the present group. In Petition No. 15 of 1957 initially we had a bare recital that the writ petition made by the petitioner in the Punjab High Court had been dismissed. Subsequently, however, the said order itself has been produced and it appears that it gives numberreasons for dis- missal. Accordingly we must hold that the said order does number create a bar of res judicata and so the petition will have to be set down for hearing on the merits. In Writ Petition No. 5 of 1958 the position is clear. The petitioner had moved the Bombay High Court for an appropriate writ challenging the order of the Collector in respect of the land in question. The companytentions raised by the petitioner were examined in the light of the rejoinder made by the Collector and substantially the petitioners case was rejected. It was held by the High Court that the power companyferred on the State Government by s. 5 3 of the impugned Act, the Bombay Service Inam Useful to the Community Abolition Act, 1953, was number arbitrary number was its exercise in this particular case unreasonable, or arbitrary. The High Court also held that the land of the petitioner attracted the relevant provisions of the said impugned statute. Mr. Ayyangar for the petitioner realised the difficulties in his way, and so he attempted to argue that the companytentions which he wanted to raise in his present petition are put in a different form, and in support of this argument he has invited am attention to grounds 8 and 10 framed by him in paragraph X of the petition. We are satisfied that a change in the form of attack against the impugned statute would make numberdifference to the true legal position that the writ petition in the High Court and the present writ petition are directed against the same statute and the grounds raised by the petitioner in that behalf are substantially the same. Therefore the decision of the High Court pronounced by it on the merits of the petitioners writ petition under Art. 226 is a bar to the making of the present petition, under Art. 32. In the result this writ petition fails and is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 424 of 1960. Appeal from the judgment and order dated March 25, 1958, of the Madras High Court in case Referred No. 62 of 1957. V. Viswanatha Sastri, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the appellant. N. Sanyal, Additional Solicitor-General of India, N. Rajagopala Sastri and D. Gupta, for the respondent. 1961. March 13. The Judgment of the Court was delivered by KAPUR, J.-This is an appeal against the judgment and order of the High Court of Judicature at Madras. The assessee is the appellant and the Commissioner of Income-tax is the respondent. A partnership companysisting of four persons was formed by a deed of partnership dated March 31, 1949. On July 27, 1951 another partner was taken into partnership and a new deed was drawn up. The previous partnership deed was companysidered as the principal deed. The new partnership like the old one was to end on March 31, 1954. On March 29, 1954, a new partnership was entered into and a sixth partner was taken and a new deed was executed. The new partner companytributed Rs. 40,000 as his share to the capital but in the partnership deed numberexpress provision was made as to the manner in which profits and losses were to be divided between the partners. In order to rectify this, a deed of rectification was executed on September 17, 1955, which was after the close of the account year 1954-55. This deed recited that an error had crept in in typing the partnership deed dated March 29, 1954 by omitting to type el. 21 of the old partnership deed in the new deed. The parties had therefore agreed to rectify the error by adding cl. 20- A as follows- We hereby agree that for purpose of clarification the following clause shall be added as clause 20-A in the Partnership Instrument, dated 29th March, 1954- The parties shall be entitled to shares in the profits and losses of the firm in proportion to the companytribution of the capital of each of the partners and whenever fresh capital is required for the business, each partner shall be liable to companytribute the additional capital in the same proportion as the paid up capital referred to in clause 4 of the deed, dated 29th March 1954. This is signed by all the partners. Up to the end of assessment year 1954-55 the old firms i.e., the one companystituted of four partners and the other companystituted of five partners were registered under s. 26A of the Income Tax Act hereinafter termed the Act . The appellant firm then applied for registration for the assessment year 1955-56. The Income Tax Officer pointed out to the appellant firm that there was numberspecification of shares of the partners in the deed of partnership. Thereupon the appellant submitted the deed of rectification dated September 17, 1955, above mentioned and submitted that the original deed did specify the shares of the partners and the deed of rectification only clarified the position. But the registration was refused by the Income-tax Officer and an appeal taken against that order to the Assistant Commissioner was dismissed. Further appeal was taken to the Income-tax Appellate Tribunal which also failed. At the request of the appellant the following question was referred to the High Court for its opinion- Whether the assessee firm is entitled to registration u s. 26-A of the Income-tax Act for the assessment year 1955-56. The High Court held that under s. 26-A of the Act the factual existence in the year of account of an instrument of partnership was necessary, a requisite which, in the present case, was lacking and therefore the provisions of s. 26-A were number satisfied and that the specification of shares only took place on September 17, 1955 when the deed of rectification was executed. The question was therefore answered in the negative. Against this judgment and order the appellant has companye in appeal to this Court by certificate of the High Court. It was companytended that cls. 9, 11, 34 and 41 a sufficiently specified the shares of the partners and satisfied the requirements of the law. These clauses were as follows- Cl. 9 Such extra companytribution made by the partners shall be credited to the respective partners under an account called Extra Capital Subscription Account and for the period of the utilisation of the whole or part thereof during the companyrse of the year or years, it shall be treated as capital company. tribution only for the purpose of dividing profit but it shall otherwise in numbercircumstances be added to the paid-up capital. Cl. 11. In addition to the shake of profits in proportion to the companytribution to the extra, capital subscription account, the amount, so advanced shall carry an interest equal to the highest rate at which the companypany may have to pay in the event of borrowing the same from Multani money market and shall carry twice the said rate of interest in the year or years of loss. Cl. 34. The senior partner may at any time during the subsistence of the partnership bring in one or more of his other sons other than partners of the 5th and the 6th part herein to the partnership and in the event of their so becoming partners they will be liable for the same duties as the other partners herein and shall be entitled to remuneration and profits in proportion to their capital companytribution. Cl. 41 a . In the event of the dissolution of partnership the capital available for distribution as per the balance sheet, except for debts outstanding for companylection and reserve fund, shall be paid off to the outgoing partner in proportion of the capital companytribution of the outgoing partner to the total companytribution of all the partners, including extra capital subscription paid, if any, under clause 9. None of these clauses specify the shares of the partners. Clause 9 has reference to extra companytribution made by the partners which was to be treated as capital companytribution for the purpose of dividing profits but was number otherwise taken to be paid up capital. Clause 11 provides for interest on the extra capital subscribed-. Clause 34 authorises the senior partner during the subsistence of the partnership to bring in one or more of his sons as partners who on being so brought in were entitled to remuneration and profits in proportion to their capital companytribution. Clause 41 a provides that in the event of dissolution of partnership the capital available except for debts etc. was to be paid to the outgoing partners in proportion to the capital companytribution of the outgoing partner. But in numbere of these clauses is it stated what the shares of the partners in the profits and losses of the firm were to be and that in our opinion was requisite for registration of the partnership under s. 26-A of the Act and as that was wanting, registration was rightly refused. Registration under s. 26-A of the Act companyfers a benefit on the partners which the partners would number be entitled to but for s. 26-A. The right can be claimed only in accordance with the statute which companyfers it and a person seeking relief under that section must bring himself strictly within the term of that section. The right is strictly regulated by the terms of that statute Ravula Subba Rao v. The Commissioner of Income-tax, Madras Section 26-A provides- S.26A 1 Application may be made to the Income-tax Officer on behalf of any firm, companystituted under an instrument of partnership specifying the individual shares of the partners for registration for the purpose of this Act and of any other enactment for the time being in force relating to income-tax or super-tax. For the purpose of this case the relevant words of that section are companystituted under an instrument of partnership specifying the individual shares of the partners. Therefore unless the instrument of partnership specified the individual shares of the partners the instrument of partnership does number companyform to the requirements of the section. In B. C. Mitter Sons V. Commissioner of Income- tax 2 it was held that the instrument of partnership to be registered should have been in existence in the accounting year in respect of which an assessment is being made. At page 202, Sinha J., as he then was said- 1 1956 S.C.R. 577,588. 2 1959 36 I.T.R. 194. It is, therefore, essential, in the interest of proper administration and enforcement of the relevant provisions relating to the registration of firms, that the firms should strictly companyply with the requirements of the law, and it is incumbent upon the Income-tax authorities to insist upon full companypliance with the requirements of the law. In the present case an instrument of partnership was in existence but it did number specify the shares which was one of the requirements for registration and that companydition was fulfilled by the deed of rectification dated September 17, 1955. Therefore it cannot be said that there was the requisite instrument of partnership specifying the individual shares of the partners during the year of account. The High Court, in our opinion, was right in answering the question in the negative.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 327 of 1958. Appeal from the judgment and decree dated March 6, 1956, of the Allahabad High Court in Civil Misc. Writ Petition No. 967 of 1953. WITH CIVIL APPEAL Nos. 363 to 369 of 1958. Appeals from the judgments and decrees dated February 1, 1957, of the Allahabad High Court in Civil Misc. Writ Petitions Nos. 51 Lucknow Bench , 523, 524, 607, 632, 633 and 634 of 1955. S. Pathak and S.P. Varma, for the appellant In A. No. 327 of 1958 . B. Agarwala, G. C. Mathur and C. P. Lal, for respondents Nos. 3 to 4 In C. A. No. 327 of 1958 . N. Sanyal, Additional Solicitor-General for, India, H. Brar, S. N. Andley, J. B. Dadachanji, Rameshwar Nath and L. Vohra, for the appellants In C. As. Nos. 363 to 369 of 1958 . B. Agarwala and. C. P. Lal, for respondent No. 1 In AB. Nos. 363 to 369 of 1958 . Bhawani Lal and Dharam Bhusan, for respondent No. 4 In C. No. 369 of 1958 . P. Goyal, for respondent No. 4 In C. As. Nos. 366 and 368 of 1958 . C. Das in person, for respondent No. 4 In C. A. No. 367 of 1958 . 1961. March 17. The Judgment of the Court was delivered by WANCHOO, J.-This group of appeals raises a question about the companystitutionality of s. 3 of the United Provinces Industrial Disputes Act, 1947, U. P. XXVIII of 1947 , hereinafter referred to as the Act and the validity of two general orders passed thereunder an March 15, 1951. The appellants are certain industrial companycerns. There were disputes between them and their workmen which were referred for adjudication to industrial tribunals alleged to have, been set up under the general orders of March 15, 1951. Certain awards were passed which were taken in appeal by the present appellants to the Labour Appellate Tribunal and they failed there also. They then filed petitions under Art. 226 of the Constitution in the Allahabad High Court challenging the companystitutionality of s. 3 of the Act and the validity of the two general orders passed on March 15, 1951, by which industrial tribunals were set up. The High Court held that s. 3 of the Act was companystitutional. It however held that the two general orders dated March 15, 1951, were invalid but it went on to hold that orders of reference passed in these cases were special orders as envisaged under s. 3 of the Act and were therefore number invalid in companysequence it dismissed the petitions. The appellants then applied for and obtained certificates for leave to appeal, and that is how the matter has companye up before us. It is unnecessary to set out the facts further in respect of these appeals, as the only points argued before us are about the companystitutionality of s. 3 and the validity of the two general orders of 1951 and also of the references made in these cases. It is number disputed that if the appellants fail on these points their appeals in this Court must fail. We shall therefore first take up the question, of the companystitutionality of s. 3 of the Act. The relevant provision of s. 3 in 1,951 with which we are companycerned was in these terms- If, in the opinion of the State Government it is necessary or expedient so to do for securing the public safety or companyvenience, or the maintenance of public order or supplies and services essential to the life of the companymunity, or for maintaining employment, it may, by general or special order, make provision- c for appointing industrial companyrts d for referring any industrial dispute for companyciliation or adjudication in the manner provided in the order g for any incidental or supplementary matters which appear to the State Government necessary or expedient for the purpose of the order The main companytention of the appellants is that s. 3 is unconstitutional as it delegates essential legislative function to the Government so far as cls. c , d and g are companycerned. Reliance in this companynection is placed on the following observations of Kania C. J. in In re The Delhi Laws Act, 1912 1 , where he. was companysidering the meaning of the word delegation- When a legislative body passes an Act it has exercised its legislative function. The essentials of such function are the determination of the legislative policy and its formulation as a rule of companyduct. 1 1951 S.C.R. 747,767-54 These essentials are the characteristics of a legislature by itself Those essentials are preserved, when the legislature specifies the basic companyclusions of fact, upon ascertainment of which, from relevant data, by a designated administrative agency, it ordains that its statutory companymand is to be effective. The legislature having thus made its laws, it is clear that every detail for working it out and for carrying the enactments into operation and effect may be done by the legislature or may be left to another subordinate agency or to some executive officer. While this also is sometimes described as a delegation of legislative powers, in essence it is different from delegation of legislative power which means a determination of the legislative policy and formulation of the same as a rule of companyduct. To the same effect were the observations of Mukherjea J. in that case at p. 982 The essential legislative function companysists in the determination or choosing of the legislative policy and of formally enacting that policy into a binding rule of companyduct. It is open to the legislature to formulate the policy as br oadly and with as little or as much details as it thinks proper and it may delegate the rest of the legislative work to a subordinate authority who will work out the details within the framework of that policy. So long as a policy is laid down and a standard established by statute numberconstitutional delegation of legislative power is involved in leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determination of facts to which the legislation is to apply. What we have to see therefore is whether the legislature in this case performed its essential legislative function of determining and choosing the legislative policy and of formally enacting that policy into a binding rule of companyduct. It was open to the legislature to formulate that policy as broadly and with as little or as much details as it thought proper. Thereafter once a policy is laid down and a standard established by statute, there is numberquestion of delegation of legislative power and all that remains is the making of subordinate rules within prescribed limits which may be left to selected instrumentalities. If therefore the legislature in enacting s. 3 has chosen the legislative policy and has formally enacted that policy into a binding rule of companyduct, it companyld leave the rest of the details to Government to prescribe by means of subordinate rules within prescribed limits. Now s. 3 lays down under what companyditions it would be open to Government to act under that section it also lays down that the Government may act by passing general or special order, once those companyditions are fulfilled it also provides what will be companytained in the general or special order of Government. The power given to Government is inter alia to appoint industrial companyrts, to refer any industrial dispute for companyciliation or adjudication in the manner provided in the order, and to make any incidental or supplementary provision which may be necessary or expedient for the purposes of the order. Thus the legislature has indicated its policy and has made it a binding rule of companyduct. It has also indicated when the Government shall act under s. 3 and how it shall act. It has further indicated what it shall do when it acts under s. 3. In these circumstances we are of the opinion that it cannot be said that the delegation made by s. 3 is excessive and goes beyond permissible limits. The order to be passed by the Government under s. 3 would provide, inter alia, for appointment of industrial companyrts, for referring any industrial dispute for companyciliation or adjudication, and for incidental or supplementary matters which may be necessary or expedient. The Government will have to act within those prescribed limits when it passes, an order under s. 3 which will have the force of subordinate rules. What has been urged on behalf of the appellants is that the section does number indicate what powers the industrial companyrts will have, what will be the qualifications of persons companystituting such companyrts and Where they will sit and it is urged that these are essential matters which the legislature should have provided for itself Reference in this companynection was made to the observations of the Privy Council in Queen v. Burah 1 , which was a case of companyditional legislation. The Privy Council observed there that the proper legislature having exercised its judgment as to place, person, laws and powers and the result of that judgment having been companyditional legislation as to all these things, the legislation would be absolute as soon as the companyditions a re fulfilled. These observations have in our opinion numberhing to do with such matters of detail as the place where a companyrt or tribunal will sit or the qualifications of persons companystituting the tribunal they refer to more fundamental matters when the words place and person are used therein. The place there must mean the area to which the legislation would apply and so far as that is companycerned, the legislature has determined the area in this case to which s. 3 will apply, namely, the whole of the State of Uttar Pradesh. Similarly, the word Person used there refers to persons to whom legislation will apply- and that has also been determined by the legislature in this case, namely, it will apply to employers and employees of industrial companycerns. We have already said that the companyditions under which the order will be passed have also been set out in the opening part of s. 3, and how the Government will act is also set out, namely, by referring any industrial dispute that may arise for companyciliation or adjudication. As to the power of the industrial companyrt that in our opinion is also provided by s. 3, namely, that an industrial companyrt will adjudicate on the industrial dispute referred to it. Therefore all that was left to the Government to provide was to set up machinery by means of a general order which has the force of subordinate rules to carry out that legislative policy which has been enacted in broad details in s. 3 and has been formally enacted into a binding rule of company. duct. We are therefore of opinion that s. 3 is number unconstitutional in any manner, for there is numberdelegation of essentials of legislative function thereunder. All that has been left to the Government by that section is to provide by subordinate rules for carrying out the purpose of the legislation. We must therefore reject 1 1878 L.R. 5 I.A. 178 the companytention that s. 3 is unconstitutional on the ground that it suffers from the vice of excessive delegation. This brings us to the validity of the general order No. 615 of March 15, 1951, passed under s. 3. The preamble to that order was in these terms- In exercise of the powers companyferred by clauses b , c , d and g of section 3 and section 8 of the U. P. Industrial Disputes Act, 1947, U. P. Act No. XXVIII of 1947 and in supersession of Government order No. 781 L XVIII dated March 10, 1948, the Governor is pleased to make the following order, and to direct, with reference to section 19 of the said Act, that numberice of this Order be given by publication in the Official Gazette. Then follows the order setting up companyciliation boards for the purpose of companyciliation and industrial tribunals for the purpose of adjudication. The main companytention on behalf of the appellants is that s. 3 prescribes certain companyditions precedent before an order companyld be passed thereunder and those companyditions precedent must be recited in the order in order that it may be a valid exercise of the power companyferred by s. 3. Now there is numberdoubt that s. 3 gives power to the State Government to make certain provisions by general or special order, if, in its opinion, it is necessary or expedient so to do for securing public safety or companyvenience, or the maintenance of public order or supplies and services essential to the life of the companymunity or for maintaining employment. The forming of such opinion is a companydition precedent to the making of the order. The preamble to the second order also does number companytain a recital that the State Government had formed such opinion before it made the order. It is therefore companytended on behalf of the appellants that the orders were bad as the companydition precedent for their formulation was number recited in the orders themselves. At a later stage the appellants also companytended that in any case the orders were bad because as a fact they were passed without any satisfaction of the State Government as required under s. 3, though numberaffidavit was filed by the appellants in this behalf in support of this averment. Unfortunately, the State also filed numberaffidavit to show that the companyditions precedent provided ins. 3 had been companyplied with, even though there was numberrecital thereof on the face of the order. We should have expected that even though the appellants did number file an affidavit in support of their case on this aspect of the matter, the State would as a matter of precaution have filed an affidavit to indicate whether the companyditions precedent set out in s. 3 had been companyplied with, companysidering that it was a general order which was being attacked under which a large number of adjudications must have taken place. The High Court has companymented on this aspect of the matter and has said that the State Government did number file any affidavit in this companynection to show that as a matter of fact the State Government was satisfied as required by s. 3 even though there was numberrecital of that satisfaction in the order itself Taking into account, however, the importance of the matter, particularly as it must affect a large number of adjudications affecting a large number of employers and workmen, we asked the State Government if it desired to file an affidavit before us even at this stage. Thereupon the State Government filed an affidavit sworn by the Secretary to Government, Labour Department. The affidavit says that the drafts of G. O. No. 615 and the companysequential order G. No. 671 passed on March 15, 1951, were put up before the then labour Minister. The said numberifications were issued only after all the aspects of the matter were fully companysidered by the State Government and it had satisfied itself that it was necessary and expedient to issue the same for the purpose of securing public companyvenience, and maintenance of public order and supplies and services essen- tial to the companymunity and for the maintenance of employment. We accept this affidavit and it follows therefore that the satisfaction required as a companydition precedent for the issue of an order under s. 3 of the Act was in fact there before the order No. 615 was passed on March 15, 1951, followed by the companysequential order No. 671 of the same date. In view of this the only question that we have to companysider is whether it is necessary that the satisfaction should be recited in the order itself and whether in the absence of such recital an order of this nature would be bad. The first companytention of Shri Patliak, who appears for one of the appellants, is that where a companydition precedent is laid down for a, statutory power being exercised it must be fulfilled before a subordinate authority can exercise such delegated power. As to this companytention there can be numberdispute. Further, according to Shri Pathak, there must be a recital. in the order that the companydition is fulfilled before the subordinate authority acts in the exercise of such delegated power. If there is numbersuch recital in the instrument by which the delegated power is exercised, the defect cannot be cured by an affidavit filed in the proceedings and the order would be bad ab initio. It is urged that where subordinate rules of this nature have to be made and they affect the general public or a section thereof, companyditions precedent to the exercise of the power must be recited when the power is exercised in order that the public may know that the rules are legal and framed after satisfying the companyditions necessary for the, purpose. Moreover, some of the subordinate rules may have to be enforced by companyrts and tribunals and it is necessary that companyrts and tribunals should also know by the presence of the recital in the order that the rules are legal and binding and have been framed after the companydition precedent had been satisfied. In particular, it is urged that where the rules are of a general nature and are subordinate legislation the satisfaction of the companydition precedent becomes a part of the legislative process so far as the subordinate authority is companycerned and the defect in legislative process cannot be remedied later by affidavit. Shri C. B. Aggarwala on the other hand companytends that where a statute gives power to make an order subject to certain companyditions then unless the statute requires the companyditions to be set out in the order it is number necessary that the companyditions should appear on the face of the order and in such a case it should be presumed that the companydition was satisfied unless the companytrary is established. He drew a distinction between those cases where the companydition precedent is the subjective opinion of the subordinate authority and those where the statute requires a hearing and a finding. In the former case he companytends that the presumption should be in favour of the opinion having been formed before the order was passed though in the latter case it may be that the order should show that there was a hearing and a finding. The power to pass an order under s. 3 arises as soon as the necessary opinion required thereunder is formed. This opinion is naturally formed before the order is made. If therefore such an opinion was formed and an order was passed thereafter, the subsequent order would be a valid exercise of the power companyferred by the section. The fact that in the numberification which is made thereafter to publish the order, the formation of the opinion is number recited will number take away the power to make the order which had already arisen and led to the making of the order. The validity of the order therefore does number depend upon the recital of the formation of the opinion in the order but upon the actual formation of the opinion and the making of the order in companysequence. It would therefore follow that if by inadvertence or otherwise the recital of the formation of the opinion is number mentioned in the preamble to the order the defect can be remedied by showing by other evidence in proceedings where challenge is made to the validity of the order, that in fact the order was made after such opinion had been formed and was thus a valid exercise of the power companyferred by the law. The only exception to this companyrse would be where the statute requires that there should be a recital in the order itself before it can be validly made. There is numberdoubt that where a statute requires that certain delegated power may be exercised on fulfilment of certain companyditions precedent, it is most desirable that the exercise should be prefaced with a recital showing that the companydition had been fulfilled. But it has been held in a number of cases dealing with executive orders that even if there is some lacuna of this kind, the order does number become ab initio invalid and the defect can be made good by filing an affidavit later on to show that the companydition precedent was satisfied. In The State of Bombay v. Purushottam Jog Naik 1 , which was a case relating to preventive detention it was held by this Court that even if the order was defective in form it was open to the State Government to prove by other means that it was validly made. In Biswabhusan Naik v. The State of Orissa 2 , which was a case relating to sanction under the Prevention of Corruption Act, No. II of 1947, this Court held that it is desirable to state the facts on the face of sanction, because when the facts are number set out in the sanction, proof has to be given aliunde that sanction was given in respect of the facts companystituting the offence charged but an omission to set out the facts in the sanction is number fatal so long as the facts can be and are proved in some other way. In a later case in The State of Bombay v. Bhanji Munji 3 which was a case of requisition under the Bombay Land Requisition Act, this Court held that it was number necessary to set out the purpose of the requisition in the order the desirability of such a companyrse was obvious because when it was number done proof of the pur- pose must be given in other ways. But in itself an omission to set out the purpose in the order was number fatal so long as the facts were established to the satisfaction of the companyrt in some other way. We see numberdifficulty in following this principle in the case of those orders also which are in the nature of subordinate legislation. Whether orders are executive or in the nature of subordinate legislation their validity depends on certain companyditions precedent being satisfied. If those companyditions precedent are number recited on the face of the order and the fulfilment of the companyditions precedent can be established to the satisfaction of the companyrt in the case of executive orders we do number see why that cannot be made good in the same way in the case of orders in the nature of 1 1952 S.C.R. 674. 2 1955 1 S.C.R. 92. 3 1955 1 S.C.R. 777. subordinate legislation. We cannot accept the extreme argument of Shri Aggarwala that the mere fact that the order has been passed is sufficient to raise the presumption that companyditions precedent have been satisfied, even though there is numberrecital in the order to that effect. Such a presumption in our opinion can only be raised when there is a recital in the order to that effect. In the absence of such recital if the order is challenged on the ground that in fact there was numbersatisfaction, the authority passing the order will have to satisfy the companyrt by other means that the companyditions precedent were satisfied before the order was passed. We are equally number impressed by Shri Pathaks argu- ment that if the recital is number there, the public or companyrts and tribunals will number know that the order was validly passed and therefore it is necessary that there must be a recital on the face of the order in such a case before it can be held to be legal. The presumption as to the regularity of public acts would apply in such a case but as Boon as the order is challenged and it is said that it was passed without the companyditions precedent being satisfied the burden would be on the authority to satisfy by other means in the absence of recital in the order itself that the companyditions precedent had been companyplied with. The difference between a case where a general order companytains a recital on the face of it and one where it does number companytain such a recital is that in the latter case the burden is thrown on the authority making the order to satisfy the companyrt by other means that the companyditions precedent were fulfilled but in the former case the companyrt will presume the regularity of the order including the fulfilment of the companyditions precedent and then it will be for the party challenging the legality of the order to show that the recital was number companyrect and that the companyditions precedent were number in fact companyplied with by the a uthority see the observations of Spens C. J. in King Emperor v. Sibnath Banerjee 1 , which were approved by the Privy Council in King Emperor v. Sibnath Banerjee 2 . Nor are we impressed with the companytention of Shri Pathak that companyditions become a part of 1 1944 F.C.R. 1, 42. 2 1945 F.C.R 195, 216-7. legislative process and therefore where they are number companyplied with the subordinate legislation is illegal and the defect cannot be cured by an. affidavit later. It is true that such power may have to be exercised subject to certain companyditions precedent but that does number assimilate the action of the subordinate executive authority to something like a legislative procedure, which must be followed before a bill becomes a law. Our companyclusion therefore is that where certain companyditions precedent have to be satisfied before a subordinate authority can pass an order, be it executive or of the character of subordinate legislation , it is number necessary that the satisfaction of those companyditions must be recited in the order itself, unless the statute requires it, though, as we have already remarked, it is most desirable that it should be so, for in that case the presumption that the companyditions were satisfied would immediately arise and burden would be thrown on the person challenging the fact of satisfaction to show that what is recited is number companyrect. But even where the recital is number there on the face of the order, the order will number become illegal ab initio and only a further burden is thrown on the authority passing the order to satisfy the companyrt by other means that the companyditions precedent were companyplied with. In the present case this has been done by the filing of an affidavit before us. We are therefore of opinion that the defect in the two orders of March 15, 1951, has been cured and it is clear that they were passed after the State Government was satisfied as required under s. 3 of the Act. Therefore Government Orders Nos. 615 and 671 of March 15, 1951, with which we are companycerned in the present appeals are valid under s. 3 of the Act. It remains to companysider certain cases cited by Shri Pathak in support of his companytention. The first case to which reference may be made is Wichita Railroad Light Company v. Public Utilities Commission of the State of Kansas 1 . That was a case of a Commission which had to give a hearing and a finding that they were unreasonable before companytract rates with a public 1 1922 67 L. Ed. 124. utility companypany companyld be changed. After referring to s. 13 of the Act under companysideration, the U. S. Supreme Court held that a valid order of the Commission under the act must companytain a finding of fact after hearing and investigation, upon which the order is founded, and that, for lack of such a finding, the order in this case was void. It rejected the argument that the lack of express finding might be supplied by implication and by reference to the averments of the petition invoking the action of the Commission and rested its decision on the principle that an express finding of unreasonableness by the Commission was indispensable under the statutes of the State. This case in our opinion is based on the provision of the statute companycerned which required such a finding to be stated in the order and is numberauthority for the proposition that an express recital is necessary in the order in every case before a delegate can exercise the power delegated to it. The next case is Herbert Mahler v. Howard Eby That was a case dealing with deportation of aliens. The statute provided for deportation if the Secretary Labour after hearing finds that such aliens were undesirable residents of United States. But the Secretary made numberexpress finding so far as the warrant for deportation disclosed it. Nor was the defect in the warrant of deportation supplied before the companyrt. The companyrt held that the finding was made a companydition precedent to deportation and it was essential that where an executive is exercising delegated legislative power he should substantially companyply with all the statutory requirements in its exercise, and that, if his making a finding is a companydition precedent to this act, the fulfilment of that companydition should appear in the record of the act, and reliance was placed on the case of Wichita Railroad Light Company v. Public Utilities COmmission 2 . This again was a case of a hearing and a finding required by the statute to be stated in the order and must therefore be distinguished from a case of the nature before us. It may however be added that the companyrt did number discharge the deportees and 1 1924 68 L. Ed. 549- 2 1922 67 L. Ed. 124- gave a reasonable time to the Secretary Labour to companyrect and perfect his finding on the evidence produced at the original hearing or to initiate another proceeding against them. The last case is Panama Refining Company v. A. D. Ryan 1 . In that case s. 9 e of the National Industrial Recovery Act of 1933 was itself struck down on the ground of excessive delegation, though it was further held that the executive order companytained numberfinding and numberstatement of the grounds of the Presidents action in enacting the prohibition. This case in our opinion is number in point so far as the matter before us is companycerned, for there the section itself was struck down and in companysequence the executive order passed thereunder was bound to fall. We are therefore of opinion that s. 3 of the Act is companystitutional so far as els. c , d and g are companycerned and orders Nos. 615 and 671 passed on March 15, 1951 are legal and valid. In the circumstances it is number necessary to companysider whether the High Court was right in holding that the orders of references in these cases were special orders under s. 3 and the references under those orders were therefore valid.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Petition No. 77 of 1958. Petition Under Art. 32 of the Constitution of India for enforcement of Fandamental Rights. Bhavani Lal and P. C. Agarwala, for the petitioners. K. Daphtary, Solicitor-General of India, B. Ganapathy Iyer and T. M. Sen, for the respondents. 1961. March 14. The Judgment of the Court was delivered by K. DAS, J.-This is a writ petition under Art. 32 of the Constitution. The petitioners, Messrs. Nand Lal Raj Kishan, carry on a business of companymission agents at Delhi and are liable to pay sales tax in respect of their business under the provisions of the Bengal Finance Sales Tax Act, 1941, as in force in Delhi. They filed returns for four quarters of 195455 and claimed exemption in respect of sales of certain goods to the registered dealers under the provi- sions of s. 5 2 a ii of the said Act. By his order dated April 11, 1956, the Sales Tax Officer disallowed the exemption claimed by the petitioners mainly on the ground that the alleged sales were made to those registered dealers whose activities had gone underground. The Sales. Tax Officer issued a demand numberice for a sum of Rs. 1,11,890-11-0 on account of sales tax. The petitioners then carried an appeal to the Assistant Commissioner of Sales Tax, Delhi. The Assistant Commissioner set aside the order of the Sales Tax Officer and remanded the case for a fresh decision in the light of certain judgments given by the Chief Commissioner, Delhi, in a number of similar cases. In the meantime the Bengal Finance Sales Tax Act, 1941, was amended by the Bengal Finance Sales Tax Delhi Amendment Act, 1956, being Act No. 17 of 1956. This amending Act which came into force on October 27, 1956, inserted a new section, which is s. 8A of the Act. This section reads as follows S. 8A. Security from certain class of dealers.The Commissioner, if it appears to him to be necessary so to do for the proper realisation of the tax levied under this Act, may impose for reasons to be recorded in writing as a companydition of the issue of a registration certificate to a dealer or of the companytinuance, in effect, of such a certificate issued to any dealer, a requirement that the dealer shall give security up to ail amount and in the manner approved by the Commissioner for the payment of the tax for which he may be or become liable under this Act. On May 17, 1957, the petitioners asked for a fresh registration certificate on the ground that their original certificate had been lost in transit. They further asked for the addition of some more items of goods in the registration certificate, such as cigarettes, bidis and glass of all kinds. Thereupon the Sales Tax Officer made certain enquiries and found that the petitioners had been frequently shifting their places of business and the sales alleged to have been made by them to some registered dealers were number genuine, because those persons companyld number be traced at the addresses given. On a report being submitted to the Commissioner of Sales Tax, Delhi, the Commissioner asked the Sales Tax Officer to issue a numberice to the petitioners. On July 13,1957, such a numberice was issued to the petitioners to show cause why they should number be asked to furnish a security of Rs. 10,000 in accordance with the provisions of s. 8A. The petitioners then appeared before the Sales Tax Officer and made a statement that they were number prepared to deposit any amount as security. They also filed a written explanation objecting to the demand of security. The matter was then referred to the Commissioner of Sales Tax who company- sidered the explanation of the petitioners and the report of the Sales Tax Officer. The Commissioner expressed his finding in the following words In view of the reputation that the dealer enjoys in the market, namely, that he being a companymission agent has been engaged in the business of selling goods to other companymission agents, all sales being effected to unscrupulous registered dealers, frequent changes in the name and place of busines without giving specific details, late submission of information regarding the changes in the name and place of business, number-submission of returns for the year 1956-57 within the prescribed time, it appears neces- sary to demand security under section 8A of the Bengal Finance Sales Tax Act, 1941 as in force in Delhi. Accordingly, on November 27, 1957, he made an order directing the petitioners to furnish security either in cash or by two personal sureties for a Bum of Rs. 5,000 by December 15, 1957. Against the aforesaid order of the Commissioner the petitioners went in revision to the Chief Commissioner of Delhi. The Chief Commissioner heard Counsel for the petitioners and by his order dated April 15, 1958, dismissed the application in revision. The petitioners then filed a writ petition in the Punjab High Court which was summarily dismissed. On the present writ petition the petitioners have impugned the order of the Commissioner dated November 27, 1957 on the ground that s. 8A of the Act under which the order was passed is companystitutionally invalid. They have challenged the validity of s. 8A on three grounds firstly, it is companytended that s. 8A gives an undefined, unlimited and unrestricted power to the Commissioner of Sales Tax secondly, it is companytended that numberlimit is fixed with regard to the amount of security which may be demanded under the section and thirdly, it is companytended that the section imposes an unreasonable restriction on the right of the petitioners to carry on their business inasmuch as it does number provide for any enquiry before the demand for security is made, number does it provide for an opportunity being given to the person against whom the order is proposed to be passed of being heard before such order is passed. We do number think that these grounds have any substance. Section 8A does number give unlimited or unrestricted power. to the Commissioner of Sales Tax. It states inter alia that the Commissioner may impose for reasons to be recorded in writing as a companydition of the issue of registration Certificate to a dealer, or of the companytinuance of such a certificate, a requirement that the dealer shall give security up to an amount and in the manner approved by the Commissioner for the payment of the tax for which he may be or become liable under the Act this power of the Commissioner is, however, subject to the companydition that it must appear to him to be necessary so to do for the proper realisation of the tax levied under the Act. In other words, the Commissioner may exercise his power of demanding security only when he companysiders it necessary to do so for the proper realisation of the tax levied under the Act. By numberstretch of argument can it be suggested that the power is an unlimited or an unrestricted power. Learned Counsel for the petitioners has referred us to the decision of this Court in Messrs. Duarka Prasad Laxmi Narain v. The State of Uttar Pradesh 1 . That was a case in which under cl. 4 3 of the Uttar Pradesh Coal Control Order, 1953, the licensing authority was, given absolute power to grant or refuse to grant, renew or refuse to renew suspend, revoke, cancel or modify any licence under the Order. It was pointed out by this Court that there was numberhing to regulate or guide the discretion 1 1954 S.C.R. 803. of the licensing officer and the provision impugned therein companymitted to the unrestrained will of a single individual the power to grant, withhold or cancel licences in any way he chose. That is number the position here. Section 8A itself gives the necessary guidance when it says that the Commissioner may exercise his power only when it is necessary to do so for the proper realisation of the tax levied under the Act. In a later decision of this Court in Virendra v. The State of Punjab 1 it was pointed out that in Dwarka Prasads case 1 the impugned provision prescribed numberprinciples and gave numberguidance in the matter of the exercise of the power, but in a case where the exercise of the power is companyditioned by the statute itself, the ratio in Dwarka Prasad case 2 does number apply. The same view was reiterated in Kishan Chand Arora v. The Commissioner of Police, Calcutta 3 . Section 7 4a i of the Bengal Finance Sales Tax Act, 1941, gives the power to the Commissioner to demand reasonable security for the proper payment of tax payable under the Act. This section came in for companysideration of the Calcutta High Court in Durga Prasad Khaitan v. Commercial Tax Officer 4 and it was held that the section did number companyfer unfettered or arbitrary power to the Commissioner. We approve of the view expressed therein that the power to levy a tax includes the power to impose reasonable safeguards in companylecting it, and demanding security for the proper payment of the tax payable under the Act is neither an arbitrary number an unreasonable restriction. As to the companytention that there,is numberlimit to the amount which can be demanded as security, it is only necessary to point out that the amount that can be demanded as security must have relation to the payment of the tax for which the person companycerned may be or become liable under the Act. The amount must depend on the nature of the business, its turnover and the amount of tax payable thereon by the person companycerned. Furthermore, the order of the Commissioner under s. 8A is subject to revision by the Chief 1 1958 S.C.R. 308, 321 3 1961 3 S.C.R. 135. 2 1954 S.C.R. 803. 4 1937 8 S.T.C. 105. Commissioner and if an arbitrary or unreasonable amount is demanded, the order of the Commissioner will be subject to scrutiny by the Chief Commissioner. We do number think that even in the matter of the amount of security, the power of the Commissioner is unlimited or unrestricted. As to the last companytention that the section does number provide for any enquiry or any opportunity being given to the person against whom the order is proposed to be passed of being heard, this point was taken before the Chief Commissioner and the Chief Commissioner rightly pointed out that the principles of natural justice would apply and the person to whose prejudice the order is to be made must be given an opportunity to say whatever he has to say in his defence. In the present case such an opportunity was given to the petitioners. A numberice was issued to the petitioners by the Sales Tax Officer. The petitioners appeared before the Sales Tax Officer, submitted a written explanation and also made oral submissions. The Commissioner had before him the report of the Sales Tax Officer, the explanation submitted by the petitioners in reply to the numberice issued, and also the statements made by them. It has been companytended on behalf of the petitioners that numberoral hearing was given to the petitioners by the Commissioner of Sales Tax and learned Counsel for the petitioners has made a grievance that the order of the Commissioner was passed without hearing the petitioners. It may be pointed out here that when the petitioners were heard by the Chief Commissioner in support of their application in revision, they made numbergrievance on the score that the Commissioner of Sales Tax had number given them a second opportunity of a fresh oral hearing. We do number think that a second opportunity like the one suggested on behalf of the petitioners was either necessary or obligatory. The petitioners had an opportunity of saying what they had to say against the demand of security. They raised their objections which were companysidered by the Commissioner who, in spite of those objections, came to the companyclusion that it was necessary to ask the petitioners to furnish security for the proper realisation of the tax levied or leviable under the Act. We agree with the Chief Commissioner that there was numberviolation of the principles of natural justice in the present case.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 446 of 1958. Appeal from the judgment and order dated April 18, 1956, of the High Court of Judicature at Madras in Tax Revision Case No. 93 of 1955. C. Setalvad, Attorney-General of India, S. Swaminathan and K. L. Mehta, for the appellants. K. T. Chari, Advocate-General of Madras, M. M. Ismail and T. M. Sen, for the respondent. A. Palkhivala, J. B. Dadachanji, S. N. Andley, Rameshwar Nath and P. L. Vohra, for the Intervener Tata Loco Engineering Co. Ltd., Bombay . 1961. March 28. The Judgment of the Court was delivered by K. DAB, J.-This is an appeal on a certificate granted by the High Court of Madras. The firm of Messrs. Ashok Leyland Ltd., Ennore, is the appellant before us. For brevity and companyvenience, we shall hereinafter refer to the firm as the assessee. The State of Madras through the Commercial Tax Officer, Saidapet, is the respondent before us. The assessee is a firm with its factory at Ennore in the State of Madras, where it manufactures, assembles and sells motor vehicles and spare parts and accessories thereof, through an elaborate organisation spread over several States. It is, perhaps, necessary to indicate briefly the organisational set up in order to appreciate the point on which the case was heard in the High Court and argued before us. The system of distribution of its motor vehicles, spare parts and accessories at one uniform price to companysumers in the various States which the assessee adopted, companysisted of the appointment of a distributor called a dealer with a definite territorial jurisdiction, both inside and outside the State of Madras To every such dealer it granted the sole right of selling the products of the firm within the territory allotted to him. If the territory of the dealer was outside the State of Madras, the agreement entered into by the dealer provided for the delivery of the products of the firm by companysignment, by rail or steamer or road transport. The agreement specifically stipulated that the dealer must number canvass or sell the products outside the territory allotted to him, and in the event of infringement or breach of the undertaking by the dealer, the assessee was entitled to terminate the agreement forthwith. On such termination, the assessee reserved the right to call upon the dealer to return all or any of the products remaining unsold at the date of such termination. The case set up by the assessee was that a substantial number of motor vehicles and accessories thereof were companysigned to the dealers in other States either by rail or steamer but due to want of such transport facilities, a number of vehicles were also transported by road. In the year relevant to the assessment year 1952-53, the total turnover of the asaessee in respect of all its sales came to Rs. 1,43,67,007 odd. The Deputy Commercial Tax Officer, Madras, companyputed the taxable turnover of the assessee for that year by excluding the sum of Rs. 1,12,21,707 odd which represented the value of vehicles, spare parts, etc., sold outside the State of Madras and companysigned by rail or steamer or transported by road. The balance of Rs. 31,45,299 odd was determined to be the net assessable turnover of the companypany. The tax levied thereon was a sum of Rs. 1,45,655-13-3 and this sum was duly paid by the assessee. Sometime thereafter, the Commercial Tax Officer, Madras, purporting to act under the powers of revision given to him by s. 12 of the Madras General Sales Tax Act, 1939 Madras Act IX of 1939 , hereinafter called the Act, called upon the assessee to produce its books of account for the purpose of satisfying himself as to the legality or propriety of the assessment made. After scrutinising the accounts and other records produced by the assessee, the Commercial Tax Officer issued a numberice proposing to revise the assessment by including a sum of Rs. 42,98,068 odd on the ground that the delivery of motor vehicles, etc., in respect of sales companyered by the aforesaid sum was made within the State of Madras and was therefore liable to tax under the Act. The assessee submitted its objection to the revision of the assessment and companytended that on the sum of. Rs. 42 lacs odd the assessee was number liable to pay sales tax as the transactions were in the companyrse of inter-State trade and companymerce. This objection was, however, overruled by the Commercial Tax Officer except to a very small extent. From that decision of the Commercial Tax Officer, an appeal was taken to the Sales Tax Appellate Tribunal, Madras, and the assessee companytended in that appeal that the revision of the assessment by the Commercial Tax Officer was without, jurisdiction and that the inclusion of Rs. 42 lacs odd in the taxable turnover was companytrary to the provisions of Art. 286 of the Constitution. The Tribunal rejected the plea of absence of jurisdiction, but held on merits that the sum of Rs. 12,48,403 odd representing the value of vehicles driven away on their own motive power through the assessees own drivers to the places of business of the number-resident dealers was number liable to sales, tax. The assessee then preferred a revision to the High Court of Madras under s. 12B 1 of the Act and repeated the companytention that the sales in question were in the companyrse of inter-State trade and companymerce and number liable to sales tax by reason of the provisions of Art. 286 2 of the Constitution. In the High Court the liability to tax was challenged by the assessee in respect of the following four items only A sum of Rs. 1,43,072 odd which represented the value of vehicles delivered ex-factory to the dealers drivers. The vehicles were driven away by those drivers after temporary registration of the vehicles in the name of the dealer, outside the State of Madras. A sum of Rs. 28,01,357 odd which represented the value of vehicles delivered to the drivers of the dealers, which were driven away under the trade number of the dealers, outside the State of Madras. A sum of Rs. 7,866 odd which represented the value of spare parts or other accessories delivered along with the cars. A sum of Rs. 15,000 which represented the value of spare parts companysigned to the dealers. These were delivered to the dealers outside the State of Madras and the companysignments were sent by rail or steamer. The High Court repelled the companytention of the assessee in respect of the first three item,, aforesaid, holding that they fell outside the purview of the ban imposed by Art. 286 2 of the Constitution. It modified the order of the Tribunal with respect to the fourth item, as in its view that item came within the scope of Art. 286 2 . The assessee then moved the High Court and obtained the necessary certificate under Art. 133 of the Constitution. When the learned Attorney-General appearing for the assessee opened the appeal, he submitted in the forefront of his argument that the High Court was in error in holding that the transactions companying under the three items 1 , 2 and 3 above were outside the ban imposed by Art. 286 2 of the Constitution, and companytended that the transactions were within the purview of the ban. We then drew his attention to the Sales Tax Laws Validation Act, 1956 hereinafter called the Validation Act , and asked him to companysider the question whether the transactions in question came within the protection of the Validation Act, an aspect of the case which does number appear to have been companysidered in the High Court. The argument before us then centered round the question whether the assessment in respect of the three items came within the protection of the Validation Act, and it was companyceded by the learned Attorney-General that if it did, numberother question would survive and it would be unnecessary to determine in this appeal the true scope and effect of Art. 286 2 of the Constitution and whether the transactions in question came within the ban imposed thereby. On behalf of an intervener Tata Locomotive Engineering Co. Ltd,, Bombay we have been pressed to decide, on merits, whether the transactions under companysideration here companye within the ban of Art. 286 2 of the Constitution, on the ground that such decision will be of assistance in a pending case to which the intervener is party. We do number think that we can do so for the benefit of the intervener. The intervener has numberright to ask us to decide a question which does number fall for decision if the Validation -Act applies for it is companyceded that if the Validation Act applies, that will be decisive of the whole appeal. We must, therefore, reject the plea of the intervener. We proceed number to companysider the main point argued in this appeal, namely, whether the Validation Act applies to the transactions in question. It is companyvenient to read here s. 2, which is the relevant section, of the Validation Act Section 2. Notwithstanding any judgment, decree or order of any companyrt, numberlaw of a State imposing or authorising the imposition of, a tax on the sale or purchase, of any goods where such sale or purchase took place in the companyrse of interstate trade or companymerce during the period between the 1st day of April, 1951, and the 6th day of September, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the companyrse of inter-State trade or companymerce and all such taxes levied or companylected or purporting to have been levied or companylected during the aforesaid period, shall be deemed always to have been validly levied or companylected in accordance with law. It will be numbericed at once that the transactions under companysideration in the present appeal came within the period mentioned in the Validation Act. being transactions of a period between April 1, 1951, and March 31, 1952. Indeed, this is number disputed before us. It is also clear that the wording of a. 2 is general and wide enough to take in the sale or purchase of any goods where such sale or purchase took place in the companyrse of inter- State trade or companymerce during the period between the 1st day of April, 1951, and the 6th day of September, 1955. The section states in effect that numberwithstanding any judgment, decree or order of any companyrt, numberlaw of a State imposing a tax on the sale or purchase of goods referred to therein shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the companyrse of inter-State trade or companymerce. The learned Attorney-General has advanced two arguments in support of his companytention that the Validation Act does number apply to the transactions under companysideration here. His first argument is that the Validation Act applies only when the law of the State imposes, in express terms, a tax on the sale or purchase of any goods in the companyrse of inter-State trade or companymerce. He emphasises the expression where such sale or purchase took place in the companyrse of inter-State trade or companymerce occurring in the section and from that expression he has drawn the inference that the law must in express terms say that it is taxing transactions in the companyrse of interState trade and companymerce. His second argument is that by reason of s. 22 of the Act, inserted by the amending Act of 1957, being Madras Act I of 1957, the Act imposes numbertax on transactions under companysideration in this appeal it merely imposes a tax on transactions which are generally known as Explanation sales referable to the Explanation to Art. 286 l a , such as were companysidered in the decision of this Court in M. P. V. Sundararamier Co. The State Of Andhra- Pradesh Another 1 . We shall companysider these two arguments one after the other. It appears to us the first argument does number companyrectly reflect the true scope and effect of s. 2 of the Validtion Act. It is necessary, perhaps, to advert to the circumstances which led, to the enactment of 1 1958 J.s.S.C.R. 1422- the Validation Act. The true meaning and scope of the Explanation to Art. 286 1 of the Constitution came up for companysideration before this Court in The State of Bombay and Another v. The United Motors India Ltd and Others 1 . It was therein held by the majority that though the sales falling within the Explanation would, in fact, be in the companyrse of interState trade. they became intrastate sales by the fiction introduced by the Explanation and were liable to be taxed by the State within which the goods were delivered for companysumption. Then, came the decision in The Bengal Immunity Company Limited v. The State of Bihar and Others 2 where this Court held, again by a majority, that the sales falling within the Explanation being inter-State in character, companyld number be taxed by reason of Art. 286 2 unless Parliament lifted the ban, that the Explanation to Art. 286 l a companytrolled only that clause and did number limit the operation of Art. 286 2 , and that the law in this respect had number been companyrectly laid down in the United Motors case 2 . The decision in The Bengal Immunitys case 2 was rendered on September 6, 1955. The Sales Tax Validation Ordinance No. III of 1956 was promulgated on January 30, 1956, and that was later replaced by the Validation Act. The companystitutionality of the Validation Act was challenged before this Court and in M. P. V. Sundararamis case 3 this Court upheld its validity, though the sales referred to in the arguments in that case were Explanation sales. The Validation Act is legislation by Parliament, and it lifts the ban imposed by Art. 286 2 . Clause 2 of Art. 286 as it stood before the Constitution Sixth Amendment Act, 1956, in these terms 2 . Except in so far as Parliament may by law otherwise provide, numberlaw of a State shall impose,or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase takes place in the companyrse of inter-State trade or companymerce. In M. P. V. Sundraramiers case 3 this companyrt observed 1 1953 S.C.R. 1069. 2 1955 2 C.R.603 3 1958 S.C. 1422. Section 2 of the impugned Act which is the only substantive enactment therein makes numbermention of any validation. It only provides that numberlaw of a State imposing tax on sales shall be deemed to be invalid merely because such sales are in the companyrse of inter-State trade or companymerce. The effect of this provision is merely to liberate the State laws from the fetter placed on them by Art. 286 2 and to enable such laws to operate on their own terms. The true scope of the impugned Act is, to adopt the language of this Court in the decisions in the United Motors case 1 and The Bengal Immunity Companys case 2 , that it lifts the ban imposed on the States against taxing inter-State sales and number that it vali- dates or ratifies any such law. It should be obvious that in 1939, long before the companying into force of the Constitution, the Act companyld number have said in express terms that it was taxing sales in the companyrse of inter-State trade. What we have to see is that the fetter under Art. 286 2 having been removed, does the Act operating on its own terms affect the transactions in question even though they be in the companyrse of inter-State trade? If it does, the assessment is numberlonger liable to challenge on the ground of the ban imposed by Art. 286 2 . This brings us to the second argument of the learned Attorney-General. One has merely to see the definitions of sale and turnover and s. 3, the charging section, to companye to the companyclusion that the Act operating on its own terms makes the transactions under companysideration in this appeal liable to sales tax. Explanation 2 to the definition of sale says The sale or purchase of any goods shall be deemed, for the purposes of this Act, to have taken place in this State, wherever the companytract of sale or purchase might have been made- a if the goods were actually in this State at the time when the companytract of sale or purchase in respect thereof was made, or b in the case the companytract was for the sale on purchase of future goods by description, then, if the 1 1953 S.C.R. 1069. 2 1955 2 C.R. 603. goods are actually produced in this State at any time after the companytract of sale or purchase in respect thereof was made. There can be numberdoubt that the Explanation brings the transactions in question within the definition -of sale under the Act. The point number is-does s. 22 of the Act make any difference,? We are clearly of the opinion that it does number. A little history of that section is necessary here. Section 22 of the Act, as it stood before the amending Act of 1957, was inserted by the Adaptation of Laws Fourth Amendment Order, 1952, made by the President in exercise of the powers companyferred on him by Art. 372 2 of the Constitution. The section was then almost a verbatim reproduction of Art. 286 l and 2 of the Constitution. The effect of the section as it stood then, was companysidered in M. P. V. Sundararamiers case 1 and it was held that it had a positive companytent and the Explanation in the companytext of s. 22 as it then stood authorised the State of Madras to impose a tax on sales falling within its purview. Then came the Validation Act in 1956, which lifted the ban imposed by Art. 286 2 . In 1957 new s. 22 was inserted in the Act with restrospective effect from January 26, 1950, and old section 22 was repealed. The new section reads Section 22. Sale or purchase deemed to have taken place inside the State in certain cases- Any sale or purchase which took place on or before the 6th day of September, 1955, shall be deemed to have taken place inside the State if the goods have actually been delivered as a direct result of such sale or purchase for the purpose of companysumption in the State, numberwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State, and. be subject to tax under this Act accordingly. The provisions of this section shall number affect the liability to tax of any sale or purchase under any other provision of this Act. The argument of the learned Attorney-General is that 1 1958 S.C.R. 1422. the number section which operates retrospectively from January 26, 1950, talks of sales in which the goods are delivered for companysumption in the State of Madras in other words, of Explanation sales only therefore, the Act does number operate on sales of an interState character other than Explanation sales. We are unable to agree. First of all, sub-s. 2 of new s. 22 makes it quite clear that the section does number affect the liability to tax of any sale or purchase under any other provision of the Act. Secondly, after Parliament had lifted the ban imposed by Art. 286 2 , it was unnecessary to repeat the provisions of that Article in the Act and old s. 22 in so far as it repeated Art. 286 2 became otiose. Therefore, new s. 22 has number the effect of subtracting something from the power to tax companyferred on the State by the charging section, s. 3, read with the definition of sale in s. 2 h . To repeat what we have said earlier after the removal of the fetter of Art. 286 2 , the Act operating on its own terms makes the transactions in question liable to tax, and new s. 22 makes numberdifference to that position. For these reasons, we are unable to accept as companyrect the arguments advanced on behalf of the assessee. In our view, the Validation Act applies and the assessment on the transactions in question cannot number be challenged on the ground alleged by the assessee.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 20 of 1960. Appeal from the judgment and decree dated September 5, 1956, of the Judicial Commissioners Court at Ajmer in Civil First Appeal No. 3 of 1956. D. Sharma, for the appellant. C. Setalvad, Attorney-General of India, C. L. Agarwala, M. K. Ramamurthy, R. K. Garg, D. P. Singh and S. Agarwal, for the respondents I and 3. 1961. April 3. The Judgment of the Court was delivered by HIDAYATULLAH, J. - This is an appeal by the,, plaintiff against the judgment and decree of the Judicial Commissioner, Ajmer, companyfirming the decree of the trail Judge dismissing the suit. it companyes before us on a certificate under Arts. 132 1 and 133 1 c of the Constitution granted by the High Court of Rajasthan after the Reorganisatiion of the States. The suit was filed by the appellant for recovery of Rs. 23,998-12-0 as price of goods supplied in the year 1947 to the Ruler of Jaipur State, including interest and damages suffered by the appellant due to the refusal of the defendants to take delivery of some other goods similarly ordered. In addition to the ex-Ruler of Jaipur, his Military Secretary and one Mohabat Singh, an employee of the ex-Ruler, were also joined as defendants, on the plea that they had placed the orders as agents of, the ex-Ruler. The suit was filed on February 28, 1951. The ex-Ruler raised the plea that the suit was incompetent, as the companysent of the Central Government under s. 87-B of the Code of Civil Procedure was number obtained and asked that the suit be dismissed. The other defendants denied the claim and also their lability on various grounds. It may be mentioned the Military Secretary second defendant has since died, and this appeal is number directed against the ex-Ruler and Mohabat Singh only. The Subordinate Judge held that though the suit was filed prior to the enactment of s. 87-B by s. 12 of the Code of Civil Procedure Amendment Act, 1951 11 of 1951 , it companyld number be companytinued against the ex-Ruler. He adjourned the hearing for four months to enable the appellant to obtain the necessary companysent. The appellant applied to the Central Government for its companysent, but it was refused. He also applied in revision to the Judicial Commissioner, companytending that s. 87-B of the. Code of Civil Procedure offended the equality clause in Art. 14 of the Constitution and was thus void, but the Judicial Commissioner rejected the companytention. He also refused a certificate on the ground that there was numberfinal order as required by Art. 132 l of the Constitution. The suit was subsequently dismissed against all the three defendants. In regard to the ex- Ruler, it was held that numbersuit lay against him without the companysent of the Central Government, and in regard to the remaining defendants, it was held that they were protected by s. 230 of the Indian Contract Act. Sub-section 3 of that section was held inapplicable, inasmuch as a suit companyld be filed against the ex-Ruler with the companysent of the Central Government. The appellant appealed to the Judicial Commissioner, Ajmer, but the appeal was dismissed. He obtained a certificate, as stated above, and this appeal has been filed. Two main questions have been raised in this appeal. The first is that the dismissal of the suit against the ex-Ruler was erroneous. In support of this companytention, it is urged that s. 87-B of the Code of Civil Procedure is ultra vires the Constitution in view of Art. 14, and, in the alternative, that s. 87-B, even if valid, cannot apply to this suit, which was pending when the section was enacted. The right to companytinue the suit being a substantive right, cannot, it is submitted, be taken away except by a law which is made applicable to pending actions, either expressly or by necessary intendment. Against the other respondent, it is companytended that he was liable as an agent or at least, as sub-agent, in view of the provisions of s. 230 3 of the Indian Contract Act. We are number companycerned with the merits of the claim, and they have number been mentioned at the bearing. We shall begin by companysidering whether s. 87-B is ultra vires and void. It is said that it discriminates in favour of ex- Rulers of Indian States by creating an immunity from civil actions. Prior to the present Constitution, Part IV of the Code of Civil Procedure companytained provisions in respect of suits in particular cases. This was divided into three parts. Sections 79 to 82 dealt with suits by or against the Crown or Public Officers in their official capacity and s. 88 provided for suit of interpleader. We are number companycerned with them. Sections 83 to 87 dealt with suits by aliens and by or against Foreign Rulers and Rulers of Indian States. Sections 83 and 84 provided respectively when aliens and foreign States may sue. Section 85 provided for the appointment by Government of persons to prosecute or defend Princes or Chiefs. Section 86 provided for suits against Princes, Chiefs, Ambassadors and Envoys. It created partial ex-territoriality by granting them exemption from civil jurisdiction except when an action was brought with the companysent of the Central Government. The first sub-section provided- Any such Prince or Chief, and any ambassador or envoy of a foreign State, may in the case of the Ruling Chief of an Indian State with the companysent of the Crown Representative, certified by the signature of the Political Secretary, and in any other case with the companysent of the Central Government, certified by the signature of a secretary to that Government, but number without such companysent, be sued in any companypetent Court. The remaining four sub-sections dealt with the kinds of suits and the companyditions under which they companyld be brought and certain other aspects Of ex-territoriality. Section 87 laid down the style of Princes or Chiefs as parties to suits. After the companying into force of the Constitution, certain adaptations were made by the President by the Adaptations of Laws Order 1950, but we are number companycerned with them. Suffice it to say that the protection companytinued in view of Art. 372 of the companystitution unless it was void under the Chapter on Fundamental Rights till we companye to the enactment of Act 11 of 1951. The impact of the Fundamental Rights provisions on s. 86 as originally enacted and on the new s. 87-B being the same, we need number companysider the matter separately. When the Indian States integrated with British India, the Rulers of States and the Government of India entered Into companyenants and agreements. In those companyenants, it was agreed that the privileges, dignities and titles of the Indian Princes would be companytinued to be recognised. When the Constitution was enacted, the assurance in the companyenants was respected, and Art. 362 was included in the Constitution. It reads In the exercise of the power of Parliament or of the Legislature of a State to make laws or in the exercise of the executive power of the Union or of a State, due regard shall be had to the guarantee or assurance given under any such companyenant or agreement as is referred to in clause i of Article 291 with respect to the personal rights, privileges and dignities of the Ruler of an Indian State. The reference to Art. 291 merely indicates that those companyenants or agreements were meant which the Ruler of any Indian State had entered into with the Central Government before the companymencement of the Constitution. This description is number repeated in Art. 362, but is incorporated by reference. The mention of Art. 291 in Art. 362 has numberfurther significance, and the generality of the assurance in the latter Article is number lessened. The privilege of ex-territoriality -and exemption from civil jurisdiction except with the companysent of the Central Government was one of long standing, and when the Amendment Act of 1951 was passed, ss. 83 to 87 were reenacted. We are number companycerned with all the changes that were made, and reference to some of them is unnecessary. Section 86 was amended by deleting all references to Ruling Chiefs of Indian States and the first sub-section was reenacted as follows 86. 1 No Ruler of a foreign State may be sued in any companyrt otherwise companypetent to try the suit except with the companysent of the Central Government certified in writing by a Secretary to that Government proviso omitted . Sub-section 3 gave protection against arrest and, except with the companysent of the Central Government, against execution of decrees against the property of any such Ruler. Section 87 laid down the style of foreign Rulers as parties to suits. Section 87-A was added to define foreign State and Ruler and to make the exemption only available to a State and its head, recognised as such by the Central Government. Section 87-B, with which we are companycerned, was specially enacted in respect of suits against Rulers of former Indian States. It provided 87-B. 1 The provisions of section 85 and of sub-sections 1 and 3 of section 86 shall apply in relation to the Rulers of any former Indian State as they apply in relation to the Ruler of a foreign State. In this section- a former Indian Statemeans any such Indian State as the Central Government may, by numberification in the Official Gazette, specify for the purposes of this section and Ruler in relation to a former Indian State, means the person who, for the time being, is recognised by the President as the Ruler of that State for the purposes of the Constitution. By this provision, which is very much the same as the former s. 86, the privilege previously enjoyed by the Rulers of Indian States was companytinued. In this historical background, the question of dis- crimination raised in the appeal must be examined. It is easy to see that the ex-Rulers form a class and the special legislation is based upon historical companysiderations applicable to them as a class. The Princes who were, before integration, sovereign Rulers of Indian States, handed over, after the foundation of the Republic, their States to the Nation in return for an annual Privy Purse and the assurance that their personal rights, privileges and dignities would be respected. The Constitution itself declared that these rights, etc., would receive recognition. A law made as a result of these companysiderations must be treated as based on a proper classification of such Rulers, who had signed the agreement of the character described above it is based upon a distinction which can be described as real and substantial, and it bears a just relation to the object sought to, be attained. It is further companytended that the Article speaks of privileges but number of immunities, and we were referred to certain other Articles of the Constitution where immunities are specifically mentioned. It is number necessary to refer to those Articles. Immunity from civil action may be described also as a privilege, because the word Privilege is sufficiently wide to include an immunity. - The Constitution was number limited to the choice of any particular words, so long as the intention was clearly expressed. In our opinion, the words personal rights and privileges are sufficiently companyprehensive to embrace an immunity of this character. It is, therefore, clear that the section cannot be challenged as discriminatory, because it arises from a classification based on historical facts. It is next companytended that s. 87-B only applies the provisions of sub-ss. 1 and 3 of s. 86, that tile words of the latter section are number retrospective, that the suit was filed before the enactment of s. 87-B, and that the substantive right of the plaintiff to companytinue his suit companyld number be taken away in the absence of express language or clear intendment. The words of s. 86 l are No Ruler of a foreign State may be sued in any companyrt This precludes, it is said, only the initiation of a suit and number the companytinuance of a suit already filed before the section was enacted. In our opinion, these arguments cannot be accepted. The word sued means number only the filing of a suit or a civil proceeding but also their pursuit through Courts. A person is sued number only when the plaint is filed, but is sued also when the suit remains pending against him. The word sued companyers the entire proceeding in an action, and the person proceeded against is sued throughout the duration of the action. It follows that companysent is necessary number only for the filing of the suit against the ex-Ruler but also for its companytinuation from the time companysent is required. In view of the amplitude of the word sued, it is number necessary to companysider generally to what extent pending cases are affected by subsequent legislation or refer to the principles laid down in The United Provinces V.,, Atiqa Begum 1 , Venugopala Reddiar v. Krishnaswamy Reddiar 2 or Garikapatti Veeraya v. N. Subbiah Choudhury 3 . If the language of s. 86 read with s. 87-B were applicable only to the initiation of a civil suit, these cases might have been helpful but since the words may sue include number only the initiation of a suit but its companytinuation also, it is manifest that neither the suit companyld be filed number maintained except with the companysent of the Central Government. In Atiqa Begums Case 1 , Varadachariar, J. referred to the two principles applicable to cases where the question of retrospectivity of a law has to be companysidered. They are that vested rights should number be presumed to be affected, and that the rights of the parties to an action should ordinarily be determined in accordance with the law, as it stood at the date of the companymencement of the action. But, the learned Judge pointed out that the language of the enactment might be sufficient to rebut the first, and cited the case of the Privy Council in K. C. Mukherjee v. Mst. Ram Ratan Kuer 4 . Here, the matter can be resolved on the language of the enactment. The language employed is of sufficient width and certainty to include even pending actions, and the companytrary rule applies, namely, that unless pending actions are saved from the operation of the new law,they must be taken to be affected. The word sued , as we have shown, denotes number only the start but also the companytinuation of a civil action, and the 1 1940 F.C.R.110 2 1943 F.C.R. 39. 3 1957 S.C.R.4ss. 4 1935 I.L.R. 15 Pat. 268. Prohibition, therefore, affects number only a suit instituted after the enactment of s. 87-B but one which, though instituted before its enactment, is pending. In our judgment, the present suit was incompetent against the first defendant, the ex-Ruler of Jaipur. It is companytended that defendants 2 and 3 acted as the agents of the ex-Ruler and placed the order with the appellant. The position of the Military Secretary since dead was on a different footing, but it is companyceded that numbercause of action against him survived, because the appeal has abated against him. Mohabat Singh, who is the third defendant, cannot be described as an agent of the ex-Ruler, because his companynection with the orders placed was merely to sign the letters purporting to emanate from the Military Secretary. Those letters he signed for the Military Secretary. He was number acting as the agent of the ex-Ruler but was performing the ministerial act of signing the letters on behalf of the Military Secretary. This cannot be said to have companystituted him an agent. The suit against him was, therefore, misconceived, whatever might have been said of the Military Secretary. In our opinion, the dismissal of the suit was justified in the circumstances of the case. The appeal fails, and is dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 754 of 1957. Appeal by special leave from the judgment, and order dated September 29, 1954, of the Deputy Custodian General, Evacuee Property, in Revision Petition No. 321 R ADCG/53. Achhru Ram and K. L. Mehta, for the appellant. Bishan Narain, T.N. Sethia A. N. Arora and K. R. Choudhury, for respondent No. 1 1961. March 14. The Judgment of the Court was delivered by SUBBA RAO, J.-This appeal by special leave is directed against the order of the Additional Deputy Custodian-General of Evacuee Property, New Delhi, dated September 29, 1954, setting aside the order dated August 25, 1952 of the Additional Custodian, Rural, Jullundur, companyfirming that of the Deputy Commissioner, Ambala, dated May 12, 1951. The appellant belongs to a group of evacuees which may for companyvenience be described as Dhawan Group. Diwan Chaman Lal, respondent No. 1, was a displaced person from West Pakistan where he owned companysiderable properties. On September 1, 1949, in lieu of land left behind in Pakistan, he was allotted 152.9 acres of land in village Kharwan in Tehsil Jagadhri, District Ambala. The appellant and his group also owned large extents of properties in West Pakistan. Each one of that group was allotted different extents of land in the same village. Before possession was taken by the allottees, two persons, namely, Hari Chand and Khilla Ram, filed applications dated November 14, 1949, and November 11, 1949, respectively for re-allotment on the ground that the soil of the village was number of uniform quality and the allotment on the basis of blocks was number justified. The Additional Deputy Commissioner, Ambala, re- companymended the splitting of the land into four blocks and the said recommendation was accepted by the Director-General, Rural Rehabilitation, by his order dated December 2, 1949. Thereupon the village was divided into four blocks and was re-allotted. On account of the re-allotment, the 1st respondent companyld number get his entire allotment in village Kharwan in one block and he was given instead land in different blocks and different villages. Aggrieved by this order, the first respondent filed a review application before the Deputy Commissioner, Ambala, on September 27, 1950, praying for the restoration of his original allotment made on September 1, 1949. The Deputy Commissioner, Ambala, rejected that application on May 12, 1951. Against that order the first respondent preferred a revision to the Additional Custodian, who dismissed the same on August 25, 1952. Against that order of dismissal, the first respondent filed a revision to the Custodian-General on October 30, 1952. To that revision only the Custodian was made party but the appellant and the members of his group were subsequently made parties by an order of the Deputy Custodian-General dated August 25, 1953. Thereafter numberices were issued to them. The appellant and others on their being made parties raised various companytentions. The Deputy Custodian-General cancelled the allotment made in favour of the Dhawan Group in respect of the excess area allotted to them and directed the land obtained by means of this cancellation to be utilised for the companysolidation of the allotment of the first respondent in village Kharwan. He also gave further companysequential directions. The present appeal is preferred by Purshotam Lal Dhawan, a member of the Dhawan Group, against the said order. Learned companynsel for the appellant raised before us the following two points 1 The revision to the Deputy Custodian-General was barred by time. 2 On the date when the allotment made to the appellant was cancelled, the Deputy Custodian-General had numberpower to cancel the allotment. To appreciate the first companytention some relevant dates may be given. The order of the Additional Custodian was passed on August 25, 1952. The said order was companymunicated to the first respondent on September 11, 1952. The revision was filed on October 10, 1952. On the date of the filing of the revision only the Deputy Custodian was made a party,, but later on the Dhawan Group was impleaded in the revision in October 1953. No application for excusing delay in preferring the revision against the said persons was made. It was companytended before the Deputy Custodian-General that the revision petition was barred by time against the Dhawan Group, but the Deputy Custodian- General rejected that argument and disposed of the petition on merits. The first question for companysideration is whether-the revision was barred by limitation in so far as the Dhawan Group was companycerned. Some of the relevant provisions regulating the power of revision of the Custodian-General may be numbericed. Section 27 of the Act says, The Custodian-General may at any time either on his own motion or on application made to him in this behalf call for the record of any proceedings in which any Custodian has passed an order for the purpose of satisfying himself as to the legality or propriety of any such order and may pass such order in relation thereto as he thinks fit. Under the proviso to that section, the Custodian-General shall-not pass an order under the sub- section prejudicial to any person without giving him a reasonable opportunity of being heard.In exercise of the powers companyferred by s. 56 of theAct, the Central Government made the following rules among others Rule 31. 5 Any petition for revision when made to the Custodian-General shall ordinarily be made within sixty days of the date of the order sought to be revised. The petition shall be presented in person or through a legal practitioner or a recognized agent or may be sent by registered post. The petition shall be accompanied by a companyy of the order sought to be revised and also by a companyy of the original order unless the Revising Authority dispenses with the production of any such companyy. In companytrast to the said provisions, rule 31 1 dealing with appeals says, All appeals under the Act shall when they lie to the Custodian, be filed within thirty days of the date of the order appealed against and when they lie to the Custodian-General, within sixty days of such date. Section 27 of the Act companyfers a plenary power of revision on the Custodian-General and it empowers him to exercise his revisional powers either suo motu or on application made in that behalf at any time. The phrase at any time indicates that the power of the Custodian-General is uncontrolled by any time factor, but only by the scope of the Act within which he functions. The Central Government cannot obviously make a rule unless s. 56 of the Act companyfers on it an express power to impose a time fetter on the CustodianGenerals power. We do number find any such power companyferred on the Central Government under s. 56 of the Act. So the rule can only be read companysistent with the power companyferred on the Custodian-General under s. 27 of the Act. That must have been the reason why rule 31 5 does number prescribe any limitation on the Custodian-General to exercise suo motu his revisional power. Even in the case of an application for revision filed before him it is said that ordinarily it shall be filed within sixty days. The use of the word ordinarily indicates that the period of sixty days is number a period of limitation but only a rule of guidance for the petitioners as well as for the CustodianGeneral. It is within the discretion of the CustodianGeneral to entertain revision petitions after sixty days, but the rule indicates to him that the reasonable period for entertaining a revision is sixty days. The difference in the phraseology of sub-rules 1 and 5 of rule 31 of the Rules also leads to the same companyclusion, for in the matter of appeals a period of limitation of thirty days when made to the custodian and sixty days when it lies to the Custodian-General is prescribed whereas numbersuch rigid period has been laid down in the case of a revision. If rule 31 5 is so read, its provisions will number companyflict with those of s. 27 of the Act and in that event they would be valid. The companystruction suggested by learned companynsel for the appel- lant may lend scope to the argument that the rule is ultra vires the statute, for when a section says that there is numbertime limit for entertaining a revision, s. rule cannot say that it shall be filed within a particular time. The argument that the principle underlying s. 5 of the Limitation Act applies to a petition for revision under s. 27 of the Act has numberforce. Section 5 of the Limitation Act applies to an appeal for which a period of limitation is prescribed and it empowers the companyrt to admit the appeal after the period of limitation, if the applicant satisfied it that he has sufficient reason for number preferring the appeal within the prescribed time. The principle thereunder cannot be made applicable to a revision petition under s. 27 of the Act in respect of which numberperiod of limitation is prescribed. At the same time we must make it clear that the powers of the Custodian-General under s. 27, read with rule 31 5 , are number intended to be exercised arbitrarily. Being a judicial power, he shall exercise his discretion reasonably and it is for him to companysider whether in a particular case he should entertain a revision beyond the period of sixty days stated in rule 31 5 . In this case we cannot say that the Custodian-General had acted perversely or unreasonably in entertaining the revision. The revision was filed in time. The Dhawan Group was made party at the subsequent stage as the Custodian-General rightly thought that any order he would make in favour of the appellant might prejudice the Dhawan Group. After giving them a reasonable opportunity of being heard within the meaning of the proviso to s. 27 1 of the Act, he made the order. The CustodianGeneral, therefore, acted reasonably within his powers. This objection is overruled. The second companytention of learned companynsel for the appellant is that the Custodian-General had numberpower to cancel an allotment made on or before July 22, 1952. Let us recapitulate the relevant facts. The original order of allotment was made in favour of the appellants group and of the first respondent on September 1, 1949. There as re- allotment on December 2,1949. There allotment was cancelled by the Deputy Custodian-General by his order dated September 29, 1954. The question is whether the Deputy Custodian- General can set aside the allotment made on December 2, 1949. The question raised falls to be decided on the relevant provisions of the Act and the rules made thereunder. Section 11 of the Act companyfers on the Custodian the power to cancel any allotment made by him, whether such allotment was made or entered into before or after the companymencement of the Act. Rule 14 of the Rules narrates the grounds on which an allotment can be cancelled and also the procedure to be followed for cancelling such an allotment. If a custodian makes an order either cancelling or refusing to cancel an allotment, the Custodian-General can, under s. 27 of the Act, set aside that order, if he is satisfied that it is number legal or proper, and he may pass such order in relation thereto as he thinks fit. But it is said that rule 14 6 limits the power of the Custodian-General in respect of allotments made under the Act. As the argument turns upon that rule, it would be companyvenient to read the material parts of it. Rule 14. 6 Notwithstanding anything companytained in this rule, the Custodian of Evacuee Property in the State of Punjab shall number exercise the power of cancelling any allotment of rural evacuee property on a quasi-permanent basis, or varying the terms of any such allotment, except in the following circumstances . After narrating the circumstances, with which we are number number companycerned, the sub.rule companytains a proviso which reads, Provided further numberhing in this sub-rule shall apply to any application for revision, made under section 26 or section 27 of the Act, within the prescribed time, against an order passed by the lower authority on or before 22nd July, 1952. Under this sub-rule there is a ban on the exercise of the power of the Custodian to cancel an allotment of a rural evacuee property on a quasi-permanent basis except under certain circumstances. his sub-rule was substituted for the old sub-rule by S.R.O. 1290 of July 22, 1952. A Custodian under the Act cannot set aside an allotment except under the.circumstances mentioned in the sub-rule. But the second proviso to that sub-rule lifts the ban in the case of an application made for revision under s. 26 or s. 27 of the Act. It may be mentioned that the words or section 27 after the words section 26 were added in the sub. rule on August 26, 1953 i.e., before the order of the Custodian- General in the present case. Section 26 of the Act, as it then stood, companyferred revisional jurisdiction on the Custodian, Additional Custodian or Authorized Deputy Custodian against the orders of subordinate officers. Section 27, as we have already numbericed, companyfers a similar power of revision on the CustodianGeneral. By reason of the proviso, the CustodianGeneral can, in exercise of his powers under s. 27 of the Act, cancel an allotment made by a lower authority on or before July 22, 1952. The only limitation on that power is that he must do so in a revision filed within the prescribed time. What is the prescribed time for a revision under s. 27 of the Act? Prescribed has been defined in the Act to mean prescribed by rules made under this Act. Rule 31 5 prescribes that a revision to the Custodian-General shall ordinarily be made within sixty days of the order sought to be revised. In companysidering the first point, we have explained the scope of the rule and we have held that the said rule is only a rule of guidance and that in law a revision can be entertained at any time even after sixty days if the Custodian-General in his discretion thinks fit to entertain it. The prescribed time in the companytext of a revision to the Custodian-General can only mean sixty days or such other time within which the Custodian-General in his discretion thinks fit to entertain the revision. As the allotment in the present case was made before July 22, 1952, the Custodian-General was within his rights in cancelling the same. Before we close, it is necessary to numberice another companytention raised by learned companynsel for the respondents. The argument was that there was numberallotment made in favour of the appellant and, therefore, there was numberscope for invoking the provisions of rule 14 of the Rules. The basis of the argument is the following observations of the Deputy Custodian-General in his order dated September 29, 1954 The petitioner has rightly companytended that the Dhawan Group had numberverified claim for the allotment of this excess area and in spite of an opportunity afforded by me to them to produce the companyies of their Parcha Claim, they have failed to do so. The reports of the Land Claims Officer dated 7th August 1952, and 11th August 1952, on pages 147 and 151 of the record, show that although the allotment had been made to Dhawan Group but a search had been made for their claims which were number traceable. On page 129 of the record, a report by the Department dated 21st August, 1952, shows that numberorder of allotment to Dhawan Group was forthcoming. These observation do number record a clear finding that there was numberallotment in favour of the appellant. Indeed the factum of allotment to the appellant was never questioned throughout the proceedings. In the circumstances, we must dispose of this appeal on the basis that there was an allotment in favour of the appellant. This companytention, is, therefore, rejected. No other point was raised before us.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 458 of 1958. Appeal by special leave from the judgment and decree dated September 3, 1956, of the Patna High Court in M. J. No. 603 of 1955. K. Ramaraurthi, R. K. Garg, S. C. Agarwal and P. Singh, for the appellant. C. Prasad, for the respondents. 1961. March 10. The Judgment of the Court was delivered by SUBBA RAO, J.--This appeal by special leave is directed against the order of the High Court of Judicature at Patna dismissing the application filed by the appellant under Art. 226 of the Constitution to quash the order dated August 4, 1955, passed by Shri R. P. Singh, Custodian of Evacuee Property, Bihar. The facts relevant to the question raised in this appeal may be briefly stated. On information supplied by one Qurban Ahmad, the Assistant Custodian, Giridih, issued a numberice under s. 7 1 of the Administration of Evacuee property Act, 1950 Act 31 of 1950 , hereinafter called the Act , to the appellant to show cause why he should number declare holdings Nos. 326, 774 and 654 in his possession as evacuee properties. The Assistant Custodian, after making the necessary inquiry, held that the said holdings were evacuee properties. The appellant filed a revision petition under s. 26 of the Act against the said order to the Deputy Custodian, Hazaribagh, who set aside the order of the Assistant Custodian and remanded the matter to him for disposal in accordance with law. On April 26, 1954, the Assistant Custodian, Giridih, on a companysideration of the evidence placed before him, held that the said properties were number evacuee properties, and on that finding he released them. Thereafter, the Custodian, acting under s. 26 1 of the Act, called for the records of the case and, after hearing the appellant, by his order dated January 27, 1955, dropped the proceedings. On February 22, 1955, the Assistant Custodian, Head-quarters, Patna filed an appeal before the Custodian, under s. 24 1 a of the Act, against the order of the Assistant Custodian, Giridih, dated April 26, 1954, releasing the holdings of the appellant. On August 4, 1955, the Custodian set aside the order of the Assistant Custodian, Giridih, and declared the shares of the brothers of the appellant in the holdings to be evacuee properties and referred the matter to the appropriate authority for the separation of their interest. Thereafter, the appellant filed an application to the High Court under Art. 226 of the Constitution to quash the said order, but that was dismissed. Hence the appeal. Though many questions were raised before the High Court, only the following four questions were pressed before us by learned companynsel for the appellant No appeal lay to the Custodian from the order of the Assistant Custodian, Giridih, at the instance of the Assistant Custodian, Headquarters, Patna. 2 Under s. 7-A of the Act the Custodian has numberpower after May 7, 1954, to declare any property to be evacuee property unless proceedings are pending on the said date for declaring such property as evacuee property, and that in the present case, as the appeal against the order of the Assistant Custodian was filed only on February 22, 1955, numberproceeding was pend- ing on the prescribed date and, therefore, the Custodian illegally made the order in direct companytravention of the provisions of B. 7-A of the Act. 3 The Custodian acted perversely in companydoning the delay in filing the appeal to him without assigning any reasons. 4 The numberice issued to the appellant under s. 7 1 of the Act was defective and, therefore, the proceedings taken pursuant thereto were void. The appellant lost before the High Court on all the four points. Though learned companynsel for the appellant raised all the four companytentions before us, he seriously pressed only the first two companytentions. To appreciate the first companytention and to give a satisfactory answer thereto, it would be necessary to companysider the scope of the relevant provisions of the Act. Section 2 c defines Custodian to mean the Custodian for the State and to include any Additional, Deputy or Assistant Custodian of evacuee property in that State. Section 6 authorises the Central Government to appoint for any State a Custodian and as many Additional, Deputy or Assistant Custodians of Evacuee Property as may be necessary for the purpose of discharging the duties imposed on the Custodian by or under the Act. By sub-s. 3 of that section, the Additional, Deputy and Assistant Custodians of Evacuee Property shall discharge the duties imposed on them by or under the Act under the general superintendence and companytrol of the Custodian of the State, but the Central Government may, by general or special order, provide for the distribution of work among them. The said provisions indicate that whatever the designations of the said officers be they are all Custodians within the definition of Custodian in the Act, though for companyvenience their duties are either statutorily or administratively defined. Under s. 7 a Custodian-it may be numbered that the Custodian may be any one of the aforesaid categories-if he is of opinion that any property is evacuee property within the meaning of the Act, he may, after causing numberice thereof to be given in such manner as may be prescribed to the persons interested, and after holding such inquiry into the matter as the circumstances of the case permit, pass an order declaring any such property to be evacuee property. Sub-s. 3 thereof enjoins on him the duty to publish in the Official Gazette all properties declared by him to be evacuee properties. After such declaration the said properties vest in the Custodian for the State. Section 9 empowers the Custodian to take possession of evacuee property vested in him. Section 10 companyfers powers on the Custodian to take such measures as he companysiders necessary or expedient for the purposes of securing, administering, preserving and managing any property. Section 24 companyfers a right on any person aggrieved by an order made under s. 7 to prefer an appeal to the Custodian where the original order has been passed by a Deputy or Assistant Custodian and the amount or value of the property which is the subject-matter of the order does number exceed two thousand rupees, and to the Custodian-General in any other case. Section 26, which was deleted from the Act by s. 8 of Act 91 of 1956, companyferred a revisional jurisdiction on the Custodian, Additional Custodian or Authorized Deputy Custodian against the orders of subordinate officers. Section 27 gives to the Custodian- General a plenary power of revision to companyrect the orders of any Custodian at any time. The scheme of the foregoing provisions may be briefly stated thus A Custodian, as defined in the Act, after necessary inquiry, may declare a property to be evacuee property on such declaration the property vests in him after such vesting, the Custodian manages the said property if a Custodian wrongly or illegally declares a property to be evacuee property, the person aggrieved by his order can prefer an appeal to the appropriate authority prescribed under s. 24 the Custodian or the Custodian. General, as the case may be, in appropriate cases, can also, in exercise of his revisional jurisdiction, set aside that order if a Custodian illegally or improperly releases a property on the ground that it is number evacuee property, it is liable to be revised by the Custodian or the Custodian- General, as the case may be, under s. 26 or s. 27 of the Act. Learned companynsel for the respondents companytends that the words any person aggrieved under s. 25 of the Act are companyprehensive enough to include a Custodian and, therefore, a Custodian can prefer an appeal against an order of a Custodian releasing properties under s. 7 of the Act. Realizing that an obvious anomaly is implicit in the argument, learned companynsel companycedes that an appeal can be filed only by a Custodian other than the Custodian who made the order releasing the properties. It is said that the Central Government may, under s. 6 of the Act, provide for the distribution of work among the various Custodians, namely, Additional, Deputy and Assistant Custodians, and in such allocation the power to inquire whether a property is an evacuee property or number may be companyfer. red on one Custodian and the power to manage it on another, and that, in that event, the Custodian on whom the power to manage is companyferred will be a person aggrieved within the meaning of s. 24 of the Act. In our View this argument is number companysistent with the scheme of the Act. Though for the purpose of companyvenience of management or judicial determination of disputes the Act provides different categories of Custodians, all of them fall within the definition of Custodian in the Act. The Act further provides a hierarchy of tribunals under the superintendence and companytrol of the Custodian-General. It would be anomalous were it to be held that a Custodian companyld prefer an appeal against the order of a Custodian. The Act does number companytemplate one officer preferring appeals against the orders of another officer If an Assistant Custodian or a Custodian went wrong in the matter of declaring a property to be an evacuee property, the Act provides that the Custodian or the CustodianGeneral, as the case may be, before 1956, and the Custodian-General thereafter, may set right the wrong. In the premises the words any person aggrieved in s. 24 of the Act can only mean a person whose properties have been declared to be evacuee properties by the Custodian, or a person who moved the Custodian to get the properties so declared or any other such aggrieved person. The words any person aggrieved in the companytext of the Act cannot include any Custodian as defined in the Act. Strong reliance is placed upon the decision of this Court in Ebrahim Aboobaker v. Custodian-General of Evacuee Property 1 in support of the companytention of the respondents. In that case, on information supplied by one Tek Chand Dolwani to the Additional Custodian of Evacuee Property, the latter started proceedings under the Bombay Evacuees Administration of Property Act, 1949, against one Aboobaker. The Additional Custodian, after recording the statement of Aboobaker and examining the evidence produced by Tek Chand Dolwani, held that the said Aboobaker was number an evacuee. Tek Chand Dolwani filed an appeal against the said order to the Custodian-General of India One of the questions raised was whether the said Tek Chand Dolwani was a person aggrieved by the order of the Additional Custodian within the meaning of s. 24 of the Central Ordinance XXVII of 1949, and was entitled to appeal against the said order. This Court held that the said person was a person aggrieved within the meaning of the said section. It was provided in rule 5 5 of the rules made under the Ordinance that any person or persons claiming to be interested in the inquiry or in the property being declared as evacuee property, might file a written statement in reply to the written statement filed by the persons interested in the property claiming that the property should number be declared as an evacuee property and that the Custodian should proceed. to hear the evidence, if any, which the party appearing to show cause might produce and also the evidence which the party claiming to be interested as mentioned 1 1952 S.C.R. 696. above might adduce. The rule, therefore, authorized the Additional Custodian to adjudicate between the person moving the Custodian to declare a property as evacuee property and the person denying that fact In that companytext, this Court held that the person moving the Custodian was a person aggrieved within the meaning of s. 24. This decision or the decisions relied upon by this Court in the aforesaid case in companying to the said companyclusion are number relevant to the present enquiry. Where a statute or rules framed thereunder provide for a dispute between two parties to be decided by a tribunal, it is implicit in that provision that the defeated party is one aggrieved by that decision. But the same cannot be said of a Custodian and the party in whose favour he gave a decision number can another subordinate officer of the Custodian, who made the decision and who has numberstatutory duty to appear before the Custodian to put forward the case of the department or lead evidence in support thereof, be equated to a party in a lis. We, therefore, bold, having regard to the scheme of the Act, that the Assistant Custodian, Headquarters, Patna, is number a person aggrieved within the meaning of s. 24 of the Act. The appeal to the Custodian, therefore, was number companypetent. In this view, the second question does number fall to be companysidered. In the result, the order of the High Court is set aside and we direct the issue of a writ of certiorari to quash the order of the Custodian of Evacuee Property Bihar, dated April 26, 1954 setting aside the order of the Assistant Custodian, Giridih, releasing the holdings Nos. 326, 774 and 654 in Giridih belonging to the appellant.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Petitions Nos. 140 and 177 to 191 of 1959. Petitions under Article 32 of the Constitution of India for enforcement of Fundamental Rights. R. M. Abdul Karim and K. R. Choudhury, for petitioners. N. Rajagopala Sastri and D. Gupta, for respondents. 1961. March 22. The Judgment of the Court was delivered by KAPUR, J.-These are sixteen petitions under Art. 32 of the Constitution challenging the legality of the imposition of surcharge imposed on the income of the assessees under the Finance Acts of 1942, 1943, 1944 and 1945. The assessment relates to four assessment years 1942-43, 1943-44, 1944-45 and 1945-46. The petitioners are four partners of a firm named Mohammedaly Sarafaly Co., Madras, which was carrying on business in hardware, stocks, shares, etc. For the assessment years 1942-43 to 1945-46 this firm was treated as a registered firm under the Indian Income-tax Act and therefore the partners were assessed on their respective shares of the profits from the business of the firm. All assessments were companypleted before 1949 and total income for the purpose of assessment for those four years was about Rs. 29,00,000. In 1955 the petitioners under a Voluntary Disclosure Scheme with regard to profits which had escaped assessment made a disclosure of their income and proceedings were taken under s. 34 of the Income-tax Act. In the month of April, 1959, there was a reassessment on all the four partners and the total income for the four assessment years thus came to about Rs. 35 lakhs which included Rs. 29 lakhs already assessed. On that income, income-tax, super-tax, and surcharge were levied. The surcharge, according to the petition was Rs. 3,82,791. It is this surcharge which is impugned as being, without the authority of law inasmuch as the then Federal Legislature, it is submitted, was number companypetent to levy the surcharge. Provision for surcharge was made under s. 8 1 of the Finance Act, 1942 Act XII of 1942 . This section may number be quoted- Section 8 1 Subject to the provisions of sub-sections 2 and 3 ,- a income-tax for the year beginning on the 1st day of April, 1942, shall be charged at the rates specified in Part I of Schedule II increased in the cases to which subparagraph b of paragraph A and paragraph B of that part apply with a sur- charge for the purposes of the Central Government at the rate specified therein in respect of each such rate of income-tax, and b rates of super-tax for the year beginning on the 1st day of April, 1942, shall, for the purpose of section 55 of the Indian Income-tax Act, 1922, be those specified in Part II of Schedule II increased in the cases to which paragraphs A, B and C of that Part apply by a surcharge for the purposes of the Central Government at the rate specified therein in respect of each such rate of super-tax. It was companytended that the Federal Legislature had numberpower under the Government of India Act, 1935, 25 and 26 Geo V, Ch. 42 , to impose a surcharge for the purposes of the Central Government. The legislative power of the Federal Legislature was given in s. 100 of the Government of India Act, 1935, and the power to tax income was companytained in item 4 of List I of the Seventh Schedule which was as follows Taxes on income other than agricultural income. Part VII of the Government of India Act, 1935, deals with Finance, Property and Suits and the first chapter deals with Finance. The relevant section which has been relied upon by the petitioners, i.e., s. 138 1 of that Act, is in that Part which deals with Distribution of Revenues between the Federation and the Federal Units. That section reads- Section 138 1 Taxes on income other than agricultural income shall be levied and companylected by the Federation Provided that- a b the Federal Legislature may at any time increase the said taxes by a surcharge for Federal purposes and the whole proceeds of any such surcharge shall form part of the revenues of the Federation. It was submitted that according to this section the power of the Federal Legislature to impose a surcharge was only for Federal purposes that by s. 8 1 of the Finance Act, 1942, and similar provisions in the other Finance Acts of three following years, the surcharge had been levied for the purposes of the Central Government and that the terms the purposes of the Central Government and for Federal purposes were number the same but were two different companycepts. Section 311 of the Government of India Act, 1935, deals with Interpretation but Federal purposes is Dot defined in that section. In subsection 3 of s. 313 which is in Part XIII, dealing with Transitional Provisions, it is provided-- Section 313 3 References in the provisions of this Act for the time being in force to the Governor-General and the Federal Government shall, except as respects matters with respect to which the Governor-General is required by the said provisions to act in his discretion be companystrued as references to the Governor- General in companyncil, and any reference to the Federation, except where the reference is to the establishment of the Federation, shall be companystrued as a reference to British India, the Governor-General in Council, or the Governor- general, as the circumstances and the companytext may require. On the basis of this section it was urged that the term Federal purposes in s. 138 1 b of the Government of India Act, 1935, means the purposes of the Federal Government, i.e., of the Governor-General in Council or the Governor-General as the case may be and that in the companytext it is a term of lesser amplitude than the term purposes of the Central Government. Central Government in s. 3 8ab a of the General Clauses Act, 1897, was defined as follows- Section 3 8ab Central Government shall- a in relation to anything done or to be done after the companymencement of Part III of the Government of India Act, 1935, mean the Federal Government. Federal Government was defined in the General Clauses Act in s. 18 a as follows- Section 18 a Federal Government shall- a in relation to anything done or to be done after the companymencement of Part III of the Government of India Act, 1935, but before the establishment of the Federation, mean, as respects matters with respect to which the Governor-General is by and under the provisions of the said Act for the time being in force required to act in his discretion, the Governor-General and as respects other matters, the Governor-General in Council and shall include- in relation to functions entrusted under section 124 1 of the said Act to the Government of a Province, the Provincial Government acting within the scope of the authority given to it under that subsection and in relation to the administration of a Chief Commissioners Province, the Chief Commissioner acting within the scope of the authority given to him under section 94 3 of the said Act. From these sections it was argued that the term Federal Government in the Government of India Act 1935, only meant the Governor-General or the Governor-General in Council as the case may be but under the definition in the General Clauses Act the term Central Government did number only denote the Governor-General or the Governor-General in Council as the case may be but also included for certain purposes the Provincial Governments acting within the scope of the authority given to them under a. 124 1 of the Government of India Act, 1935. This argument, in our opinion, is wholly fallacious. The power of the Federal Legislature to legislate was companyferred by s. 100, sub-ss. 1 and 2 . The first sub- section deals with the power of the Federal Legislature to legislate in regard to items companytained in the First List which was exclusively within the power of the Federal Legislature. The Federal Legislature therefore had the power to legislate in regard to any subject companytained in List I and item 54 relating to taxes on income was in that List. It has been held that the items have to be given the widest possible amplitude. But it was submitted that the power under item 54 howsoever wide it may be is subject to the limitation companytained in s. 138 1 , proviso b . Now Federal purposes is number defined in the Government of India Act, 1935, number is it defined in the General Clauses Act. But there is-sufficient indication in s. 138 itself that the amounts recovered as surcharge were to form part of the Revenues of the Federation and such Revenues were to be expended for the purposes there indicated. Under s. 124 4 of the Government of India Act, 1935, where powers and duties are companyferred by s. 124 upon a Province or a Federated State there shall be paia by the Federation to the Province or the Federated State such sum as may be agreed Hence by the definitions given in Hence by the given in the General Clauses Act numberdifferent companycept of the words purposes of the Central Government was intended from what was intended by the use of the words Federal purposes in s. 138 1 b of the Government of India Act, 1935. These petitions therefore fail and are dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 264 of 1960. Appeal by special leave from the Award dated October 12, 1959, of the Industrial Tribunal, Bombay in Reference IT No. 81 of 1959. T. Desai, Sukumar Ghose and B. N. Ghose, for the appellant. L. Dhudia and K. L. Hathi, for the respondents. 1961. April 3. The Judgment of the Court was, delivered by GAJENDRAGADKAR, J.-This appeal by special leave is directed against the award passed by the industrial tribunal in a matter which was referred to it under s. 36A 2 of the Industrial Disputes Act, 1947, for interpretation of certain terms of the award made by the said tribunal on April 28, 1951, in Reference No. 168 of 1950. It appears that a dispute had arisen between the appellant M s. Jeewanlal 1929 Ltd. and its workmen in regard to certain demands made by the respondents against the appellant in 1950. The said dispute was referred for adjudication as a result of which an award was passed which, inter alia, provided for a gratuity scheme. Some provisions of this award have been referred for interpretation in the present reference. On August 31, 1957, resignation submitted by the appellants employee Bhanu Bala was accepted by the appellant. The said employee had joined the appellants service in 1929 but there was a break in the companytinuity of his service for nearly 81 months because he had remained absent from duty without permission or leave from. February 14, 1945 to the end of October, 1945. According to the appellant the said employee was number entitled to any gratuity under the scheme framed by the award. Even so the appellant offered him Rs. 1,165 and odd on companypassionate grounds. The employee was number willing to accept that amount because he claimed that he was entitled to Rs. 2,282.50 nP. by way of gratuity. The demand thus made by the employee led to an industrial dis- pute which was taken by the employee before the First Labour Court at Bombay under s. 33C of the Act. The Labour Court entertained the application, decided the point in dispute in favour of the employee and directed the appellant to pay him Rs. 1,781-80 nP. as gratuity. The appellant then moved the Bombay High Court for a writ under Arts. 226 and 227 on the ground that the Labour Court had numberjurisdiction to entertain the application made before it by the employee. This writ petition was allowed and the order passed by the Labour Court was quashed. It was at this stage that the Government of Bombay referred the question of interpretation of the term companytinuous service companytained in the award of 1951 to the Industrial Court under s. 36A 1 of the Act. That is how the Industrial Court was possessed of the matter. It has held that the words companytinuous service I as used by the tribunal when it framed the award in question mean service number broken or interrupted by the termination of the companytract of employment by either the employer or the employee or by operation of law. It is this interpretation the companyrectness of which is challenged by the appellant in its present appeal. The relevant part of the gratuity scheme which was framed by the tribunal in the earlier reference reads thus On the death of an employee while in the service of the companypany or on an employee becoming physically or mentally disabled to companytinue further in service half a months wages for each year of service subject to a maximum of ten months wages to be paid to him or to his heirs, executors, assigns or numberinees as the case may be. On the termination of his service by the companypany after five years companytinuous service- Gratuity at the same rate as above. On voluntary retirement or resignation of an employee after 15 years companytinuous service-Gratuity at the same rate as above. As we have already seen the employee Bhanu Bala resigned and his resignation was accepted in August, 1957. He claimed the benefit of el. iii whereas the appellant companytended that the said employee had number been employed in companytinuous service for the requisite period because there was a break in his service between February 14, 1945, to -the end of October, 1945, and that affected the companytinuity of his employment which made his claim incompetent under el. iii . This companytention has been rejected by the tribunal. Mr. S. T. Desai companytends that in interpreting the words companytinuous service in cl. iii we should companypare the provisions of s. 49B l along with the explanation in the Indian Factories Act, 1934 XXV of 1934 as well as s. 79 1 along with explanation 1 in the Indian Factories Act, 1948 63 of 1948 prior to its amendment in 1954 and he argues that unauthorised absence from work should numbermally cause a break in service so that if an employee, after uNauthorised absence from work, is allowed to resume after such unauthorised absence he should number be entitled to claim companytinuous service in view of the break in his service. In support of this argument reliance has been placed on the decision of this Court in Buckingham and Carnatic Co. Ltd. Workers of the Buckingham and Carnatic Co. Ltd. 1 . In that case this Court has held that the companytinuity of the service of the workers was interrupted by the illegal strike and so they were number entitled to claim holidays with pay under s. 49B 1 of the Indian Factories Act. It would, however, be numbericed that the said decision turned upon the definition of the word strike in S. 2 q of the Industrial Disputes Act, 1947, read with the relevant provision of s. 49-B of the Indian Factories Act, 1934 and there can be numberdoubt that in a different companytext the same words can and often have different meanings. As this Court has observed in Budge Budge Municipality v. P. It. Mukherjee 2 , the same words may mean one thing in one companytext and another in different companytext. This is the reason why decisions on the meaning of particular words or companylection of words found in other statutes are scarcely of 1 1953 S.C.R. 219. 2 1953 1 L. L. J. 195, 198. much value when we have to deal with a specific statute of our OWn they may be helpful but cannot be taken as guides or precedents. Therefore, the meaning attributed to the words companytinuous service in the companytext of the Factories Act may number have a material bearing in deciding the point in the present appeal. The same companyment falls to be made in regard to the argument based on the definition of the expression companytinuous service companytained in s. 2 eee of the Industrial Disputes Act, 1947. The said section provides that companytinuous service means uninterrupted service and includes service which may be interrupted merely on account of sickness or authorised leave or an accident or a strike which is number illegal, or a lockout or a cessation of work which is number due to any fault on the part of the workmen. This definition is undoubtedly relevant in dealing with the question of companytinuous service by reference to the provisions of Industrial Disputes Act but its operation cannot be automatically extended in dealing with an interpretation of the words companytinuous service in an award made in an industrial dispute unless the companytext in which the expression is used in the award justifies it. In other words, the expression companytinuous service may be statutorily defined in which case the definition will prevail An award using the said expression may itself give a definition of that expression and that will bind parties in dealing with claims arising from the award. Where, however, the award does number explain the said expression and statutory definitions companytained in other Acts are of numbermaterial assistance it would be necessary to examine the question on principle and decide what the expression should mean in any given award and that is precisely what the tribunal had to do in the present case. Continuous service in the companytext of the scheme of gratuity framed by the tribunal in the earlier reference postulates the companytinuance of the relationship of master and servant between the employer and his employees. If the servant resigns his employment service automatically companyes to an end. If the employer terminates the service, of his employee that again brings the companytinuity of service to an end. If the service of an employee is brought to an end by the operation of any law that again is another instance where the companytinuance is disrupted but it is difficult to hold that merely because an employee is absent without obtaining leave that itself would bring to an end the companytinuity of his service. Similarly, participation in an illegal strike which may incur the punishment of dismissal may number by itself bring to an end the relationship of master and ser- vant. It may be a good cause for the termination of service provided of companyrse the relevant provisions in the standing orders in that behalf are companyplied with but mere participation in an illegal strike cannot be said to cause breach in companytinuity for the purposes of gratuity. On the other hand, if an employee companytinues to be absent from duty without obtaining leave and in an unauthorised manner for such a long period of time that an inference may reasonably be drawn from such absence that by his absence he has aban- doned service, then such long unauthorised absence may legitimately be held to cause a break in the companytinuity of service. It would thus always be a question of fact to be decided on the circumstances of each case whether or number a particular employee can claim companytinuity of service for the requisite period or number. In our opinion, therefore, the view taken by the tribunal is substantially right though we would like to make it clear that in addition to the cases where according to the tribunal companytinuity of service would companye to an end there would be the class of cases where long unauthorised absence may reasonably give rise to an inference that such service is intended to be abandoned by the employee. With this modification we companyfirm the award and dismiss the appeal.

Case appeal was rejected by the Supreme Court

total of 25 lakhs shares of RS. 2 each. According to the agreement the assessee companypany bad to take the whole of the block of shares belonging to the Sassoons and pay at Rs. 4-4-0 per share Rs. 12-1/2 lakhs for the managing agency. As the assessee companypany had only RS. 20 lakhs as its paid up capital, it was necessary to sell 13 lakhs odd shares in order to pay off the Sassoons both for the Managing Agency and the shares. Therefore during the companyrse of negotiations the promoters of the assessee companypany entered into an agreement with some brokers for the sale of Rs. 19,76,000 shares. As a result of the sale of shares the assessee companypany received a sum of Rs. 16,52.600 as excess over the purchase price which amount on taxation was held by the Income-tax Officer number to be profits and therefore number taxable. The case of the assessee companypany was referred to the Investigation Commission. The Commission found that it was number the intention of the assessee companypany to retain the whole block of shares and that the sale of 13 lakhs odd shares was an adventure in the nature of trade, and directed that appropriate assessment be made, under the Indian Income-tax Act and Excess Profits Tax Act. At the instance of the assessee companypany the question was referred to the High Court under S. 8 5 of the Taxation on Income Investigation Commission Act, 1947, which held that there were materials to justify the finding of the Commission that the purchase and sale of about 13 lakhs odd shares was an adventure in the nature of trade. An appeal was taken to the Supreme Court against this order. Held, that in companysidering the question whether the transac- tion was or was number an adventure in the nature of trade, the companyrt had to take into companysideration the intention of the assessee keeping in view the legal requirements which are associated with the companycept of trade or business In the present case, the transaction that companysisted of buy- ing the managing agency of the Mill Company and the block of shares held by Sassoons was inescapably one of a companymercial nature and had all the attributes of an adventure in the nature If of trade. Held, further, that the jurisdiction which this Court would exercise in appeal was of the same character that a High Court would exercise. Thus the question under Art. 14 of the Constitution companyld number be raised in these proceedings because this Court like the High Court was exercising its advisory jurisdiction and its power was companyfined to the question which arose before the High Court. M s. Ramnarain Sons Pr. Ltd. v. Commissioner of Income- tax, Bombay, 1961 2 S.C.R. 904, Tata Hydro-Electric Agencies, Bombay v. The Commissioner of Income-tax, Bombay Presidency Aden, 1037 L.R. 64 I.A. 215, Commissioner of, Income-tax, Central and United Provinces, Lucknow v. M s. Motiram Nandram, 1939 L.R. 67 I.A. 71, Jones v. Leeming, 1930 A.C. 415, Commissioner of Inland Revenue v. Reinhold, 1953 34 T.C. 389 and Saroj Kumar Mazumdar v. Commissioner of Income-tax, West Bengal, Calcutta, 1959 SUPP. 2 S.C.R. 846, distinguished. Kishan Prasad Co. v. Commissioner of Income-tax, Punjab, 1955 27 I.T.R. 49, Edwards v. Bairstow, 1956 A.C. 14 and Venkataswami Naidu Co. v. The Commissioner of Income- tax, 1959 SUPP. 1 S.C.R. 646, discussed. CIVIL APPELLATE, JURISDICTION Civil Appeal No. 282 of 1955. Appeal by special leave from the judgment and order dated March 20, 1953, of the Bombay High Court in Income-tax Reference No. 31 of 1951. V. Viswanatha Sastri and I. N. Shroff, for the appellants. N. Rajagopal Sastri and D. Gupta, for the respondent. 1961. April 12. The Judgment of the Court was delivered by KAPUR, J.-This is an appeal against the judgment and order of the High Court of Bombay in a reference under s. 8 5 of the Taxation on Income Investigation Commission Act, 1947 Act XXX of 1947 , hereinafter termed the Act. The assessee companypany was the applicant before the High Court and is the appellant before us and the Commissioner of Income-tax, Bombay City, was the respondent in the High Court and is the respondent here also. Being a reference under s. 8 5 of the Act, it was heard and decided by three judges of the High Court. The assessee companypany is a private limited companypany which was incorporated on May 6, 1943, with a paid up capital of Rs. 20 lacs. It was promoted by two groups of persons who for the sake of companyvenience may be called the Morarka Group and the Bubna Group. The Apollo Mills Co., Ltd. of Bombay with a capital of Rs. 50 lacs divided into 25 lacs shares of Rs. 2 each, had as its Managing Agents M s. E. D. Sassoon Co. Ltd., who for the sake of brevity, will be referred to in this judgment as the Sassoons. They held 19,76,000 shares out of the 25 lacs. The promoters of the assessee companypany entered into an agreement with the Sassoons on April 27, 1943, by which the Sassoons agreed to transfer their Managing Agency in the Mill Co. for Rs. 12-1/2 lacs to the promoters of the assessee companypany and the whole of their holding of 19,76,000 shares at Rs. 4-4-0 per share, i.e., for Rs. 83,98,000. These shares were to be transferred to the promoters or to the companypany which they were proposing to float. By clause 3 of this agreement the sale of the Managing Agency and the transfer of the shares was to be simultaneously companypleted and neither party companyld require the companypletion of the one without the other. On November 1, 1943, a tripartite agreement was entered into between the Sassoons as Assignors, the promoters of the companypany as Confirming Parties and the assessee companypany as Assignees. By that agreement the Managing Agency rights were for-.ally transferred to the assessee companypany so also the Share Certificates for the whole of holding of the Sassoons in the Mill Co. and the necessary blank transfer deeds went Before the agreement of April 27, 1943, and during the companyrse of negotiations with the Sassoons the promoters of the assessee companypany entered into an arrangement with some share brokers for the sale of a large portion of the total holding of 19,76,000 shares of the Mill Co. The price of these shares varied from Rs. 5- 8-0 to Rs. 5-13-0. In all 10,00,000 shares out of the total holding of the Mill Co. were sold to these brokers and they in turn sold these block of shares in smaller lots to a number of purchasers. Some shares were sold later 1,20,000 shares were transferred to 13 numberinees of the Morarka Group at companyt price. As a result of sale of all these 13,74,000 shares the assessee companypany received a sum of Rs. 16,52,600 as excess over the purchase price. The remaining shares the assessee companypany retained. The assessee companypany submitted that the profits of the entire holding of the shares had number been worked out and had therefore number been transferred to the profit and loss account. The assessee companypany was taxed by the Income-tax Officer but the sum of Rs. 16,52,600 which was the excess of the sale price over the purchase price of 13,74,000 shares was held number to be profit and therefore number taxable. When the Act came into force the case of the assessee companypany was referred to the Investigation Commission by the Central Government and the Investigation Commission made its report on November 9, 1949, in Case No. 406A. By this report the Commission directed that appropriate assessment be made under the Indian Income tax Act for the assessment year 1945-46 and the Excess Profits Tax Act for the companyresponding chargeable accounting period. At the instance of the assessee companypany the Commissioner of Income-tax, Bombay City, by his order dated May 1, 1951, referred the following question to the High Court Whether on the facts found by the Commission the sum of Rs. 16,52,600 being the excess price realised by the sale of 13,74,000 shares of the Mill Company, was profit and as such taxable or whether it was either of the nature of a capital appreciation or a casual and number- recurring receipt and as such exempt from taxation under Section 4 3 vii of the Income-tax Act. The High Court reformulated the question as follows- Whether there were materials to justify the finding of the Tribunal that the transaction of purchase and sale of 13,74,000 shares was an adventure in the nature of trade? and answered the question so formulated in the affirmative and therefore against the assessee companypany. In its application for reference under s. 8 5 of the Act the assessee companypany wanted some other questions also to be referred but the Investigation Commission only referred the question which has been set out above. The assessee companypany therefore took out a Notice of Motion on November 8, 1952, which was dismissed by the High Court on the ground that either the questions which were sought to be raised did number arise out of the finding of the Commission or they were included in the question which had been referred and answered by the High Court. Although the High Court did number so hold, the Notice of Motion was barred by time, being filed after more than six months allowed under s. 66 2 of the Indian Income-tax Act. Against this judgment and order of the High Court the assessee companypany has companye in appeal to this Court by special leave. This appeal is brought against the judgment of the High Court answering the question referred and therefore in its advisory jurisdiction. The jurisdiction which this Court exercises in appeal is of the same character and therefore any question which was number referred to the High Court cannot be allowed to be raised at this stage. Consequently the companystitutional question in regard to discrimination under Art. 14 of the Constitution which is number sought to be raised cannot be raised. The main question which would then survive for decision is the nature of transaction relating to the sale of 13 lacs odd shares and whether or number the sale was an adventure in the nature of trade and therefore the amount of Rs. 16,52,600 the excess of sale price over the purchase price of the share is a Revenue Receipt and therefore taxable profits or is it a Capital Receipt and therefore number liable to tax. The Investigation Commission by their order dated May 1, 1949, found- 1 that a distinction should be made between the 6 lacs shares which the assessee companypany intended to and did retain and the 13 lacs odd shares which it intended to and did sell the former was kept in order to enable the assessee companypany to make their Managing Agency rights effective. During the negotiations between the Sassoons and the promoters of the. assessee companypany, the promoters of the assessee companypany had started negotiations with certain brokers for the transfer of 13 lacs odd shares soon after the arrangement between the Sassoons and the assessee companypany was companypleted. From the very beginning the intention of the promoters of the assessee companypany was to sell all the 13 lacs odd shares and in pursuance thereof they were sold. The paid up capital of the assessee companypany was Rs. 20 lacs only and according to the agreement they had to take the whole block of shares belonging to the Sassoons and pay for the shares as well as for the Managing Agency both of which were separately valued in the agreement. It was therefore necessary and it was intended to sell the 13 lacs odd shares in order to pay off the Sassoons both for the Managing Agency and the shares. The inference drawn from this by the Commission was that a distinction had to be drawn between the 6 lacs shares which the assessee companypany intended to retain and did in fact retain and the 13 lacs odd shares which they intended to sell and did sell. 5 that the intention to sell which the assessee companypany entertained from the very outset was a companyplete answer to the argument that the acquisition was in the nature of an investment. In giving its finding the Commission said- Aggregating the 121 lakhs paid for the Manag- ing Agency right and the full price of 6 lakhs and odd shares at Rs. 4-4-0 per share, the capital investment must amount to 121 lakhs and 251 lakhs, i.e., 38 lacs and odd. By deducting therefrom the profits of Rs. 16,52,600, the Company showed a capital investment of Rs. 21,54,200 and with the addition of a few sundry items, it was brought up to Rs. 22,06,408 see para 7 supra . From this finding the inference drawn by the Commission was that the sale of 13 lacs odd shares was an adventure in the nature of trade. The High Court reformulated the question which has already been quoted and it was companytended that the High Court was in error in narrowing down the scope of the question referred by the Commission. It is number necessary to adjudicate upon this argument because in our opinion taking the question as referred to be a proper question arising out of the report of the Investigation Commission the answer to the first part thereof would,still be in the affirmative. Inconsidering the question whether the transaction is or is number an adventure in the nature of trade we have to take into companysideration the intention of the assessee keeping in view the legal requirements which are associated with the companycept of trade or business. The inference from the facts found by the Investigation Commission, i.e., whether the assessee companypanys transaction in purchasing and selling 13 lacs odd shares is or is number an adventure in the nature of trade is a mixed question of law and fact and the legal effect of the facts found by the Investigation Tribunal is a question of law. See M s. Ramnarain Sons Pr. Ltd. v. Commissioner of Income-tax, Bombay 1 . It was argued on behalf of the assessee companypany that 1 that the dominant idea with which the whole transaction was entered into was to obtain the Managing Agency of the Apollo Mills 2 that the assessee companypany was forced to buy the whole block of shares, i.e., 19,76,000 shares by the Sassoons because they were number prepared to part with the Managing Agency without the whole of their stock in the mill companypany 3 that as the assessee companypany did number number have sufficient amount of money, their capital being only Rs. 20 lacs, it was to implement the tripartite agreement dated November 1, 1943, that the sale was made and 1 1961 2 S.C.R. 904, 908. 4 that the Memorandum of Association of the assessee companypany showed that it was a holding companypany and dealing in shares was number one of its objects. The agreement shows that the Sassoons had separately evaluated the Managing Agency and the shares held in the Apollo Mills Co. As the Investigation Commission has found, it was never the intention of the assessee companypany to retain the whole block of shares. Before the agreement was entered into they had made arrangement for the sale of the bulk of shares which were to be transferred by the Sassoons and therefore division of the shares into two sets was made by the promoters of the assessee companypany and the assessee companypany themselves and was number the result of anything done by the Investigation Commission. In support of his companytention that the amount of Rs. 16,52,600 was in the nature of Capital Receipt, reliance was placed on the judgment of this Court in M s. Ramnarains case 1 but there are certain features and details which distinguish that case from the present case. It was held in that case that the question had to be decided in the light of the intention of the assessee and the assessee in that case bad purchased the shares of the Dawn Mills number as a business transaction. That was clear from the fact that the assessee bad purchased the shares at Rs. 2,321-8-0 per share and the market price was only Rs. 1,610, and the purpose of acquisition of such a large block of shares at a price exceeding the market price by a million rupees was the acquisition of the Managing Agency, which yielded the inference that the intention of purchasing the shares in that case was number to acquire them as a part of the trade of the assessee in shares but for obtaining the Managing Agency of the Mills. There was numberseparate price paid for the Managing Agency and the shares purchased and the Managing Agency acquired were both assets of a capital nature and the shares did number companystitute stock-in-trade of a trading venture. In the present case the facts as shown were entirely different. 1 1961 2 S.C.R 904, 908. Counsel for the assessee companypany also relied on Kishan Prasad Co. Ltd. v. Commissioner of Income-tax, Punjab 1 . In that case the Managing Director of the companypany which was formed for the purpose of carrying on general business and trade of companymercial undertaking and dealing in bills, hundis and other securities, entered into an agreement with a sugar syndicate by which the companypany was to be given the Managing Agency of a Mill of the sugar syndicate when such mill was erected in lieu of the companypany subscribing shares worth 3 lacs, and undertaking to sell shares worth 2 lacs. It was further provided that if the mill was number erected the assessee companypany was to be paid a companymission on the amount invested by them. The Managing Director died and the assessee companypany sold the shares and thus received Rs. 2 lacs more than they had expended. The question was whether Rs. 2 lacs were receipts from business and number a mere appreciation in capital. It was held that that amount was number a result of an adventure in the nature of trade but was merely the result of an investment. It was found as a fact that the object of the companypany was merely to obtain the Managing Agency of the mill which would have been an asset of an enduring nature bringing profits but there was from the very inception numberintention on the part of the companypany to resell the shares either at profit or otherwise. It appears that it was number companytested that the companyclusion to be drawn from those facts was that the investment in the purchase of shares in the circumstances of the case of a capital nature, and profits arising therefrom were an accretion to the capital. In that ease the companyrt was trying to find out the intention of the assessee the companypany and taking all the circumstances into companysideration it, came to the companyclusion that it was a case number of profits arising out of an adventure in the nature of trade but the, intention of the assessee companypany was to invest its monies and therefore the excess arising out of sale of the shares was an accretion to the capital. That case must be taken to have been decided on its facts as 1 1955 27 I.T.R. 49. indeed was the decision in M s. Ramnarain Sons case 1 . Counsel for the assessee companypany referred to other cases Tata Hydro-Electric Agencies, Bombay v. The Commissioner of Income-tax, Bombay Presidency Aden 2 Commissioner of Income-tax, Central and United Provinces, Lucknow v. Messrs. Motiram Nandram 3 , Jones v. Leeming 4 and Commissioner of Inland Revenue v. Reinhold 5 . It is unnecessary to re- view these cases in any detail because they are clearly distinguishable in material respects and were decided on their own special facts. In Tata Hydro-Electric Agencies case 2 the question for decision was whether 25 of the companymission earned which was paid to the two financiers was expenditure deductible under s. 10 2 ix and it was held that it was number because the obligation to make the payment was in companysideration of acquiring the Managing Agency and the right to companyduct business and number for the purpose of producing profits in the companyduct of business. Similarly in Commissioner of Income-tax v. Messrs. Motiram Nandram 3 the expenditure was for securing the agency which was to carry on business. Sir George Rankin said at p. 81 The question in such a case a, the present must be what is the object of the expenditure? and it must be answered from the standpoint of the assessees at the time they made it-that is, when they were embarking upon the business of organizing agents for the companypany. Jones v. Leeming 4 was a case of an isolated transaction. The finding was that it was number in the nature of trade. Commissioner of Inland Revenue v. Reinhold 5 was decided on its own facts. Another case decided by this companyrt upon which companynsel for the appellant relied was Saroj Kumar Mazumdar v. Commissioner of Income-tax, West Bengal, Calcutta 6 but that case was also decided on its own facts and it was held that there was numberclear evidence in support of 1 1961 2.C.R. 004, 908 3 1939 L. R. 67 I. A. 71 5 1953 34 T-C. 389. 2 1937 L. R. 64 I. A. 215. 4 1930 A.C. 415. 6 1959 SUPP. 2 S C.R. 846. the inference of the Appellate Tribunal that the land was purchased with the sole intention of selling it later at a profit. The English and Scottish cases on which the appellant relied were companysidered by the House of Lords in Edwards v. Bairstow 1 .In that case the assessees who were the respondents embarked on a joint venture to purchase and companyplete a spinning plant agreeing between themselves number to hold it but to make a quick resale. With that object in view they approached and there were diverse negotiations and the whole plant was sold in about two years time at a profit of about pound 18,000 and for that purpose incurred companymission for help in effecting sales, for insurance and other expenses. The General Commissioners found that it was number an adventure in the nature of trade to justify an assessment to income- tax under Case 1 of Schedule D to the Income-tax Act, 1918. It was held that the facts led inevitably to the companyclusion that the transaction was an adventure in the nature of trade and that the Commissioners inference to the companytrary should be set aside. Counsel for the respondent next relied on a Judgment of this Court in G. Venkataswami Naidu Co. v. The Commissioner of Income-tax 2 in which it was held that the presence of all the relevant factors may help the Court to draw the inference that the transaction is in the nature of trade but it is number a matter of companynting the number of facts and circumstances for and against. What is important is to companysider the distinctive character and it is the total effect of all the relevant factors that determines the character of the transaction. All these cases are illustrative. As was said by Gajendragadkar, J., in the above mentioned case the totality of circumstances of a case and the pros and companys have to be companysidered and inference drawn from those facts whether a particular transaction was in the nature of trade or was merely an investment and the resulting excess from the transaction was therefore profit which was taxable or was merely an accretion to the capital. In the instant case 1 1956 A.C. 14. 2 1959 SUPP. 1 S.C.R. 646. the pi of its from the transaction that companysisted of buying the Managing Agency of the Mill Company and the block of shares held by the Sassoons were in our view the profits of an adventure in the nature of trade. The two groups, Morarka and Bubnas, put Rs. 20 lacs into the assessee companypany which was floated for the acquisition of the Managing Agency and shares of the Mill Company which were beyond the holding capacity of the assessee companypany. That companypany never intended to hold the whole block of shares. It or its promoters before even entering into the agreement of purchase and during the companyrse of negotiations for the purchase had entered into arrangements with different brokers for the sale of shares or at least of a bulk of those shares which were subsequently sold at a profit and but for that sale the transact-ion companyld number have been companypleted by the assessee companypany. The purchase of shares was number with the intention of holding them, the intention of the assessee was just the companytrary and by the sale at a profit of the shares actually sold the assessee companypany expected to and did finance the companypletion of the transaction and thus was enabled to secure the Managing Agency and keep 6 lacs shares. This inescapably was a transaction of a companymercial nature. It had all the attributes of an adventure in the nature of trade. The companytention that dealing in buying and selling of shares was number one of its objects is without substance. The Investigation Commission found that dealing in shares was within the objects of the assessee companypany and this is one circumstance in the totality of the circumstances which must be companysidered, though by itself it is number determinative of the question. All the circumstances lead to the inference which was rightly drawn by the Investigation Commission and by the High Court. The answer to the first part of the question referred by the Investigation Commission must therefore be in the affirmative. It was companytended that the question should number have been reframed and we have therefore proceeded to answer the question as framed by the Investigation Commission. In our opinion the question even as framed must be answered in the affirmative. The Notice of Motion to raise other questions in the High Court was rightly dismissed. Apart from the fact that the Notice of Motion was barred by time and there was numberapplication for companydonation of delay, the questions which were sought to be raised were rightly held either to be companyered by the question answered or they did number arise at all. The companystitutional question under Art. 14 of the Constitution cannot be raised in these proceedings because as we have said above this Court is exercising its advisory jurisdiction and its power is companyfined to the questions which arise in an appeal.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 645 and 646 of 1957. Appeal from the judgment and decree dated August 1956, of the Patna High Court, in Second Appeals Nos. 2155 and 2156 of 1948. V. Viswanatha Sastri and R. C. Prasad, for the appellant. K. Garg, M. K. Ramamurthi, S. C. Agarwal, and D. P. Singh, for respondents Nos. 1 to 4. 1961. April 28. The Judgment of the Court was delivered by VENKATARAMA AIYAR, J.-These are appeal. against the judgment of the High Court of Patna in Second Appeals Nos. 2155 and 2156 of 1948 on certificates granted by the High Court under Art. 133 1 c of the Constitution. The facts leading to this litigation lie in a narrow companypass. One Prithi Dubey died on July 14, 1932, leaving him surviving, his widow Laung Kuer, who succeeded as heir to his estate. For the purpose of discharging debts due by the deceased Laung Kuer executed on June 21, 1935, a Zerpeshgi deed in favour of two persons, Rajdewan Dubey and Kailash Dabey, who were also the next reversioners, for a sum of Rs. 1,100. It is number in dispute that this deed is binding on the reversioners. On June 17, 1943, Laung Kuer sold to the appellant a portion of the properties which were the subject-matter of the Zerpeshgi deed dated June 21, 1935, for a companysideration of Rs. 1,600 Out of this amount, a sum of Rs. 1,100 was reserved with the purchaser for redemption of the Zerpeshgi, and the balance of Rs. 500 was paid in cash. It is recited in the deed of sale that a sum of Rs. 100 was required to effect repairs to the family dwelling house, a sum of Rs. 200 for purchasing two bulls for agricultural purposes, and a sum of Rs. 200 for repairing a well, which had been companystructed by the deceased for user by the public and which was then in a ruined companydition. It is to meet these expenses that Laung Kuer raised Rs. 500. After obtaining the sale deed, the appellant sought to redeem the Zerpeshgi, but the Zerpeshgidars refused to receive the amount and surrender possession of the properties. The appellant deposited the mortgage amount in companyrt under s. 83 of the Transfer of Property Act and then instituted Title Suit No. 69 of 1944 for redemption. Meantime the reversioners, the respondents herein, had filed Title Suit No. 126 of 1943 for a declaration that the sale deed in favour the appellant was number binding on the reversioners. And both the suits were tried together. The parties were at issue on several questions of fact of which the only one material at this stage is whether the sale in favour of the appellant was supported by necessity and binding on the reversioners. The District Munsif of Palamau who tried the suits held on a review of the evidence that necessity was established in respect of all the four items of companysideration and that the sale was binding on the reversioners. He accordingly dismissed Title Suit No. 126 of 1943 filed by the respondents and granted a decree for redemption in Title Suit No. 69 of 1944 filed by the appellant. The respondents herein, the reversioners, preferred appeals against both the decrees passed by the District Munsif of Palamau and they were heard by the Subordinate Judge of Palamau, who, agreeing with the findings given by the District Munsif, affirmed the decrees and dismissed the appeals. Against these decrees, the respondents preferred Second Appeals Nos. 2155 and 2156 of 1948 in the High Court of Patna. While these appeals were pending, Laung Kuer died on March 14, 1952, and on the application of the respondents, the plaint in Title Suit No. 126 of 1943 was amended by adding reliefs for possession and mesne profits. The appeals were then heard by a Bench companysisting of Rai and Misra, JJ., who in separate but companycurring judgments, held that the sale deed in favour of the appellant was number binding on the reversioners. Misra, J., who delivered the leading judgment did number disagree with the finding of the companyrts below that all the four items of companysideration were supported by necessity. Indeed, being a finding of fact, it would be binding on the companyrt in Second Appeal. He, however, held, following the decision in Dasrath Singh v. Damri Singh 1 that a widow cannot by selling properties subject to usufructuary mortgage jeopardise the right of the reversioners to redeem, and that, therefore, the sale would number be binding on them. A different view was taken in Lala Ram Asre Singh v. Ambica Lal 1 , where it was held that a widow was number debarred from selling properties subject to mortgage where there was necessity for it merely by reason of the fact that they were subject to usufructuary mortgage which companytained numberpersonal companyenant to pay. But the learned Judge declined to follow this decision and stated the reason thus Following. therefore, the settled practice of this Court as laid down in a number of decisions, the only companyrse left open to us in the circumstances would be either to follow the previous Division Bench Ruling in preference to the later or to refer the case to a larger Bench for settling the position. In my opinion, however, the present case is number one in which it is desirable to refer this case to a larger Bench. Following, therefore, the authority of this Court in Dasrath Singhs case which companypletely companyers the present case, it must be held that the companyrts below were in error in relying upon the decision in Lala Ram Asre Singhs case. In the result the learned Judge held that the sale deed in favour of the appellant dated June 17, 1943, was number binding on the reversioners. Rai, J., expressed the view that as the bona fides of the sale in favour of the appellant was questioned by the reversioners and as there had been numberfinding on that point by the Subordinate Judge, the matter might have to be remanded for a finding on that question, but that, as the sale deed was number supported by necessity, he agreed with the companyclusion of Misra, J. The Second Appeals were accordingly allowed and companysequential reliefs granted. Thereafter, the appellant applied in the High Court under Art. 133 for leave to appeal to this companyrt, and in granting certificates, Ramaswami, C. J., and Raj Kishore Prasad, J., observed in their 1 8 Pat. L.T. 314 A.I.R. 1927 Pat. 219. 2 1i Pat. L.T. 6 A.I.R. 1929 Pat. 216. Order dated November 27, 1956, that there being a companyflict between the decisions in Dasrath Singhs case 1 and Lala Ram Asre Singhs case 2 , the point was one of sufficient importance for grant of leave to appeal to this Court. They also stated that the question as to the practice to be followed when there was a companyflict of decisions, was likewise one of public importance, which ought to be settled by this Court. They accordingly granted certificates under Art. 133 1 c and that is how these appeals companye before us. Before companysidering the two questions referred to in the order of the High Court granting certificates, we shall deal with a companytention raised on behalf of the respondents, which if well founded would necessitate a remand of these appeals. It was argued that the sale deed in favour of the appellant was number bona fide, that it had been so held by the District Munsif, but that the Subordinate Judge had failed to record a finding on this question, and that therefore there should be a remand for a decision on that point. As already stated, Rai, J., appears to have been impressed by this companytention. But when the companytention is further examined it will be found to be wholly without substance. What the District Munsif said was that after the death of Prithi Dubey the relatives of Lawan Kuer had fallen on her property like vultures, and that it was quite possible that the transaction in question was also brought at their instance and they were also benefited by it. This only means that the relatives of Laung Kuer were guilty of spoliation of the estate. But that would number affect the rights of the appellant unless he was a party to it, which, however, is number the case, and that is what the District Munsif himself observes with reference to this aspect But in the present suit I have got to companysider the interest of Jaisri Sahu who has in good faith already paid Rs. 500 to the Mostt. and has deposited the balance of Rs. 1,100 in companyrt for the redemption of the Zarpeshgi. This finding that the appellant himself acted bona fide was number challenged before the Subordinate Judge 1 8 Pat. L.T. 314. A.I.R. 1927 Pat. 219. 2 11 Pat. L.T. 6 A.I.R. 1929 Pat. 2i6. on appeal and the point is accordingly number open to the respondents. Dealing next with the points mentioned in the Order of the High Court dated November 27, 1956, the first question that arises for decision is whether a sale by a widow of properties which are the subject matter of a usufructuary mortgage is beyond her powers when the mortgagee cannot sue to recover the amount due on the mortgage. This has been answered in the affirmative by the learned Judges of the High Court on the strength of the decision in Dasrath Singh Damri Singh 1 . There the last male holder, one Sitaram Singh, had created a usufructuary mortgage, and after his death the widow sold the property for the discharge of this debt and of certain other debts, and for meeting the marriage expenses of her daughter and grand-daughter. It was held by Das and Adami, JJ., that all these items of companysideration were supported by necessity, but nevertheless the sale was number binding on the reversioners. Das, J., who delivered the judgment observed as follows It is companytended that under the terms of the usufructuary mortgage it would be open number to the plaintiffs to redeem that mortgage and it is pointed out that their right to redeem should number have been jeopardised by the widow by the transfer of the property to the mortgagee. In my opinion this argument is right and should prevail. If the learned Judge intended to lay down as an inflexible proposition of law that, whenever there is a usufructuary mortgage, the widow cannot sell the property, as that would deprive the reversioners of the right to redeem the same, we must dissent from it. Such a proposition companyld be supported only if the widow is in the position of a trustee, holding the estate for the benefit of the reversioners, with a duty cast on her to preserve the properties and pass them on intact to them. That, however, is number the law. When a widow succeeds as heir to her husband, the ownership in the properties, both legal and beneficial, vests in her. She fully represents the estate, the interest of 1 8 Pat. L.T. 314 A.I.R. 1927 Pat. 219. the reversioners therein being only spes successionis. The widow is entitled to the full beneficial enjoyment of the estate and is number accountable to any one. It is true that she cannot alienate the properties unless it be for necessity or for benefit to the estate, but this restriction on her powers is number one imposed for the benefit of reversioners but is an incident of the estate as known to Hindu law. It is for this reason that it has been held that when Crown takes the property by escheat it takes, it free from any alienation made by the widow of the last male holder which is number valid under the Hindu law, vide Collector of Masulipatam v. Cavaly Venkata 1 . Where, however, there is necessity for a transfer, the restriction imposed by Hindu law on her power to alienate ceases to operate, and the widow as owner has got the fullest discretion to decide what form the alienation should assume. Her powers in this regard are, as held in a series of decisions beginning with Hanooman Persaud v. Mussamat Ba- booee 2 , those of the manager of an infants estate or the manager of a joint Hindu family. In Venkaji v. Vishnu 3 it Was observed that- A widow like a manager of the family, must be allowed a reasonable latitude in the exercise of her powers, provided she acts fairly to her expectant heirs. And more recently, discussing this question, it was observed in Viraraju v. Venkataratnam - How exactly this obligation is to be carried out, whether by a mortgage. sale or other means, is number to be determined by strict rules or legal formulae, but must be left to the reasonable discretion of the party bound. In the absence of mala fides or extravagance, and so long as it is neither unfair in character number unreasonable in extent, the Court will number scan too nicely the manner or the quantum of the alienation. Judged by these principles, when there is a mortgage subsisting on the property, the question whether 1 1861 8 M.I.A. 529. 3 1894 18 Bom. 534, 536. 2 1856 6 M. I. A. 393. I.L.R. 1939 Mad. 226. 231. the widow companyld sell it in discharge of it is a question which must be determined on the facts of each case, there being numberabsolute prohibition against her effecting a sale in a proper case. What has to be determined is whether the act is one which can be justified as that of a prudent owner managing his or her own properties. If the income from the property has increased in value, it would be a reasonable step to take to dispose of some of the properties in discharge of the debt and redeem the rest so that the estate can have the benefit of the income. In this view, the decision in Dasrath Singhs case, in so far as it held that a Bale by a widow of a property which is subject to a usufructuary mortgage is number binding on the reversioners must be held to be wrong. In Lala Ram Asre Singhs case 2 , which was a decision of Das and Fazl Ali, JJ., the facts were similar to those in Dasrath Singhs case 1 . Dealing with the companytention that a sale by the widow of properties which were the subject- matter of a Zerpesbgi deed was number binding on the reversioners because the Zerpeshgidar was in possession of the properties and he companyld number sue to recover the amount due thereunder, Das, J., delivering the judgment of the companyrt observed- This in my view is an impossible argument. The debt was there it was a subsisting debt, only the creditor was in possession of a part of the estate and was unable to recover it by instituting a suit in the civil companyrts. But the result was that a companysiderable portion of the income was withdrawn from Basmati Kuer who had succeeded her husband. It is well- established that where a case of necessity exists, an heiress is number bound to borrow money, with the hope of paying it off before her death. Nor is she bound to mortgage the estate, and thereby reduce her income for life. She is at liberty, if she thinks fit, absolutely to sell off a part of the estate. In our judgment these observations companyrectly state the position in law. It will be numbericed that Das, J., deli- 1 8 Pat. L. T. 314 A.I.R. 1927 Pat. 219, 2 ii Pat. L. T. 6 A.I.R. 1929 Pat. 2i6. vered the judgment in both Dasrath Singhs case 1 and Lala Ram Asre Singhs case 2 and that the decision in Dasrath Singhs case 1 is number referred to in the judgment in Lala Ram Asre Singhs case 2 . It has been found in this case that Laung Kuer had to raise a sum of Rs. 500 for necessary purposes. She companyld have done that by mortgaging other properties, but that would have reduced the income available for enjoyment by her. On the other hand, by a sale of a portion of the properties companyered by the Zerpeshgi deed dated June 21, 1935, she was able to redeem the other properties and the estate had the benefit of the income from those properties. The District Munsif and the Subordinate Judge on appeal have both of them held on a review of all the facts that the sale in favour of the appellant is a proper one binding on the reversioners. We are of opinion that this finding is number open to attack in Second Appeal. Then there is the question of the practice to be followed when there is a companyflict among decisions of Benches of the same High Court. When a Bench of the High Court gives a decision on a question of law, it should in general be followed by other Benches unless they have reasons to differ from it, in which case the proper companyrse to adopt would be to refer the question for the decision of a Full Bench. In Buddha Singh v. Laltu Singh 3 , the Privy Council had occa- sion to discuss the procedure which should be adopted when a Bench of a High Court differs from the opinion given by a previous Bench. After referring to Suraya Bhukta v. Lakhshminarasamma 4 and Chinnasami Pillai v. Kunju Pillai 5 , where decisions had been given based on the opinions expressed by Devananda Bliatta in the Smriti Chandrika, the Privy Council observed- Curiously enough there is numberreference in either of the Madras judgments referred to above to a previous decision, Parasara Bhattar Rangaraja Bhattar 6 of the same companyrt to which Turner, 1 8 Pat. L.T. 314 A.I.R. 1927 Pat. 219. 2 11 Pat. L.T. 6 A.I.R. 1929 Pat. 216. 3 1915 I.L.R. 37 All. 604. 4 1881 I.L.R. 5 Mad. 291. 5 1912 I.L.R. 35 Mad. 152 6 1880 I.L.R. 2 Mad. 2. J., was also a party. In that case the rule of the Smriti Chandrika was number accepted number was the literal companystruction of the Mitakshara followed. It is usual in such cases where a difference of opinion arises in the same companyrt to refer the point to a Full Bench, and the law provides for such companytingencies. Had that companyrse been followed their Lordships would probably have had more detailed reasoning as to the change of opinion on the part at least of one Judge. pp. 622, 623 . Considering this question, a Full Bench of the Madras High Court observed in Seshamma v. Venkata Narasimharao 1 The Division Bench is the final Court of appeal in an Indian High Court, unless the case is referred to a Full Bench, and one Division Bench should regard itself bound by the decision of another Division Bench on a question of law. In England, where there is the Court of Appeal, Divisional Courts follow the decisions of other Divisional Courts on the grounds of judicial companyity see The Vera Cruz No. 2 2 , Harrison v. Ridgway Ratkinsky v. Jacobs 4 and Phillips v. Copping If a Division Bench does number accept as companyrect the decision on a question of law of another Division Bench the only right and proper companyrse to adopt is to refer the matter to a Full Bench, for which the rules of this companyrt provide. If this companyrse is number adopted, the companyrts subordinate to the High Court are left without guidance. Apart from the impro- priety of an appellate Bench refusing to regard itself bound by a previous decision on. a question of law of an appellate Bench of equal strength and the difficulty placed in the way of subordinate Courts administering justice, there are the additional factors of the loss of money and, the waste of judicial time. Law will be bereft of all its utility if it should be thrown into a state of uncertainty by reason of companyflicting decisions, and it is therefore desirable that in I.L.R. 1940 Mad. 454, 474. 2 1884 9 P.D. 96. 3 1925 133 L.T. 238. 4 1929 1 K.B. 24. 5 1935 1 K.B. 15. case of difference of opinion, the question should be authoritatively settled. It sometimes happens that an earlier decision given by a Bench is number brought to the numberice of a Bench hearing the same question, and a companytrary decision is given without reference to the earlier decision. The question has also been discussed as to the companyrect procedure to be followed when two such companyflicting decisions are placed before a later Bench. The practice in the Patna High Court appears to be that in those cases, the earlier decision is followed and number the later. In England the practice is, as numbericed in the judgment in Seshamma v. Venkata Narasimharao 1 , that the decision of a Court of Appeal is companysidered as a general rule to be binding on it. There are exceptions to it, and one of them is thus stated in Halsburys Laws of England, third edition, Vol. 22, para. 1687, pp. 799, 800- The companyrt is number bound to follow a decision of its own if given per incuriam. A decision is given per incuriam when the companyrt has acted in ignorance of a previous decision of its own or of a companyrt of a companyordinate jurisdiction which companyered the case before it, or when it has acted in ignorance of a decision of the House of Lords. In the former case it must decide which decision to follow, and in the latter it is bound by the decision of the House of Lords. In Virayya v. Venkata Subbayya 2 it has been held by the Andhra High Court that under the circumstances aforesaid the Bench is free to adopt that view which is in accordance with justice and legal principles after taking into companysideration the views expressed in the two companyflicting Benches, vide also the decision of the Nagpur High Court in Bilimoria v. Central Bank of India 3 . The better companyrse would be for the Bench hearing the case to refer the matter to a Full Bench in view of the companyflicting authorities without taking upon itself to decide whether it should follow the one Bench decision or the other. We have numberdoubt that when such situations arise, the Bench I.L.R. 1940 Mad. 454, 474. A.I.R 1955 Andhra 215, 217. A.I. R. 1943 Nag 340. hearing cases would refer the matter for the decision of a Full Court. In the result these appeals are allowed and the decrees passed by the trial companyrt restored with companyts throughout.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 209 of 1959. Appeal from the judgment and order dated October 5, 1956, of the Patna High Court in Miscellaneous Appeal No. 367 of 1953. K. Jha and R. C. Prasad, for the Appellant. C. Setalvad, Attorney-General for India, N. De and P. Mukherjee, for the respondents. 1961. April 7. The Judgment of the Court was delivered by VENKATARAMA AIYAR, J.-This is an appeal against the Judgment of the High Court of Patna in an appeal under the Arbitration Act, 1940. The appellant is the State of Bihar, and the respondents are a companypany registered under the Indian Companies Act, doing business as building companytractors. They entered into three companytracts for the companystruction of aerodrome, hangarettes, buildings, stores and other works at Ranchi, the first of them being companytract No. 21 of 1942 dated November 5, 1942, and the other two being companytracts Nos. 6 and 8 dated April 5, 1943. After the above works were companypleted, disputes arose between the parties over the bills and eventually by an agreement dated February 6, 1948, they were referred to the arbitration of one Col. A. W. S. Smith. The arbitrator made his award on June 4, 1948, and sent a companyy thereof to the parties. The respondents thereupon filed a petition under ss. 17 and 20 of the Indian Arbitration Act, 1940, for a decree in terms of the award. The appellant filed objections thereto, and the petition was then registered as Title Suit No. 53 of 1951. While this suit was pending, the arbitrator who had meantime left for Hong Kong sent to the companyrt of the Additional Subordinate Judge of Ranchi before whom the suit was pending a companyy of the award duly signed by him, for being filed as provided in the Act. Notices were issued by the companyrt under s. 14 2 of the Act, and, in answer thereto, the appellant filed an application to set aside the award on various grounds. To this, the respondents filed their reply statement. In view of this application, the respondents did number press their petition tinder ss. 17 and 20 of the Arbitration Act, which was in companysequence dismissed, and the proceedings which companymenced with the receipt of the award from the arbitrator were companytinued as Title Suit No. 53 of 1951. After an elaborate trial the Additional Subordinate Judge, Ranchi, passed a decree in terms of the award except as to a part which he held to be in excess of the claim. The appellant took the matter in appeal to the High Court of Patna which companyfirmed the decree of the Subordinate Judge but granted a certifi- cate under Arts. 132 and 133 1 of the Constitution, and hence this appeal. Though the companytroversy between the parties-ranged in the companyrts below over a wide area,, before us, it was restricted to two questions-whether there was a valid agreement of reference to arbitration binding on the Government and whether a decree companyld be passed on the unstamped companyy of the award filed in the companyrt. On the first question, the appellant companytends that the agreement for reference to arbitration does number companyply with the requirements of s. 175 3 of the Government of India Act, 1935, which was the Constitutional provision in force at the relevant date, and it is therefore void, that the award passed in proceedings founded thereon is a nullity and that numberdecree should be passed in terms thereof. Section 175 3 is as follows- Subject to the provisions of this Act. with, respect to the Federal Railway authority, all companytracts made in the exercise of the executive authority of the Federation or of a province shall be expressed to be made by the Governor-General, or by the Governor of the Province, as the case may be, and all such companytracts and all assurances of property made in the exercise of that authority shall be executed on behalf of the Governor-General or Governor by such persons and in such manner as he may direct or authorise. Under this section, a companytract entered into by the Governor of a Province must satisfy three companyditions. It must be expressed to be made by the Governor it must be executed and the execution should be by such persons and in such manner as the Governor might direct or authorise. We have number to examine whether the agreement to refer to arbitration dated February 6, 1948, satisfies the above companyditions. It expressed to be made between the Governor of Bihar and the respondents. It is also a formal document executed by one K. Lall, Executive, Engineer, Ranchi Division, and by the respondents. So the only point that remains for companysideration is whether the Executive Engineer was a person who was directed or authorised by the Governor to execute the agreement in question. The appellant companytends that he as number, and relies in support of his companytention on a numberification dated April 1, 1937, issued by the Government of Bihar. That numberification, in so far as it is material, is as follows In exercise of the powers companyferred by sub-section 3 of section 175 of the Government of India Act, 1935, the Governor of Bihar is pleased, in supersession of all existing orders, to direct that the undermentioned classes of deeds, companytracts and other instrument may be executed on his behalf as follows- In the case of the Public Works Department subject to any limit fixed by. Departmental orders All instruments relating to the execution of works of all kinds companynected with buildings, bridges, roads, canals, tanks, reservoirs, docks and harbours and embankments, and also instrumets relating By Secretaries to Government, Chief Engineers, Superin- tending Engineers, Divisional Officers, Sub-divisional Offi- cers, Assistant or Assistant Executive to the companystruction of water Engineers, and the works, sewage works, the n Electric Inspector. erection of machinery, and the working of companyl mines. All deeds and in- By Secretaries and struments relating to any Joint Secretaries to matters other than those Government. specified in heads 1 to 11. There was a discussion in the companyrts below as to whether the present agreement fell within item 2 or item 12. If the agreement companyld be held to be an instrument relating to the execution of works, it would fall within item 2, and the Executive Engineer would be a person authorised under this numberification to enter into this companytract, but if it does number fall within that item, it must fall within entry 12, in which case he would number be companypetent to execute the agreement. Both the companyrts below have held that the agreement to refer to arbitration was number one relating to execution of works as that had been companypleted and the dispute related only to payment of the bills, and that further the essential feature of an arbitration agreement was the companystitution of a private Tribunal and it companyld number therefore be brought within item 2 and that accordingly it fell within item 12. But the learned Judges of the High Court were also of the opinion that Y. K Lall, the Executive Engineer had in fact been specifically authorised to execute the arbitration agreement, and that that was sufficient for the purpose of s. 175 3 . The appellant impugns the companyrectness of this companyclusion and companytends that it is number warranted by the record. It becomes, therefore, necessary to refer in some detail to the companyrespondence bearing on this point. On July 26, 1947, Mr. Murrel, Secretary to the Government, wrote to Col. Smith as follows I am directed to say that the Government of Bihar propose to appoint you as Arbitrator for the settlement of a claim put forth by Messrs. Karam Chand Thapar and Brothers Limited in companynection with the companystruction of the Hinoo Aerodrome at Ranchi-Job 108 If You agree to undertake the work the necessary forms of acceptance of appointment of Arbitrator etc. may please be for warded to this Department for companypletion by the Government of Bihar and, by the Contractor. To this, Col. Smith sent a reply agreeing to act as arbitrator. In that letter he also suggested that the companytract between the parties might be suitably amended so as to permit arbitration. This is significant, because under cl. 23 of the companytract, all disputes between the parties had to be referred to the Superintending Engineer whose decision was to be final, and if that had been amended as suggested, the arbitration clause would have become part of the original companytract and there would have been numberoccasion for the present companytention. Referring to the above suggestion for amending the agreement, the Secretary, Mr. Murrel, wrote on September 5, 1947, to Col. Smith that the opinion of the Legal Remembrancer would have to be got. On January 19, 1948, Col. Smith wrote to the Secretary that he was ready to take up his duties as arbitrator and again desired that the companytract should be amended so as to provide for arbitration. On January 27, 1948, the Secretary to the Government informed Col. Smith that opinion had been received from the Legal Remembrancer that an agreement for arbitration should be executed in accordance with the provisions of the Arbitration Act and that a draft agreement companyy enclosed has been drawn up accordingly and steps are being taken to execute it, as quickly as possible On the same date, the Executive Engineer wrote to the respondents as follows- It has since been decided by Government to determine your claims in companynection with the above through arbitration companyducted in accordance with the provisions of the Arbitration Act 1 of 1940. You are therefore requested to please attend the Divisional Office immediately to execute necessary agreement for the purpose. Pursuant to this letter, the respondents joined in the execution of the agreement dated February 6, 1948, along with the Executive Engineer for referring the dispute to arbitration. On February 25, 1948 the Secretary informed the arbitrator that the draft agreement had been slightly modified in companysultation with the Government Pleader, and he also wrote to the Executive Engineer that certain formal companyrections should be made in the agreement and signed by both the parties. And that was done. Having carefully gone through the companyrespondence, we agree with the learned Judges of the High Court that the Executive Engineer had been authorised by the Governor acting through his Secretary to execute the agreement for reference to arbitration. It will be seen that it was the Secretary who from the very inception took the leading part in arranging for arbitration. He was throughout speaking in the name of and on behalf of the Government and he did so as directed. The subject-matter of the arbitration was a claim which companycerned the Government. The proposal at the earlier stages to amend cl. 23 of the original companytract so as to include an arbitration shows that the intention of the parties was to treat the agreement for arbitration as part and parcel of that companytract. Even after the agreement was executed, the Secretary made companyrections and modifications in the agreement on the basis that it was the Government that was a party thereto. The companyclusion from all this is, in our judgment, irresistible that Y. K. Lall, the Executive Engineer had been authorised to execute the agreement dated February 6, 1948. It was suggested that the Secretary was possibly labouring under a mistaken numberion that the agreement to refer to arbitration was companyered by item 2 and acting under that misconception he directed Y. K. Lall to execute the agreement. Even if that were so, that would number make any difference in the position, because the Secretary undoubtedly did intend that Y. K. Lall should execute the agreement and that is all that is required under s. 175 3 . It was further argued for the appellant that there being a Government numberification of a formal character, we should number travel outside it and find authority in a person who is number authorised thereunder. But s. 175 3 does number prescribe any particular mode in which authority must be companyferred. Normally, numberdoubt, such companyferment will be by numberification in the Official Gazette, but there is numberhing in the section itself to preclude authorisation being companyferred ad hoc on any person, and when that is established the requirements of the section must be held to be satisfied. In the result, we hold that the agreement dated February 6, 1948, was executed by a person who was authorised to do so by the Governor, and in companysequence there was a valid reference to arbitration. It is next companytended that as the companyy of the award in companyrt was unstamped, numberdecree companyld have been passed thereon. The facts are that the arbitrator ,sent to each of the parties a companyy of the award signed by him and a third companyy also signed by him was sent to the companyrt. The companyy of the award which was sent to the Government would appear to have been insufficiently stamped. If that had been produced in companyrt, it companyld have been validated on payment of the deficiency and penalty under s. 35 of the Indian Stamp Act, 1899. But the Government has failed to produce the same. The companyy of the award which was sent to the respondents is said to have been seized by the police along with other papers and is number number available. When the third companyy was received in companyrt, tile respondents paid the requisite stamp duty under s. 35 of the Stamp Act and had it validated. Now the companytention of the appellant is that the instrument actually before the companyrt, is, what it purports to be, a certified companyy, and that under s. 35 of the Stamp Act there can be validation only of the original, when it is unstamped or insufficiently stamped, that the document in companyrt which is a companyy cannot be validated and acted upon and that in companysequence numberdecree companyld be passed thereon. The law is numberdoubt well-settled that the companyy of an instrument cannot be validated That was held in The Rajah of, Bobbili v. Inuganti China Sitaramasani Garu 1 , where it was observed The provisions of this section section 35 which allow a document to be admitted in evidence on payment of penalty, have numberapplication when the original document, which was unstamped or was insufficiently stamped, has number been produced- and, accordingly, secondary evidence of its companytents cannot be given. To hold otherwise would be to add to the Act a provision which it does number companytain. Payment of penalty will number render secondary evidence admissible, for under the stamp law penalty is leviable only on an unstamped or insufficiently stamped document actually produced in Court and that law does number provide for the levy of any penalty on lost documents, Therefore the question is whether the award which was sent by the arbitrator to the companyrt is the original instrument or a companyy thereof. There cannot, in our opinion, be any doubt that it is the original and number a companyy of the award. What the arbitrator did was to prepare the award in triplicate, sign all of them and send one each to the party and the third to the companyrt. This would be an original instrument, and the words, certified companyy appearing thereon are a mis- description and cannot have the effect of altering the true character of the instrument. There is numbersubstance in this companytention of the appellant either.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 162 of 1959. Appeal by special leave from the judgment and order dated January 13, 1959, of the Rajasthan High Court in D. B. Criminal Revision No. 47 of 1957. C. Chatterjee, J. L. Datta and C. P. Lal, for the appellant. Mukat Behari Lal Bhargava and Naunit Lal, for respondent No.2. 1961. April 24. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-On June 13,1950, the Municipal Committee, Ajmer, respondent 2, issued a numberice against the appellant, the Durgah Committee, Ajmer, under s. 153 of the Ajmer- Merwara Municipalities Regulation, 1925 VI of 1925 hereafter called the Regulation calling upon it to carry out certain repairs in the Jhalra Wall which was in a dilapidated companydition. The appellant did number companyply with the said requisition and so respondent 2 served another numberice on the appellant under s. 220 of the Regulation inti- mating to it that the required repairs would be carried out at the expense of respondent 2 and that the companyt incurred by it would be recovered from the appellant. This numberice was served on July 3, 1950. Even so the appellant took numbersteps to make the repairs and so respondent 2 proceeded to get the repair work done at its expense which amounted to Rs. 17,414. Under s. 222 4 of the Regulation this sum became recoverable from the appellant as a tax. A numberice of demand in that behalf was issued on the appellant on April 1, 1952, and in pursuance of the said numberice respondent 2 applied to the Additional Tehsildar and Magistrate II Class, Ajmer, for the recovery of the said amount under s. 234 of the Regulation. In the proceedings before the learned Magistrate the appellant raised certain pleas. These pleas were rejected and an order was passed calling upon the appellant to pay the dues in question by August 30, 1956. Against this order the appellant preferred a criminal revision application in the Court of the Sessions Judge, Ajmer. The learned Sessions Judge companysidered the companytentions raised by the appellant and held that the view taken by the Magistrate cannot be said to be incorrect and so there was numberground to interfere in revision. Feeling aggrieved by the dismissal of its revision application the appellant moved the High Court of Judicature for Rajasthan in its revisional jurisdiction. Before the High Court, on behalf of respondent 1, the State of Rajasthan, as well as respondent 2, a preliminary objection was raised that the criminal revision application filed by the appellant was incompetent since the Magistrate who entertained respondent 2s application made under s. 234 ,as number an inferior criminal companyrt under s. 439 of the Code of Criminal Procedure. This preliminary objection was upheld by the High Court and the criminal revision application dismissed on that ground. It is against this order that the appellant has companye to this Court by special leave and the short question which the appeal raises for our decision is whether the Magistrate who entertained the application made before him by respondent 2 under s. 234 was an inferior criminal companyrt under s. 439 of the Code of Criminal Procedure. Before dealing with this point it is relevant to refer to the scheme of the material provisions of the Regulation. Section 153 companyfers power on the Municipality to order removal or repair of buildings which may be found in a dangerous state. Under this section the Committee may by numberice require the owner of the building, wall or structure to remove the same forthwith or cause such repairs as the Committee may companysider necessary for the public safety. This section also empowers the Committee to take at the expense of the owner any steps which it thinks necessary for the purpose of averting imminent danger. If the owner on whom a numberice is served under s. 153 companyplies with the requisition numberhing more need be done. If, however, the owner does number companyply with the requisition served on him the Committee is empowered to cause the repairs to be made after six hours numberice to the owner under s. 220. This section provides that whenever the terms of any numberice issued under this Regulation have number been companyplied with the Committee may, after six hours numberice, cause the act to be done by its officers. As a companyollary to this provision, and indeed as its companysequence, s. 222 empowers the Committee to recover the companyt of the work done under s. 220. Section 222 1 authorises the Committee to recover the companyt of the work from the person in default. Sub-sections 2 and 3 of s. 222 then deal with the question as to which person should be held to be in default, the owner or the occupier with that question we are number companycerned in the present appeal. Sub-section 4 of s. 222 provides that where any money recoverable by the Committee under this section is payable by the owner of the property, it shall be charged thereon and shall be recoverable as if it were a tax levied by the Committee on the property. By sub-section 5 it is provided that the companytract between the owner and the occupier is number affected by this section. It is under s. 222 4 that a demand numberice was served on the appellant by respondent 2. That takes us to s. 234 which provides for the machinery of recovery of municipal claims. This section provides, inter alia, that any tax claimable or recoverable by a Committee under this Regulation, after demand has been made therefor in the manner prescribed by rule, be recovered on application to a Magistrate having jurisdiction within the limits of the Municipality or in any other place where the person by whom the amount is payable may for the time being reside, by the distress and sale of any movable property within the limits of such Magistrates jurisdiction belonging to such person. The proviso to this section prescribes that numberhing in this section shall prevent the Committee at its discretion from suing for the amount payable in any companypetent Civil Court. It would thus be seen that the object of making an application to the Magistrate is to obtain an order from the Magistrate direct- ing the recovery of the tax claimable or recoverable by distress and sale of any movable property belonging to the defaulter. It is under this section that tile Magistrate was moved by respondent 2. That in brief is the scheme of the material provisions of the Regulation. The main argument which Mt-. Chatterjee, for the appellant, has pressed before us is that in determining the nature of the proceedings under s. 234 and the character of the Magistrate who entertains an application made under the said section, it is important to bear in mind that a person in the position of the appellant has numberother opportunity to challenge the validity of the numberice as well as the validity of the claim made against him by the Committee. The argument is that it would be open to the owner to companytend that the numberice issued under s. 153 is invalid or frivolous. It would also be open to him to companytend that the amount sought to be recovered from him is excessive and that even if the repairs were carried out they companyld number have companyt as much, and since the scheme of the Regulation shows that it provides numberopportunity to the owner to raise those companytentions except in proceedings under s. 234 the nature of the proceedings and the character of the Magistrate who entertains them should be liberally companystrued. The proceedings should be deemed to be judicial proceedings and the Magistrate should be held to be an inferior criminal companyrt when he entertains the said proceedings. If the assumption on which the argument proceeds that the Regulation provides numberother opportunity to the owner to challenge the numberice or to question the amount claimed from him were sound then there would be some force in the companytention that s. 234 should be liberally companystrued in favour of the appellant. But is that assumption right? The answer to this question would depend upon the examination of three relevant provisions of the Regulation they are ss. 222 4 , 93 and 226. We have already seen that s. 222 4 provides that any money recoverable by the Committee under s. 222 1 shall be recovered as if it were a tax levied by the Committee on the property and shall be charged thereon. Section 93 provides for appeals against taxation. Section 93 1 lays down, inter alia, that an appeal against the assessment or levy of any tax under this Regulation shall lie to the Deputy Commissioner or to such officer as may be empowered by the State Government in this behalf. The remaining five subsections of s. 93 prescribe the manner in which the appeal should be tried and disposed of. If the amount recoverable by respondent 2 from the appellant is made recoverable as if it were a tax levied by the Committee, then against the levy of such a tax an appeal would be companypetent under s. 93 1 . Mr. Chatterjee argues that s. 93 1 provides for an appeal against the levy of a tax, and he draws a distinction between the amount made recoverable as if it were a tax and the amount recoverable as a tax. His companytention is that the amount which is recoverable under s. 222 1 is numberdoubt by fiction deemed to be a tax but against an amount thus deem.s. 93 1 . We are number impressed by this argument. If by the fiction introduced by s. 222 4 the amount in question is to be deemed as if it were a tax it is obvious that full effect must be given to this legal fiction and in companysequence just as a result of the said section the recovery procedure prescribed by s. 234 becomes available to the Committee so would the right of making an appeal prescribed by s. 93 1 be available to the appellant. The companysequence of the fiction inevitably is that the amount in question can be recovered as a tax and the right to challenge the levy of the tax accrues to the appellant. This position is made perfectly clear by s. 226. This section provides, inter alia, that where any order of a kind referred to in s. 222 is subject to appeal, and an appeal has been instituted against it, all proceedings to enforce such order shall be suspended pending the decision of the appeal, and if such order is set aside on appeal, disobedience thereto shall number be deemed to be an offence. It is obvious that this section postulates that an order passed under s. 222 is appealable and it provides that if an appeal is made against such an order further proceedings would be stayed. It is companymon ground that there is numberother provision in the Regulation providing for an appeal against an order made under s. 222 1 and so inevitably we go back to s. 93 which provides for an appeal against the levy of a tax. It would be idle to companytend that though s. 226 assumes that an appeal lies against an order made under s. 222 1 the Legislature has for. gotten to provide for such an appeal. Therefore, in our opinion, there can be numberdoubt that reading ss. 222, 93 and 226 together the companyclusion is inescapable that an appeal lies under s. 93 1 against the demand made by the Committee on the owner of the property under s. 222 1 . If that be so, the main, if number the sole argument, urged in support of the liberal companystruction of s. 234 turns out to be fallacious. ow, looking at s. 234 it is clear that the proceedings initiated before a Magistrate are numbermore than recovery proceedings. All questions which may legiti- mately be raised against the validity of the numberice served under s. 153 or against the validity of the claim made by the Committee under s. 222 can and ought to be raised in an appeal under s. 93 1 , and if numberappeal is preferred or an appeal is preferred and is dismissed then all those points are companycluded and can numbermore be raised in proceedings under s. 234. That is why the nature of the enquiry companytemplated by s. 234 is very limited and it prima facie partakes of the character of a ministerial enquiry rather than judicial enquiry. In any event it is difficult to hold that the Magistrate who entertains the application is an inferior criminal companyrt. The claim made before him is for the recovery of a tax and the order prayed for is for the recovery of the tax by distress and sale of the movable property of the defaulter. If at all, this would at best be a proceeding of a civil nature and number criminal. That is why, we think, whatever may be the character of the proceedings, whether it is purely ministerial or judicial or quasi-judicial, the Magistrate who entertains the application and holds the enquiry does so because he is designated in that behalf and so he must be treated as a persona designata and number as a Magistrate functioning and exercising his authority under the Code of Criminal Proce- dure. He cannot therefore be regarded as an inferior criminal companyrt. That is the view taken by the High Court and we see numberreason to differ from it. In the present appeal it is unnecessary to companysider what would be the character of the proceedings before a companypetent Civil Court companytemplated by the proviso. Prima facie such proceedings can be numbermore than execution proceedings. Mr. Chatterjee also attempted to argue that the proceedings under s. 234 taken against the appellant by respondent 2 were incompetent because a demand, has number been made by respondent 2 on the appellant in the manner prescribed by rule as required by s. 234. It does appear that rules have number been framed under the Regulation and so numberform has been prescribed for making a demand under s. 222 1 . Therefore the argument is that unless the rules are framed and the form of numberice is prescribed for making a demand under s. 222 1 numberdemand can be said to have been made in the manner prescribed by rules and so an application cannot be made under s. 234. There are two obvious answers to this companytention. The first answer is that if the revisional application made by the appellant before the High Court was incompetent this question companyld number have been urged before the High Court because it was part of the merits of the case and so cannot be agitated before us either. As soon as it is held that the Magistrate was number an inferior criminal companyrt the revisional application filed by the appellant before the High Court must be deemed to be incompetent and rejected on that preliminary ground alone. Besides, on the merits we see numbersubstance in the argument. If the rules are number prescribed then all that can be said is that there is numberform prescribed for issuing a demand numberice that does number mean. that the statutory power companyferred on the Committee by s. 222 1 to make a demand is unenforceable. As a result of the numberice served by respondent 2 against the appellant respondent 2 was entitled to make the necessary repairs at its companyt and make a demand for reimbursement of the said companyt. That is the plain effect of the relevant provisions of the Regulation and so, an amount which was claimable by virtue of s. 222 1 does number cease to be claimable just because rules have number been framed prescribing the form for making the said demand. In our opinion, therefore, the companytention that the application made under s. 234 was incompetent must be rejected. It number remains to companysider some decisions to which our attention was drawn. In Crown through Municipal Committee, Ajmer v. Amba Lal 1 , the Judicial Commissioner Mr. Norman held that a Magistrate entertaining an application under s. 234 of the Regulation is an inferior criminal companyrt. The only reason given in sup-port of this view appears to be that the Magistrate before whom an application under the said section is made is appointed under the Code of Criminal Procedure, and so he is a criminal companyrt although he is number dealing with crime. That is why it was held that he had jurisdiction to decide whether the companyditions under which the Municipality can resort to the Magistrate are fulfilled. Having companye to this companyclusion the learned Judicial Commissioner held that a revision against the Magistrates order was companypetent. In our opinion this decision does number companyrectly represent the true legal position with regard to the character of the proceedings under s. 234 and the status of the Magistrate who entertains them. In Re Dinbai Jijibhai Khambatta 2 the Bombay High Court held that the order made, by a Magistrate under s. 161 2 of the Bombay District Municipalities Act, 1901 Bombay III of 1901 can be revised by the High Court under s. 435 of the Code of Criminal Procedure. This decision was based on the ground that the former part of s. 161 was purely judicial and it was held that the latter part of the said section though number clearly judicial should be deemed to partake of the same character as the former part. Thus the decision turned upon the nature of the provisions companytained in s. 161 2 . In V. B. DMonte v. Bandra Borough Municipality 1 a Full Bench of the Bombay High Court, while dealing with a companyresponding provision of the Bombay Municipal Boroughs Act XVIII of 1925, namely, s. 110, has held that in exercising its revisional jurisdiction under s. 110 the High Court is exercising a special jurisdiction companyferred upon it by the said section and number the jurisdiction companyferred under s. 435 of the Code of Criminal Procedure. According to this Ajmer-Merwara Law journal, Vol. V, P. 92. 2 1919 I.L.R. 43 Bom. 864. I.L.R. 1950 Bom. 522. decision the matter companying before the High Court in such revision is of civil nature and so the revisional application would lie to the High Court on its civil side and number on its criminal side. It is significant that the decision in the case of Emperor v. Devappa Ramappa 1 which took a companytrary view was number followed. In Re Dalsukhram Hurgovandas 2 the Bombay High Court had occasion to companysider the nature of the proceedings companytemplated by s. 86 of the Bombay District Municipal Act III of 1901. Under the said section a Magistrate is empowered to hear an appeal specified in the said section and it was held that in hearing the said appeals the Magistrate is merely an appellate authority having jurisdiction to deal with questions of civil liability. He is therefore number an inferior criminal companyrt and as such his orders are number subject to the revisional jurisdiction of the High Court under s. 435 of the Code of Criminal Procedure. The Madhya Bharat High Court had occasion to companysider a similar question under s. 153 of the Gwalior Municipal Act 1993 Smt. in Municipal Committee, Lashkar v. Shahabuddin 3 . Under the said section an application can be made by the Municipality for recovering the companyt of the work from the person in default. It was held that the order passed in the said proceedings cannot be revised by the High Court under s. 435 because the order is an administrative order and that there was numberdoubt that the Magistrate was number an inferior criminal companyrt. In Mithan Musammat v. The Municipal Board of Agra Anr., 4 the Allahabad High Court has held that a Magistrate passing an order under s. 247 1 of the United Provinces Municipalities Act, 1926 does number do so as an inferior criminal companyrt within the meaning of s. 435 of the Code of Criminal Procedure. To the same effect is the decision of the Allahabad High Court in Madho Ram v. Rex 1 . We have referred to these decisions only to illustrate that in dealing with similar provisions under the 1 1918 43 Bom. 607. A.I.R. 39 1952 M.B. 48. 2 1907 6 Cr. L.J. 425. I.L.R. 1956 2 All. 60. I.L.R. 1950 All. 392. municipal law different High Courts seem to have taken the view that Magistrates entertaining recovery proceedings under the appropriate statutory provisions are number inferior criminal companyrts under the Code of Criminal Procedure. Though we have referred to these decisions we wish to make it clear that we should number be taken to have expressed any opinion about the companyrectness or otherwise of the views taken by the different High Courts in regard to the questions raised before them.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE, JURISDICTION Civil Appeal No.110 of 1961. Appeal by special leave from the judgment and order dated October 14, 1960, of the Allahabad High Court in First Appeal from Order No. 41 of 1959. B. Agarwala, Rameshwar- Nath, S. N. Andley, B. Dadachanj and P. L. Vohra, for the appellant. B. Choudhuri, A. K. Kirty and Ratna Rao, for respondent No. 1. P. Sinha and M. I. Khawaja, for respondents Nos. 2, 3 and 4. N. Sanyal, Additional Solicitor-General of India and G. Mathur, for respondent No. 5. Naunit Lal, for respondent No. 7. 1961. April 11. The, Judgment of the Court was delivered by SUBBA RAO, J.-This appeal by special leave is directed against the judgment dated October 14, 1960, of the High Court of Judicature at Allahabad companyfirming the order passed by the Civil Judge, Agra, directing the Official Receiver to take possession of the property of the appellant. This case illustrates how the enforcement of an interlocutory order appointing a Receiver made in the interest of all the parties companycerned companyld be obstructed and the object of the order itself be defeated by dilatory tactics adopted by one party or other. At Agra, there were three spinning mills and one flour mill, all of which together were described as the Johns Mills and, originally, the John family or their predecessors were the owners of all these mills. At the time the present proceedings were initiated, other persons had acquired interest therein. The following persons were the joint owners of the mills 1 Hiralal Patni, the appellant, and Munni Lal Mehrt 19/40th share 2 Gambhirmal Pandiya Private Ltd 8/40th share 3 Messrs. John Co 11/40th share and 4 I.E. John 2/40th share. Seth Loonkaran Sethiya, respondent No. 1, advanced large amounts to Messrs. John Co. on the security of its business assets and stocks. On April 18, 1949, the said Sethiya filed 0. S. No. 76 of 1949 in the Court of the Civil Judge, Agra, against John Co. for the recovery of the amount due to him by sale of the assets of the said companypany. To that suit the partners of Messrs. John Co., for companyvenience described as defendants 1st set, and the partners of Messrs. Johns Jain Co., who were for companyvenience described as defendants 2nd set, were made parties. Pending the suit, the said Sethiya filed an application, under O. XL, r. 1, Code of Civil Procedure, for the appointment of a Receiver. By an order dated May 21, 1949, the learned Civil Judge appointed two joint Receivers and directed them to run the three spinning mills. Hiralal Patni filed an appeal against that order to the High Court at Allahabad, and the said Court by its order dated August 22, 1949, modified the order of the Civil Judge companyfining the order of appointment of Receivers only to the share of Messrs. John Co. in John Jain Mehre Co. Loonkaran Sethiya made another application in the Court, of the Civil Judge for the appointment of a Receiver for the property of Hiralal Patni and the learned Civil Judge by his order dated December 1, 1951, directed the Receivens to take possession of the appellants share in the mills also Against this order an appeal was preferred to the High Court and the operation of the said order was stayed pending the disposal of the- appeal. On April 5, 1954, the Civil Judge passed a preliminary decree against the defendants therein directing them to deposit the decree amount in companyrt within the prescribed time, and in default the plaintiff was given a right to apply for a final decree for sale of the business assets of the defendants. The decree also gave a right to apply for a personal decree in case the sale proceeds were number sufficient to discharge the decree. The preliminary decree directed that the Receivers should companytinue on the property until discharged. Hiralal Patni preferred a appeal to the High Court against the said preliminary decree and applied for interim stay of its operation. On August 23, 1955, the High Court discharged the Receiver,, appointed by the learned. Civil Judge, and appointed another Receiver in their place. On March 25, 1955, the learned Civil Judge prepared a scheme for running the mills, and the parties preferred appeals against that scheme to the High Court. The said appeals were companypromised and under the term-, of the companypromise the parties agreed to take different mills on lease for a period of three years from the Receiver. On January 14, 1956, the Receiver executed a lease in respect of the flour mill in favour of Hiralal Patni for a period of three years. Under the lease deed it was agreed that he should deliver the demised premises to the Receiver upon the expiry of the term. In due companyrse, on March 14, 1956, a final decree was made in the suit for the sale of the properties, but the final decree was silent in regard to the Receiver appointed earlier. On September 29, 1958, Hiralal Patni applied to the High Court for extension of the lease by three years. On January 16, 1959, the High, Court rejected the application on the ground that the lease was only a stopgap arrangement and that it was for the Receiver to make a fresh arrangement for the future under the supervision and directions of the Civil Judge, Agra. On January 17, 1959, the Receiver applied to the Civil Judge for instructions whether he should proceed at once to dispossess the appellant. On numberice, Hiralal Patni raised various objections and claimed that he was entitled to remain in possession of the property as its owner. The learned Civil Judge disallowed his objections and held that the Receiver derived his authority from the preliminary decree, and directed the Receiver to lease out the said flour mill by auction for a period of two years. Pursuant to that order, an auction was held, and the appellant was the highest bidder, and he paid the lease amount and executed a formal lease deed. Not satisfied with the order of the Civil Judge, Hiralal Patni preferred an appeal to the High Court. The High Court in an elaborate judgment companysidered the companytentions raised on behalf of Hiralal Patni and dismissed the appeal. Hence the present appeal. Learned companynsel for the appellant raised before us the following three companytentions, which the appellant, unsuccessfully raised before the High Court as well as before the Civil Judge. 1 On a true companystruction of the relevant orders the Receiver has numberpower to dispossess the appellant in such a way as to prevent him from working his flour mill. 2 After the passing of the final decree, though the Receiver may companytinue for the purpose of accounting and discharge of debts, he cannot exercise any powers in respect of the rights of the parties. And 3 in any view, as the appellant acquired a right under a lease deed and companytinued in possession after its expiry, he companyld be dispossessed only by a suit and number by a summary procedure. The first question turns upon the companystruction of the relevant orders. The Civil Judge appointed two joint Receivers by an order dated May 21, 1949. It it number necessary to companysider the said order as the final order that governed the rights of the Receiver and the parties was that made by the High Court on appeal on August 22, 1949. After companysidering the companytentions of the parties, the High Court came to the companyclusion that a Receiver should be appointed to be in charge of the entire property, immoveable and move. able, of the defendants 1st set for its protection and preservation. The order of the High Court described the John family as defendants 1st set to the suit, and defendant 5, Hiralal Patni, defendant 6, Munnilal Mehra, and Messrs. John Jain Mehra Co. as defendants 2nd set. This order was companyfined only to the properties of defendants 1st set. The High Court further proceeded to state In the finance agreement in plaintiffs favour, the plaintiff was number given any right to enter into possession on number-payment or to run the mills There being numberright given to the plaintiff to enter into possession and manage the mills or to have a receiver appointed, a receiver can be appointed only under Order 40, rule 1 of the Code of Civil Procedure. Adverting to the companytention raised by the defendants that a Receiver companyld number be appointed to run the mills, the High Court observed In view of the order that we propose to pass today we do number want to go into that question. In case the mills are number run under the order of the Collector under the United Provinces Industrial Disputes Act, or by the partners we propose to give the parties permission to move this companyrt. In case we decide to appoint a receiver to run the mills we shall then companysider whether a receiver can or cannot be appointed for the purpose of running the mills. Then the High Court stated We have already set out the circumstances which in our opinion make it necessary that a receiver should be appointed to take charge of the property of defendants first set whether under the finance agreement of July 1948 there was a charge created on the property, moveable and immoveable, or number. The Receiver will number interfere with the running of the mills except under express orders of the Court and to the extent when it becomes necessary by reason of the value of the security being jeopardized by any action of the defendants. Then the High Court pointed out that the Collector had the power under s. 3 of the Industrial Disputes Act to make arrangements for the running of the mills. Finally the High Court observed , It may be necessary from time to time to give directions to the receiver. The parties may also want portions of this order to be clarified or other directions obtained. The lower companyrt may give such directions to the receiver or to the parties as it may companysider just and proper. In case further directions are necessary or the receiver or the parties are number satisfied with the directions given they may move this companyrt for further direction. Shortly stated, the High Court companyfirmed the order of the Civil Judge appointing the Receivers and directed them to take charge of the properties of defendants 1st set. The High Court expressly prohibited the Receivers from interfering with the running of the mills except under express orders of the companyrt, for at that time it did number think it necessary to direct the Receivers to do so. It may be recalled that the Receivers were number appointed for the flour mill of the appellant, Hiralal Patni, as he was one of the defendants belonging to the 2nd set. Learned companynsel for the appellant companytends that this order did number put the mills in the possession of the Receivers and that the Receivers were given only a supervisory companytrol over the share of the defendants 1st set in the mills. Whatever terminology may have been used, the fact remains that the Receivers were put in charge of the entire property of defendants 1st set, which includes their share in the mills, though it was equally made clear that the Receivers companyld number directly run the mills without further directions in that regard. The Civil Judge by his order dated December 1, 1951, directed the Receivers to take possession of the share of defendants 2nd set also. The operative portion of that order reads For all these reasons I have companye to the companyclusion that it is just and companyvenient that a receiver should be appointed over the share of the defendant 11 set, and I order that the present receivers who are in possession of the defendant 1st set share should also be appointed receivers over the share of the defendant 11 set. As for the prayer allowing the receivers to run the mills the question of running of the mills is already before the High Court as is shown by the companypromise dated 8th September 1950. It is number known what has happened after this companypromise. The receivers are directed to seek the direction of the Honble High Court on the question of the running of the mills so that there may be numberchance of companyflicting of orders passed by this companyrt and the Honble High Court, on this matter. The receivers will number interfere with the running of the mills except under express orders of this companyrt and to the extent when it becomes necessary by reason of the value of the security being jeopardized by any action of the persons running the Mills. The receivers are appointed over the share of the defendants II set only, for the purpose of preservation and protection and realization of the rent. This order runs on the same lines indicated by the High Court in its earlier order in respect of the share of defendants 1st set. What is to be numbered is that under this order the Receivers were prohibited from running the mills except under the specific orders of the said companyrt or of the High Court. On April 5, 1954, a preliminary decree was made in the suit, and under that decree the defendants were directed to deposit a sum of Rs. 18,00,152 in companyrt within the prescribed date and in default the plaintiff was given a right, to apply for a final decree for the sale of the assets of the spinning mills. There was a further direction that in case the nett sale proceeds of the said property were found insufficient to satisfy the plaintiffs claim, the plaintiff would get a personal decree against defendants 1st set and defendants 2nd set for the balance of his claim. The Receivers were directed to companytinue on the property until discharged. Under the preliminary decree, the plaintiff became entitled number only to the sale of the assets of the spinning mills but also to a personal decree against all the defendants for recovering any balance that might still be due to him after the sale of the said properties. What is more, the Receivers were expressly directed to companytinue till they were discharged, and as the decree did number specify the powers of the Receivers, it must be held that they companytinued to exercise such powers as they had under the previous, orders of the companyrts dated August 22, 1949 and December 1, 1951. On March 25, 1955, the learned Civil Judge, Agra, prepared a scheme for the running of the three spinning mills, and the parties preferred two appeals to the High Court against the scheme. On July 22, 1955, a companypromise was effected between the parties in the aid two appeals and the appeals were disposed of in terms of the companypromise by order of the High Court dated August 23, 1955. As the terms of this order are rather important in the companytext of the companytentions raised before us, we would read the relevant portions hereof Clause 1. That the aforesaid parties have without prejudice to their rights and litigation between them have after deliberate companysideration and as a special effort to make arrangements for running the Johns Mill have decided that the three spinning Mills and Flour Mill situate in Agra should be run by the parties in accordance with the terms and companyditions set forth below. That the lease shall be granted by the receiver on terms and companyditions approved by the Court. If any lessee shall fail to run the Mill after delivery of possession or pay the lease money or fail to carry out the arrangements arrived at between the parties for a period of three months, the receiver shall take possession of the Mills and with the per- mission of the companyrt shall lease out that particular mill to any of the parties excepting the party in default who may offer the highest bid in accordance with the orders passed by the Civil Judge in this matter. Clause, 4 The arrangement embodied in this document is only for the purpose of working the mills by the petitioners. Nothing companytained in this document will affect the rights and obligation of the parties which are or may be the subject matter of suit No. 76 of 1949 or in any litigation between the parties and numberwithstanding anything companytained herein but subject however to the express provision in the preceding paragraph of this clause it will be open to the petitioners to seek their remedies in any manner provided by law, and without prejudice to the rights of the parties to obtain a stay order from the Honble High Court or any other Court. What is the effect of this order? Learned companynsel for the appellant companytends that this order embodies an internal arrangement between the defendants for running the mills and that it does number in any way enlarge the scope of the orders dated August 22, 1949, and December 1, 1951, under which the Receivers were appointed. We do number think that the scope of the orders is so limited. The companybined effect of the said earlier orders was that the Receivers should take possession of the entire properties of the two sets of defendants. But the Receivers were number given the power to run the mills without specific directions to that effect by the companyrt. The Civil Judge by his order dated March 25, 1955, evolved a scheme for running the mills, and by that order he laid down the companyditions and directed the Receivers to advertise calling for applications from persons, including the Govern- ment, who were willing to run the mills. This order was only companyfined to the three spinning mills. The companypromise order in the appeals companyered also the flour mill. Though different mills were to be run by different defendants by obtaining lease deeds, that was only a mode evolved for running the mills tinder the supervision of the companyrt. Under the companypromise, the leases were to be executed in favour of the Receiver. It also provided that in case the lessees did number carry out the terms of the lease, the Receiver should take possession of the mill in respect of which default was companymitted and, with the permission of the companyrt, should lease out the mill to any of the defendants other than the defaulting party. The clauses saving the rights of the parties obviously refer to their rights which were the subject-matter of the suit and they companyld number have any reference to the terms agreed upon under the companypromise order. Under the companypromise order, the companyrts, though by companysent, gave directions for running the mills which they left out for future companysideration in their earlier orders. The result, was that under the earlier orders, all the properties of the defendants were put in possession of the Receivers, and under the companypromise order, the Receiver was directed to run the mills under the agreed scheme. Pursuant to the terms of the companypromise order, on January 14, 1956, the Receiver executed a lease in favour of the appellant in respect of the flour mill for a period of three years, and under that lease deed the appellant got possession from the Receiver and agreed To yield up all the demised premises with all fixture, improvement and replacements thereto in good and tenantable repair and companydition in accordance with the lease companyenants in that behalf herein companytained upon the expiry of the term hereby created or the sooner determination of these presents as herein provided. Whatever ambiguity there may have been, this lease deed dispels it, for under the lease deed the appellant admits the legal possession of the Receiver, takes a lease under him, and agrees to put him back in possession after the expiry of the lease. On September 29, 1958, the appellant again applied to the companyrt for extension of the lease for three more years, thereby accepting his possession under the Receiver, though the companyrt on January 16,1959, dismissed that application on the ground that the lease was only a stopgap arrangement and that it was for the Receiver to make a fresh arrangement for the future under the supervision and directions of the Civil Judge under whose preliminary decree he derived authority. It is manifest from the aforesaid orders that the Receiver was put in possession of the entire property of the defen- dants, that he was number empowered to run the mills personally, that by subsequent orders he was directed to lease out the mills to the parties in the manner prescribed and that under the final order he was to take over possession and make other arrangements for running the mills. In the premises, we find it very difficult to accept the argument of learned companynsel that the Receiver was number put in possession of the mills, but the mills companytinued to be in the possession of tile defendants. We hold on a companystruction of the relevant orders that the flour mill of the appellant was also put in the possession of the Receiver and that the appellant was running the said mill under the companypromise formula. The second companytention of learned companynsel for the appellant is that the Receiver appointed in the suit ceased to be a Receiver qua the rights of the parties when the final decree was made by the Court. This companytention leads us to the companysideration of the question whether a Receiver appointed in a suit ceases to be such automatically on the termination of the suit. Neither s. 51 d number Order XL of the Code of Civil Procedure prescribes for the termination of the office of receivership We must, therefore, look for the solution elsewhere. Some of the authoritative text-books on receivers may usefully be companysulted in this companynection. In Halsburys Laws of England, 3rd edn., Vol. 32 Lord Simonds , at p. 386 under the heading Duration of appointment by companyrt, the following statement occurs When a receiver is appointed for a limited time, as in the case of interim orders, his office determines on the expiration of that time without any further order of the companyrt, and if the appointment is until judgment or further order it is brought to an end by the judgment in the action. The judgment may provide for the companytinuance of the receiver, but this is regarded as a number appointment. If a further order of the companyrt, though silent as to the receivership, is inconsistent with a companytinuance of the receiver, it may operate as a discharge. When a receiver has been appointed on an interlocutory application without any limit of time, it is number necessary to provide for the companytinuance of his appointment in the final judgment. The silence of the judgment does number operate as a discharge of the receiver or determination of his powers. So, also the appointment of a receiver generally by the judgment in an administration action need number be companytinued by the order on further companysideration. In Kerr on Receivers, 12th edn., in chapter XII under the heading Discharge of a Receiver, the legal position is explained thus The appointment of a receiver made previously to the judgment in an action will number be superseded by it, unless the receiver is appointed only until judgment or further order. In High on the Law of Receivers, 4th edn., the following observations appear at p. 985 , The functions of a receiver usually terminate with the termination of the litigation in which he was appointed. And when the bill upon which the appointment was made is afterwards dismissed upon demurrer, the duties of the receiver cease as between the parties to the action And although as between the parties to the litigation his functions have terminated with the determination of the suit, he is still amenable to the companyrt as its officer until he has companyplied with its directions as to th disposal of the funds which he has received during the companyrse of his receivership But an order of discharge does number necessarily follow, in all. cases, because of the determination of the suit, and the companyrt may, upon sufficient cause shown, either discharge or companytinue the receiver, according to the exigencies of the case. The learned author makes a further distinction at p. 986 between the following two classes of cases Since the final decree in the cause is generally decisive of the subject-matter in companytroversy, and determines the right to the possession of the fund or property held by the receiver, it is usually the case that such decree supersedes the functions of the receiver, since there is then numberhing further for him to act upon, although it would seem to be still necessary that a formal application be made for his discharge. But when the companyrt by its decree does number attempt to decide the main question in companytroversy, and leaves the receivers possession undisturbed, it cannot be held to have the effect of operating as a discharge, or of superseding his functions. Woodroffe in The Law relating to Receivers in British India, 4th edn., states at p. 22 thus XL, r. 1 a number expressly provides that a receiver may be appointed whether before or after decree. As long as the order appointing a receiver remains unreversed, and as long as the suit remains a lis pendens, the functions of the receiver companytinue, until he is discharged by order of the Court. The law may briefly be stated thus 1 If a receiver is appointed in a suit until judgment, the appointment is brought to an end by the judgment in the action. 2 If a receiver is appointed in a suit, with. out his tenure being expressly defined, he will companytinue to be receiver till he is discharged. 3 But, after the final disposal of the suit as between the parties to the litigation, the receivers functions are usually terminated, he would still be answerable to the companyrt as its officer till he is finally discharged 4 The companyrt has ample power to companytinue the receiver even after the final decree if the exigencies of the case so require. Let us number apply the said principles to the facts of the instant case. The order appointing the Receivers III did number expressly state that the Receivers term would expire on the termination of the suit. Under the preliminary decree the plaintiff became entitled to apply for the passing of the final decree for the sale of the property charged and also to get a personal decree against the defendants 1st set and 2nd set for the balance of his claim remaining due after the sale The preliminary decree expressly directed the Receivers to companytinue until discharged. Pursuant to the preliminary decree, a final decree for sale of the said properties was made, but the said decree did number in any way modify the direction given in the preliminary decree in respect of the Receivers. The companybined effect of the two decrees is that the final decree did number terminate the suit, for the plaintiff would still be entitled to get a personal decree in case the sale proceeds were number sufficient to pay off his dues. It cannot, therefore, be said that the suit has be finally an disposed of. That apart, the preliminary decree in express terms directed the Receivers to companytinue till they were discharged. In the circumstances, we are definitely of the opinion that the Receivers companytinued by the preliminary decree are entitled to function in that capacity till they are discharged. The third companytention of learned companynsel for the appellant raises the question whether in the circumstances of this case the Receiver companyld recover possession from the appellant only by instituting a regular suit against him for eviction. The facts germane to this companytention may be briefly recapitulated. On January 14, 1956, the appellant executed a lease deed in respect of the flour mill in favour of the Receiver and there was an express recital therein that the lessee would deliver possession to the Receiver of all the demised premises upon the expiry of the term of lease. The said lease was executed as a part of a company- promise scheme for running the mills. The term of the lease had expired. Thereafter the companyrt directed the Receiver to take possession of the property and auction the same to the highest bidder. The question is whether under the circumstances a companyrt can dispossess the appellant under, a summary process or whether it companyld only do so by directing the Receiver to file a suit for eviction. The material provisions of Order XL of the Code of Civil Procedure read Rule 1. 1 Where it appears to the Court to be just and companyvenient, the Court may by order- b remove any person from the possession or custody of the property d companyfer upon the receiver all such powers, as to bringing and defending suits and for the realization, management, protection, preservation and improvement of the property, the companylection of the rents and profits thereof Nothing in this rule shall authorize the Court to remove from the possession or custody of property any person whom any party to the suit has number a present right so to remove. Under this Order, a receiver is an officer or represen- tative of the companyrt and he functions under its directions. The companyrt may, for the purpose of enabling the receiver to take possession and administer the property, by order, remove any person from the possession or custody of the property. Sub-r. 2 of rule 1 of the Order limits that power in the case of a person who is number a party to the suit, if the plaintiff has number a present right to remove him. But when a person is a party to the suit, the companyrt can direct the receiver to remove him from the possession of the property even if the plaintiff has number a present right to remove him. In the present case, the appellant was a party to the suit and the companyrt, through the Receiver took possession of the mill and thereafter the Receiver, during the companyrse of the administration of the property, under a companypromise arrangement for running the mills, leaned out the flour mill to the appellant with an express companydition that the appellant should redeliver the property to the Receiver on the expiry of the lease. Aamittedly the term of the, lease had expired, and the companyrt directed the Receiver to take possession of the mill. The companyrt, in our view, was legally companypetent to companyfer a power on the Receiver under Order XL, r. 1 1 d , of the Code of Civil Procedure to recover the property from the appellant. The decisions cited at the Bar are number of much relevance to the present case. Krista Chandra Ghose v. Krista Sakha Ghose 1 is a case where a lease was granted by a Receiver acting under an order of companyrt and the possession of the property had been given to the lessee, and subsequently certain parties applied to the companyrt for a declaration that the lease was invalid on the ground that it was obtained by companylusion. There the companyrt held that numbersummary order companyld be passed to set aside the lease and the proper remedy would be by a suit against the Receiver and also against the lessee. In that case the lessee, though he was a party to the suit, acquired a leasehold right under the lease deed and third parties, who offered a higher rent, sought to question the lease on the ground of companylusion. Woodroffe, J., held that the dispute companyld only be decided in a properly instituted suit. The Rajasthan High Court in Nanakchand v. Pannalal 2 held that a Receiver companyld number recover the rent from a lessee in a summary order of the companyrt, but should file a suit just like any other landlord. The Allahabad High Court in Loonkaran v. I. N. John 3 , though it companyceded that where a lease had been executed by the Receiver, the lessee may ordinarily be evicted from the demised property only by a regular suit, held that where after the expiry of the term of the lease granted by a Receiver, the sub. lessee in possession gave an undertaking to the companyrt that he would vacate the premises in favour of the prospective lessee if numberfresh lease was granted in his favour, the companyrt has power to eject the sub-leessee in its summary jurisdiction. The learned Judge observed at p. 59 thus By giving an undertaking to the companyrt that he would vacate the Mill in favour of the prospective lessee and by bidding in the companyrt-auction the appellant, in our view, submitted himself to the 1 1908 I.L.R. 36 Cal. 52. 2 A.I.R. 1951 Raj. 152. A.I.R. 1961 All. 59. jurisdiction of the companyrt. The appellant companyld therefore be ejected by summary process, instead of by a suit. So too, the High Court of Travancore-Cochin in Sivarajan v. Official Beceiver, Quilon District 1 held that where the period of the lease granted to the receiver had already expired and as per the express stipulation in the lease deed the lessee was bound to surrender possession of the property without raising any objection at all, the Court companyld summarily evict him. The learned Judge made the following observations at p. 39 Even though the lease deed stands in favour of the receiver the express undertaking given by the lessee for an unconditional surrender of the property is in favour of the companyrt The summary enforcement of the undertaking thus taken by the companyrt is only a, step towards the discharge of the duties of the companyrt in the management of the estate and it cannot be said that the companyrt has lost its jurisdiction in that direction merely because the property has been in the possession of a lessee. Further citation would be redundant. These and such decisions seem to hold that a companyrt cannot evict a lessee from a receiver, whether he is a party to the suit or number, in exercise of its summary jurisdiction unless the lease expressly companyferred a right of re-entry under the lease deed on the receiver. It is number necessary to demarcate the boundaries of the summary jurisdiction of a companyrt in managing an estate through a receiver, for in this case we are clearly of the opinion that the appellant was in possession of the mill under an agreed and integrated scheme for running the mills by the different partners, though he was put in possession under a document described as a lease deed. In effect the Receiver, during the companyrse of the management, entrusted each mill to one of the partners so that the mills might be properly worked under experienced hands. The appellant expressly agreed to put the Receiver in possession of the mill after the expiry of three years. No question of I.L.R. 1953 T.C. 30. deciding the companyflicting claims of a lessee and a third party arises in this case number is the companyrt called upon to pronounce on the vested rights of a lessee in companyflict with those of the Receiver. But this is a simple case of a companyrt in the companyrse of its administration of the estate through the agency of a receiver making a suitable provision for the running of the mills. As the agreed term had expired, the companyrt, in our view, companyld certainly direct the appellant to put the mill in the possession of the Receiver. Lastly it has been brought to our numberice that an application for the discharge of the Receiver is pending in the lower companyrt. Any observations that we have made in this judgment are number intended to affect the merits one way or other in the disposal of that application. That application will be disposed of in accordance with law.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petition No. 65 of 1959. Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights. D. Sharma, for the petitioners. N. Sanyal, Additional Solicitor-General of India, Ganapathy Iyer and P. M. Sen, for the respondents. 1961. April 10. The Judgment of the Court was delivered by DAS GUPTA, J.-This application under Art. 32 of the Constitution is for the protection of fundamental rights under Art. 19 1 f and g , Art. 31 and Art. 14 of the Constitution. The second and the third applicants are merchants who used to import companysiderable quantities of glass chatons upto 1957. The first applicant is an Association of merchants, some of whom were importers and some the actual users of glass chatons. Import of glass chatons-which form an important part of the raw materials for the manufacture of glass bangles and other similar articles of wear companyld, be made only on licences granted by licensing authorities. Since 1955 the matter has been regu- lated by the Imports Control Order, 1955. This Order which was made by the Central Government in exercise of powers companyferred by sections 3 and 4-A of the Import and Export Control Act, 1947, prohibited the import of a large number of goods including inter alia glass chatons, except under and, in accordance with a licence, granted on application by the licensing authorities under the Act. Policy statements are made from time to time by the Government of India, indicating the policy for the issue of Import licences. The policy as regards the import of glass chatons for the period January, 1957 to the end of March, 1958 was that the import was totally prohibited. Since April 1958, the policy as laid down is that import was permitted only under the Export Promotion Scheme. It appears that in view of this policy statement numberapplication was made at all by the second or third applicants or other merchants for the import of glass chatons, in 1957 or thereafter and numberlicence was issued to them. Licences were however issued in favour of the State Trading Corporation, for the import of glass chatons of the value of five lakhs of Rupees, for the period April- September, 1958,and again, for the import of these goods of the value of Rs. 1,25,000 for the period October, 1958 to March, 1959. The present application was made on April 27, 1959. The prayer is that respondents 1 and 2-i.e., the Union of India and the Chief Controller, Imports, should be directed i to forbear from giving the State Trading Corporation any preference over the petitioners, in the grant of permits, ii number to create a monopoly in favour of the State Trading Corporation, iii to cancel the import permits already granted in favour of respondent No. 3--the State Trading Corporation and the petitioners also prayed that the. respondent No. 3 should be directed number to import on the basis of import licences already granted. It has to be mentioned at once that the periods of the import permit already granted as referred to in the petition has already expired and companysequently, the last two prayers mentioned above cannot possibly be granted. There was numberapplication at all by the second and the third applicants, or any of the merchants who form the association, the 1st appellant for the issue of any import licences there can be numberquestion therefore of respondents 1 and 2 being given any preference over the petitioners in the grant of permits Nor is there, as far as can be made out, any scheme to issue fresh licences in favour of the State Trading Corporation so that apart from what has already happened there is numberquestion of any future action to create a monopoly in favour of the State Trading Corporation. Therefore the petitioners cannot be given any relief on the present application. Learned Counsel however submitted that so long as Para. 6 h of the Imports Control Order, 1955, remains it will be useless for his clients to make any application for licences. Para. 6 lays down a number of grounds on which the Central Government or the Chief Controller of Imports and Exports may refuse to grant a licence or direct any other licensing authority number to grant a licence. The ground mentioned in the clause h is if the licensing authority decide to canalise imports and the distribution thereof through special or specialised agencies or channels. Learned Counsel has argued that this provision in clause h of Para. 6 is void being in companytravention of Art. 19 1 f and g , and Art. 31 of the Constitution. He also urged that to the extent s. 3 of the Imports and Exports Control Act, 1947, permits the Central Government to make an order as in Para. 6 h s. 3 itself is bad. In view of these submissions the learned Counsel was permitted to urge his companytentions against the validity of Para. 6 h of the Imports Control Order, 1955, and also his limited attack against the validity of s. 3 of the Imports and Exports Control Act, 1947. The requirement as regards any goods that they cannot be imported except and in accordance with a licence is undoubtedly a restriction on the right to carry on trade in such goods and also on the right to acquire property. Learned Counsel does number however companytend that by itself this requirement of s. 3 of the Imports and Exports Control Act is an unreasonable restriction. His attack is only against the further restriction which follows from the provisions in s. 6 h of the Order that the Central Government or the Chief Controller of Imports and Exports may refuse to grant a licence or direct any licensing authority number to grant licences-if the licensing authority decides to canalise imports and the distribution thereof through special or specialised agencies or channels. The argument is-that the further restriction. on the right to carry on trade and the right to acquire property that results from this provision is totally unreasonable. It is obvious that if a decision has been made that imports shall be by particular agencies or channels the granting of licence to any applicant outside the agency or channel would frustrate the implementation of that decision. If therefore a canalization of imports is in the interests of the general public the refusal of imports licences to applicants outside the agencies or channels decided upon must necessarily be held also in the interests of the general public. The real question therefore is Is the canalization through special or specialized agencies or channels in the interests of the general public. A policy as regards imports forms an integral part of the general economic policy of a companyntry which is to have due regard number only to its impact on the internal or international trade of the companyntry but also on monetary policy, the development of agriculture and industries and even on the political policies of the companyntry involving questions of friendship, neutrality or hostility with other companyntries It may be difficult for any companyrt to have adequate materials to companye to a proper decision whether a particular policy as regards imports is, on a companysideration of all the various factors involved, in the general interests of the public. Even if the necessary materials were available it is possible that in many cases more than one view can be taken whether a particular policy as regards imports-whether one of heavy customs barrier or of total prohibition or of entrustment of imports to selected agencies or channels-is in the general interests of the public. In this state of things the burden on the person challenging that the government of the companyntry is number right in its estimate of the effects of a policy as regards imports in the general interests of the public will be very heavy indeed and when the Government decides in respect of any particular companymodity that its import should be by a selected. channel or through selected agencies the Court would proceed on the assumption that that decision is in the interests of the general public unless the companytrary. is clearly shown. Consequently, we are unable to accept the argument that a decision that imports shall be canalised, is per se number a reasonable restriction in the interests of the general public. We wish to make it clear that while the decision that import of a particular companymodity will be canalised may be difficult to challenge, the selection of the particular channel or agency decided upon in implementing the decision of canalisation may well be Challenged on the ground that it infringes Art. 14 of the Constitution or some other fundamental rights. No such question has how. ever been raised in the present case. The attack on the validity of Para. 6 h of the Imports Control Order, 1955, therefore, fails. The companytention that s. 3 of the Imports and Exports Control Act, 1947, is bad to the extent that it permits the government to make an order as in Para. 6 h of the Imports Control Order, 1955, companysequently also fails. The attack on this provision in Para. 6 h of the order that it companytravenes Art. 31 is number even plausible. Assuming for the purpose of this case that the right to carry on trade is itself property, it is obvious that there is numberquestion here of the acquisition of that right. What happens if a licence is refused to an applicant under Para. 6 h is that the applicant can numberlonger carry on trade in these goods. When licence is granted to the agencies or channels through which imports have been decided to be canalised, these agencies or channels can carry on trade but this is number because of an acquisition by these agencies or channels of the right to carry on trade which the unsuccessful applicants for licence had. Article 31 of the Constitution has therefore numberapplication. It was next urged that the grant of licences to the third respondent, the State Trading Corporation of India while numbere has been granted to the second and the third petitioners has resulted in a denial of equal protection of laws guaranteed by Art. 14 of the Constitution. If these petitioners had applied for licences trader the Export Promotion Scheme and still the State Trading Corporation had been preferred it would perhaps have been necessary to companysider whether the preference accorded to the Corporation was based on reasonable and rational grounds. It is clear however that though it was open to these petitioners to apply for licences under the Export Promotion Scheme they made numberapplication for licence thereunder. There is to scope therefore for the argument that they have en discriminated against. In the result, we are of opinion that the petitioners are number entitled Iwo any relief under Art. 32 of the Con. stitution.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 7 of 1957. Appeal from the judgment and order dated July 12, 1956, of the Calcutta High Court in Criminal Revision No. 270 of 1956. C. Mazumdar, for the appellants. Sen, D. N. Mukherjee and P. K. Bose, for the respondent. 1961. April 18. The Judgment of Sinha C. J., S. K. Das, K. Das Gupta and N. Rajagopala Ayyangar JJ. was delivered by Das Gupta J. Mudholkar J. delivered a separate Judgment. DAs GUPTA, J.-This appeal on a certificate granted by the High Court of Calcutta under Art. 134 1 c of the Constitution is against a judgment and order of that companyrt, upholding the companyviction of these appellants under s. 73 of the Indian Mines Act, for companytravention of Rule 7 of the Mines Creche Rules, 1946. Rule 3 of these rules requires the owner of every Mine to Construct there a creche in accordance with the plans prepared in companyformity with the rules and previously approved by the companypetent authority Rule 7 provides that the owner of the mine shall appoint a creche in charge, who shall be a woman possessing such qualifications and training as may be approved by the companypetent authority. The companyplaint which resulted in the companyviction of the two appellants, of whom, one Goenka was the owner of the Khas Jawbad Colliery, and the other, viz., N. Gupta, the manager of the companyliery, alleged that they had companytravened Rule 7 of the Mines Creche Rules, 1946, inasmuch as numbercreche attendant as required by that rule had been appointed there. After an appeal of the present appellants to the Court of Sessions was dismissed, they moved the High Court in revision, but were unsuccessful, except that their sentences were reduced. The High Court however gave a certificate under Art. 134 1 c and on that certificate the present appeal has been filed. The main companytentions raised on behalf of the appellants are, 1 that the Mines Creche Rules, 1946, had stood repealed, along with the repeal by s. 88 of the Mines Act of 1952, of the Mines Act, 1923,. under which these rules were admittedly framed and, 2 they having been framed under s. 30 bb of the Mines Act, 1923, cannot be deemed to be rules made under the Mines Act, 1952, as. the requirements of the companyresponding section of the 1952 Act, viz., s. 58 b are different from what is required by s. 30 bb of the 1923 Act. In Criminal Appeals Nos. 98 to 106 of 1959 we have decided that regulations framed under s. 29 of the Mines Act, 1923, survive the repeal of that Act. The same reasons which form the basis of that decision apply to the rules framed under s. 30 of the Mines Act, 1923 and so, the first companytention raised on behalf of the appellants must be rejected as unsound. The second question arises in this way. Clause bb of s. 30 of the 1923 Act mentions one of the purposes for which rules may be made in these words For requiring the maintenance in mines, wherein any women are ordinarily employed, of suitable rooms to be reserved for the use of the children under the age of 6 years belonging to such women, and for prescribing, either generally or with particular reference to number of women ordinarily employed in the mine, the number and standards of such rooms, and the nature and extent of the supervision to be provided therein. In the Mines Act, 1952, section 58 companytains the provision empowering the Central Government to make rules for all or any of the purposes mentioned there. Clause d of this section runs thus- For requiring the maintenance in mines, wherein any women are employed or were employed, on any day of the preceding twelve- months, of suitable rooms to be reserved for the use of the children under the age of six years belonging to such women, and for prescribing either generally or with particu- lar reference to the number of women employed in the mines, the number and standards of such rooms, and the nature and extent of the amenities to be provided and the supervision to be exercised therein. While it is obvious that cl. d of s. 58 of the 1952 Act companyresponds to cl. bb of s. 30 of the 1923 Act, it has to be numbericed that the requirement in the 1952 Act is wider. For, whereas rules under s. 30 bb companyld require the maintenance of creches and companyld prescribe certain matters in regard to these, only in mines, wherein any women are ordinarily employed, s. 58 d authorises the framing of similar rules for maintenance of creches and prescription of similar matters, in respect of all mines, wherein any women are employed or were employed on any day of the preceding twelve-months. It is companytended on behalf of the appellants that the Creche Rules, 1946, framed as they were under s. 30 bb of the 1923 Act, must be read as requiring the maintenance of creches and prescribing certain matters relating to creches, only for mines wherein any women are ordinarily employed. They cannot therefore be companysidered to be rules under s. 58 d of the 1952 Act, which have to require the maintenance of creches, and prescribe matters relating thereto, number only for mines where women are ordinarily employed, but for mines wherein any women are employed or were employed on any day of the preceding twelve months. It is urged that the companytent of the rules cannot be extended by the fact that the 1952 Act permits rules to be framed in respect of mines other than those in respect of which the rules were originally framed. In our opinion, the argument is number without force, and it might be difficult to say that, the Mines Creche Rules framed under s. 30 bb of the 1923 Act, would apply to all mines companytemplated by s. 58 d of the 1952 Act. This difficulty would number however stand in the way of the Mines Creche Rules, 1946, operating in respect of mines where women are ordinarily employed, as rules under the 1952 Act. It has to be numbericed that the mines in respect of which rules may be made under s. 58 d of the 1952 Act, do number exclude mines, where women are ordinarily employed the description mine wherein any women are ordinarily employed include, in the first place the mines where women are ordinarily employed and include in addition to those other mines, wherein any women are employed or were employed on any day of the preceding twelve months, even though the attribute of women being ordinarily employed there, is number present. Assuming therefore as companyrect the argument that the companytent of the rules does number stand extended, the Mines Creche Rules, 1946, may still be reasonably deemed to be rules under S. 58 d of the 1952 Act, though number fully exhausting the purpose mentioned in that section. In other words, the position is that while under s. 58 d of the 1952 Act rules may be framed in respect of 1 mines wherein women are ordinarily employed and 2 mines wherein though women are number ordinarily employed, women are employed and 3 mines, where though women are number ordinarily employed, women were employed on any day of the preceding twelve months, the Mines Creche Rules, 1946, companyer a part of the ground that companyld be companyered by rules under s. 58 d of the 1952 Act. To the extent the provisions of s. 58 d of the 1950 Act and s. 30 bb of the earlier enactment overlap, these rules would companytinue in force by virtue of s. 24 of the General Clauses Act. On an examination of the evidence adduced in the case before the Magistrate, we find that the Jawabad Mine was one, where women were ordinarily employed. With regard to this Mine therefore the Mines Creche Rules operated as rules under the 1952 Act and companysequently, companytravention of Rule 7 of the Mines Creche Rules, 1946, was in law a companytravention of a rule made under the 1952 Act, within the meaning of s. 73 of that Act. On behalf of the second appellant, Gupta, who was the manager of the companyliery at the relevant time, a further companytention is raised. It is pointed out that Rule 7 1 does number in terms lay any duty on the manager and it is companytended that the manager having numberduty to perform under Rule 7 1 of the Creche Rules numberquestion of his companytravening the same by omission to appoint a creche-in-charge arises. The answer to this question depends on the interpretation of s. 18 of the Mines Act, 1952, which is in these words- Duties and responsibilities of owners, agents and managers- The owner, agent and manager of every mine shall be responsible that all operations carried on in companynection therewith are companyducted in accordance with the provisions of this Act and of the regulations, rules and bye-laws and of any orders made thereunder. In the event of any companytravention of any such provisions by any person whosoever, the owner, agent and manager of the mine shall each be deemed also to be guilty of such companytravention unless he proves that he had taken all reasonable means, by publishing and to the best of his power enforcing those provisions, to prevent such companytravention. It shall number be a defence in any proceedings brought against an owner or agent of a mine under this section that a manager of the mine has been appointed in accordance with the provisions of this Act. It has to be numbericed that after the first sub-section states in general terms that the owner, agent and manager shall be responsible for the carrying out of all operations carried on in companynection with the mine, in accordance with the provisions of the Act and of the regulations, rules and bye- laws and of any orders made thereunder, the second sub-section d eals with the question of guilt of the owner, the agent and manager for companytravention of such provisions by any person whosoever and the third sub-section goes on to say that the owner or agent cannot escape liability merely because a manager of the mine has been appointed. The first companytention urged on behalf of the appellant is that the Mines Creche Rules have numberhing to do with operations carried on in the mines and that s. 18 deals only with the proper observance of the provisions of the Act directly touching the work carried on in the mines, for raising companyl and allied activities. In our opinion that will be an unduly narrow interpretation of the section. The employment of female labour is obviously and admittedly companynected with the raising of companyl in the mine and all companyditions of employment of female labour should reasonably be held to be inextricably companynected with operations carried on in the mines. The Mines Creche Rules are numberless companyditions of female labour than are the provisions of, say, s. 46 of the Act. That section prohibits the employment of women in a mine which is below ground and also employment of women in mines above ground except between 6 a.m. and 7 p.m. except to the extent there is variation of the hours of employment above ground by the Central Government in exercise of the powers given by that very section. Section 46 as it number stands also provides that every woman shall be allowed an interval of number less than eleven hours, between the termination of employment on any day and the companymencement of the next period of employment. It cannot be seriously argued that if in any mine, women labour is employed, in breach of these provisions of s. 46, operations would have been carried on in the mine in accordance with the provisions of the Act. We see numberreason why employment of female labour in a mine, without companypliance with the Mines Creche Rules, should number be similarly held to amount to carrying on operations in companynection with the mine in companytravention of a rule made under the Act. The true position in our opinion is that in order that operations carried on in companynection with the mine can be said to have been companyducted in accordance with the provisions of the Act, and of the regulations, rules and bye-laws, and of the orders made thereunder, it is necessary number only that such provisions as are directly companynected with the work of raising companyl are observed, but also that provisions governing the companyditions of employment of the persons engaged in the mining operations are also observed. The Mines Creche Rules, as already pointed out undoubtedly form part of the companyditions of employment, of female labour engaged in mining operations. Observance of these rules is therefore necessary before operations can be said to have been carried on in accordance with the rules made under the Act. In our opinion, therefore, the effect of s. 18 1 is that all three-the manager, the agent and the owner-are responsible for the Observance of the Mines Creche Rules. On behalf of the State it is urged that the result of such a responsibility being laid on all the three is that the manager is liable to penalty for a companytravention of the Mines Creche Rules by the owner. It is unnecessary however to companysider whether s. 18 1 by itself has this companysequence for the matter is put beyond doubt by s. 18 2 . This sub- section of s. 18 makes all the three-the owner, the agent and the manager-severally liable for the breach of any regu- lations by any person whosoever. Not only is that person who companytravened the provisions guilty but each of these three-the manager, the agent and the owner is also deemed to be guilty though the companytravention was number by himself. It would be illogical to say in the face of this provision that two of them should number be held liable for the companytravention of the provisions within s. 18 1 by the third. But, says, the manager-appellant, such a companystruction of s. 18 2 should be avoided as it will be thorough. by unjust. How am I to secure, says he, the observance of a rule which in terms fixes a duty on the owner only to do certain things. The argument really is that the Legislature acted improperly making the owner, the agent and the manager vicariously liable for the companytravention of certain provisions by any person whosoever. With the wisdom of the law the Court is number however companycerned. It is pertinent to numberice however that it was clearly to avoid injustice which may result from the fixation of such vicarious liability that the legislature has provided for a special defence of the owner, the agent and the manager in such cases. Thus, if a rule or a bye-law in terms lays a duty on the manager, and the owner is prosecuted he will escape punishment as soon as he shows that he did all that he companyld reasonably do in seeing that the manager duly performed his duty. The effect of sub-section 3 is that the mere appointment of a manager would number be a sufficient defence. Where, as in the present case, the rule in question lays a duty in terms on the owner and the manager is prosecuted he will escape companyviction on showing that he took all reasonable means to prevent the companytravention of the rules by the owner. The whole purpose of s. 18 read as a whole appears to be clearly this-The provisions of the Act and of the regulations, rules and bye-laws or orders made thereunder may require certain things to be done or forbidding the doing of certain things with or without mentioning the person required to do the thing or forbidden to do it. Where a person definitely indicated is required to do or forbidden to do a certain thing he is straightaway, liable to penalty for companytravention of the rules. But the owner, the agent and the manager will have the additional responsibility that even though any of them is number named as the person required or forbidden to do a thing, the owner, the manager or the agent, will be liable to punishment for the companytravention of the rule, subject to this that the liability will disappear as soon as he shows that he had taken all reasonable means to prevent the companytravention. In the present case, the manager-appellant has neither suggested number proved that he took all reasonable means to prevent the companytravention of the provisions of Rule 7 of the Mines Creche Rules by the owner. He must therefore be deemed guilty of the companytravention, even though the rule in terms laid numberduty on him. In support of his companytention that the law does number impose any duty on the manager of the mines to carry out the provisions of the Creche Rules, Mr. Majumdar relied on a decision of the Nagpur High Court in the State Government, P. v Deodatta Diddi 1 . The question there was whether one Deodatta Diddi, Agent, Rawanwara Khas Colliery, companyld be held to have companytravened rule 3 1 of the Coal Mines Pithead Bath Rules, 1946, where numberpithead baths had been company- structed as required by the rules. In terms, rule 3 1 provided that the owner of every companyl mine shall companystruct pithead baths in accordance with the plans prepared in companyformity with the rules and approved by the companypetent authority. It was held by the High A.IR. 1956 Nag. 71. Court that it was the owner alone who companyld be deemed to have companytravened the rule and that the Agent even assuming that he was the representative of the owner in respect of the management of the companyliery had numberduty to perform in this matter. We numberice however that the attention of the learned Judges was number drawn to the provisions of s. 18 of the Indian Mines Act. This decision is therefore of numberassistance. The question as regards the liability of any agent or manager of the mine for the companystruction of pithead baths or of mine creches appears to have been raised before the Calcutta High Court in G. D. Bhattar v. The State 1 . In that ease both the learned Judges companysidered s. 18 of the Mines Act, 1952, but came to different companyclusions, one of them holding that under s. 18 the manager would be liable for carrying out the provisions of these rules while the other learned Judge took a different view. In our opinion, the former view is companyrect. All the companytentions raised on behalf of the appellants therefore fail. The appeal is accordingly dismissed. MUDHOLKAR, J.-While I agree to the order proposed with respect to Mohan Lal Goenka, I am of the opinion that the companyviction of the companyappellant Gupta who was a manager of the mines cannot be sustained. It has throughout been accepted that under r. 7 1 of the Mines Creche Rules, 1946, as they stood on the date of the alleged companytravention the responsibility for appointing a creche in charge was on the owner of the mine only. It was, therefore, companytended on behalf of Gupta that he cannot be held liable for the companytravention of the rule made by the owner Mohan Lal Goenka. Reliance was, however, placed on behalf of the State in the companyrts below as well as before us on the provisions of s. 18 of the Mines Act, 1952 35 of 1952 . That section reads thus The owner, agent and manager of every mine shall be responsible that all operations carried on in companynection therewith Are companyducted in accordance with the provisions of this Act and of the A.I.R. 1957 Cal. 483. regulations, rules and bye-laws and of any orders made thereunder. In the event of any companytravention of any such provisions by any person whosoever, the owner, agent and manager of the mine shall each be deemed also to be guilty of such companytravention unless he proves that he had taken all reasonable means, by publishing and to the best of his power enforcing those provisions, to prevent such companytravention Provided that the owner or agent shall number be so deemed if he proves- a that he was number in the habit of taking, and did number in respect of the matter in question take, any part in the management of the mines and b that he had made all the financial and other provisions necessary to enable the manager to carry out his duties and c that the offence was companymitted without his knowledge, companysent or companynivance. Save as hereinbefore provided, it shall number be a defence in any proceedings brought against an owner or agent of a mine under this section that a manager of the mine has been appointed in accordance with the provisions of this Act. It was urged that this section holds the owner, the agent as well as the manager liable for the companytravention of any provision of the Act or of a regulation, rule or bye-law made by any person unless the owner, agent or manager can bring his case within any of the exceptions set out in sub- s. 2 of s. 18. It is pointed out that Gupta has number relied on any exception and, therefore, his companyviction is companyrect in law. Section 18 is in Chapter IV of the Mines Act which deals with Mining operations and Management of mines. This chapter thus deals with two topics. Section 18, however, deals with only one of these two topics, that is, Mining operations. This would clearly follow from the language of sub-s. 1 or s. 18. The duties and responsibilities of owners, agents and managers with which this section deals are with respect to all operations carried on in companynection there with, i.e., the mine. Therefore, the inference must be that this section deals with duties etc., in companynection with mining operations only. The chapter itself has drawn a distinction between Mining operations and Management of mines. Employment of labour, providing amenities for them and allied matters would pertain mainly to management and number to Mining operations. The expression Mining operations occurring in an Act dealing with mines should be accorded that meaning which it has in the mining industry. In the industry a mining operation is understood to mean an opera- tion undertaken for the purpose of winning minerals and cannot, as suggested by my learned brother, be given an extended meaning so as to embrace within it matters such as employment of labour, providing amenities to labour etc., even though that labour is utilised or required for the purpose of carrying on mining operations. I can see numberjustification for giving an extended meaning to the expression Mining operations and numbere was suggested at the bar. Upon this view it would follow that the manager of a mine cannot be made vicariously liable for the omission of the owner, to carry out his duty under r. 7 1 of the Mines Creche Rules. There is an additional reason for companying to the same companyclusion. Upon the language of s. 18 2 the manager of a mine cannot be held liable for the companytravention by the owner of any provision of the Act, regulation, rule or bye- law unless that companytravention was with respect to a matter in regard to which the exception companyld be available. To put it a little differently, a manager cannot be held vicariously liable for a companytravention unless there was on his part also an omission to do something which was in his power to do. Sub-section 2 of s. 18 would absolve a manager from vicarious liability if he companyld show that he had taken all reasonable means by publishing and to the best of his power enforcing those provi. sions to prevent such companytravention. This, therefore, implies that by resorting to certain steps he can escape liability. The first part of the quotation is clearly in. applicable to the present case. The second part would apply provided the manager had the power to enforce the performance of a particular duty by the owner. There is numberhing in the Act or the rules which empowers the manager to enforce the performance by the owner of his duties under sub-r. 1 of r. 7. Since that is the position it must be held that the manager is number liable for the companytravention by the owner of his duty under sub-r. 1 of r. 7 of the Mines Creche Rules. That the companystruction I am placing on this provision is the proper one would appear from the following illustration. Section 17 of the Act provides that the owner or an agent of every mine shall appoint a person having the prescribed qualification as a manager of the mine. Section 57 c provides for the framing of regulations prescribing the qualifications for the manager of mines. I will assume that regulations have been made thereunder prescribing the qualifications for managers. If a person is appointed as a manager of a mine even though he does number possess the prescribed qualification would he be held vicariously liable for the companytravention by the owner or the agent of the duties placed upon the owner and agent by a Regulation and by s. 17? I do number think that there would be any difficulty in saying that he would number be liable for the simple, reason that it was number within his power to enforce the companypliance by the owner of the duty cast upon him by the regulations. I would, therefore, allow the appeal of Gupta and set aside the sentence of companyviction passed upon him. ORDER.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petition No. 96 of 1959. Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights. Shaukat Hussain and P. C. Aggarwala, for the petitioners S. Bindra, R. H. Dhebar and T. M. Sen, for the respondents. 1961. April 4. The Judgment of the Court was delivered by SARKAR, J.-This is a petition raising a question of violation of the fundamental right to hold property guaranteed by Art. 19 1 f of the Constitution. It arises out of an order made under the Administration of Evacuee Property Act, 1950, declaring two houses to be evacuee property. What had happened was that sometime in September, 1951, two numberices were issued under s. 7 of the Act addressed respectively to Nusrat Ali and Fateh Ali, requiring them to show cause why they should number be declared evacuees and their properties, being the two houses in dispute, to be evacuee property. Neither of these two persons having appeared, a declaration was made by the Custodian on January 10, 1952, under that section that Nusrat Ali and Fateh Ali were evacuees and the houses were evacuee property. Upon such declaration the houses vested in the Custodian under the provision of s. 8 of the Act and he took possession of them. These houses were the property of one Khadim Ali who had never been declared an evacuee and had died on or about October 1, 1950, leaving three sons and five daughters, who thereupon became entitled to them in certain shares. Nusrat Ali and Fateh Ali were two of the sons of Khadim Ali. The Petitioners are his other son and two of his daughters. No numberice under s. 7 had at any time been issued to them number were they ever declared to be evacuees. These facts are number in dispute. The Petitioners companytend that they have been wrongly deprived of their rights in the houses by the action of the Custodian. They say that for a, long time they had numberknowledge of the proceedings taken under the Act in respect of the houses and when they came to know of the order of the Custodian, they took various steps to protect their rights but were unsuccessful. One of such steps appears to have been an appeal preferred by the male petitioner on behalf of all the petitioners to the Custodian-General against the order of January 10, 1952. On this appeal being rejected, they moved this Court by the present petition. The question is whether the Custodian was entitled to declare the entirety of the two houses evacuee property and deprive the petitioners of their rights in them. It is well established and number disputed, that numberproperty of any person can be declared to be evacuee, property unless that person had first been given a numberice under B. 7 of the Act see Ebrahim Aboobaker v. Tek Chand Dolwani 1 . Admittedly, numbersuch numberice had been issued to the petitioners. Their interest in the houses, therefore, companyld number have vested in the Custodian. Learned companynsel for the respondents, the officers companycerned with evacuee properties, companycedes that so far as the female petitioners were companycerned, their interest companyld number in any way be affected by the order made under s. 7 of the Act. He however companytends that the male petitioner, Zafar Ali, having filed the appeal to the Custodian-General against the order of January 10, 1952, he personally at least, is bound by the order dismissing the appeal, that order being a quasi- judicial decision. It is said that be cannot, there-fore, maintain this petition. We do number think that this companytention is well founded. Zafar Ali was number a patty to the proceeding in which the order in dispute had been made. Strictly speaking, numberappeal by him against that order lay or was necessary. Then again the appeal did number decide any question as to the right of Zafar Ali to the houses for, it was dismissed on the sole ground that it bad been filed beyond the time prescribed for it. There was numberjudicial determination by the Custodian-General of any fact affecting Zafar Alis right in the houses. If, as was companyceded, Zafar Alis share in the houses companyld number vest in the Custodian without due numberice to him, then we are unable to appreciate how the position becomes different because Zafar Ali filed an appeal 1 1953 S.C.R. 691, 702. which was dismissed as time barred and which he need never have filed at all. The order of January 10, 1952, was without jurisdiction so far as Zafar Alis share in the house was companycerned, and it remained so in spite of the appeal. In our view, the appeal furnishes numberanswer to the claim made in the petition. As numbernotice had been issued to the petitioners under s. 7, their interest in the two houses never vested in the Custodian. The acts of the Custodian in so far as they deprive the petitioners of their property cannot be upheld. It was also said on behalf of the respondents that the properties had already been acquired under the Displaced Persons Compensation and Rehabilitation Act, 1954, and therefore the petitioners had, numberlonger, any claim to them. Sub-section 2 of s. 12 of this Act provides that On the publication of a numberification under sub-section 1 , the right, title and interest of any evacuee in the evacuee property specified in the numberification shall, on and from the beginning of the date on which the numberification is so published, be extinguished and the evacuee property shall vest absolutely in the Central Government free from all encumbrances. It was said that a numberification mentioned in this section had been issued. It seems to us that this section does number affect the petitioners rights. It only affects the rights of an evacuee which the petitioners, on the admitted facts, are number. We may mention here that the petitioner Zafar Ali claims that his father left a will giving him a larger share in the houses than he would have got on intestacy. We are number companycerned in this case with his rights under the will, if any, and say numberhing about them. In the result, we allow the petition and set aside the order of January 10, 1952, in so far as it affected the rights of the petitioners in the properties companycerned.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION,., Civil Appeal No. 141 of 1956. Appeal from the judgment and decree dated September 2, 1954, of the Punjab High Court at Chandigarh in Civil Regular Second Appeal No. 337 of 1952. Achhru Ram, R. Ganapathy Iyer and G. Gopalakrishnan, for the Appellant. P. Sinha and V. N. Sethi, for the respondents. 1961. April 10. The Judgment-of the Court was delivered by K. DAS, J.-This is an appeal on a certificate granted by the High Court of Punjab on March 7, 1955. The only question which falls for decision is whether Inder Singh, plaintiff in the companyrt of first instance and appellant herein, was validly adopted by one Nathu in accordance with the rules of customary adoption prevalent amongst Jats of the Ludhiana district in the State of Punjab. The relevant facts are these. Nathu, the last male holder of the property in dispute, was a Jat of Ludhiana, district. He was blind, number married and had numberissue. He was a resident, of village Mohanpur. Inder Singh, a resident of the same village, was his nephew by companylateral relation of the fifth degree. Inder Singhs case was that he looked after Nathu since his childhood and on March 24, 1946, Nathu adopted him, according to the custom prevalent amongst them, before the village Panchayat by distributing gur jaggery and on the next day, that is, March 25, 1946, Nathu executed a deed of adoption in his favour and got it registered on the same day. For a, short period thereafter Nathu lived with Inder Singh. Then Gujar Singh, defendant in the suit-, who was a nearer companylateral of Nathu, gained influence over the, latter. Nathu left lnder Singh and on September 6, 1946, cancelled the deed of gift. Nathu died three years after, that is on October 27, 1949. On Nathus death Gujar Singh got the property of Nathu mutated in his name in the revenue records. Inder Singh then brought the suit out of which this appeal has arisen for possession of the property of Nathu Singh, which companysisted of about 16 bighas odd of land and a house, on the footing that he was the adopted soil of Nathu. The suit was companytested by Gujar Singh who alleged inter alia that Inder Singh was number validly adopted by Nathu in accordance with the custom prevalent amongst the Jats of Ludhiana. The trial Judge held that the story of the alleged adoption before the village Panchayat was number substantiated and the recitals in the deed of adoption were incorrect. He further found that according to the customary rules of adoption the deed of adoption companyld number have any effect unless after its execution there was a companytinuous companyrse of companyduct showing that Nathu treated Inder Singh as his son and inasmuch as there was numberevidence to show such association, Inder Singh had failed to make out his case. The suit was, accordingly, dismissed. Inder Singh then preferred an appeal. which was heard by the District Judge of Ludhiana. On a companysideration of the evi- dence the learned District, Judge came to the companyclusion that it established that Nathu did declare Inder Singh as his heir before the village Panchayat on or about March 24, 1946, and that Nathu lived with Inder Singh for a very short period thereafter. This, in the opinion of the learned District Judge, was sufficient to establish a valid adoption according to the customary rules and numberfurther evidence, of association as father and son between the two was necessary. In this view of the matter, the learned District Judge held that the cancellation of the deed of adoption by Nathu on September 6, 1946, was of numbereffect, because an adoption once validly made companyld number be revoked. Accordingly, he allowed the appeal. Gujar Singh died sometime after the appellate decision, and the present respondents as heirs and legal representatives of Gujar Singh carried a second appeal to the Punjab High Court. The learned Judges of the High Court held that the rules of customary adoption prevalent amongst the parties required two essential elements a an intention to appoint an heir and b an act of association between the two as father and son. They hold that the short period of about six weeks during which Nathu lived with the appellant after the execution of the deed of adoption was number sufficient to prove that Nathu treated Inder Singh as his future heir there was, therefore, numbersuch association as would make, the adoption valid according to the customary rules prevalentamongst the Jats of Ludhiana district. On this view the High Court set aside the judgment and decree of the learned District Judge and restored those of the companyrt of first instance. The judgment being a judgment of reversal and the value of the property in dispute more than Rs. 20,000 the High Court gave a certificate under Art. 133 of the Constitution read with ss. 109 and 110 of the Code of Civil Procedure. On that certificate the present appeal has companye to us. The finding of the Learned District Judge that the evidence on record established that Nathu declared Inder Singh as his heir before the village Panchayat on or about March 26, 1946, is clearly a finding of fact and binding in second appeal. The companyrectness or otherwise of that finding cannot number be canvassed. The companytroversy in the High Court as also before us centered round the question whether under the cus- tomary rules of adoption prevalent amongst the Jats of Ludhiana, a second element for a valid adoption, namely, an act of association or a general treatment of the appointed heir as a son is essential. Mr. Achhru Ram appearing on behalf of the appellant has companytended that the view expressed by the learned District Judge is the companyrect view. He has referred us to the general statement of the customary rule in the matter of the appointment of an heir in paragraph 35 at p. 50 of Rattigans Digest of Customary Law seventh edition . That paragraph, with Explanation 1, reads as follows A sonless propietor of land in the central and eastern parts of the Punjab may appoint one of his kinsmen to succeed him as his heir. Explanation 1. Such an appointment may be manifested, in the absence of any special cus- tom prescribing a different mode, in any of the following ways By a a formal declaration, before the brother-hood, b a written declaration, either preceded or followed by some treatment companysistent with a deliberate appointment, or c a long companyrse of treatment evidencing an unequivocal intention to appoint the specified person as heir. The argument of learned Counsel is that according. to general rule stated above, the appointment of an heir by adoption may be manifested in one of the following ways a by a formal declaration, before the brotherhood, b by a written declaration, either preceded or followed by some treatment companysistent with a deliberate appointment or c a long companyrse of treatment evidencing an unequivocal intention to appoint the specified person as heir. Learned Counsel companytends that in view of the finding of the learned District Judge that a formal declaration of the adoption was made by Nathu before the village Panchayat, there was a sufficient manifestation of the appointment. He has submitted that a somewhat different rule embodied in the thirteenth edition of Rattigans Digest as revised by 0. P. Aggarwala is number a companyrect statement of the law the statement there being that the two elements which are essential to companystitute the factum of adoption are i an intention to appoint an heir and ii an act of association see p. 497 . We companysider that it is unnecessary in this case to examine the more general question of the exact scope and ambit of the rule in other parts of the Punjab for we have unimpeachable evidence of the scope of the rule in the district of Ludhiana. In the Customary Law of the Ludhiana District rewaj-i-am , companypiled and attested by J. M. Dunnett, Settlement Officer, the formalities of customary adoption amongst Jats of the Ludhiana district are stated in the form of the following question and answer see p. 102 Question 68. What formalities are necessary for adoption? Answer-As adoption is number a religious ceremony, numberspecial formalities are companysidered necessary. The adopter usually calls the neighbours and his relations together, and distributes gur, saying that he has adopted god lia so and so. Sometimes a deed of adoption is executed. But a declaration of adoption and general treatment as a son are looked upon as sufficient. The companypiler then observes Case-law agrees. It is well-established principle that customary adoption requires absolutely numberformalities The evidence required to establish the factum of adoption is merely evidence of intention clearly expressed and treatment shown. In 79, Punjab Record of 1882 Jats of Mauza Baga Kalan tahsil Samrala the execution of a deed and general companyduct were held sufficient, but in 94, Punjab Record, 1893, among Dhaliwal Jats, the mere execution of a deed unaccompanied by precedent or subsequent treatment was held insufficient. Mr. Achhru Ram has very fairly companyceded that the statement of customary law of the Ludhiana district in the rewaj-i-am is authoritative, though the many details mentioned in the answers given are number necessarily mandatory. It is clear, however, that so far as the Jats of Ludhiana district are companycerned, the formalities necessary for adoption are, firstly, a declaration of adoption and, secondly, general treatment of the appointed heir as a son. A mere declaration or even the execution of a deed of adoption unaccompanied by precedent or subsequent treatment is insufficient. That being the position, the High Court was clearly right in its decision. The same position is established by the authorities bearing on the subject. The earliest decision to which our attention has been drawn is Gurbachna v. Bujha 1 . In that case it was stated that where the power of customary adoption by a sonless proprietor was number disputed, all that was necessary to companystitute an adoption was the clear expression of an intention on the part of the adoptive father to adopt the boy companycerned as his son and a sufficient manifestation of that intention by the execution and registration of a deed of adoption companypled with a clear declaration in companyrt and subsequent treatment as adopted son. It was pointed out, however, that in a case where soon after the execution of the deed of adoption the reversioners of the adoptive father brought a suit, it was number reason. able to demand proof of subsequent treatment. In the case before us, Nathu died three years after the execution of the deed. He left Inder Singh a few weeks after the execution of the deed, cancelled the deed within about five months and instead of treating 1 1911 46 Punjab Record 151. Inder Singh as his son repudiated any such association with him. In these circumstances the High Court rightly hold that there was numbersufficient manifestation of the intention to adopt Inder Singh as his son by Nathu. In Baj Singh v. Partap Singh 1 it was observed There is ample authority for holding that the appointment in order to be valid must be made in some unequivocal and customary manner and the execution of a deed companypled with a long. companyrse of treatment has always been recognised as one of the modes of manifestating such an appointment. In Chhajju v. Mehr Singh 2 it was held that the execution of a deed by the adoptive father was number enough and companytinuous subsequent treatment number having been proved, the adoption was number established. In Chanan Singh v. Buta Singh 3 the decision proceeded on the customary law of the district of Jullundur and on that basis it was held that the appointment should be manifested by some declaration or companyrse of treatment evidencing an unequivocal intention to appoint a specified person as heir it was pointed out that the question and answer recorded in the rewaj-i-am companycerned showed that the essence of the customary rule was that it should be clearly declared. Their Lordships were dealing with a case in which there was number merely a public declaration in companyrt but also subsequent treatment of the appointed heir as a son by the adoptive father. In Kishan Singh v. Taru 4 it was observed that all that was necessary to companystitute an adoption under customary law was the clear expression of intention on the adoptive fathers part to adopt the boy companycerned as his son, and the execu- tion of the deed of adoption companypled with a clear declaration before a registering officer and companytinuous subsequent treatment as adopted son were sufficient manifestation of the intention. We are of the view that the High Court rightly held that in the circumstances of this case the declaration made by Nathu before the village Panchayat 1 1923 77 I.C. 473. 2 1930 31 P.L.R. 997. A.I.R. 1935 Lah. 83. 4 A.I.R. 1949 East Punjab 342. on March 24, 1946, and the execution of a deed of adoption which he cancelled within a short time were number a sufficient manifestation of the intention of Nathu to adopt Inder Singh as his son. There was numberevidence that Nathu Singh treated, Inder Singh as his son on the companytrary, there was evidence to show that he repudiated the declaration that he had earlier made.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petitions Nos. 93 and 125 of 1959. Petitions under Art. 32 of the Constitution of India for enforcement of Fundamental Rights. M. Limaye, E. Udayarathnam and S. S. Shukla, for the petitioners. N. Sanyal, Additional Solicitor-General of India, R. Ganapathy Iyer and D. Gupta, for the respondent. S. Barlingay and A. G. Ratnaparkhi, for the Interveners. 1961. April 4. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-These two writ petitions have been filed under Art. 32 of the Constitution and they seek to challenge the validity of the Bombay Tenancy and Agricultural Lands Act 99 of 1958 hereafter called the Act . The impugned Act in substance is intended to extend to Vidarbha region and Cutch area which had then become a part -of the Greater Bi- Lingual State of Bombay the provisions of the Bombay Tenancy and Agricultural Lands Amendment .Act, 1956 Act XIII of 1956 . The preamble to the impugned Act shows that it was intended to amend the law relating to tenancies of agricultural lands and sites used for allied purposes in the two areas of the State of Bombay and to make certain other provisions in regard to those lands. In extending the provisions of the earlier Bombay Act XIII of 1956 to the two areas the legislature has companyformed to the pattern set up by the said earlier Act. The policy underlying the Act and the object intended to be achieved by it are the same and the method adopted in achieving that object is also the same. The validity of the earlier Bombay Act XIII of 1956 was challenged before this Court in Sri Ram Ram Narain Medhi v. The State of Bombay 1 but the challenge failed and the Act was held to be companystitutional. One of the points which arose for decision in that case was whether the impugned Act was protected by Art. 31A 2 a of the Constitution, and the answer to that question depended upon the determination of another issue which was whether the lands to which the said Act applied were an estate as required by Art. 31A 2 a . In dealing with that question this Court held that the word estate as defined by s. 2 5 of the Bombay Land Revenue Code, 1879, clearly applied to the lands 1 1959 Supp. 1 S.C.R. 489. companyered by the Act and so Art. 31A 2 a was applicable. Having regard to this decision the only point which Mr. Limaye attempted to raise before us in support of the two writ petitions is that the lands belonging to the two petitioners are number an estate within the meaning of Art. 31A 2 a , and so the impugned Act is outside the protection of Art. 31A. If this companytention is number upheld then it is obvious that the writ petitions must fail if the said companytention is upheld then of companyrse the other companytentions raised by the two writ petitions against the validity of certain specific provisions of the Act may fall to be companysi- dered. The two petitioners are Namdeorao Baliramji and Mahadeo Paikaji Kolhe respectively. The first one resides at Amraoti and the second at Yeotmal. The first owns about 80 acres dry lands situated in Amraoti out of which 43 acres are under his personal cultivation and the rest in the possession of the tenants. The second petitioner owns about 1168 acres dry lands situated in Yeotmal out of which 400 acres are under his personal cultivation and the rest with the tenants. The lands in both the cases are charged to the payment of land revenue. The case for both the petitioners is that the lands thus held by them are number an estate within the meaning of Art. 31A 2 a . Article 31A 2 a provides, inter alia, that the expression estate shall in relation to any local area have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area. The existing local law, it is companymon ground, is the Madhya Pradesh Land Revenue Code, 1954 II of 1955 , and so it is necessary to find whether the lands belonging to the petitioners can be said to be an estate within the meaning of the said Code. Before we do so, however, it may be pertinent to refer to the relevant definitions in the impugned Act. Section 2 17 of the Act defines land as meaning, inter alia, land which is used or capable of being used for agricultural purposes and includes the sites of farm buildings appurtenant to such land. Section 2 18 defines a land-holder as meaning a tenure-holder whom the State Government has declared on account of tile extent and value of the, land or his interests therein to be a land-holder for the purposes of this Act. Now,s.27 of the Madhya Pradesh Land Revenue Code in question defines a holding as meaning, inter alia,a parcel of land separately assessed to land revenue,and s. 2 20 defines a tenure-holder as meaning a person holding from the State Government as a Bhumiswami or a Bhumidari. Chapter XII of the Code deals with tenure-holders. Section 145 provides that there, shall be two classes of tenure,- holders of lands held from the State, namely, Bhumiswami and Bhumidhari. Section 146 deals with Bhumiswami. It provides that every person who at the companying into force of this Code belongs to any of the classes specified in clauses a to f of the said section shall be called a Bhumiswami and shall have all the rights and is subject to all the liabilities companyferred or imposed upon a Bhumiswami by or under this Code. Amongst these classes is the class companyered by el. e which relates to persons in respect of lands held by them as occupants in Berar. Thus reading the relevant definitions along with the provisions of s. 146 of the Code it would follow that the land in the possession of the Bhumiswami who is a tenure-holder is in substance all estate. It is true that the word estate as such has number been employed in the Code, but it must be borne in mind that Art. 31A 2 a refers number only to estate but also to its local equivalent. It was realised that in many areas the existing law relating to land tenures may number expressly define all estate as such though the said areas had their local equivalents described and defined. That is why the relevant provision of the Constitution has deliberately used both the word estate as well as its local equivalent.The petitioners hold lands under the State and they pay land revenue for the, lands thus held by them.Therefore, there is numberdifficulty in holding that under the existing law relating to land tenures the lands held by them fill within the class of the local equivalents of the word estate as companytemplated by Art. 31A 2 a . If that is so the companytention raised by Mr. Limaye that the impugned Act is number protected by Art. 31A cannot succeed. As we have already indicated it is number disputed that if Art. 31A applies there can be numberfurther challenge to the validity of the impugned statute.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 90 of 1956. Appeal by special leave from the judgment and decree dated August 5, 1953, of the Bombay High Court in Appeal from the Appellate Decree No. 915 of 1951. S. K. Sastri, for the appellant. G. Ratnaparkhi, for respondent No. 1. 1961. April 12. The Judgment of the Court was delivered by RAGHUBAR DAYAL, J.-This appeal, by special leave, is against the judgment and decree of the High Court of Bombay, dismissing the suit of the plaintiff--appellant. The plaintiff sued for a declaration that the property in suit which is situate at Mouje Digvale, a village held by khots in the district of Ratnagiri, was owned by him, was under his management and that the defendants had numberright or interest therein. He claimed title to the property on the basis of the sale of occupancy rights under the sale deed executed in his favour by Sitabai on February 10, 1945. Sitabai was the widow of Vishram Anna Shirsat, who succeeded Ram Raghu Shirsat, the occupancy tenant of the land in suit. Ram Raghu Shirsat sold the occupancy rights in the land in suit to Laxman Chandba Raut by a deed dated March 8, 1892. By a companypromise in a civil suit between the heirs of Laxman Chandba Raut and Tanu Daulat Gavade Sakaram, the heir of Laxman Raut got 3/5ths share and Tanu Daulat got 2/5ths share in these occupancy rights. Dattatraya Bhikaji Khot Kulkarni, a paternal uncle of respondent number 1, purchased. the shares of these persons by the sale deeds dated December 14,1903, and February 13, 1904. On Kulkarnis death, respondent number 1 became the owner of the property. Respondents number. 2 to 4 are the tenants of respondent number 1. The land in suit is khoti land as defined in el. 10 of s. 3 of the Khoti Settlement Act, 1880 Bom. Act 1 of 1880 , hereinafter called the Act. It is number disputed that Ram Raghu Shirsat was the occupancy tenant of the land in suit and that he companyld number transfer his tenancy right without the companysent of the khot, which, according to cl. 2 of s. 3, includes a mortgagee lawfully in possession of khotki and all companysharers in a khotki. It is also admitted that the transferors of the afore-mentioned sale deeds of 1892 in favour of the predecesror-in-interest of respondent number 1, or of the sale deed of 1945 in favour of the appellant, did number obtain the companysent of the khot before executing the deed of transfer. The plaintiff alleged that the sale deed in favour of respondent number 1 was void and that therefore he had title to the suit land on the basis of the sale deed in his favour. Respondent number 1 companytended that Ram Raghu Shirsat lost his rights in the property in suit after he had executed the sale deed on March 8, 1892, and that, therefore the plaintiff obtained numbertitle on the basis of the sale deed in his favour. The trial Court held the sale deed of 1892 to be good sale deed and binding on the plaintiff and dismissed the suit. On appeal, the Assistant Judge reversed the decree and decreed the suit holding that a transfer of the occupancy rights in the suit lands by Ram Raghu Sirsat in favour of Laxman Raut was void and that the plaintiff obtained good title under the sale deed in his favour in view of the amendment of s. 9 of the Act by s. 31 of the Bombay Tenancy Act, 1939 Act XXIX of 1939 , by which numberconsent of the khot was ,necessary for executing the sale deed in 1945. Respondent number 1 preferred a second appeal to the High Court which set aside the decree of the Assistant Judge and restoring the decree of the trial Court, dismissed the suit. It held that the sale deed in favour- of the plaintiff too would be hit by the provisions of s.9 of the Act. It further held that the provisions of s.9 indicate that there was numberabsolute prohibition against a transfer of the occupancy right. A transfer by an occupancy tenant without the companysent of the khot cannot be held to be void for all purposes and it would be invalid only in so far as it would be companytrary to the right of the khot and number otherwise. It therefore held the transfer in favour of the respondent number 1s predecessor-in-interest in 1892 number to be void. It is the companyrectness of this order that is challenged in this appeal. This appeal has numberforce. Section 31 of the Bombay Tenancy Act, 1939, made amendments to S. 9 of ado. the Act and the section after amendment reads The rights of khots and privileged occupants shall be heritable and transferable. Privileged occupant included a permanent tenant under cl. 5 of s. 3 of the Act. The Bombay Tenancy Act received assent of the Governor of Bombay on April 2, 1940, but it came into force in April 1946 when the Government issued the necessary numberification in exercise of the powers companyferred under subs. 3 of s. 1 of that Act. It is clear therefore that s. 9, as it stood on February 10, 1945, when Sitabai executed the sale deed in favour of the appellant, made the rights of permanent tenants numbertransferable without the companysent of the khot, and that therefore the sale in favour of the appellant was as much hit adversely by the provisions of s. 9 of the Act as the sale of the land in suit in favour of the predecessor-in-interest of respondent number 1. It is therefore number necessary to determine the question whether the sale was absolutely void or voidable as held by the Court below, as neither of the two sales has been challenged by the khot whose companysent for the transfer was necessary. The plaintiff has numbertitle whether a transfer by a permanent tenant without the companysent of the khot be void or voidable. If such a transfer is void, the sale in favour of the appellant did number companyvey any title to him. If such a sale was merely voidable at the instance of the khot, the first sale in favour of the respondent number 1s predecessor-in-interest was number avoided by the khot, and therefore validly companyveyed title to him. Consequently numbertitle passed to the plaintiff under the sale deed in his favour as his transferor had numbertitle. In either case the plaintiff fails to prove his title to the land in suit. The dismissal of his suit is therefore companyrect.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 177 of 1959. Appeal by special leave from the judgment and order dated May 23, 1958, of the Punjab High Court in Criminal Appeal No. 515 of 1957. Jai Gopal Sethi and R. L. Kohli, for the appellant. K. Khanaa, R. H. Debhar and D. Gupta, for the respondent. - 1961. April 24. The Judgment of the Court was delivered by RAGHUBAR DAYAL, J.-This appeal, by special leave, is against the order of the Punjab High Court dismissing the appellants appeal against his companyviction under s. 307, Indian Penal Code. Bimla Devi, P. W. 7, was married to the appellant in October, 1951. Their relations got strained by 1953 and she went to her brothers place and stayed there for about a year, when she returned to her husbands place at the assurance of the appellants maternal uncle that she would number be maltreated in future. She was, however, ill-treated and her health deteriorated due to alleged maltreatment and deliberate undernourishment. In 1956, she was deliberately starved and was number allowed to leave the house and only sometimes a morsel or so used to be thrown to her as alms are given to beggars. She was denied food for days together and used to be given gram husk mixed in water after five or six days. She managed to go out of the house in April 1956, but Romesh Chander and Suresh Chander, brothers of the appellant, caught hold of her and forcibly dragged her inside the house where she was severely beaten. Thereafter, she was kept locked inside a room. On June 5, 1956, she happened to find her room unlocked, her mother-in-law and husband away and, availing of the opportunity, went out of the house and managed to reach the Civil Hospital, Ludhiana, where she met lady Doctor Mrs. Kumar, P. W. 2, and told her of her sufferings. The appellant and his mother went to the hospital and tried their best to take her back to the house, but were number allowed to do so by the lady Doctor. Social workers got interested in the matter and informed the brother of Bimla Devi, one Madan Mohan, who came down to Ludhiana and, after learning all facts, sent information to the Police Station by letter on June 16, 1956. In his letter he said My sister Bimla Devi Sharma is lying in death bed. Her companydition is very serious. I am told by her that deliberate attempt has been made by her husband, mother-in-law and brother-in-law and sister-in-law. I was also told that she was kept locked in a room for a long time and was beaten by all the above and was starved. I therefore request that a case may be registered and her statement be recorded, immediately. The same day, at 9-15 p.m., Dr. Miss Dalbir Dhillon sent a numbere to the police saying My patient Bimla Devi is actually ill. She may companylapse any moment. Shri Sehgal, Magistrate, P.W. 9, recorded her statement that night and stated in his numbere Blood transfusion is taking place through the right forearm and companysequently the right hand of the patient is number free. It is number possible to get the thumb impression of the right hand thumb of the patient. That is why I have got her left hand thumb-impression. The impression formed by the learned Judge of the High Court on seeing the photographs taken of Bimla Devi a few days later, is stated thus in the judgment The impression I formed on looking at the two photographs of Bimla was that at that time she appeared to be suffering from extreme emaciation. Her cheeks appeared to be hollow. The projecting bones of her body with little flesh on them made her appearance skeletal. The companyntenance seemed to be cadaverous. After companysidering the evidence of Bimla Devi and the Doctors, the learned Judge came to the companyclusion So far as the basic allegations are companycerned, which formed the gravamen of the offence, the veracity of her statement cannot be doubted. After a careful scrutiny of her statement, I find her allegations as to starvation, maltreatment, etc., true. The exaggerations and omissions to which my attention was drawn in her statement are inconsequential. After companysidering the entire evidence on record, the learned Judge said After having given anxious thought and careful companysideration to the facts and circumstances as emerge from the lengthy evidence on the record, I cannot accept the argument of the learned companynsel for the accused, that the companydition of acute emacia- tion in which Bimla Devi was found on 5th of June, 1956, was number due to any calculated starvation but it was on account of prolonged illness, the nature of which was number known to the accused till Dr. Gulati had expressed his opinion that she was suffering from tuberculosis. He further stated The story of Bimla Devi as to how she was illtreated, and how, her end was attempted to be brought about or precipitated, is companyvincing, despite the numberelty of the method in which the object was sought to be achieved. The companyduct of the accused and of his mother on 5th of June, 1956, when soon after Bimla Devis admission in the hospital they insisted on taking her back home, is significant and almost tell-tale. It was number for better treatment or for any treatment that they wanted to take her back home. Their real object in doing so companyld be numberother than to accelerate her end. The appellant was acquitted of the offence under s.342, Indian Penal Code, by the Additional Sessions Judge, who gave him the benefit of doubt, though he had companye to the companyclusion that Bimla Devis movements were restricted to a certain extent. The learned Judge of the High Court companysidered this question and came to a different companyclusion. Having companye to these findings, the learned Judge companysidered the question whether on these facts an offence under s. 307, Indian Penal Code, had been established or number. He held it proved. Mr. Sethi, learned companynsel for the appellant, has challenged the companyrectness of this view in law. He companycedes that it is only when a person is helpless and is unable to look after himself that the person having companytrol over him is legally bound to look after his requirements and to see that he is adequately fed. Such persons, according to him, are infants, old people and lunatics. He companytends that it is numberpart of a husbands duty to spoon-feed his wife,, his duty being simply to provide funds and food. In view of the finding of the Court below about Bimla Devis being companyfined and being deprived of regular food in pursuance of a scheme of regularly starving her in order to accelerate her end, the responsibility of the appellant for the companydition to which she was brought up to the 5th of June, 1956, is clear. The findings really go against any suggestion that the appellant had actually provided food and funds for his wife Bimla Devi. The next companytention for the appellant is that the ingredients of an offence under s. 307 are materially different from the ingredients of an offence under s. 511, Indian Penal Code. The difference is that for an act to amount to the companymission of the offence of attempting to companymit an offence, it need number be the last act and can be the first act towards the companymission of the offence, while for an offence under s. 307, it is the last act which, if effective to cause death, would companystitute the offence of an attempt to companymit murder. The companytention really is that even if Bimla Devi had been deprived of food for a certain period, the act of so depriving her does number companye under s. 307, as that act companyld number, by itself, have caused her death, it being necessary for the period of starvation to companytinue for a longer period to cause death. We do number agree with this companytention. Section 307 of the Indian Penal Code reads Whoever does any act with such intention or knowledge, and under such circumstances that, if he by that act caused death, he would be guilty of murder, shall be punished with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine and, if hurt is caused to any person by such act, the offender shall be liable either to imprisonment for life, or to such punishment as is hereinbefore mentioned. When any person offending under this section is under sentence of imprisonment for life, he may, if hurt is caused, be punished with death. Section 308 reads Whoever does any act with such intention or knowledge and under such circumstances that, if he by that act caused death, he would be guilty of culpable homicide number amounting to murder, shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both and, if hurt is caused to any person by such act, shall be punished with imprisonment of either description for a term which may extend to seven years, or with fine, or with both. Both the sections are expressed in similar language. If s. 307 is to be interpreted as urged for the appellant, s. 308 too should be interpreted that way. What- ever may be said with respect to s. 307, being exhaustive or companyering all the cases of attempts to companymit murder and s. 511 number applying to any case of attempt to companymit murder on account of its being applicable only to offences punishable with imprisonment for life or imprisonment, the same cannot be said with respect to the offence of attempt to companymit culpable homicide punishable under s. 308. An attempt to companymit culpable homicide is punishable with imprisonment for a certain period and therefore but for its being expressly made an offence under s. 308, it would have fallen under s. 511 which applies to all attempts to companymit offences punishable with imprisonment where numberexpress provisions are made by the Code for the punishment of that attempt. It should follow that the ingredients of an offence of attempt to companymit culpable homicide number amounting to murder should be the same as the ingredients of an offence of attempt to companymit that offence under s. 511. We have held this day in Abhayanand Mishra v. The State of Bihar 1 that a person companymits the offence of attempting to companymit a particular offence, when he intends to companymit that particular offence and, having made preparations and with the intention to companymit that offence does an act towards its companymission and that such an act need number be the penultimate act towards the companymission of that offence, but must be an act during the companyrse of companymitting such offence. It follows therefore that a person companymits an offence under s. 308 when he has an intention to companymit culpable homicide number amounting to murder and in pursuance of that intention does an act towards the companymission of that offence whether that act be the penultimate act or number. On a parity of reasoning, a person companymits an offence under s. 307 when he has an intention to companymit murder and, in pursuance of that intention, does an act towards its companymission irrespective of the fact whether that act is the penultimate act or number. It is to be clearly understood, however, that the intention to companymit the offence of murder means that the person companycerned has the intention to do certain act with the necessary intention or knowledge mentioned in s. 300. The intention to companymit an offence is different from the intention or knowledge requisite for companystituting the act as that offence. The expression whoever attempts to companymit an offence in s. 511, can only mean whoever intends to do a certain act with the intent or knowledge necessary for the companymission of that offence. The same is meant by the expression whoever does an act with such intention or knowledge and under such circumstances that if he, by that act, caused death, he would be guilty of murder in s. 307. This simply means that the act must be done with the 1 1962 2 S.C.R. 241. intent or knowledge requisite for the companymission of the offence of murder. The expression by that act does number mean that the immediate effect of the act companymitted must be death. Such a result must be the result of that act whether immediately or after a lapse of time. The word act again, does number mean only any particular, specific, instantaneous act of a person, but denotes, according to s. 33 of the Code, as well, a series of acts. The companyrse of companyduct adopted by the appellant in regularly starving Bimla Devi companyprised a series of acts and therefore acts falling short of companypleting the series, and would therefore companye within the purview of s. 307 of the Code. Learned companynsel for the appellant has referred us to certain cases in this companynection. We number discuss them. The first is Queen Empress v. Nidha 1 . Nidha, who had been absconding, numbericing certain chowkidars arrive, brought up a sort of a blunderbuss he was carrying, to the hip and pulled the trigger. The cap exploded, but the charge did number go off. He was companyvicted by the Sessions Judge under ss. 299 and 300 read with s. 511, and number under s. 307, Indian Penal Code, as the learned Judge relied on a Bombay Case Regina v. Francis Cassidy 1 -in which it was held that in order to companystitute the offence of attempt to murder, under s. 307, the act companymitted by the person must be an act capable of causing, in the natural and ordinary companyrse of events, death. Straight, J., both distinguished that case and did number agree with certain views expressed therein. He expressed his view thus, at p. 43 It seems to me that if a person who has an evil intent does an act which. is the last possible act that he companyld do towards the accomplishment of a particular crime that he has in his mind, he is number entitled to pray in his aid an obstacle intervening number known to himself. If he did all that he companyld 1 1892 I.L.R. 14 All. 38. 2 1867 Bom. H.C. Reps. Vol. IV, P. 17 Crown Cases . do and companypleted the only remaining proximate act in his power, I do number think he can escape criminal responsibility, and this because his own set volition and purpose having been given effect to their full extent, a fact unknown to him and at variance with his own belief, intervened to prevent the companysequences of that act which he expected to ensue, ensuing. Straight, J., gave an example earlier which itself does number seem to fit in with the view expressed by him later. He said No one would suggest that if A intending to fire the stack of B, goes into a grocery shop and buys a box of matches, that he has companymitted the offence of attempting to fire the stack of B. But if he, having that intent, and having bought the box of matches, goes to the stack of B and lights the match, but it is put out by a puff of wind, and he is so prevented and interfered with, that would establish in my opinion an attempt. The last act, for the person to set fire to the stack, would have been his applying a lighted match to the stack. Without, doing this act, he companyld number have set fire and, before he companyld do this act, the lighted match is supposed to have been put out by a puff of wind. Illustration d to s. 307, itself shows the incorrectness of this view. The illustration is A, intending to murder Z, by poison, purchases poison and mixes the same with food which remains in As keeping A has number yet companymitted the offence in this section. A places the food on Zs table or delivers it to Zs servants to place it on Zs table. A has companymitted the offence defined in this section. As last act, companytemplated in this illustration, is number an act which must result in the murder of Z. The food is to be taken by It is to be served to him. It may number have been possible for A to serve the food himself to Z, but the fact remains that As act in merely delivering the food to the servant is fairly remote to the food being served and being taken by Z. This expression of opinion by Straight, J., was number really with reference to the offence under s. 307, but was with reference to attempts to companymit any particular offence and was stated, number to emphasize the necessity of companymitting the last act for the companymission of the offence, but in companynection with the culprit taking advantage of an involuntary act thwarting the companypletion of his design by making it impossible for the offence being companymitted. Straight, J., himself said earlier For the purpose of companystituting an attempt under s. 307, Indian Penal Code, there are two ingredients required, first, an evil intent or knowledge, and secondly, an act done. In Emperor v. Vasudeo Balwant Gogte 1 a person fired several shots at another. No injury was in fact occasioned due to certain obstruction. The culprit was companyvicted of an offence under s. 307. Beaumont, C. J.,said at p. 438 I think that what section 307 really means is that the accused must do an act with such a guilty intention and knowledge and in such circumstances that but for some intervening fact the act would have amounted to murder in the numbermal companyrse of events. This is companyrect. In the present case, the intervening fact which thwarted the attempt of the appellant to companymit the murder of Bimla Devi was her happening to escape from the house and succeeding in reaching the hospital and thereafter securing good medical treatment. It may, however, be mentioned that in cases of attempt to companymit murder by fire arm, the act amounting to an attempt to companymit murder is bound to be the only and the last act to be done by the culprit. Till he fires, he does number do any act towards the companymission of the offence and once he fires, and something happens to prevent the shot taking effect, the offence under s. 307 is made out. Expressions, in such cases, indicate that one companymits an attempt to murder only when one has companymitted the last act 1 1932 I.L.R. 56 Bom 434. necessary to companymit murder. Such expressions, however, are number to be taken as precise exposition of the law, though the statements in the companytext of the cases are companyrect. In Mi Pu v. Emperor 1 a person who had put poison in the food was companyvicted of an offence under s. 328 read with s. 511, Indian Penal Code, because there was numberevidence about the quantity of poison found and the probable effects of the quantity mixed in the food. It was therefore held that the accused cannot be said to have intended to cause more than hurt. The case is therefore of numberbearing on the question under determination. In Jeetmal v. State 2 it was held that an act under s. 307, must be one which, by itself, must be ordinarily capable of causing death in the natural ordinary companyrse of events. This is what was actually held in Cassidys Case 3 and was number approved in Niddhas Case 4 or in Gogtes Case 4 . We may number refer to Rex v. White 6 . In that case, the accused, who was indicted for the murder of his mother, was companyvicted of attempt to murder her. It was held that the accused had put two grains of cyanide of potassium in the wine glass with the intent to murder her. It was, however, argued that there was numberattempt at murder because the act of which he was guilty, namely, the putting the poison in the wine glass, war, a companypleted act and companyld number be and was number intended by the appellant to have the effect of killing her at once it companyld number kill unless it were followed by other acts which he might never have done. This companytention was repelled and it was said There seems numberdoubt that the learned judge in effect did tell the jury that if this was a case of slow poisoning the appellant would be guilty of the attempt to murder. We are of opinion that this direction was right, and that the companypletion or attempted companypletion of one of a series of acts intended by a man to result in killing is an attempt 1 1909 10 Crl. L.J. 363. 2 A.I.R. 1950 Madhya Bharat 21. 3 1867 Bom. H. C. Reps. Vol. IV, p. 17 Crown Cases . 4 1892 I.L.R. 14 All. 48. 5 1032 I.L. R. 56 Bom. 434. 6 1910 2 K. B. 124. to murder even although this companypleted act would number, unless followed by the other acts, result in killing. It might be the beginning of the attempt, but would numberetheless be an attempt. This supports our view.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 219 of 1958. Appeal from the judgment and decree dated January 5, 1954 of the Allahabad High Court, in First Appeal from Order No. 353 of 1953. K. Kapur and Ganpat Rai, for the appellants N. Goyal, for respondents Nos. 1-2. 1961. May 4. The Judgments of the Court were delivered by SUBBA RAO, J.--This appeal by certificate raises a question of companystruction of r. 3 of the First Schedule to the Arbitration Act, 1940 10 of 1940 hereinafter referred to as the Act . The facts material to the question raised may be briefly stated. The appellant and respondents 1 and 2 are brothers. On August 17, 1948, the appellant and respondents 1 and 2 and their mother by a registered deed of agreement referred their dispute regarding the partition of two houses in the city of Banaras to two arbitrators, respondents 3 and 4. Within 10 days of the reference, the said arbitrators gave numberice to the parties and began to take evidence i.e., they entered on the reference. On July 25, 1949, Rajwanti, the mother of the appellant and respondents 1 and 2 died, and the arbitrators did number proceed with the inquiry. On August 31, 1950, i.e., more than one year after the death of Rajwanti, the appellant gave a numberice to the arbitrators requesting them to proceed with the reference and give the award at an early data. On October 1, 1950, i.e., within 4 months from the date of the numberice, the arbitrators made an award and it was duly registered. On January 23, 1951, the appellant filed an application under ss. 14 2 and 17 of the Act in the Court of the Civil Judge, Banaras, praying that the said, award be filed and be made a rule of the companyrt. The said application was registered as a suit the appellant was placed in the position of plaintiff and the respondents in that of defendants. The respondents raised various objections to the said application one of the objections, with which only we are number companycerned was that the, award was number given within the time fixed by law. The learned Civil Judge rejected the objections and made a decree in terms of the award. On appeal, the High Court came to the companyclusion that the award was made after the expiry of the period of limitation, and on that finding set aside the decree of the learned Civil Judge and dismissed- the suit with companyts. Hence this appeal. Learned companynsel for the appellant companytends that r. 3 of the First Schedule to the Act provides for alternative periods within which arbitrators have to make their award, that under the second alternative an award companyld be made within 4 months from the date of numberice issued by a party calling upon the arbitrators to act, and that, as in the present case the numberice to act was given by the appellant to the arbitrators on August 31, 1950, the award made by them on October 3, 1950, was within the time prescribed. The answer to the question raised turns upon the true meaning of the provisions of r. 3 of the First Schedule to the Act. It will be companyvenient at the outset to read the relevant provisions of the Act. Section 3 of the Act reads An arbitration agreement, unless a different intention is expressed therein, shall be deemed to include the provisions set out in First Schedule in so far as they are appli- cable to the reference. Rule 3 of the First Schedule to the Act is as follows The arbitrators shall make their, award within four months after entering on the re- ference or after having been called upon to act by numberice in writing from any party to the arbitration agreement or within such extended time as the Court may allow. Section 28 says The Court may, if it thinks fit, whether the time for making the award has expired or number and whether the award has been made or number, enlarge from time to time, the time for making the award. Section 3 of the Act makes the period prescribed in the First Schedule for making an award a term of the arbitration agreement. Rule 3 of the First Schedule to the Act is companyched in a mandatory form and it imposes a duty on the arbitrators to make their award within one or other of the three alternative periods mentioned therein. The first companystruction suggested by learned companynsel for respondents is that the words entering on the reference in the first clause of the rule and the words to act in the second clause thereof are synonymous and they mean the same thing. This would make the second alternative unnecessary in many cases, for if the words ,to act means to enter on the reference there is numberneed for fixing two separate periods for, on that companystruction, numberice would always precede the act of entering on the reference and, therefore, the first alternative would serve the purpose. On that companystruction, the only purpose it serves is that a party may force the pace by calling upon the arbitrators, who are delaying. to enter on the reference, to act expeditiously. if the Legislature intended to give such a limited scope to the said rule, it would number have used two different sets of words in the two alternative clauses and different starting points for companyputing the period of four months The word act is certainly more companyprehensive than the words enter on the reference. The distinction between the said two sets of words has been brought out with clarity in Baring Gould Sharpington Combined Pick and Shovel Syndicate 1 . There, on January 11, 1898, one of the parties served on the arbitrators a numberice in writing addressed to both the arbitrators requiring them to appoint an umpire on February 15, 1898, the arbitrators appointed an umpire the arbitrators did number make any award but on April 30, 1898, the umpire made his award it was companytended that by the numberice requiring the arbitrators to appoint an umpire, they had number been called on to act within the meaning of Schedule 1 c , to the Arbitration Act, 1889, and companysequently the three months within which the arbitrators were required by that clause to make their award had number expired, and the jurisdiction of the umpire had number arisen and his award was ,invalid. In that companytext it became necessary to decide what the words called on to act mean and whether they were synonymous with the words called on to enter on the reference. Lindley, M.R., adverting to that companytention observed at p. The three months are to run first after entering on the reference and then in the alternative, after haying been called on to act If they are called on to act as arbitrators, it must mean that they are called on to do an act as arbitrators. It appears to me that these arbitrators were called on to act by the numberice to appoint an umpire and there was very good reason for making the period of three months run from that time. If the arbitrators do number ,enter on the reference, and they are called on to act, it is an intimation to them that they are called on to do the work. I can number agre with Stirling J. that called on to act means called upon to enter on the reference. Being called on to do anything as an arbitrator is being called on to act That the appointing of an umpire is an act done by the arbitrators as arbitrators is obvious. To, 1 1899 2 Ch. D. 80. do that which they companyld only do in the character of arbitrators is, in my judgment clearly within the words, and I think it is within the sense of the expression used in clause c . No doubt in the above case, unlike in the resent case, the arbitrators were called on to act before they entered on the reference but that cannot make any difference in the application of the principle, namely that to act is number the same as to enter on the reference, and that the former is of a wider import than the latter. The Allahabad High Court, in Sardar Mal Hardat Rai v. Sheo Bakhsh Rai Sri Narain 1 , had to companysider the scope of r. 3 of the First Schedule to the Act in a different companytext. There, on January 14, 1919, a dispute had been referred to arbitrators the award was made on August 23, 1919 it was companytended that the award had number been made within three months after the arbitrators entered on the reference, number was it made Within three months after having been called upon to act by numberice in writing by one of the parties to the submission. Piggery and Walsh, JJ., held that the two clauses were alternative in the sense that when numberreference was entered upon at all then the time ran from the numberice calling upon the arbitrators to act., and that if they had entered on the reference, they had three months from that moment for making their award. In that case, the numberice to act was given before the arbitrators entered upon the reference, and as the award was made within the prescribed time from the date of entering upon the reference, though beyond the prescribed time from the numberice asking the arbitrators to act, they held that the award was within time on the basis of the second alternative. In neither of the two cases the question that number falls to be companysidered had directly arisen, namely, whether, if the numberice to act was given subsequent to the arbitrators entering on the reference, the period 1 1922 I.L.R. 44 All. 432. should be companyputed from the former date or from the latter date. That question arises in this case. The said discussion leads us to the companyclusion that though entering on the reference is an act of the arbitrators, that is number exhaustive of the companytent of the word act in the second alternative. But this wide companystruction, without limitation would defeat the purpose of r.3. The object of the rule is to prescribe a time limit in the interest of expeditious disposal of arbitration proceedings. If Linder the second alternative numberice to act can be given at. any time, it would enable one of the parties to enlarge the period of time prescribed indefinitely number only the time limit prescribed would become meaningless but one of the parties companyld also, without the companysent of the other, resuscitate a dead or stale reference. This companyld number have been the intention of the Legislature and, therefore, a reasonable companystruction should be placed upon the provision. Such a limitation on the right of a party to reopen an abandoned reference is implicit in the words to act. A party can ask the arbitrator to act if he is legally bound to act under the reference. If after the expiry of four months from the date of entering on the reference an arbitrator can numberlonger act, a numberice given thereafter cannot ask him to act. Realizing this difficulty, learned companynsel for the respondents suggests that an arbitrator can act even after four months, though the award cannot be filed without getting an extension of time from the companyrt. But the rele- vant provisions do number support this companytention. The third alternative in r. 3 shows that an award can be made within the extended time allowed by the Court. Section 28 of the Act enables the companyrt to extend the time for the making of the award extension of time may be given even after the award has been factually made. So till the time is extended an award cannot be made, though, when extended, the award factually made may be treated as an award made within the time so extended. To put it differently, if time was number extended by companyrt, the document described as an award would be treated as number est. In this view, the second alternative in r. 3 can be invoked only in a case where a numberice to act has been given to the arbitrators either before the arbitra- tors entered on the reference or after they have entered on the reference but before the period of four months from that date has run out. It is said that this companystruction also may start off a chain of numberices which may lead to the same result sought to be avoided by it. The argument is that if one of the parties gives a numberice to act, it gives the arbitrators 4 months from that date to act and if before the expiry of the 4 months from that date of numberice another numberice is given, they will get another lease of life and so on indefinitely. Though there is some plausibility in the criticism, it is answered by our companyfining the right to give numberice by a party to the period of four months from the date the arbitrators entered upon the reference. Nor the apprehension that a party may go on giving number of numberices to act within the said 4 months from the date of the arbitrators entering upon the reference, each numberice giving a fresh period of. 4 months, has any basis. A numberice to act can only be given when an arbitrator is number acting i.e., he has refused or neglected to discharge his duty. Therefore, every numberice cannot give a fresh period unless in fact the arbitrators refused or neglected to act before such numberice is given. The legal position may be formulated thus a a numberice to act may be given before or after the arbitrators entered upon the reference, b if numberice to act is given before they entered upon the reference, the four months would be companyputed, from the date they entered upon the reference, c if a party gives numberice to act within 4 months after the arbitrators entered upon the reference, the arbitrators can make an award within 4 months from the date of such numberice, and d in that event, after the expiry of the said 4 months the arbitrators become functus officio, unless the period is extended by companyrt under s. 28 of the act such period may also be extended by the companyrt, though the award has been factually made. In the present case, the numberice was given long after the expiry of four months from the date when the arbitrators entered on the reference and, therefore, they companyld numberlonger act pursuant to the numberice calling upon them to act. The proper companyrse should have been to apply to the companyrt for extension of time under s. 28 of the Act. We, therefore, agree with the companyclusion arrived at by the High Court, though on different- grounds. In the result, the appeal fails and is dismissed with companyts. RAGHUBAR DAYAL, J.-I agree with the order proposed, but for different reasons, which I number state. The period of four months under r. 3 of the First Schedule to the Arbitration Act is to run from the date of the arbitrators entering on the reference or from the date on which they have been called upon to act by numberice in writing from any party to the arbitration agreement. If the arbitrators, have entered upon the reference, the period of four months begins to run from the date they entered on the reference. Any numberice subsequently given to them calling upon them to act will number make the period of ,Our months start afresh from the date of the service of the numberice. Such a numberice would be ineffective for the purposes of determining the period of four months within which the arbitrators had to make the award. In fact, there would be numbervalid occasion for giving such a numberice subsequent to the arbitrators entering on the reference. Parties cannot prompt them for companyducting their enquiry or taking steps in companynection with the enquiry. Even if they do, in case the arbitrators were lethargic,, such a numberice is number companytemplated by r. 3 of the First Schedule. A case may possibly arise when an arbitrator, by his companyduct, indicates that he refuses to act and that it becomes necessary for a party to give numberice to the other arbitrator to appoint another person arbitrator in his place. The appointment of arbitrators, would be companyplete after the fresh arbitrator has been appointed. The proceedings taken previously would have companye to an end as infructuous. The period of four months, therefore, would start in accordance with the provisions of r. 3 of the First Schedule and number from the date on which any party had called upon the remaining arbitrators to appoint an arbitrator in the place of one who had refused to act. Sections 8 and 9 of the Arbitration Act provide for the appointment of an arbitrator by the Court in place of such defaulting arbitrator. The view that the fresh period of limitation will begin to start from the date of the numberice if it be served within the period of four months which had begun to run from the date on which the arbitrators entered on the reference, would mean that any of the parties will be able to extend the period by just giving a numberice, to the arbitrators within the original period of four months. Such an effect of a unilateral numberice companyld Dot have been intended by the Legislature. If one can extend the time-the original period of four months-by giving a numberice within that period, there is numberreason why another fresh period of four months should number start by the giving of a second numberice to the arbitrators to act, before the expiry of the period extended by the first numberice. If this be possible, the period for making the award can be extended without any limit by any of the parties. This is what must have been in the mind of Lindley, M. R., in BaringGoulds Case 1 when he said The arbitrators have three months within which to make their award, and the umpire has another month after the expiration of those three months. Every one agrees, although the enactment does number expressly say so, that the time from which the three months are to be reckoned is the first of the two periods mentioned, and number the last. If it were the last, the proceedings might be very unreasonably postponed. The enactment under companysideration there, is to be found quoted at the bottom of page 86 and, but for the period of three months instead of four months, is in identical terms with those of r. 3 of the First Schedule. In the present case, the arbitrators did enter on the reference by the end of August, 1948, and therefore the award made on October 3, 1950 was made beyond the period of four months of the arbitrators entering on the reference,, and was therefore made when the arbitrators had numberjuris- diction to make it. In this view, it is number necessary to companysider whether the numberice to act, served after the period of four months had expired, is a good numberice or number or whether the arbitrators are companypetent to act in expectation of getting the time extended by the Court or number. I am, however, inclined to the view that in view of the provisions of s. 28, it is number possible to say that the arbitrators are number companypetent to act after the expiry of the period of four months from the date of their entering oh the reference. The provisions of this section companytemplate the arbitrators 1 1899 2 Ch. D. 80,91. having made the award beyond the period of limitation without having previously obtained the order of the Court extending the time of making the award. This implies that the arbitrators would have carried on their proceedings and would have made the award subsequent to the expiry of the period during which they should have made the award. The companypetency of the arbitrators to act in pursuance of the reference arises out of the reference made by the parties and is number dependent on the period during which they ought to make the award. So long as the power vested in them to decide the dispute between the parties is number withdrawn, they companytinue to be companypetent to act on the reference in expectation that the period for making the award would be extended by the Court. I also do number companysider it necessary to decide in this case as to when arbitrators can be said to enter on the reference or what is meant by their being called upon to act by numberice under r. 3 of the First Schedule.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 479 of 1960. Appeal by special leave from the Award dated August 13, 1959, of the Industrial Court Bombay in Ref. f.C. No. 159 of 1957. T. Daru, L. Udayarathnam and S.S. Shukla, for the appellant, Vimadalal, J. B. Dadachanji, Revinder Narain and O. C. Mathur for the respondent. 1961. July 28. The Judgment of the Court was delivered by WANCHOO, J.-This is an appeal by special leave in an industrial matter. The appellant is the Ahmedabad Miscellaneous Industrial Workers Union, and the dispute which went for adjudication before the Industrial Court Bombay was with respect to bonus for the year ending Septem- ber 1956. The appellant claimed that three months I wages should be awarded as bonus by the respondent, which is the Ahmedabad Electricity Company Limited. The companytention of the respondent was that if a calculation was made in accordance with the Full Bench Formula evolved by the Labour Appellate Tribunal and approved by this Court in the Associated Cement Companies Ltd. v. Its Workmen 1 , there would be numberavailable surplus from which any bonus companyld be awarded. The Industrial Court accepted the companytention of the respondent and rejected the appel- lants claim. The main dispute in the Industrial Court centred on three points namely- whether depreciation should be cal- culated according to the provisions of the Income-tax Act and the rules framed thereunder or in accordance with the provisions companytained in the Seventh Schedule to the Electricity Supply Act, No. LIV of 1918 whether any deduction should be allowed as a prior charge towards companytingencies reserve created under the Electricity Supply Act and whether any deduction should be allowed on account of income-tax. The Industrial Court held against the appellant on all the three points and found that there was numberavailable surplus from which any bonus companyld be awarded. Hence this appeal by special leave. It is number in dispute between the parties that if depreciation is calculated in accordance with the rules framed under the Income-tax Act, there will be numberavailable surplus, from which bonus companyld be awarded. The main question therefore that arises in this appeal is whether depreciation should be calculated according to the Rules framed under the Income-tax Act or in accordance with the Seventh Schedule to the Electricity Supply Act. If this question is decided against the appellant. it would be unnecessary to decide the other two points on which the parties were at variance in the Industrial Court. 1 1959 S.C.R. 925. What depreciation should be allowed in the case of electricity companypanies came lip for companysideration before the Appellate Tribunal in 1955 in the case of U. P. Electric Supply Company Ltd. v. Their Workmen 1 , and it was pressed before it that in the case of electricity companypanies depreciation should be deducted in the manner specified in the Seventh Schedule to the Electricity Supply Act. The Appellate Tribunal pointed out that in the long run the result of the application of the two methods would be the same but it preferred to give as prior charge income-tax depreciation as it was in keeping with the Full Bench formula and was number likely to raise fresh problems. It appears that since then, as pointed out by the Industrial Court, various Industrial Tribunals have been allowing depreciation according to the income-tax rates and number according to the Seventh Schedule to the Electricity Supply Act in the case of electricity companypanies also. The P. Electric Supply Companys case 1 came up for companysideration before this Court in The Shree Meenakshi Mills Ltd. v. Their Workmen 2 and was approved. This Court then approved the decision of the Appellate, Tribunal disallowing initial and additional depreciation in calculating depreciation for purposes of the Full Bench formula but accepted that depreciation according to income-tax rates should be deducted. It is true that The Meenakshi Mills case 2 was number dealing with an electricity companypany and this Court did number have occasion to companysider the point directly even so, this Court approved the decision in the P. Electric Supply Companys case 1 with respect to depreciation and companyld number have been unaware of the fact that the Appellate Tribunal had applied the income-tax rules for purposes of depreciation to electricity companypanies in preference 1 1955 2 L. L. J. 431. 2 1958 S. C. R. 878. to the provisions of the Seventh Schedule to the Electricity Supply Act. Further in The Tinnevelly-Tutcorin Electric Supply Co. Ltd. Its Workmen 1 , this Court dealt with the case of an electricity companypany directly. It had then occasion to companysider the U. P. Electric Supply Companys case 2 again and pointed out that that case decided two questions of law. The first was in regard to the applicability of the Full Bench formula to electricity companypanies, and the second was with respect to the extent of statutory depreciation to be allowed under the Full Bench Formula. It was pointed out that the decision on the second point by which the income- tax rules were applied for purposes of depreciation to electricity companypanies with the exception of initial and additional depreciation was approved by this Court in the Meenakshi Mills case 3 . It is again true that in the Tinnevelly-Tuticorin Electric Supply Companys case 1 the question whether depreciation should be allowed in accordance with the income-tax rules or under the Seventh Schedule to the Electricity Supply Act for the purposes of the Full Bench formula was number directly raised but in effect the decision in the U. P. Electric Supply Companys case 2 where the Appellate Tribunal had applied the income-tax rules of depreciation in preference to the provisions of the Seventh Schedule to the Electricity Supply Act, was approved. In the circumstances it seems to us that it is number open to the appellant to raise the question that the provisions of the Seventh Schedule to the Electricity Supply Act should be applied for purposes of calculating depreciation in preference to the income-tax rates in working out the Full Bench formula. 1 1960 3 S. C. R. 68. 2 1955 2 L.L.J. 431. 3 1958 S.C.R. 878. 4 1960 3 S.C.R.68. But, assuming that the question is still open because it was never directly raised in this Court and specifically decided, we are of opinion that the income-tax rules should be applied in working out depreciation under the Full Bench formula in preference to the provisions of the Seventh Schedule to the Electricity Supply Act. It was pointed out in Tinnvelly Tuticorin ElectriG Supply Co.s case 1 that the provisions in the Electricity Supply Act companytained in s. 57 and the Sixth and Seventh Schedules to the Act were for a special purpose, namely, to work out the charges to be recovered from companysumers for the supply of electricity. It was also observed that the provisions of the Electricity Supply Act and its Schedules were meant for operation in the field companyered by the Act and that the principles of industrial adjudication were wholly different and had to be worked out in their own way in the industrial field. It seems to us therefore that in working, out available surplus according to the Full Bench formula, the same principle with respect to depreciation should be applied in the case of electricity companypanies as in the case of all other industrial companycerns. As the Appellate .Tribunal pointed out, the result in the long run would. be the same, though there might be difference in some years. Besides, in the formula when it was evolved in 1950 see The Mill-Owners Association v. The Rashtriya Mill Mazdoor Sangh Bombay 2 , the depreciation intended to be allowed was, as provided in the rules under the Income-tax Act. The Appel- late Tribunal pointed this out in the U. P. Electric, Supply Compans case 3 and said the Full Bench formula allowed depreciation according to incometax rates. It seems to us therefore that in the field of industrial relations in companynection with which the Full Bench formula was evolved 1 1960 3 S. C. R. 68. 2 1930 2 L. L. J. 1247. 3 1955 2 L. L. J. 431. it is proper that the formula should be worked out as it was evolved without injecting into it the provisions companytained in the Seventh Schedule to the Electricity Supply Act. This will work for uniformity in all industrial companycerns and as pointed out in the Associated Cement Companies case the formula had on the whole worked fairly satisfactorily in a large number of industries all over the companyntry, and the claim for bonus should be decided by tribunals on the basis of this formula without attempting to revise it. If the provisions of the Seventh Schedule to. the Electricity Supply Act which, as we have pointed out, were evolved for a special purpose, were to be injected into this formula, the result would be that electricity companypanies would stand in a group by themselves when companypared with other industrial companycerns, and the uniformity that the formula had achieved in the matter of bonus would be destroyed. The companysequence then will be that in identical situations electricity companypanies may have to pay bonus while other industrial companycerns to which income-tax rates of depreciation would be applied may number have to do so. It seems to us that this is number desirable, particularly when we remember that electricity companypanies are public utility companypanies. Another reason why we think that income-tax rates of depreciation should be applied for the purposes of the Full Bench formula in the case of electricity companypanies also is that income-tax rates provide for a quicker building up of the depreciation fund. This to our mind is all to the good in the case of public utility companypanies like those providing electricity so that they may be in a position to have funds at their disposal in case of unforeseen difficulties resulting in the necessity of replacing plant and machinery earlier than what is provided under the Seventh Schedule to the Electricity Supply Act. 1 1959 S. 0, R. 925. There is yet another reason which inclines us to approve the view taken by the Appellate Tribunal in the U. P. Electric SupplyCompanys case 1 . That case settled the law in 1955 and has since been followed throughout the companyntry. We feel that we should number disturb that decision, unless there are good reasons for doing so and numbere I has been shown. If anything, it appears to us that this is number the time to disturb that decision which has number been followed throughout the companyntry for the last six years, for the whole question of bonus is under reference to a high-powered companymission which ,,ill go into the matter afresh and will necessarily companysider the question of the revision of the Full Bench formula. As this Court pointed out in the Associated Cement Companys case 2 , the problem raised by the question of the revision of the Full Bench formula is of such a character that it companyld only be companysidered by a high-powered companymission. That is number being done and it seems to us in the circumstances that we should number disturb the decision arrived at by the Appellate Tribunal in the U. P. Electric Supply Companys case 1 on this question.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 268 of 1958. Appeal from the judgment and decree dated June 15,1956, of the Calcutta High Court in Appeal from Original order No. 349 of 1953. C. Chatterjee and S. Ghose, for the appellant. P. Maheshwari, for respondents Nos. 1, 2 and 4. 1961. August 8. The Judgment of the Court was delivered by SUBBA RAO, J.-This appeal by certificate from the order of the High Court at Calcutta raises the question of the true interpretation of the provisions of s. 127 a of the Calcutta Municipal Act, 1923 hereinafter called the Act . The respondents are the owners of premises No. 296, Bowbazzar Street, Calcutta. The Corporation of Calcutta fixed the annual valuation of the said premises at a sum of Rs. 14,093 and directed the same to take effect from the second quarter of 1950-51. In fixing the annual valuation, the said Corporation took as basis Rs. 1,450 as the monthly rental value of the premises. On June 20, 1950, numberice of the assessment based on the said annual valuation was served on the respondents. Respondent No. 1 filed objections to the said assessment under s. 139 of the Act. Meanwhile under the West Bengal Premises Rent Control Temporary Provision Act, 1950 W.B. XVII of 1950 , hereinafter called the Rent Control Act , the standard rent of the said premises was fixed by the Rent Controller the rent was fixed at Rs, 550 per month with effect from April, 1951, and at Rs, 632-8-0 per month with effect from August, 1951. One of the objections raised was that the Corporation had numberpower to fix the annual valuation at a figure higher than the standard rent. The Special Officer disallowed all the objections and companyfirmed the assessment. Being aggrieved by the said order, respondent No. 1 filed an appeal in the Court of Small Causes, Calcutta, and the learned Small Causes Judge allowed the appeal and fixed the annual valuation, for the purpose of assessment, at Rs. 6,831. That was on the basis of the standard rent of Rs. 632-8-0 per month. The Corporation of Calcutta questioned the companyrectness of the said Judgment by preferring an appeal to the High Court at Calcutta. The High Court by a majority agreed with the Small Causes Judge and dismissed the appeal. Hence the present appeal. The main companytention of Mr. N. C. Chatterjee, learned companynsel for the appellant Corporation, is that under s. 127 a of the Act the Corporation has to ascertain only the hypothetical rent realisable from a hypothetical tenant at the time of assessment and number the actual rent payable at that time by any tenant, and therefore it is number bound to take into companysideration the standard rent fixed under the Rent Control Act. A subsidiary point raised in the appeal is as to the precise meaning of the phrase ,at the time of assessment occurring in s.127 a of the Act. The problem presented depends for its solution on the interpretation of the provisions of s.127 a of the Act. The said section reads the annual value of land, and the annual value of any building erected for letting purposes or ordinarily let, shall be deemed to be the gross annual rent at which the land or building might at the time of assessment reasonably be expected to let from year to year, less, in the case of a buildings an allowance of ten per cent for the companyt of repairs and for all other expenses necessary to maintain the building in a state to companymand such gross rent. We shall first look at the provisions of the section to ascertain the meaning The crucial words are gross annual rent at which the land or building might at the time of assessment reasonably be expected to let from year to year. The dictionary meaning of the words to let, is grant use of for rent or hire. It implies that the rent which the landlord might realise if the house was let is the basis for fixing the annual value of the building. The criterion, therefore, is the rent realisable by the landlord and number the value of the, holding in the hands of the tenant. This aspect has been emphasized by the Judicial Committee in Bengal Nagpur Railway Company Limited v. Corporation of Calcutta 1 . The question for determination in that case was whether the assessment of a certain premises to the companysolidated rate was made in accordance with the provisions of s.127 a of the Calcutta Municipal Act, 1923. There the plot in question was a vacant land occasionally used by the member of Railway Officers Club for practice of the game of Golf. It was bought by the Railway Company number for present use but to be kept in reserve against the companypanys future requirement. The Corporation assessed the land on the basis of rental value of land in the neighborhood. It was argued that the premises ought to be valued on the basis of rent which would be paid by a hypothetical tenant who must be presumed to keep the land vacant, or at the most use it as an imperfect golf companyrse. The Judicial Committee rejected the companytention and made the following observations at p. 5 Indeed, it provides a striking example of the danger attending an injudicious use of precedent. The owner of land in England is number chargeable with rates, as owner, at all. If he leaves land vacant and unoccupied, he 1 1946 L. R. 74 1. A. 1. pays numberrates. Under the Calcutta Act mere, ownership carries with it a liability to pay one-half of the rate assessed on the annual value of the land. It is impossible to companystrue s.127 as meaning that, when land is unoccupied, its annual value must be taken to be the rent at which it might be expected to be let to a tenant who was- precluded from occupying it. There is numberhing in the words of the section to suggest that a hypothetical tenancy of so improbable a character was companytemplated, and the elaborate provisions of s.151 can hardly have been framed in order to reduce by half, for the benefits of the number occupying owner, what would already be a merely numberinal sum. The same principle was accepted by a division bench of the Madras High Court as early as 1886 in Secretary of State v. Madras Municipality , . Section 123 of the City of Madras Municipal Act Mad. 1 of 1884 which was similar in its terms to s.127 a of the Calcutta Municipal Act, 1.923, ran as follows .lm15 The gross annual rent at which a building or land might reasonably be expected to let from month to month or from year to year shall for the purposes of assessment under this Act be deemed to be the annual value of such building or land. The learned Judges in companystruing the said section observed thus at p. 41 The standard of value is certainly the value of the property to the owner which is to be measured, whether he occupies the property himself or lets it out to a tenant by the amount of rent per annum it would be worth to a hypothetical tenant. 1 1886 I.L.R. 10 Mad. 38. Mukherjee, J., in Corporation-of Calcutta v. Ashutosh De 1 , accepted the said principle and applied the same in companystruing s.127 a of the Act though Roy, J., differed from him. We, would, with respect, accept the said principle in the companystruction of the said section and hold that the value of the property to the owner is the standard in making the assessment thereunder. The word reasonably in the section throws further light on this interpretation. The word reasonably is number capable of precise definition. Reasonable signifies ,in accordance with reason. In the ultimate analysis it is a question of fact. Whether a particular act is reasonable or number depends on the circumstances in a given situation. A bargain between a willing lessor and a willing lessee uninfluenced by any extraneous circumstances may afford a guiding test of reasonableness. An inflated or deflated rate of rent based upon fraud, emergency, relationship, and such other companysiderations may take it out of the bounds of reasonableness. Equally it would be incongruous to companysider fixation of rent beyond the limits fixed by penal legislation as reasonable. Under the Rent Control Act, the receipt of any rent higher than the standard rent fixed under the Act is made penal for the landlord. Section 3 of the said Act says that any amount in excess of the standard rent of any premises shall be irrecoverable numberwithstanding any agreement to the companytrary. Section 33 a thereof provides inter alia that ,whoever knowingly receives, whether directly or indirectly, any sum on account of the rent of any premises in excess of the standard rent will be liable to certain penalties. Standard rent has been defined in 2 10 b to mean that where the rent has been fixed under s. 9, the rent so fixed, or at which it would have been fixed if application were made 1 1927 31 C.W.N. 864. under the said section. A companybined reading of the said provisions leaves numberroom for doubt that a companytract for a rent at a rate higher than the standard rent is number only number enforceable but also J. that the landlord would be companymitting an offence if he companylected a rent above the rate of the standard rent. One may legitimately say under those circumstances that a landlord cannot reasonably be expected to let a building for a rent higher than the standard rent. A law of the land with its penal companysequences cannot be ignored in ascertaining the reasonable expectations of a landlord in the matter of rent. in this view, the law of the land must necessarily be taken as one of the circumstances obtaining in the open market placing an upper limit on the rate of rent for which a building can reasonably be expected to let. It is said that s.127 a does number companytemplate the actual rent received by a landlord but a hypothetical rent which he can reasonably be expected to receive if the building is let. So stated the proposition is unexceptionable. Hy- pothetical rent may be described as a rent which a landlord may reasonably be expected to get in the open market. But an open market cannot include a ,,black market, a term euphemistically used to companymercial transactions entered into between. parties in defiance of law. In that situation, a statutory limitation of rent circumscribes the scope of the bargain in the market. In numbercircumstances the hypothetical rent can exceed that limit. Strong reliance is placed by learned companynsel for the appellant on the decision of the House of Lords in Poplar Assessment Committee v. Roberts 1 in support of the companytention that the standard rent fixed under the Rent Control Act shall number be taken into account in determining the valuation for rating purposes. There, it was held that in arriving at 1 1922 2 A. C. 93, 104, 107, 116, 118, 125. the valuation of a hereditament under s. 4 of the Valuation Metropolis Act, 1869, the maximum gross value to be assigned to the hereditament was number limited to the standard rent of the hereditament within the meaning of the lent Restrictions Act, 1920. One of the numberle Lords, Lord Carson, dissented from the majority view. It is number necessary to companysider that case in detail except to numbere the passages in the judgments of the learned Lords emphasizing upon the peculiar aspect of the English Law of rating. Lord Buckmaster stated ,From the earliest time it is the inhabitant who has to be taxed. It is in respect of his occupation that the rate is levied, and the standard in the Act is numberhing but a means of finding out what the value of that occupation is for the purposes of assessment. Lord Atkinson observed What the ratepayer is, under both the Act of 1836 and that of 1869, rated in respect of is decided by many cases in this House to be the beneficial occupation of a hereditament. Lord Sumner declared Rating is a process between an occupier and a rating authority, to the determination of which the landlord and the lessee are strangers. Lord Parmoor stated thus Under 43 Eliz. c. 2, rates are to be levied upon every occupier of lands, houses, etc. The distinction between occupier and owner, in this companynection, is of primary importance. The occupation value of property may be, and often is, distinct from its value to the owner. This distinction would probably be emphasized where an artificial statutory maximum is fixed, and a statutory restriction prevents an owner from recovering from any tenant a, greater amount, as rent, than the statutory maximum. These passages bring out in bold relief the distinction between the English and the Indian law which has already been pointed out by the Judicial Committee in Bengal Nagpur Railway Company Limited v. Corporation of Calcutta 1 . That is why, while in England the value of occupation by a tenant is the criterion for fixing the, standard rent under the rating law, under the Act the letting value of a building to the landlord is the standard in fixing the, rental value. If this distinction is borne in mind much of the cloud cast in this case is dispelled. It would be instructive to quote the weighty observations of Atkin, L. J., as he then was, which were approved by Lord Carson in his dissenting judgment and they are ,If numberhigher rent than the standard rent and statutory increases is enforceable, as a matter of companymon sense that seems to be the limit of the rent a tenant can be reasonably expected to give How then is the annual rent to be ascertained ? It is obvious that the definition presupposes that the premises are deemed to be vacant and are deemed to be capable of being let. Accepting the said observations, Lord Carson proceeded to observe, I cannot persuade myself that it is possible to ask the assessment authority to enter into such super-speculative and hypothetical regions, and I am of opinion that the only rent we have to companysider is a rent de jure recoverable and number a voluntary promise which cannot be enforced. 1 1946 L.R.74 I.A.I. With great respect to the other lerned Lords, we are inclined to agree with the observations of Atkin, L. J., as approved by Lord Carson. That apart, the majority view can easily be distinguished on the peculiar principle of rating obtaining in England which is fundamentally different from that accepted under the Act. There is another difference between the English law and the Indian law under the English Act of 1920, payment of rent in excess of the statutory rent was number barred and the, landlord might receive the same, but under the Rent Control Act receipt of a higher rent than the standard rent is penalised that is, while in England a companytract to pay a higher rent may number by enforceable in a Court of law, it is number unlawful, but in India it is both unenforceable and unlawful. This difference is of vital importance in judging the reasonableness of a landlords expectations to get a particular rent. The Bombay High Court in Mongharam Jiwandas v. Municipal Corporation of the City of Bombay 1 and the Madras High Court in The Madurai Municipality v. Kamakshisundaram Chettiar 2 followed the majority judgment of the House of Lords in Poplar Assessment Committee Case 3 while the Rangoon High Court in The Municipal Corporation of the City of Rangoon v. The Surati Bara Bazzar Company Limited 4 and the Calcutta High Court in the present case distinguished the said decision. We would prefer to accept the view expressed by the Calcutta and Rangoon High Courts, is the decisions of the said Courts are based upon a companyrect appreciation of the distinction between the law of rating in England and that under the Act. It is said that, as under s. 9 1 b of the Rent I.L.R. 1951 Bom. 713. 2 1955 11 M.L.J. 369. 3 1922 2 A C. 93,104.107.116,118,125. 4 1923 I.L.R. 1 Rang. 668. Control Act the landlord can get the standard rent raised by an amount equivalent to the increase in taxes, rates or cesses, there would number be any prejudice even if the annual value of the building is fixed on the basis of a rate of rent higher than that permissible under the said Act. But this reasoning would land us in a vicious circle and would enable one to circumvent the provisions of the Rent Control Act, for though a tenant if number liable under an Act to pay a rent higher than the standard rent, by this process he would be companypelled to pay a higher rent. On the other hand, the scope of that section can legitimately be companyfined to situations giving rise to increase of taxes such as the increase in the rate, etc. Nor are we impressed by the argument that the omission of a specific provision, as in s.26 of the Calcutta Rent Act of 1920, prohibiting the Calcutta Corporation from making assessment of any rent higher than the rent fixed by the Rent Controller in the subsequent Acts would inevitably lead to the companyclusion that the omission implies the companyferment of such a power. Section 26 of the Calcutta Rent Act, 1920 Ben. III of 1920 debars the Corporation of Calcutta and other local bodies from raising the annual value of any premises above the standard rent but the life of that Act expired in the year 1926. For many years thereafter there were numberRent Control Acts in Bengal but some Rent Control Acts came to be passed in the years 1942, 1943 and 1946. In 1950, Act XVII of 1950 was passed to make better provision for the companytrol of rents of premises in Calcutta and in certain other areas in West Bengal. The said Act was amended by subsequent Acts and was finally repealed by Act XII of 1956. It may be mentioned that in the subsequent Acts there was numberprohibition similar to that companytained in s. 26 of the Calcutta Rent Act of 1920. It may also be stated that there is numbersuch prohibition in the Municipal Act of 1923. But when that Act was repealed and replaced by the Calcutta Municipal Act, 1951 W. B XXXIII of 1951 , a proviso was added to s.168 1 to the effect that in respect of any land or building, the standard rent of which has been fixed under s.9 of the tent Control Act of 1950,. the annual value under s.168 1 shall number exceed the annual amount of standard rent so fixed. It may be numbericed from the history of the legislation that when the Calcutta Municipal Act, 1923, was passed, the Calcutta Rent Act of 1920 was still in force. Section 128 of the Calcutta Municipal Act,, 1923, laid down the criteria for fixing the annual value under that Act and perhaps it was found number necessary to incorporate therein the prohibition companytained in s.26 of the Rent Act of 1920. But that in itself cannot mean that the absence of such an express prohibition would imply that but for such a companyresponding provision of the Rent Act the section should be understood as free from such a prohibition. The intention of the Legislature depends upon the interpretation of the words used in s.127 a of the Act and number on the provisions of another Act. On the other hand, the Legislature, which must be presumed to have had knowledge that the Calcutta Rent Act of 1920 would expire within three years from the companymencement of the Municipal Act of 1923, and also have been aware that former Act companytained such a prohibition, if it intended to remove any such prohibition during those three years or even there- after, would have expressly made a provision to that effect in the Municipal Act, 1923. On the other hand, the phraseology of the section must have been designedly used wide enough to companyprehend such a prohibition. Indeed, when the Act was repealed in 1951 by Act XXXIII of 1951, what was implicit in s.127 a was made explicit in the proviso to s.168 1 of that Act. We cannot, therefore, draw any implied prohibition from the history of the legislation. In the result, we hold, on a fair reading of the express provision of s.127 a of the Act in the light of the decisions companysidered, that the rental value cannot be fixed higher than the standard rent under the Rent Control Act. The next question is, what is the meaning of the phrase at the time of assessments occurring in s.127 a of the Act. The majority view of the High Court was that assessment companymences with the making of the valuation under B. 131 of the Act and ends with the determination of the objection under s.140 thereof, and that an event which took place during this period may be relied upon for assessing the annual value under s.127 a of the Act. The companyrectness of this view has number seriously been companytested before us. That apart, for the reasons mentioned by Lahiri and Sen, JJ., that companyclusion is justified on the provisions of the Act. No other question is raised.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 517 of 1960. Appeal from the Judgment and order dated November 20, 1958, of the Mysore High Court in Civil Writ Petition No. 234 of 1957. Porus A. Mehta, J. R. Gagrat and Gopalakrishnan, for the appellants. C. Chatterjee, G. Channappa, R. Gopalakrishnan and T. Sen, for the respondent. 1961. August 8. The Judgement of the Court was delivered by KAPUR, J. This is an appeal against the judgment and order of the High Court of Mysore dismissing the petition of the appellants made under Art. 226 of the Constitution. The appellants. were companyducting since the month of August 1948, what were called prize companypetitions in the State of Mysore with the permission of the Government of the erstwhile State of Mysore. An Act called the Mysore Lotteries and Prize Competitions Control and Tax Act, 1951 Act 27 of 1951 , hereinafter called the Mysore Act was passed by the Mysore Legislature and came into force as from June 21, 1951. The Rules made thereunder came, into force on February 1, 1952. Previous to that the Bombay Legislature had passed a similar Act called the Bombay Lotteries and Prize Competitions Control and Tax Act, 1948, which was amended in November 1952. by the Bombay Act 30 of 1952. In December 1952 and January 1953 petitions under Art. 226 were filed in the High Court of Bombay challenging the Bombay Act. On January 12, 1955 the Bombay High Court held that the provisions of the Bombay Amendment Act above referred to were unconstitutional and that the taxes imposed under the provisions of that Act were hit by Art. 301 of the Constitution. The result of that judgment was that though prize companypetitions companyld be companytrolled by the States within their respective borders, their ramifications beyond those borders companyld only be dealt with by action under Art. 252 1 of the Constitution. It was for that reason that the States of Andhra, Bombay, Madras U. P., Hyderabad, Madhya, Bharat, Pepsu and Saurashtra passed resolutions under Art. 252 1 of the Constitution authorising Parliament to legislate for the companytrol and regulation of prize companypetition and in pursuance thereof Parliament passed the Prize Competitions Act Act 42 of 1955 hereinafter called the Central Act which Received the assent of the President on October 22, 1955, and came into force on April 1, 1956. On February 24, 1956, the Mysore Legislature passed a, resolution adopting the said Act. The resolutions passed by the various States and the resolution passed by the Mysore Legislature will be quoted in a later part of this judgment. On April 7, 1956, the appellants filed a petition under Art. 32 of the Constitution in the Supreme Court challenging the validity of the Central Act but that petition was dismissed and is reported as R.M.D.C. Chamarbaugwala v. The Union of India 1 . The appeal against the Bombay judgment declaring the Bombay Act to be unconstitutional was brought in this companyrt and, was allowed and that case is reported as State of Bombay v. R. M. D. Chamarbaugwala 2 . During the pendency of their petition under Art. 32 the appellants applied for and wore granted a stay of the operation of the Central Act pending the disposal of the said writ petition. This was on April 16, 1956. The judgment of the Supreme Court in that petition was given. on April 9, 1957. On August 31, 1957, the 1 1957 S.C.R. 930, 939. 2 1957 S.C.R. 874, 929. Mysore Lotteries Prize Competitions Control and Tax Amendment Ordinance, 1957 Ord. 6 of 1957 was issued by the Governor of Mysore and thus for the period of about 16 months the appellants carried on prize companypetitions as before. The Ordinance was enacted into an Act on September 28, 1957, which is Mysore Act 26 of 1957. Certain amendments were made by this in the Mysore Act as originally passed in 1951. As a result of this amendment the definition of prize companypetition was amended the definition as given in the Central Act was adopted and ss. 8 9 of the Mysore Act. were omitted with retrospective effect from April 1, 1956 cl. b of sub-s. 1 of s.12 was amended and certain words referring to licences under s.8 were retrospectively omitted and retrospective effect was given to the Mysore Act as amended. By adding a proviso to s.15 of the Mysore Act all prize companypetitions companyducted between March 31,1956, and August 31 1957, were brought within the purview of the amended Act. Thus the prize companypetitions which as a result of the stay of the operation of the Central Act were companyducted by the appellants became subject to the operation of the Mysore Act as amended. The appellants on September 10, 1957, were called upon to file their returns but at their request for extension of time, they were given another 15 days in which to file their return. They filed their return but under protest. The gross companylections were of a sum of Rs. 26,47,147-5-9 and on that the appellants were called open to pay up provisionally a sum of Rs. 3,30,893- 7-0. As the money was number paid within the time specified proceedings were taken under s. 6 1 of the Revenue Recovery Act, 1890 Central Act 1 of 1890 , and certain properties moveable and immoveable were attached and one of the properties was sold and the price so realised was deposited in the Government treasury. The Mysore amending Act was challenged in the High Court of Mysore by a petition under Art, 226 which was dismissed on November 20, 1958 and against that judgment and order this appeal has been brought pursuant to a certificate of the, High Court under Art. 132 1 of the Constitution. The Certificate was companyfined to the interpretation of Art. 252 of the Constitution. The respondent in the present appeal is the State of Mysore. The challenge to the companystitutionality of the Mysore Act was on the ground that 1 the Mysore Legislature by. adopting the Central Act was numberlonger companypetent to pass any law in regard to prize, companypetitions because the whole matter including the power of taxation was surrendered in favour of Parliament. 2 Even if the whole power had number been surrendered the impugned Act i.e. the, Mysore Act as amended violated Art.252 2 of the Constitution inasmuch as it indirectly amends the Central Act by adding a new method of companytrol by imposition of penalties of a monetary nature. 3 The Mysore Legislature companyld number amend an Act which stood repealed as a result of the enactment of the Central Act. The Mysore Act as amended was repugnant to the Central Act and is therefore, to the extent of repugnancy, void under Art. 254 1 of the Constitution and 5 it was companyor- able legislation in as much as the tax was imposed on the prize companypetitions with the object of companytrolling them. Certain other questions relating to the legality of the imposition of the tax and the proceedings for the recovery of the tax were also raised but on all these points the High Court found against the appellants The first question, raised before us is the effect of the resolution passed by the, legislatures of the States above mentioned and of the resolution passed by the Mysore legislature adopting,the central Act. The resolution Passed by the States was in the following terms. This Assembly do resolve that it is desirable that companytrol and regulation of Prize Puzzle companypetitions and all other matters companysequential and incidental thereto insofar as these matters are matters with respect to which Parliament has numberpower to make laws for the States should be regulated by Parliament by law. The two Houses of the Mysore Legislature passed the following resolution on February 23, 1956 and February 21, 1956, respectively Resolution passed by the Mysore Legislative Assembly on 23rd, February, 1956. Whereas for the purpose of securing uniformity in legislation it is desirable that the companytrol and regulation of Prize Compe- titions and all other matters ancillary thereto should be regulated in the State of Mysore by the Prize Competitions Act, 1955 Central Act 42 of 1955 passed by Parliament Now, therefore, in pursuance of Clause, 1 of Article 252 of the Constitution, this Assembly resolves that the Act aforesaid be adopted by the State of Mysore. It was companytended that by these resolutions the legislatures of the various States had surrendered their power of legislation in regard to the companytrol and regulation of prize puzzle companypetitions and all other matters companysequential and incidental thereto and had thus numberlegislative power left in regard to that matter including the power to tax. Article 252 provides Art. 252 1 If it appears to the legislature of two or more, States, to be desirable that any of the matters with respect to which Parliament has numberpower to make laws for the States except as provided in articles 249 and 250 should be regulated in such States by Parliament by law, and if resolutions to that effect are passed by all the Houses of the legislatures-of those States, it shall be lawful for Parliament to pass an, Act for regulating that matter accordingly, and any Act so passed shall apply to such States and to any other State by which it is adopted afterwards by resolution passed in that behalf by the House or, where them are two Houses, by each of the Houses of the Legislature of that State. Any Act so passed by Parliament maybe amended or repealed by an Act of Parliament passed or adopted in like manner but shall number, as respects any State to which it applies, be amended or repealed by an Act of the Legislature of that State. The result of the passing of a, resolution under Art. 952 1 is that any matter with respect to which Parliament has numberpower to enact laws becomes a matter for the regulation of which Parliament becomes empowered to pass any Act, and such Act, if passed by the Parliament, becomes applicable to the States passing the resolution or adopting that Act. Sub- clause 2 of that Article provides that any such Act may be amended or repealed by an Act of Parliament in the like manner i.e. in the manner provided in cl. 1 and it cannot be amended or repealed by the Legislature of the State or States passing the resolution. The question then arises do the resolutions as passed and particularly the words companytrol and regulation of prize puzzle companypetitions and all other matters ancillary thereto surrender the whole subject of prize companypetitions to the Central Parliament i.e. every matter and power companynected therewith including the power to tax. The argument raised was that the language of the resolutions was wide enough to companyprise the legislative power under entries 34 and 62 of List II the former dealing with betting and gambling and the latter with taxation of luxuries including betting and gambling. One of the methods of companytrol and regulations, it was submitted, is by taxation and as the power to companytrol, and regulate and all powers ancillary to the subject were surrendered the power to tax, being included- therein was also surrendered. In support of this -Argument reliance was placed on. certain judgments of the American Supreme Court. The first case relied upon was.Rudolph Helen V. United States 1 . In that ease the question was about the jurisdiction of the United States District Court which, depended upon the nature-. of -the, imposition of -an, additional- duty i.e. whether it was penalty or number. The imposition, was held to be a penalty as it was number imposed for the purpose of revenue but was based -upon the particular act of the importer i.e. his undervaluation of the goods imported in other words this additional sum was a penalty for undervaluation whether innocently done or number and whether it was called a further sum or an additional duty the amount imposed was number a duty upon imported article but a penalty and numberhing else. The next case relied upon was J. W. Bailey v. Dexel Furniture Company 2 . That was a case of companyorable exercise, of legislative power. .Under the Child Labour Tax Law a tax of 10 of the net profits of the year companyld be imposed upon an employer and knowingly during any portion of the taxable period employed children within certain age- limits irrespective of whether only one child was employed or several, This was held number to be a valid exercise by Congress of power of taxation but an unconstitutional regulation by the use of the tax as a penalty for the employment of child labour in the States which was exclusively a State function. That case was one in which the Congress exercised its. power of regulation by imposing a tax by way of penalty in,order to prevent the employment of childlabour and thus by If the exercise of the power which it possessed i.e. of 1 1903 188 U.S.605 47 L.Ed. 614. 2 1922 259 U.S.33 66 L. Ed. 817. taxation it tried to regulate a subject over which it had numberjurisdiction and that really was the matter which was decided by the American Supreme Court. The next case relied upon was Gloucester Perry Th companypany Commonwealth of Pennsylvania 1 . That was a case of interstate companymerce and it was hold that numberState companyld impose a tax on that portion of interstate companymerce which is involved in the transportation of persons and property what- ever be the instrumentality by which it is carried on. The tax there was levied upon receiving and landing of passengers and freight which was held to be a tax on transportation i.e., upon companymerce. between the two States involved in such transportation. The following passage in the judgment of Field, J., at p. 162 was relied upon by companynsel for the appellants The Power to regulate that companymerce, as well as companymerce with foreign nations, vested in Congress is the power to prescribe the rules by which it shall be governed that is, the companyditions upon which it shall be companyducted to determine when it shall be free, and when subject to duties or other exactions. But these observations were made in a different companytext, i.e., whether the tax companyld be levied upon transportation made in ferry boats which passed between States every hour of the day and as this transportation was within the companymerce clause numbertax companyld be levied by the States. Reference was next made to certain observations made in the State of Bombay v. R.M.D. chamarbaugwala 2 which was an appeal against the judgment of the. Bombay High Court. Das, C. J., observed at p. 926 The fact that regulatory provisions have been enacted to companytrol gambling by issuing 1 1885 114 U.S. 196 29 L. Ed. 158. 2 1957 S.C. R. 874, 929. licences and by imposing taxes does number in any way alter the nature, of gambling which is inherently vicious and pernicious. In that case numberquestion as to the meaning of the word companytrol and regulation arose number whether those words included the power of taxation. All that the Court was called upon to decide was whether prize companypetitions were trade, companymerce or business or were anti-social activities. It was then argued that it was because of the decision by the Bombay High Court in State of Bombay v. R. M. D. Chamarbaugwala 1 whereby the tax imposed on prize companypetitions was struck down as companytravening Art. 304 b , that the various States companybined together and passed the resolution under Art. 252 1 of the Constitution. The object of the resolutions, it was submitted, was to get over the unconstitutionality pointed out by the Bombay High Court and therefore the resolutions were passed in the language used therein, i.e., for the companytrol and regulation of prize companypetitions which power was transferred and surrendered to Parliament along with the powers incidental and ancillary thereto which must include taxation. It was further argued that as Parliament had failed to impose any tax it implied that it had refused to do so. In support of this argument reliance was placed on Sabine Robbins v. Taxing District of Shelby County, Tennessee 2 . It was there held that where the power of the Legislature is exclusive its failure to make express regulation indicated its will that the subject shall be left free from any restriction or imposition. The pivot of the appellants argument is that the words companytrol and regulation and ,incidental and ancillary thereto included power of taxation but this argument is number well founded. The power in regard to betting and gambling is companytained in entry 34 of the State List which as follows . Entry 34 Betting and gambling. I. L. R. 1955 Bom. 680. 2 30 L. Ed. 694. The power of taxation is companytained in entry 62 which is as under Entry 62 Taxes on luxuries including taxes on entertainments., amusements, betting and gambling. In the Indian Constitution as it was in the Government of India Act the power of legislation is distributed between the Union and the States and the subjects on which the respective Legislatures can legislate are enumerated in the three Lists and in the Articles of the Constitution, provision is made as to what is to happen if there is a companyflict between the Statutes passed by Parliament and the Legislatures of the States. The peculiar nature of the Indian Constitution in regard to the enumeration of powers in the entries in the Lists was emphasised by Gwyer, C. J., in re The Central Provinces Berar Act No. XIV of 1938 1 at p. 38 and by Sulaiman, J., at pp. 73 and 74. Gwyer, J., said- But there are few subjects on which the decision of other Courts require to be treated with greater caution than that of federal and provincial powers, for in the last analysis the decision must depend upon the words of the Constitution which the Court is interpreting and since numbertwo Constitutions are in identical terms, it is extremely unsafe to assume that a decision on one of them can be applied without qualification to another. This may be so even where the words or expressions used are the same in both cases for, a word or a phrase may take a companyour from its companytext and bear different senses accordingly. 1 1939 F.C.R.18,38,73,74. At p. 74 Sulaiman, J., observed The heads have been separately specified in great detail and a special head taxes on the sale. of goods has been assigned to the Provinces, which did number at all find a separate and distinct place in the State or Provincial List of any of the Dominions. This peculiarity is a unique feature of the Indian Constitution, having an important bearing on the present case, as taxes on Bales have been adopted as a post-war measure in most companyntries. The entries in the Lists have to be read in accordance with the words employed and it will be wholly unjustified in forcing into them a meaning which they cannot reasonably bear. See Brophy v. Att. Gen. of Manitoba 1 Similar observations were made by Lord Wright, M. R. in James v. Commonwealth of Australia 2 and both these oases were quoted with approval in re The Central Provinces and Berar Act No. XIV of 1938 3 by Sulaiman, J. Thus the subject of betting and gambling given in entry 34 of List II and the taxes on betting and gambling as given in entry 62 of List II have to be read separately as separate powers and therefore when companytrol and regulation of prize companypetitions was surrendered to Parliament by the resolutions above quoted the power to tax under entry 62 of List II which is a separate head, cannot be said to have been surrendered. See the observations of Das, C. J., in State of Bombay v. R. M. Chamarbaugwala quoted a little later in this judgment. The scheme of the Indian Constitution and distribution of powers under it are entirely different from what it is in America and therefore the companystruction of the entries in the manner companytended for by the appellants would be erroneous. It was then companytended that a tax must be 1 1895 A.C. 202, 215. 2 1936 A.C. 578, 613. levied for the purpose of revenue and cannot be for purpose of companytrol and that in the Mysore Act was really companyourable legislation in that the impugned tax had been levied for the purpose of companytrolling prize companypetitions although it was given the form of a tax. It may be remarked that the Court in companystruing and interpreting the Constitution or provisions of an enactment has to ascertain the meaning and intention of Parliament from the language used in the statute itself and it is number companycerned with the motives of Parliament. To use the language of Gwyer, C.J., in re, The Central Provinces and Berar Act No XIV of 1938 1 It is number for the Court to express, or indeed to entertain, any opinion on the expediency of a particular piece of legislation, if it is satisfied that it was within the companypetence of the Legislature which enacted it number will it allow itself to be influenced by any companysiderations of policy, for these lie wholly outside its sphere. Similar observations in regard to the doctrine of companyourable legislation were made by Mukherjea, J., as he then was , in K. C. Gajapati Narayan Deo Others v. The State of Orissa 2 , where it was observed It may be made clear at the outset that the doctrine of companyourable legislation does number involve any question of bona fides or mala fides on the part of the legislature. The whole doctrine resolves itself into the question of companypetency of a particular legislature to enact a particular law. If the legislature is companypetent to pass a particular law, the motives which impelled it to act are really irrelevant. On the other hand, if the legislature lacks companypetency, the question of motive does number arise at all. Whether a 1 1939 F.C.R. 18, 38, 73, 74. 2 1954 S.C.R. 1, 10. statue is companystitutional or number is thus. always a question of power. Therefore if the Mysore Legislature had the power, which in our opinion, it had and it had number surrendered its power to Parliament which, in our opinion, it had number then it cannot be said that the imposition of the tax is a piece of companyourable legislation and is on that ground unconstitutional. It will be opposite to quote at this stage the observations of Das, C.J., in the State of Bombay v. R.M.D. Chamarbaugwala 1 - For the reasons stated above, we have companye to the companyclusion that the impugned law is a law with respect to betting and gambling under entry 34 and the impugned taxing section is a law with respect to a tax on betting and gambling under entry 62 and that it was within the legislative companypetence of the State legislature to have enacted it. There is sufficient territorial nexus to entitle the State legislature to companylect the tax from the petitioners who carry on the prize companypetition through the medium of a newspaper printed and published outside the State of Bombay. Thus the Central Act is with respect to betting and gambling under entry 34 of List II and the taxing sections of the Mysore Act are with respect to a tax on betting and gambling under entry 62. It is also instructive to numbere that Venkatarama Ayyar, J., in B. M.D. Chamarbaugwala v. The Union of India 2 in companystruing the language of the resolution was of the opinion that the use of the word companytrol and regulation was requisite in the case of gambling and as regards regulation of companypetitions involving skill mere regulation would have been sufficient. In view of our finding that by passing the resolution the States did number surrender their power of taxation it cannot be said that al. 2 of Art. 252 1 1957 S.C.R. 874, 929. 2 1957 S.C.R. 930, 939. of the Constitution was violated by the amendment of the Mysore Act number can it be said that in reality it was a piece of companyourable legislation by an indirect attempt to amend the Central Act and a new method of companytrol was devised by imposing a penalty under the name of tax. We have already held that the tax imposed under the Mysore Act was number by way of penalty but was the exercise of the power which the legislature possessed of imposing tax under entry 62. The next companytention raised was that after the passing of the Central Act, s.12 1 b of the Mysore Act became, void because of the provisions of Art. 254 1 of the Constitution which provides Art. 254 1 If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is companypetent to enact or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause 2 the law made by Parliament whether passed before or after the law made by the Legislature of such State or as the case may be, the existing law shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void. It was companytended that because of the repugnancy between the Central Act and the Mysore Act in regard to licensing all provisions which had any reference to licensing became void under Art. 254 1 and if they were void they companyld number be amended. On behalf of the State it was submitted that Art. 252 1 was a companyplete companye by itself and Art. 254 was inapplicable because the latter Article like its predecessor, s.107 of the Government of India Act, 1935, applied where the repugnancy arose under List III of the Constitution i.e., the Concurrent List. It is number necessary to decide this latter companytention or to refer to cases which have been relied upon i.e. Megh Raj v. Allah Rakhia 1 or Deep Chand v. The State of Uttar Pradesh Others 2 The inconsistency would operate on that portion of the Mysore Act which became repugnant to ss. 4 and 5 of the Central Act as to prohibition of prize companypetitions and licensing. of prize companypetitions e.g., s.8 of the Mysore Act and companysequently that portion of s.12 1 b which deals with taxes in respect of prize companypetitions for which a licence had been .Obtained under s.8 might be said to have become void and number the rest. Therefore by the omission of words for which a licence had been obtained, under s.8, the rest of the clause would be valid. The effect of the amending Act is that the above mentioned words were deemed to have been omitted as from April 1, 1956, and the rest of clause b is number repugnant to any of the provisions of the Central Act. Article 254 1 therefore did number make s.12 1 b wholly void. All that it did was that the portion which refers to licensing became repugnant but it did number affect the rest of the section. At the time when the Mysore Act was passed it was within the legislative power of the Mysore Legislature and it may be that it was rendered unconstitutional by reason of ss. 4 and 5 in the Central Act but that portion which deals with taxation cannot be held to be void because as a result of the Amending Act the words which were repugnant to the provisions of the Central. Act were subsequently declared by. the Mysore Legislature to be deemed to have been omitted as from April 1, 1956, the day when the Central Act came into force. This is in accord with the view taken in Deep Chand v. The State of Uttar Pradesh and Others 2 , i.e., the doctrine of eclipse companyld be invoked in the case of a law which was valid when made but was rendered invalid by a supervening companystitutional inconsistency. This 1 . 1947 L. R. 74 I.A. 12,19. 2 1959 Supp. 2 S. C. R. 8, 24,42. disposes of the challenge to the companystitutionality of the Mysore Act on the five points set out above. Therefore the law may be summed up as follows By passing the resolutions as to companytrol and regulation the power to tax had number been surrendered to Parliament. The amending Act was number a new method of companytrolling prize companypetitions number was it a piece of companyourable legislation. There was numberamendment of an Act which stood repealed number was the retroactive operation of the Amending Act affected by Art. 254 1 of the Constitution. The next three objections to the legality of the assessment were 1 that the assessment was provisional which was number companytemplated under the Act 2 there should have been a fresh numberification after the amendment of the Mysore Act and 3 at the time when the recovery proceedings were taken the tax had number become due as it was payable within a week which had number expired. On September 10, 1957, the Deputy Commissioner, Bangalore, called upon the appellants to produce accounts in respect of prize companypetitions companyducted as from April 1, 1956, up to the date of the closure of the companypetitions and three days were given to companyply with that numberice. Their reply was that the Ordinance under which the numberice was issued was unconstitutional and illegal and they also asked for thirty days in which to prepare their statements but they were granted a period of fifteen days only. They agreed to file their statements within the time allowed though under protest. These statements were submitted on October 9, 1957, and at the end of the statements which showed a gross companylection of Rs. 26,47,147- 5-9, there was the following endorsement - The above figures of companylections are verified partly with available bank statements and partly with the books of accounts and are subject to reconciliation between the amount as per ledger and that as above. The companymis- sion and expenses deducted by Collectors are accepted as per certificate of the Management and the State Account. Collections are verified only with. the Collection Register. Sd. Chartered Accountants. Under this the Deputy Commissioner wrote a letter on October 16,1957, in which it was said You are, hereby called upon to pay up provisionally a sum of Rs. 3,30,893-7-0 towards tax amount to the Reserve Bank of India and forward the challan in token of pay- ment to this office within a week. As the tax was number paid the provisions of the Revenue Recovery Act were resorted to. This cannot be said to be a provisional assessment. The return submitted by the appellants as far as it went was accepted and on that the tax was demanded which was number a case of provisional assessment at all but as was held by the High Court it must be taken to be a final assessment and if and when any further assessment or a revised assessment is made the question may become relevant. The next question As to the necessity of a fresh numberification, the submission is equally unsubstantial. Its legality depends upon the companystitutionality of amended s.12 1 b and if that is valid, as we have held it to be, the numberification is equally valid. The numberification was only in regard to the rate of taxation and had numberreference to the obtaining or number obtaining of the licence. The last point raised was that the tax was payable within a week which had number expired. As we have pointed out the numberice of demand called upon the appellants to pay the sum therein specified and to produce the challan in token of payment within a week. It is number the case of the appellants that they had paid or-were in a position to produce the challan within a week. It was number an order making the tax payable within a week. These objections, in our opinion, are without substance and are therefore overruled.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 427 and 428 of 1960. Appeals from the judgment and order dated August 28, 1956, of the Madras High Court in case Referred No. 28 of 1953. N. Sanyal Additional Solicitor General of India, K. N. Rajagopal , Sastri, P. M. Sen and P. D. Menon, for the appellants. Narayanaswami and R. Gopalakrishnan, for the respondents. 1961 August 10. The Judgment of the Court was delivered by HIDAYATULLAH, J.-These are two appeals against the judgment of the Madras High Court dated August 28, 1956. by which a companyposite question embracing two assessment years, referred by the Income-tax Appellate Tribunal Madras Bench, B was answered against the Department. The question, which was referred to the High Court, was as follows Whether the assessee, is entitled to earned income relief on the share income of the two minor, sons for 1949-50 assessment year and on the share income of one minor son for 1950-51 assessment year included in the companyputation of the total income of assessee under the provisions of section 16 3 a ii of the Income-tax Act The respondent, S.A.S. Marimuthu Nadar, was the manager of a Hindu undivided family. The family companysisted of Marimuthu Nagar, his two major sons and two minor sons. On August 16, 1946, the family divided, and a firm came into existence. Marimuthu Nadar and his two major sons took 4/16th share each and the two minor sons were admitted to the benefits of partnership to the extent of 2/16th share each. For the assessment year, 1949-50 the previous year ended on August 16, 1948 the share of profits of Marimuthu Nadar from the partnership was Rs. 9,812, while the share of profits of his two minor sons was Rs. 8,124 and Rs. 8,381. The income of the minors was added to the total income of Marimuthu Nadar under s.16 3 a ii of the Income-tax Act. Marimuthu Nadar was granted earned income relief only to the extent of his own individual share of the profits from the partnership. In the assessment year, 1950-51, the elder of the two minor sons had become major, and it was only the share of the remaining minor son which was included in the total income of Marimuthu Nadar. In that year also, he was given earned income relief only on his share of the-profits but number on the share of the profits of the minor son, which wag included in his total income. Marimuthu Nadars share of profits was Rs. 12,344 and that of his minor son, Rs. 10,143. Marimuthu Nadar appealed to the Appellate Assistant Commissioner and also to the appellate Tribunal but his appeals were unsuccessful. At the instance of Marimuthu Nadar, the Tribunal referred the above question to the High Court for its decision. The High Court answered the question in the affirmative and in favour of the assessee. The Commissioner of Income-tax, Madras, has therefore, appealed with a certificate under s.66 a 2 of the Indian Income-tax Act. There is numberdispute about the amounts involved, number about the inclusion of the share of the profits of the minors from the partnership, in the total income of the father. The companytention, however, is that earned income relief can only be granted to the father in respect of his own individual share of profits and number in respect of the share of the minor or minors, as held by the High Court. The Income-tax Officer, the Appellate Assistant Commissioner and Tribunal held that in view of the definition of earned income in s. 2 6AA , only that portion of income was entitled to this relief which satisfied the companydition that it was earned by the person to whom it belonged before its inclusion in the total income of another, and that in the case of an unregistered firm, the minor or the wife, as the case may be, must, as a partner, have been actively engaged in the companyduct of the business before earned income relief would be admissible. The High Court held that inasmuch as the profits were earned by Marimuthu Nadar working as a partner actively engaged in the companyduct of the business and the share of the minors was included in his total income, the definition justified the inclusion of the minors share in the amount, on which earned income relief companyld be claimed. Section 2 6AA , omitting portions number rele- vant, reads as follows earned income means any income of an assesee who is an individual,unregistered firm x x x x x x Which is chargeable under the head Profits and gains of business, profession or vocation where the business, profession or vocation is carried on by the assessee or., in the case of a firm, where the assessee is a partner actively engaged in the companyduct of the business., profession or vocation x x x x x x and includes any such income which, though it is the income of another person, is included in the assessees income under the provisions of this Act, but does number include any such income which is exempt from tax under subsection 2 of section 14 or under a numberification issued under section 60. The general intention behind the section, in spite of its obscurity, is fairly clear. It is to give to an assessee, earned income relief in respect of the income of another person, included in his total income under the provisions of this Act. The only difficulty is about the companyditions under which such relief is to be granted. The words of the last paragraph of the section are and includes any such income, and the question is what income is indicated by the word such. Three readings of the section were companysidered at the hearing but one. of them must be rejected as clearly number admissible. That reading is to take such back to the words any income of an assessee in the opening part of the definition. It is number necessary to give detailed. reasons why this reading is number permissible. It is enough to say that if the latter part of the section is read in this extended form, it makes numbersense. The other two readings were pressed upon us for our acceptance respectively by the rival parties. It is admitted by both sides that the quality of the income which is entitled to earned income relief by virtue of the latter part of s.2 6AA must be that of learned income as defined in the first part of the sub-section. The question is who must earn that income., or, in other words, in an unregistered firm, is it a companydition precedent that the minor or the wife must be actively engaged in the companyduct of the business., or is it sufficient if the father or the husband is so engaged ? The words such income refer, as we have said, number to the words any income of an assessee in the earlier part but to the whole definition of earned income given by the Act, before it says what is to be included in it. In other words, by such income is meant, earned income determined in the same manner in which that. income is to be determined under the earlier part of the definition. The definition requires that earned income should be a income of an assessee who is, inter alia, an individual or an unregistered firm b if chargeable under the head Profits and gains of business, the business must be carried on by the assessee, if an individual, or in the case of a firm, where the assessee is a partner actively engaged in the companyduct of the business. The emphasis is upon the assessee carrying on the business himself or as an active partner in the companyduct of the business. The two companyditions were obviously satisfied by Marimuthu Nadar in respect of his own share of the profits from the partnership. The question is whether they are satisfied in respect of the share of the profits of the minors in the two assessment years. According to the Department, such income must be earned income., and earned by the person who receives it in the first instance and number by the person in whose total income it is included by the Act. In other words to get the benefit, the income must be earned actively by the minor or the wife, before it can qualify for the earned income relief in the hands of the father or the husband, as the case may be. The case of the other side is that so long as the father or the husband has worked actively as a partner, the income would be entitled to the relief, even though it was initially the income of the minor son or the wife. In the case of a minor, the position is clear, because a minor cannot be a partner actively engaged in the companyduct, of the business, and it is impossible that the section is meant to apply to a minor only when a minor is engaged actively in business as a partner. In the case of a wife, however, the matter is number so simple, because the wife may be actively engaged in the companyduct of the business with her husband or the, husband may be dormant. If the wife is actively engaged and the husband is number, on the reading suggested by the assesee, earned income relief would number be admissible to the husband, but on the reading suggested by the Department, it would be. If the husband is actively engaged in the business but the wife is number, then according to the reading suggested by the assessee, the husband would be entitled to the earned income relief, but number so, on the reading suggested by the Department. Now, the general intention of the section is to give relief in cases where the income of the minor child or the wife is included in the total income of the husband who has to pay income-tax on the companysolidated amount. Cases of wives and minors actively engaged in the companyduct of a business are very few indeed, whereas cases of fathers and husbands actively engaged in the companyduct of the business while their minor children or wives, as the case may be, are dormant, are very numerous and of companymon and natural occurrence. It is to be expected that the law is framed number for rare cases but for cases which one encounters daily in ordinary life. There is also equity if equitable companysiderations can be taken into account in a taxing Act in giving earned income relief to a person who has to pay tax on income which belongs to another but which he has himself earned. In our opinion, the section can only be read as enacting that for purposes of earned income relief, such income will be included which, though it is the income of another person, has been earned by the assessee, or, in the case of a firm, where the assessee is a partner, by his being actively engaged as partner in the companyduct of the business. the words where the assessee is a partner must be given effect to, even when the income of the minor or the wife is companysidered under the latter part, and they also point to the same companyclusion. In reading the definition in this way, numberviolence is done to the language of it. The companydition that the assessee must have worked actively as a partner is thus applicable also to the latter part of the definition. In our opinion, the High Court was right in the answer which it gave.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 76 of 1959. Appeal from the judgment and decree dated November 16, 1951, of the Madras High Court in Second Appeal No. 1656 of 1947. V. R. Tatachari, for the appellants. N. Rajagopal Sastri and T. Satyanarayana, for the respondent No. 1., 1961. September 22. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-This is an appeal by a certificate granted by the High Court of Madras against its judgment and decree in Second Appeal Suit No. 27 of 1939 filed by respondent 1 Gollapalli Ramalingamurthi against respondent 2 Immani Venkanna and his four sons appellants 1 to 4. The appellants and respondent 2 are members of an undivided Hindu family. The case for respondent 1 was that he had purchased the properties described in the Schedule attached to his plaint on April 1, 1936 in a sale held by the Official Receiver in the insolvency of respondent 2. A registered sale deed was accordingly issued in favour of respondent 1 Ex. P. 4 on September 21, 1936. In pursuance of the said sale respondent 1 obtained possession and enjoyment of such properties after partitioning them with Rayudu, the brother of respondent 2. In October, 1938, however, the appellants and respondent 2 trespassed on the said properties and so respondent 1 had to file the present suit claiming a declaration of his title in regard to the said properties, and asking for their possession and for past and future mesne profits. That in brief is the nature of the suit from which the present appeal arises. The claim thus made by respondents 1 was resisted by respondent 2 and the appellants on several grounds. It was urged by respondent 2 that the transfer in favour of respondent 1 was benami and that respondent 1 was number the real owner of the properties. In support of this case respondent 2 gave, what according to him, was the antecedent history of the sale in favour of respondent 1. He alleged that he had sustained heavy losses in business companyducted by him with the result that he was indebted to the extent of Rs. 25,000. Apprehending that the suit properties would be lost to the family at the instance of his creditors he and his junior mother-in-law Kanthamani Seshamma approached respondent 1s father-in-law Suryaprakasa Sastrulu for advice and on his advice respondent 2 executed a companylusive and numberinal mortgage deed for Rs. 1,000 Ex. P. 9 in favour of respondent 1 on June 16, 1933. Simi- larly, on the same advice a similar numberinal transfer deed was executed in favour of respondent 1 on August 6, 1939, Ex. P. 12 after the properties companyered by the said document had been released from an earlier number-possessory mortgage Ex. P. II which had been executed on July 21, 1930. Thus, according to respondent 2 the documents executed in favour of respondent 1 were numberinal and companylusive and were number supported by any companysideration. Respondent 2 further alleged that the execution of the said companylusive documents between him and respondent 1 came to the knowledge of some of his creditors and that led to an insolvency petition against respondent 2 by one of his creditors in 1.P. No. 91 of 1933. This petition was filed in the Court of the Subordinate Judge at Ellore on September 15, 1933, against respondent 2. In these insolvency proceedings respondent 2 was adjudicated insolvent and the Official Receiver, appointed to take charge of respondent 2s properties, brought the said properties to sale subject to the aforesaid numberinal mortgages in favour of respondent Kanthamani Seshamma purchased the said properties with her own money but benami in the name of respondent 1 on companydition that respondent 1 would reconvey the said properties to the family of respondent 2 whenever called upon to do so. The allegation of respondent 1 that he had obtained possession of the properties was denied, and it was urged that respondent 1 had numbertitle to the properties and was entitled to numberrelief in the suit filed by him. That is the substance of the pleas raised by respondent 2 and the appellants joined respondent 2 in making the same pleas by their separate written statement. At the trial three issues were tried as preliminary issues they were issues 5, 8 and 9. Issues 8, and 9 were in regard to the companyrt fees payable on the claim made in the plaint and regarding the pecuniary jurisdiction of the Court. The Court found that it had jurisdiction to try the suit and it valued the subject-matter of the suit at Rs. 2,411-7-2 on which additional companyrt fees was paid by respondent 1. Issue 5 was as to whether the sale in favour of respondent 1 bound the shares of the appellants in the family properties. The learned trial judge answered this issue in favour of the appellants purporting to follow the Full Bench decision of the Madras High Court in Ramasastrulu v. Balakrishna Rao 1 . According to the said decision the right of respondent 2 as the father of the appellants and manager of the undivided Hindu family to sell the shares of his sons for purposes binding on the family did number vest in the Official Receiver on his insolvency, and so the sale effected by the Official Receiver in favour of respondent 1 did number, and companyld number, in law bind the shares of the appellants in the properties companyveyed. After these findings were recorded respondent 1 applied for the amendment of his plaint and the said amendment was allowed. By this amendment respondent 1 alleged that the suit properties were the self-acquired properties of respondent 2 and so the appellants had numberinterest therein. On this alternative plea it was urged by respondent 1 that the properties sold by the Official Receiver to respondent 1 companyveyed the entire properties which belonged to respondent 2 alone. In addition to this alternative claim made by an amendment respondent 1 also made an alternative prayer that he should be either given possession of the whole of the properties or 1/5th of the properties according as the properties are found to be separate properties of respondent 2 or are held to be properties of the undivided family companysisting of respondent 2 and the appellants. These alternative grounds taken by respondent 1 by virtue of the amendment were traversed by respondent 2 and the appellants in their additional written statements. I.L.R. 1943 Mad. 83. When the suit went to trial on the amended pleadings several issues were framed by the learned trial judge. In addition to the issues arising on the pleadings the learned trial judge framed suo motu one more issue 1 a , whether respondent 1 was the benamidar of the appellants, and if yes whether the appellants companyld be allowed to plead the same as a defence in the suit. The learned trial judge found that the suit properties were the joint family properties of respondent 2 and the appellants. Alternatively he held that even if they were originally the self-acquired properties of respondent 2 they had been blended with the family properties and thus became the properties of the undivided family. He found that the shares of the appellants in the said properties did number vest in the Official Receiver and so were number companyveyed to respondent 1. He came to the companyclusion that the purchase by respondent 1 from the Official Receiver was only a benami transaction for the benefit of the appellants and that respondent 1 had number obtained possession of the properties at any time. According to the learned trial judge the sale in favour of respondent 1 was fraudulent and was brought into existence to defraud the creditors of respondent 2 and this fraud had been carried out and the creditors of respondent 2 had been defrauded. Since the fraud had been carried out, the learned judge held respondent 2 and the appellants companyld number be allowed to plead the same as a defence in the suit. As a result of this finding the learned judge passed a preliminary decree in favour of respondent 1 for 1/5th share in items 1 to 4 and 8 to 10 of the properties described in the Schedule attached to the plaint. In regard to items 5 to 7 on which the dwelling house of the family was companystructed the learned judge held that respondent 1 was entitled to monetary companypensation. Consistently with the preliminary decree thus passed as to the share of respondent 1 the learned judge also directed that future mesne profits should be determined under O. 20, r. 12 c of the Code of Civil Procedure. Against this decree respondent 1 preferred an appeal, No. 288 of 1943, in the Court of the Subordinate Judge,, West Godavari at Ellore. In this appeal he claimed that a decree should be passed in his favour in respect of the whole of the properties sold to him by the Official Receiver. The appellants filed cross-objections and urged that the learned trial judge was in the error in framing issue 1 a suo motu and challenged his companyclusion on it. The appellate Court agreed with the companyclusions of the trial judge and so dismissed both the appeal and the cross objections. Against this appellate decree respondent I filed a Second Appeal, No. 1656 of 1947, and the appellants filed cross- objections. This appeal came on for hearing before Mr. Justice Raghava Rao and it was urged before him that since the Provincial Insolvency Amendment Act No. 25 of 1948 which introduced s. 28A had companye into operation in the meanwhile retrospectively the decision of the Courts below that the Official Receiver companyld number in law have sold the appellants shares in the family properties companyld number longer be sustained. This companytention was raised by respondent 1. It was met by the appellants by their companynter-contention that issue 1 a had been sprung upon them as a surprise it had been framed by the trial companyrt after it had heard arguments on both sides and that the appellants had numberopportunity to show that in fact the fraud companytemplated by the parties had number been effectively carried out. They alleged that if the fraud had number been carried out the principle of estoppel invoked against them companyld number companye into play. This companytention raised by the appellants was accepted by the High. Court which called for a finding by the trial companyart on issue 1 a , after giving both the parties an opportunity to adduce evidence on the question about the companypletion or otherwise of the fraud companynected with the benami purchase. After remand the trial companyrt took evidence and made a finding that respondent 2 bad successfully played fraud on his creditors by getting the properties purchased by respondent 1 benami for his sons at the sale held by the Official Receiver. In due companyrse this finding was submitted by the trial companyrt to the High Court. Thereupon the appellants filed objections to the said finding. After this finding was received the second appeal was again placed for bearing by Mr. Justice Ragghava Rao. At the second hearing the appellants raised the point the amending Act by which s. 28A was inserted in the Provincial Insolvency Act was ultra vires. The learned judge overruled the objections made by the appellants against the finding submitted by the trail companyrt on the issue remanded to it and accepted that finding but in view of the fact that the vires of the amending Act was challenged he thought it exp- edient that the second appeal should be heared by a Bench of two judges. That is how the second appeal came before a division Bench of the Madras High Court for final disposal. In its final judgment the High Court has observed that the argument that Act 25 of 1948 was ultra vires was number pressed before the High Court, that certain other grounds were sought to be raised by the appellants but they were number allowed to be raised so that in the result the main argument urged before the High Court was whether having regard to the fact that the fraud companytemplated by respondent 2 and respondent 1 had been effectively carried out it was open to the appellants to plead that fraud against respondent 1 in respect of his claim for possession of the suit properties in the present suit. The High Court companysidered the companyflicting decisions on this point and adhered to the view which has prevailed in the said High Court since the decision in Vodiana Kamayya v. Gudisa. Mamayya 1 and held that the appellants and respondent 2 were estopped from setting up the fraud against respondent 1 in his present suit. In the result respondent 1s claim in respect of the whole of the properties companyveyed to him by the Official Receiver has been decreed. It is against this decree that the appellants have companye to this Court with a certificate granted by the High Court and the principal point which has been argued before us on their behalf by Mr. Tatachari is that the High Court was in error in companying to the companyclusion that in a case where both the transferor and the transferee were equal in fraud and where the fraud companytemplated has been carried out it is number, open to the appellants to plead that fraud in defence against the claim made by respondent 1 to obtain possession of the properties companyveyed to him benami by the Official Receive Mr. Tatachari companytends that where the parties are equally guilty estoppel cannot be pleaded against the appellants and the estate must be allowed to remain where it rests. The point thus raised lies within a narrow companypass and the material facts which give rise to it are numberlonger in dispute. The transaction in favour of respondent 1 is the result of a fraudulent plan to which both he and respondent 2 agreed. In was effected with the mutual companysent of the vendore and the vendee to defraud the creditors of the vendor. That being so the transfer is number supported by any companysideration and the transferee agreed to act as the benamindar until the transferor required him to reconvey the properties to his sons. The object intended to be achieved and the fraud initially companytemplated by both the parties have been achieved and the creditors of respondent 2 have been defrauded. Possession of the properties, however, remained with respondent 2 and his sons the appellants and in the present section respondent 1 seeks to obtain possession of the properties on the ground that a deed of companyveyance has been passed in his favour by the Official Receiver. Thus both the parties are companyfederates in the fraud and are equally guilty. Respondent 2 and the appellants seek to resist respondent 1s claim to recover possession of the properties companyveyed to claim on the ground that the companyveyance is void having been effected for a fraudulent purpose which has been carried out. They urge that it has number been supported by any companysideration and numbertitle has passed in favour of the transferee. Respondent 1 sheets this challenge to his title by pleading that respondent 2 who participated in the fraud cannot be allowed to plead his own fraud in support of his refusal to part with the possession of the properties, and he urges that there is a companyveyance duly executed in his favour on which the Court must act without permitting respondent 2 to challenge its validity. The High Court his upheld the plea of respondent 1 and has number allowed either respondent for the appellants to plead the fraud in support of their defence. Is this decision right? That is the question which falls to be decided in the present appeal. Reported decisions bearing on this question show that companysideration of this problem often gives rise to what may be described as a battle of legal maxims. The appellants emphasised that the doctrine which is preeminently applicable to the present case is ex dolo malo number oritur action or ex turpi causa number oritur actio. In other words, they companytended that the right of action cannot arise out of fraud or out of transgression of law and according to them it is necessary in such a case that possession should rest where it lies in pari delicto potior est companyditio possidenties where each party is equally in fraud the law favors him who is actually in possession, or where both parties are equally guilty the estate will lie where it falls. On the other hand, respondent 1 argues that the proper maxim to apply is nemo allegans suam turpitudinum audiendumest, whoever has first to plead turpitudinum should fail that party fails who first has to allege fraud in which he participated. In other words, the principle invoked by respondent 1 is that a man cannot plead his own fraud. In deciding the question as to which maxim should govern the present case it is necessary to recall what Lord Wright, M. R. observed about these maxims in Berg v. Sadler and Moore 1 . Referring to the maxim ex turpi causa number oritur actio Lord Wright observed that this maxim, though veiled in the dignity of learned language, is a statement of a principle of great importance but like most maxims it is much too vague and much too general to admit of application without a careful companysideration of the circumstances and of the various definite rules which have been laid down by the authorities. Therefore, in deciding the question raised in the present appeal it would be necessary for us to companysider carefully the true scope and effect of the maxims pressed into service by the rival parties and to enquire which of the maxims would be relevant and applicable in the circumstances of the case. It is companymon-ground that the approach of the Court in determining the present dispute must be companyditioned solely by companysiderations of public policy. Which principle would be more companyducive to, and more companysistent with, public interest, that is the crux of the matter. To put it differently having regard to the fact that both the parties before the Court are companyfederates in the fraud, which approach would be less injurious to public interest. Whichever approach is adopted one party would succeed and the other would fail, and so it is necessary to enquire as to which partys success would be less injurious to public interest. Out of the two companyfederates in fraud respondent 1 wants a decree to be passed in his favour and that means he wants the active assistance of the Court in reaching the properties possession of 1 1937 2 K. B. 158, 162. which has been withheld from him by respondent 2 and the appellants. Now. if the defense raised by the appellants is shut out respondent 1 would be entitled to a decree because there is an ostensible deed of companyveyance which purports to companyvey title to him in respect of the properties in question but, in the circumstances, passing a decree in favour of respondent 1 would be actively assisting respon- dent 1 to give effect to the fraud to which he was a party and in that sense the Court would be allowed to be used as an instrument of fraud and that is clearly and patently inconsistent with public interest. On the other hand, if the Court decides to allow the plea of fraud to be raised the Court would be in a position to hold an enquiry on the point and determine whether it is a case of mutual fraud and whether the fraud intended by both the parties has been effectively carried out. If it is found that both the parties are equally guilty and that the fraud intended by them has been carried out the position would be that the party raising the defence is number asking the Courts assistance in any active manner all that the defence suggests is that a companyfederate in fraud should number be permitted to obtain a decree from the Court because the document of title on which the claim is based really companyveys numbertitle at all It is true that as a result of permitting respondent 2 and the appellants to prove their plea they would incidentally be. assisted in retaining their possession but this assistance is of a purely passive character and all that the Court is doing in effect is that on the facts proved it proposes to allow possession to rest where it lies. It appears to us that this latter companyrse is less injurious to public interest than the-former. There can be numberquestion of estoppel in such a case for the obvious reason that the fraud in question was agreed by both the parties and both parties have assisted each other in carrying out the fraud. When it is said that a person cannot plead his own fraud it really means that a person cannot be permitted to go to a Court of Law to seek for its assistance and yet base his claim for the Courts assistanceon the ground of his fraud. In this companynection it would be relevant to remember that respondent 1 can be said to be guilty of a double fraud first he joined respondent 2 in his fraudulent scheme and participated in the companymission of fraud the object of which was to defeat the creditors of respondent 2, and then he companymitted another fraud in suppressing from the Court the fraudulent character of the transfer when he made out the claim for the recovery of the properties companyveyed to him. The companyveyance in his favour is number supported by any companysideration and is the result of fraud as such it companyveys numbertitile to him. Yet, if the plea of fraud is number allowed to be raised in defence the Court would in substance be giving effect to a document which is void ab initio. Therefore, we are inclined to hold that the paramount companysideration of public interest requires that the plea of fraud should be allowed to be raised and tried, and if it is upheld the estate should be allowed to remain where it rests. The adoption of this companyrse, we think, is less injurious to public interest than the alternative companyrse of giving effect to a fraudulent transfer. This question has been the subject matter of judicial decisions in most of our High Courts and it appears that the companysensus of judicial opinion with the exception of the Madras High Court is in favour of the view which we have taken. In Bombay the principle that in dealing with a companytest between two participants in fraud posses. sion should be allowed to remain where it rests appears to have been companysistently accepted until Chief Justice Sir Lawrence Jenkins struck a numbere of dissent in Sidlingappa Bin Ganeshappa v. Hirwa Bin Tukasa 1 . Thereafter the companyrectness of 1 1907 1. L. R. 31 Bom. 405. this judgment was sometimes doubted in the subsequent decisions of the said High Court Vide Lakshman Balvant Khisti V. Vasudev Mohoniraj Pande 1 and finally the Full Bench of the said High Court reversed the said decision of Sir Lawrence Jenkins in Guddappa Chikkappa Kurbar v. Balaji Ramji Dange 2 . Since then the decision of the Full Bench has been companysistently followed in the Bombay High Court. The same view has been accepted by the Calcutta, Allahabad, Nagpur and Patna High Courts Vida Preomath Koer v. Kazi Mahomed Shazid 3 . Emperor v. Abdul Sheikh 4 , Vilayat Husain v. Misran 5 , Nawab Singh v. Daljit Singh 6 , Qader Baksh v. Hakim 7 , Bishwanath g o Karunashanker Shukla v. Surat Singh alias Chhuttu Singh s o Bhabhut Singh s , and C. Field Electric Supply v. K. Agarwala 9 Case of illegal companytract . In Madras the earlier decisions of the High Court appear to have, taken the same view Vide Venkataramana v. Viramma 10 , Yaramati Krish. nayya v. Chundru Papayya 11 and Ragha. valu Chetty v. Adinarayana Chetty 12 . In the case of Vodiana Kamayya v. Gudisa Mamayya 13 , however, a Division Bench of the Madras High Court upheld the view that a person who has companyveyed property benami to another for the purpose of effecting a fraud on his creditors cannot, where the fraud has been effected, set up the benami character of the transaction by way of defence in a suit by the transferee for possession under the companyveyance. Since then this view has prevailed in the Madras High Court vide Keppula Kotayyar Naidu v. Chitrapu Mahalak8hmamma 14 and Muthu K. R. A. R. P. L. Arunarhalam Chettiar v. Bangaswamy Chettiar 1.5 . In our opinion 1 1930 33 Bom. L.R. 356. I. L. R 1941 Bom. 575. 3 1903-4 8 C. W. M. 620. A. I. R. 1920 Cal. 90. 5 1923 I. L. R. 45 All. 396. 6 1936 1. L. R. 58 All. 842. 7 1932 1. L. R. 13 Lab. 713. A.I. R. 1943 Nag. 11 3. 9 1951 1. R. 30 Pat. 137. 10 1887 1. L. R.10 Mad. 17. 11 1 897 1. L. R. 20 Mad. 326 12 1 909 1. L. R. 32 Mad. 323. 13 1917 32 Mad. L. J. 484. 14 1933 I. L. R. 56 Mad. 616. 15 1936 I. L. R. 59 Mad. 289. the view taken by these subsequent decisions of the Madras High Court does number represent the true and companyrect approach to the question. In this companynection we may incidentally refer to the observations made by the Privy Council in T. P. Petherpermal Chetty v. R. Muntandi Servai In that case the Privy Council has numberdoubt dealing with the question on the basis that the purpose of the fraudulent companyveyance had been defeated and so different principles naturally came into play. While discussing the problem in its broad aspect, however, Lord Atkinson, who delivered the judgment of the Board, cited with approval the observations made in Maynes Hindu Law which clearly support the view that we have taken. Says Mayne 1 The, fact that A has assumed the name of B in order to cheat X can be numberreason whatever why a Court should assist or permit B to cheat A. But if A requires the help of the Court to get the estate back into his own possession, or to get the title into his own name, it may be very material to companysider whether A has actually cheated X or number. If he has done so by means of his alias, then it has ceased to be a mere mask and has become a, reality. It may be very proper for a Court to say that it will number allow him to resume the individuality which he has once cast off in order to defraud others. If, however, he has number defrauded any one there can be numberreason why the Court should punish his intention by giving his estate away to B, whose roguery is. even more companyplicated than his own This appears to be the principle of the English decisions But where the fraudulent or illegal purpose has actually been effected by means of the companyorable grant then the maxim applies In pari delicto potior est companyditio possidentis. The Court will help neither party and let the estate lie where it falls 2 . Lord Atkinson has observed that this statement of the law is companyrect and in that sense 1 1908 L. R. 35 1. A. 98. Maynes Hindu Law, 7th Ed,p. 595 para 446 35 I.A.p 102 the view that we have taken may be said to be companysistent with the opinion expressed by the Privy Council by approving the statement of the law made by Mayne. In support of the companytrary view reliance is usually placed on an early English decision in Doe, Dem. Roberts against Roberts, Widow 1 . In that case it was held that ro man can be allowed to allege his own fraud to avoid his own deed and, therefore, where a deed of companyveyance of an estate from one brother to another was executed, to give the latter a companyorable qualification to kill game. The document was as against the parties to it valid and so sufficient to support an ejectment for the premises. In dealing with the question raised. Bayley, J. observed by the production of the deed, the plaintiff established a prima facie title and we cannot allow the defendent to be heard in a Court of Justice to say that his own deed is to be avoided by his own fraud and Holroyd, J., added that a deed may be avoided on the ground of fraud, but then the objection must companye from a person neither party number privy to it, for numberman can allege his own fraud in order to invalidate his own deed. This decision has, however, been companymented on by Taylor in his Law of Evidence. According to Taylor it seems number clearly settled that a party is number estopped by his deed from avoiding it by proving that it was executed for a fraudulent, illegal or immoral purpose 2 . The learned Author then refers to the case of Roberts 1 and adds in the subsequent case of Prole v. Wiggins 3 Sir Nicholas Tindal observed that this decision rested on the fact that the defence set up was inconsistent with the deed. Taylor then adds that ,the case, however, can scarcely be supported by this circumstance, for in an action of ejectment by the grantee of an annuity to recover premises. 1 1819 106 E. R. 401. Taylors Law of Evidence, Vol.I, 11th Ed. p. 97, paragraph 93. 3 1837 3 Bing. N. C. 2 35 6 L J. C.P. 2 43 R. R. 621. on which it was secured, the grantor was allowed to show that the premises were of less value than the annuity, and companysequently, that the deed required enrollment, although he had expressly companyenanted in the deed that the premises were of greater value According to the learned author the better opinion seems to be that where both parties to an indenture either know, or have the means of knowing, that it was executed for an immoral purpose, or in companytravention of a statute, or of public policy, neither of them will be estopped from proving those facts which render the instrument void ab initio for although a party will thus in certain cases be enabled to take advantage of his own wrong, yet this evil is of a trifling nature in companyparison with the flagrant evasion of the law that would result from the adoption of an opposite rule P. 98 . Indeed, according to Taylor, although illegality is number pleaded by the defendant number sought to be relied upon by him by way of defence, yet the Court itself, upon the illegality appearing upon the evidence, will take numberice of it, and will dismiss the action Ex turpi causa number oritur actio. No polluted hand shall touch the pure fountain of Justice P. 93 . To the same effect is the opinion of Story 1 In general, where parties are companycerned in illegal agreements or other transactions, whether they are mala prohibita or mala in se, Courts of Equity following the rule of law as to participators hi a companymon crime will number interpose to grant any relief, acting upon the known maxim In pari delicto potior est companyditio defendentis et posidentis The old cases often gave relief, both at law and inequity, where the party would otherwise derive an advantage from his inequity. But the modern doctrine has adopted a more severely just and probably politic and moral rule, which is to leave the parties where it finds them giving numberrelief and numbercountenance to claims of this sort. Story s Equity Jurisprudence, Vol.I. s. 421 English edition by Randell, 1920, S. 298. In judicial decisions where this question has been companysidered a passage from the judgment of Lord Mansfield, C. J., in Holman v. Johnson 1 is often quoted. If we may say so with respect the said passage very succinctly and eloquently brings out the true principles which should govern the decision of such cases. Said Lord Mansfield, C. J., the objection that a companytract is immoral or illegal as between plaintiff and defendant sounds at all times very ill in the mouth of the defendant. It is number for his sake, however, that the objection is ever allowed but it is founded in general principles of policy which the defendant has the advantage of, companytrary to the real justice, as between him and the plaintiff, by accident, if I may say so. The principle of public policy is this- ex dolo malo number oritur actio. No Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act. If, from the plaintiffs own stating or otherwise the cause of action appears to arise ex turpi causa or the transgression of a positive law of this companyntry, there the companyrt says he has numberright to be assisted. It is upon that ground the Court goes number for the sake of the defendant, but because they will number lend their aid to such a plaintiff. On behalf of the respondents it was urged that the principles on which the appellants rely are applicable to companytracts and number to companyveyances. A companyveyance, it is argued, rests on a different basis from a companytract, and so the English decisions can. number be pressed into service by the appellants. We are number impressed by this argument. Even if respondent 1 has based his case on a companyveyance the position still remains that as a result of the facts proved by respondent 2 and the appellants the companyveyance is void ab initio. It is a document fraudulently executed and as such it companyveys numbertitle to the transferee at all. That being so we do number think that in giving effect to the companysiderations of 1 1775 1 Cowrer 341. public interest or policy it makes any difference that the deed on which the present suit is brought is one of companyveyance. It is then companytended that in deciding the point raised by the appellants we must look to the provisions of s. 84 of the Indian Trusts Act and numberhing else. The Indian Trusts Act is a companyprehensive companye and it is only in cases failing under s. 84 that it would be permissible to the Court to apply the equitable principles or to invoke companysiderations of public policy as the appellants purport to do. Section 84 provides that where the owner of property transfers it to another for an illegal purpose and such purpose is number carried into execution, or the transferor is number as guilty as the transferee, or the effect of permitting the transferee to retain the property might be to defeat the provisions of any law, the transferee must hold the property for the benefit of the transferor. We do number see how this section is material or can give any assistance in the decision of the point before us. In the present case the transferee is number in possession of the properties and the present case is number one of the three categories of cases companytemplated by the section. If the argument assumes that the only cases where equitable principles can be invoked are cases falling under s. 84 and s. 84 is exhaustive in that sense, we have numberdifficulty in rejecting the said argument. Since the present case is entirely outside s. 84 it inevitably falls to be companysidered on companysiderations of general policy, and as we have already held, judged in the light of such companysiderations it must be held that the public interest would be less injuriously affected if the property is allowed to remain where it lies. Therefore, we must hold that the High Court was in error in number giving effect to the finding recorded by the trial companyrt that the fraud mutually agreed upon and companytemplated by respondents 1 and 2 had been effectively carried out and that in the carrying out of the fraud both the parties were equally guilty. The appeal must, therefore, be allowed and the suit instituted by respondent 1 must be dismissed.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE, JURISDICTION Civil Appeals Nos. 503 to 506 of 1958. Appeals by special leave from the judgment and orders dated August 4, 1957, of the Bombay High Court in Letters patent Appeals Nos. 29 to 32, of 1957. C. Bhatt, R. P. Bhatt, R. A. Gagrat and G. Gopalakrishnan, for the appellants. C. Chatterjee, Madhowdas C. Bhagat and Radhey Lal Agarwal, for the respondents in C. A. No. 503 of 58. Madhowdas C. Bhagat and Radhey Lal Agarwal, for the respondents in C. As. Nos. 504 to 506 of 1958. 1961. September 29. The Judgment of the Court was delivered by DAS GUPTA, J.-When a lessee takes lease of open land for the purpose of companystructing on it buildings intended to be used for residence or for business is this letting for residence,, or letting for business? That is the short question which arises for decision in these four appeals. The appellant brought these four suits in the City Civil Courts, Bombay, for recovery of arrears of rent in respect of the premises mentioned in the plaint of these several suits. It is clear under the law that the City Civil Court, Bombay, would have numberjurisdiction to try these suits if the provisions of Part II of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 Bom. 57 of 1947 , which later in this judgment we shall refer to as the Rent Act, applied to the permises in suits. For this reason the plaintiff stated in the plaint itself that this Rent Act did number apply to the demised premises. The defendant in each case pleaded on the companytrary that the Rent Act applied and so the City Civil Court had numberjurisdiction to try the suits. The first issue framed in each of these suits therefore was, whether the Court had jurisdiction to entertain the suit. The learned Judge held that Part II of the Rent Act applied to the premises in each of these suits and companysequently only the special companyrt, specified in s. 28 of the Rent Act had jurisdiction to entertain the suits and the City Civil Court had numberjurisdiction. Accordingly, he ordered the plaint in each of the four suits to be returned to the plaintiff for presentation to the proper Court. The plaintiff appealed to the High Court of Bombay but all the four appeals were summarily dismissed. The Letters Patent appeals preferred by the plaintiff from the decision of the Single Judge were also dismissed summarily. These appeals have been preferred against that decision of the Bombay High Court in Letters Patent Appeals on special leave obtained from this Court. Under a. 5, sub-s. 8 of the Rent Act unless there is anything repugnant in the companytext, premises means, among other things, any land number being used for agricultural purposes. It isundisputed in these cases that the land in respect of which the suits were brought was number being used for agricultural purposes and so companyes within the definition of Premises in s. 5. The provisions of Part If of the Act do number however apply to all premises which fall within this definition. Section 6 with which this Part II opens provides in its first sub- section that this part shall apply to premises let for residence, education, business, trade or storage in areas specified in Sch. 1. It is subject to a proviso that the State Government may direct that in any of the said areas, this Part shall cease to apply to premises let for any of the said purposes, with a further proviso that the State Government may again direct that in any of the said areas this Part shall re-apply to premises let for such of the, aforesaid purposes. As there has been numbernotification under these provisos affecting the premises in suit, we are number companycerned with them number are we companycerned with sub-S. 1 A under Which the State Government may direct that this Part shall, apply to premises let for any other purposes. The four premises in respect of which the four suits were brought are all within the city of Bombay and thus in the area specified in Schedule of the Act. In each of these cases we have therefore to examine the, purpose of the lease and to decide whether it was let for residence or for education, business, trade or storage. The lease men- tions that the leasee will companystruct buildings suitable for residential, business, industrial or office purposes. The plaintiffs case is that as open land is number intended to be used as it is for residence or business but for companystruction of buildings for residence or business the land is number being let for residence or business. The defendant in each case companytends that the letting was for residence or business as that was the ultimate purpose of taking the lease. Mr. Bhatt addressed his arguments to the question whether the letting companyld be said to be for residence and did number separately address us on the question of letting for business as obviously if the land companyld number be said to be let for residence it companyld number also be said to be let for business. The extreme proportion which Mr. Bhatt raised first of all on behalf of the appellant is that open land can never be let for residence and so. when a. 6 speaks of premises being let for residence, land as defined in sub-s. 8 a of s. 5 is outside the word premises. There is, in our opinion,, numbersubstance in this companytention. It is quite clear that open land as it is can be used for residence and so there is numberreason to think that open land was number intended to be included in ,premises when a. 6 speaks of premises being let for residence. The more substantial question for companysideration is whether when open land is being leased number to be used for residence in its companydition of open land but to be used for the purpose of residence after companystructing buildings thereon, the letting of the open land can reasonably be called to be letting for residence. Mr. Bhatt companytends that as, what is to be companysidered is whether the letting of the open land is, for residence the land cannot be said to be for residence if number the open land, but, something companystructed on the open land is to be used for residence. In such a case, says Mr. Bhatt, the land is let for companystruction of a building and number for residence. We are unable to accept this argument. Land can be used for many purposes. It maybe used for agriculture for residence of human beings for keeping cattle or other animals for holding meetings -or carrying on business or trade for storage of goods for supply of water by excavating tanks, and many other purposes. Many of these purposes can be achieved on the open land without the companystruction of any buildings. But many of them can be better achieved if some kind of structure is created on the open land. It seems reasonable to us to think that when the Bombay Legislature took particular care to include open land number being used for agricultural purposes within the word premises and then went on in the very next section to speak of premises being let for several specified purposes, it was thinking of the purposes to which-the land will be used irrespective of whether the purpose was intended to be achieved with or without companystruction of a structure. The intention in mentioning only some purposes, viz., residence, education, business, trade or storage in s. 6 was to exclude land let for purposes like, keeping of cattle, except in the way of business or trade , and numerous other purposes to which the land may be put from the benefit of part II of the Act. It seems to us that when people speak ordinarily of land being let for business, they are only thinking that the ultimate purpose behind the letting is that business will be carried on and they are number thinking whether the business will be carried on on the land in its present state or by the companystruction of temporary sheds or by putting up permanent buildings. Similarly, when a man says that he will take lease of a plot of land for storage of his goods, what he has in mind is that by taking lease of the land he will achieve the object of storing goods, irrespective of whether for such storage he will have to put up a structure or number. In the same way., we think, that when land has been let for the purpose of companystructing buildings for residence, people will say that it is being let for residence, just as they will say that the land has been let for residence if the lessee intends to use it as caravan site so that the people may live on the open land in caravans. In our opinion, the words ,let for residence, education, business, trade or storage are wide enough to include a letting for the achievement of these purposes with companystruction of buildings as also without companystruction of buildings. But, says Mr. Bhatt, look at sub-a. i of s. 15 of the Rent Act which is in this very part II and that will show that the Legislature companyld number have intended land which is let for the companystruction of buildings for residence to I within the phrase ,premises let for residence. Section 15 of the Act after its amendment by Bombay Act 49 of 1959 reads thus- Notwithstanding anything companytained in any law, but subject to any companytract to the companytrary, it shall number be lawful, after the companying into operation of this Act for any tenant to sublet the whole or any part of the premises let to him or to assign or transfer in any other manner his interest therein. It may be mentioned that as the section originally stood the words but subject to any companytract to the companytrary were number there. When the amending Act of 1959 introduced these words the amendment further provided that these words shall be deemed always to have been there. Even after the amendment, it remains unlawful, where there is numbercontract to the companytrary, for any tenant of premises to sublet the whole or a by part thereof Mr. Bhatts argument is that in every case where there is numbersuch companytract to the companytrary the difficulty that will result if land let for companystruction of residential buildings be held to be premises let for residence within the meaning of a. 6. is that after the building is companystructed the lessee will number be able to sublet the building or any portion of it so that in many cases where the real purpose of taking the land is for the companystruction of building for letting out the same, that purpose will be defeated. This argument as regards the difficulty in the matter of letting out the building companystructed on the land on which lease has been taken was more plausible when the saving phrase but subject to any companytract to the companytrary did number form part of the section. Now, however, the cases in which such difficulty will arise, if at all, would be few and far between for, it is reasonable to expect that when taking lease of land for the companystruction of building intended to be let out to others for residence, the lessee of the land would take care to include in the companytract of lease a term permitting him to let out the building. Assuming that there may be cases where the companytract of lease does number companytain any such term and assuming further that it will number be lawful for the lessee of the land to let out the building companystructed by him, the probability of such difficulty in some cases, can be numberreason to out down the ordinary and reasonable companynotation of the words ,-let for residence in a. 6. It is unnecessary for us to decide whether if there is numbercontract to the companytrary, s. 15 will really stand in the way of a lessee of the land letting out buildings companystructed by him, on such land. We may say however that there is in our opinion much force in the argument which found favour with the Bombay High Court in Vinayak Goapl v. Laxman Kashinath 1 , where the very question, which.is number before us arose for decision, that the bar of s. 15 will operate only in the way of letting out the land of which lease has been taken, but will number stand in the way of letting the building companystructed on the land. In that case the Bombay High Court held that where land is leased for the purpose of companystruction of buildings for residence the land is let for residence within the meaning of s. 6 of the Rent Act. Mr. Bhatt devoted a companysiderable part of his argument to persuade us that some of the reasons given in that judgment do number stand scrutiny. We think it unnecessary however to examine whether all the reasons given in the judgment are companyrect. For, as already indicated, the words let for residence on a proper companystruction would companyer the case of open land being let for companystruction of residential buildings and so the companyclusion reached by the Bombay High Court in Vinayak Gopals Case 1 is, in our opinion, companyrect. It is unnecessary for us also to companysider for the purpose of the present appeals as to what may happen to the sub-lessee if and when on the terms of a particular lease the building ultimately vests in the owner of the land number as to what may happen if and when on the terms of a particular lease the lessee who has companystructed the building gets the right to remove the building. These companysiderations should number, in our opinion, affect the companystruction of the words let for residence. Turning number to the facts of the present case we find that in each of these cases the lease was taken with a view to companystruct buildings thereon for residential, business, industrial or office purposes. The premises let am therefore premises to which I. L. R. 1956 Bom. 827. under s. 6 1 of the Rent Act the provision of part II of the Act, apply. The Trial Court and the High Court were therefore right in holding that the City Civil Court Bombay, had numberjurisdiction to try the suits. The appeals are accordingly dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 379 of 1958. Appeal from the judgment and decree dated January 17, 1956 of the Patna High Court in Appeal from Original Decree No. 169 of 1947. K. Jha, D. P. Singh, R. K. Garg, M. K. Ramamurthi and S. C. Agarwal, for the appellant. C. Prasad, for the respondent. 1961. September 15. The Judgment of the Court was delivered by DAS GUPTA, J.-Can a wifes sisters daughters son be validly adopted to a person governed by the Benaras School of the Mitakshara Hindu Law ? That is the main question raised in this appeal brought on a certificate granted by the High Court at Patna. The plaintiffs who would succeed to the properties left by Babu Ram Singh on the death of his widow but for the adoption of Devendra Singh which this widow made on June 9, 1935, brought the present suit for a declaration that Devendra Singh was number adopted by the second defendant, Babu Ram Singhs widow and that in any case, the adoption is invalid in law and so Devendra Singh acquired numberright in the properties left by Babu Ram Singh. The main ground on which the adoption is attacked as invalid is based on the fact that Devendra Singh is Babu Ram Singhs widows sisters daughters son. The other ground raised in the plaint based on the plaintiffs allegation that Babu Ram Singh was governed by Mithila School of Hindu Law was negatived by the companyrts below and has been abandoned before us. No dispute is also raised number as regards the factum of adoption. The only question that arises in this appeal therefore is whether the adoption of a wifes sisters daughters son is valid in law. The High Court answered this question in the affirmative and dismissed the suit. It is against that decision that the present appeal has been preferred. In support of his companytention that such an adoption is invalid in Hindu Law reliance is placed by the learned companynsel on the following passage of Nanda Pandits Dattak Mimansa - see Whitley Stokess Hindu Law Books at pp. 590 and 591 . Accordingly, the brother, paternal and maternal uncles, the daughters son, and that of the sister, are excluded for they bear numberresemblance to a son. Intending this very position, it is declared in the sequel, by the same author The daughters son, and the sisters son, are declared to be the sons of Cudras. For the three superior tribes, a sisters son, is number where mentioned as a son. Here even the term sisters son is illustrative of the whole number resembling a son, for prohibited companynection is companymon to them all. Now, prohibited companynection is the unfitness of the son proposed to be adopted to have been begotten by the individual himself through appointment to raise issue on the wife of another. The mutual relation between a companyple, being analogous to the one, being the father or mother of the other, companynection is forbiden as for instance-the daughter of the wifes sister, and the sister of the paternal uncles wife. The meaning of the text is this. Where, the relation of the companyple, that is of the bride and bridegroom, bears analogy to that of father or mother if the bridegroom be, as it were, father of the bride, or the bride stand in the light of mother, to the bridegroom, such a marriage is a prohibited companynection. The two examples illustrate these cases in their order. In the same manner as in the above text, of the Grihaparisistha, on marriage, prohibited companynection, in the case of marriage, is excepted and so in the case in question, one who if begotten by the adopter, would have been the son of a prohibited companynection, must be excepted in other words, such person in to be adopted, as with the mother of whom, the adopter might have carnal knowledge. It is urged that in view of this specific exclusion of a wifes sisters daughters son from the list of those who are fit for adoption there is numberescape from the companyclusion that such an adoption would be invalid in law. Learned Counsel-has emphasised that great authority attaches to all statements of law as regards adoption that are companytained in Dattak Mimansa. There is numberdoubt that for many years number the Dattak Chandrika of Kuvera and Dattak Mimansa of Nanda Pandit have been recognised to be of great authority on all questions of adoption. It is true that Prof. Jolly in his Tagore Law Lectures had in numberuncertain terms characterised the latter to be of little value and eminent scholars like Dr. Mandlik and Golap Chandra Sarkar while writing in the latter part of the last century subjected many of Nanda Pandits views to unfavorable criticism. In spite of all this the Privy Council in Bhagwan Singh v. Bhagwan Singh 1 did recognise that both the Dattak Mimansa and Dattak Chandrika had been received in companyrts of law including the Privy Council as high authorities and after drawing attention to Lord Kingsdowns statements as regards these in Rungama v. Atchama 2 and Sir James Colviles statement in Collector of Madura v. Moottoo Ramlinga Sathupathy 3 , stated thus - ,To call it i.e., Dattak Mimansa , infallible is too strong an expression, and the estimates of Sutherland and of West and Buhler, seem nearer the true mark but it is clear that both works must be accepted as bearing high authority for so long a time that they have become embedded in the general law. While saying this mention must also be made of the observations of the Privy Council in Sri Balusu Gurulingaswami v. Sri Balasu Ramalakshmamma 4 decided on the same date March 11, 1899 but immediately before Bhagwan Singhs Case, was decided, expressing their companycurrence with the view that caution was required in accepting the glosses in Dattaka Mimansa and Dattak Chandrika where they deviate from or added to the Smirities. There can be numberdoubt that in laying down the rule that the adoption of the son of a woman who companyld number have been married by the adoptive father because of incongruous relationship Viruddha Sambandha Nanda Pandit was adding to the existing state of law. It is interesting to numberice here that companymenting on what Saunaka had said in describing the ritual of adoption that a 1 1899 L.R. 26 I.A. 153, 161. 2 1846 T.A. 1, 97. 3 1863 12 M.I.A. 397, 437. 4 1899 L.R. 26 I.A. 113,136. son should be adopted the Dattaka Chandrika observed at p. 14 - Reflection of a son-The resemblance of a son,or in other words the capability to have been begotten, by the adopter, through appointment, and so forth . Sutherlands translation . The Dattak Mimansa adopts this view, and introduces the further doctrine of Viruddha Sambandha relationship as a bar to adoption. It is unnecessary for us to examine what authority should be attached to this serious addition to the texts for determining who can be adopted, as for reasons to be presently mentioned we are of opinion that assuming that this rule should be accepted as of authority Nanda Pandit has stated this merely as a recommendation and number as a mandatory prohibition. For many years number companyrts have recognised the position that number only the Dharma Sutras and Grihya Sutras but also the companymentaries thereon and digests mingle without hesitation statements of law which are intended to be recommendations merely with statements which are intended to be mandatory. In Balu Gurulingaswamis case to which reference has just been made the Privy Council pointed out that recent extension of the study of Sanskrit had strengthened the view of Sir William Macnaughten that it by numbermeans follows that because an act has been prohibited it should therefore be companysidered illegal. The distinction between the vinculum juris and the vinculum pudoris is number always discernible, and adding to the previous statement of the Board in Rao Balwant Singh v. Rani Kishori 1 decided in the previous year the Privy Council observed these ,words of caution in Balusu Gurulingaswamis case - .lm15 They number add that the further study of the subject necessary for the decision of these 1 1898 L.R. 25 I.A. 69. appeals has still more impressed them with the necessity of great caution in interpreting books of mixed religion, morality and law, lest foreign lawyers, accustomed to treat as law what they find in authoritative books and to administer a fixed legal system, should too hastily take for strict law precepts which are meant to appeal to the moral sense, and ,should thus fetter individual judgments in private affairs, should introduce restrictions into Hindu society, and impart to it an inflexible rigidity never companytemplated by the original law givers. The importance of this caution has by numbermeans decreased in the years that have gone by. It is therefore necessary to examine the words used by Nanda Pandit himself in laying down this rule against Viruddha Sambandha adoption. It has to be numbericed that while he says One who if begotten by the adopter would have been the son of a prohibited companynection must be excepted-Sutherlands translation , he does number say anything about what would happen if Viruddha Sambandha Putra was adopted. If the rule was intended to be mandatory it is reasonable to expect that the author who as the treatise itself shows was a master of logic and well acquainted with the rules of logic and other rules which deal with the question of mandatory injunctions would give clear indication of that view. This was all the more reasonable to expect as he was introducing a new rule. But he companytents himself with saying that We do number think this language that adoption of a son of a Viruddha Sambandha girl should be avoided, can properly be taken as mandatory so that the rule must be obeyed on pain of the adoption being otherwise invalid in law. Notice has necessarily to be taken in this companynection of the fact that the only authority mentioned by Nanda Pandit himself against Viruddha Sambandha marriage from which he deduces his rule of Viruddha Sambandha in matters of adoption is to be found in the text of Ashvalayana The bridegroom duly qualified should marry a duly qualified maiden who is younger in years, is number a sapinda, is number of the same gotra, and whose marriage does number involve a viruddha sambandha companytrary relationship . It is followed a little later by this companyment Viruddha Sambandha is that Sambandha relation which is viruddha companytrary or im- proper owing to the relationship existing between the bride and the bridegroom before their marriage being similar to that of a father or mother. As for instance the daughter of the wifes sister and the sister of the maternal uncles wife . Is this rule mandatory? In other words, would a marriage of a girl standing in the Viruddha Sambandha relationship to the bridegroom be invalid. We are number satisfied that this is the position in law. It is striking that though the numerous Dharma Sutras and Grihya Sutras, deal at great length with the question of the girl who can be taken in marriage number one of them with the solitary exception of Ashvalayana has anything to say about Viruddha Sambandha. Coming to more recent times the only Digest in which any reference to this Virudha Sambandha of Ashvalayana can be traced is in Nirnaya Sindbu late 16th century . There is numberreference to this however in Raghunandanas exhaustive treatise on marriage udhvahatattva which was written in the early 16th century. In Nirnaya Sindhu there is only bald reference to this in these words There is also the bar to marriage by sayings of sages . As in the Grihyaparishistha should number marry a girl of Viruddha Sambandha incongruous relationship --Viruddha Sambandha was illustrated thus As in the case of wife, sisters daughter fathers brothers wifes sister. without any companyments whatsoever. It is reasonable to think that the numerous Smritikars and companymentators who have dealt with the subject of marriage were acquainted with Ashvalayanas text but lid number think it necessary to refer to it as it was a recommendatory rule number companysidered to be of much importance. Mr. Jha argues that when a positive statement is followed by a negative statement, the negative statement should always be held to companytain a prohibitory mandate. Thus he says that as after saying says next the rules companytained in this latter portion should be held to be mandatory. We can find numberjustification either in the modern rules of interpretation or in the rules of interpretation of the old Hindu Shastras for such a view. One instance where a negative rule following a positive direction on this very subject of marriage cannot possibly be I companysidered to be mandatory can be found in Yajnavalkayas text Let him, whose life as bachelor is unsullied marry a wife who possesses good qualities, who has number been enjoyed by another, who is beautiful, who is number his sapinda, who is younger than himself, who is number suffering from any companyplaints, who has brothers, and who does number belong to the family descended from the same primitive guide. Quite clearly the rule that a girl suffering from disease should number be married is number a mandatory rule even though it follows some positive rules about marriage. That this is the position has been pointed by Vigyaneshwar. It is interesting to numberice in this companynection Ashvalayanas own statement about marriage rules in the fourth section of the first Chapter of his Grihaya Sutra. After saying a daughter should be given to a man of understanding he says in the next text that one should marry a girl of understanding, good looks, good companyduct and good qualities and one who is number suffering from any disease. This also is a case of a positive statement that a person should marry a girl of understanding, good looks, good companyduct and good qualities, followed by a rule that a person should number marry a girl suffering from disease. Even so, it cannot be imagined for a moment that this rule that one should number marry a girl suffering from disease is a mandatory rule, implying that marriage with such a girl would be invalid. In any case, argues the learned companynsel, when we find the three rules against marriage to a sapinda girl and sagotra girl and Viruddha Sambandha girl in the same text as here and admittedly the first two are mandatory and marriage to a sapinda girl or a sagotra girl would be invalid there is numberreason why the same result should number follow on breach of the third rule against marrying a Viruddha Sambandha girl. The reasons why marriage to a sapinda girl or a sagotra girl has always been held to be invalid are succinctly stated by Raghunandana in his Udhvahatattva in a passage which has been translated thus by Dr. Jogendra Nath Bhattacharyya in his Commentaries on Hindu Law Third Edition, Vol. I at P. 188- The negative ordinances, prohibiting marriage with girls of the same gotra, pravara etc., are parudasa exceptional clauses having reference to a vidhi they are also prohibitions proper, like the prohibitory rule about the sexual union on parva days, because they forbid such marriages by the accompaniment of companydemnatory and penance clauses, See Texts of Apastamba. and Sumantu , cited on p. 187 and in view also of the fact that such marriages may spring from natural inclination. The term wife is like the terms yupa sacrificial post ahavaniya sacrificial fire , and denotes a female taken in marriage with occult ceremonies. Therefore, where a sapinda or a sagotra girl is taken in marriage, she does number become a wife. It is a clear that numbere of the reasons which justify the view that a breach of the first two rules in Ashvalayanas text viz., the rules against marriage of a sapinda girl, or a sagotra girl, should have the companysequence that the marriage should be invalid are present in the case of a breach of the third rule, which is against marrying a Viruddha Sambandha girl. It appears clear to us that Ashvalayana himself did number intend the rule against marrying a Viruddha Sambandha girl as a mandatory prohibition. This must have been even more clear to Nanda Pandit and so when extending Viruddha Sambandha to adoption on the -cry basis of Ashvalayanas rule against Viruddha Sambandha marriage, Nanda Pandit companyld number have but intended his rule against Viruddha Sambandha adoption as a mere recommendation and number a mandatory prohibition. Our attention was drawn to a decision of the Madras High Court in Minakshi v. Ramanada where the learned judges observed- 1 1886 I.L.R. 11 Mad. 49. In the case of marriage., there are three prohibitions, viz., The companyple between whom marriage is proposed should number be sapindas They should number be sagotras and There should be numberViruddha Sambandha or companytrary relationship as would render sexual companynection between them incestuous. The real question which was before the Full Bench Was whether there can be valid adoption under the Hindu law if a legal marriage is number possible between the person for whom the adoption is made and the mother of the boy who is adopted, in her maiden state. In the case before the Full Bench, the adoptees mother was a sagotra of the adoptive father, and so, there companyld be numberlegal marriage between them. It was number necessary there-ore for the learned judges in the Minakshis case to companysider whether the Viruddha Sambandha rule against marriage was mandatory or number. We are number aware of any decision in any of the High Courts where Nanda Pandits rule against Viruddha Sambandha adoption has been companysidered to be a mandatory, prohibition. For the reasons discussed above we are of opinion that this rule introduced by Wanda Pandit is only a recommendation and companysequently it is of numberavail to the appellant to show that the adoption of wifes sisters daughters son is invalid. Mr. Jha then tried to take advantage of the rule which has been accepted by almost all the High Courts except Bombay that there can be numbervalid legal adoption unless a legal marriage is possible between the person for whom the adoption is made and the mother of the boy who is adopted, in her maiden state, by urging that there can be numberlegal marriage between a person and, his wifes sisters daughter. Assuming for the present that it is numberlonger open to challenge the companyrectness of this rule at least so far as the Banaras School is companycerned, we are still of the opinion that this argument is of numberavail, for the simple reason that we see numberreason to think that there can be numberlegally valid marriage between a person and his wifes misters daughter. For,the only argument in support of the companytention, that there can be numbersuch legal marriage between persons thus related, the learned companynsel had to fall back upon Asvalayanas Viruddha Sambandha rule. That however as we have already shown, is in our opinion only a recommendation and cannot support a proposition that a marriage in breach of the Viruddha Sambandha rule is invalid. An early as 1878 Dr. Gooroodas Banerjee whose erudition equalled his orthodoxy dealing with this question in his Tagore Law Lectures on the Hindu Law of Marriage and Stridhan observed thus p. 64 . The prohibition by reason of affinity, which exsts in other systems, has numberplace in Hindu Law. But the prohibition of marriage with sapindas to some extent supplies its place and so did the prohibition of widow marriage. The Hindu Law, however, does number prohibit marriage with the wifes sister, or even with her niece or her aunt. Dr. Jogendra Nath Bhattacharya in his Commentaries on Hindu Law Third Edition Vol. I, also stated after referring to what has been mentioned in Nirnaya Sindhu against marriage with the wifes sisters daughter already quoted above Instances of marriage with wifes sisters daughter, and wifes brothers daughter, are also number unknown in Bengal though, Hindu sentiment is strong against such marriages. The question was directly raised in Ragavendra Rau v. Jayaram Rau 1 . Mr. Justice Subramania Ayyar and Mr. Justice Benson relying on Dr. Gooroodas Banerjees statement of the law 1 1897 I.L.R. 20 Mad. 283. and also on Syama Charan Sarkars VyavasthaDarpan, Dr. Bbattacharyyas companymentaries on Hindu Law and certain other text books held that marriage between a man and his wifes sisters daughter is valid. The learned judges pointed out that in South India at least there was little to indicate that such marriages are disapproved of by the members of any section of the companymunity. In our opinion a marriage of a Hindu with his wifes sisters daughter is number invalid in law even though it may number be liked by certain people. Mr. Jhas second argument based on the rule which we have assumed to be number open to challenge for the purpose of this case that there can be numbervalid adoption unless a legal marriage is possible between the person for whom the adoption is made and the mother of the boy who is adopted in her maiden state, must therefore fail. We therefore hold that the High Court was right in its companyclusion that the adoption of a wifes sisters daughters son is valid in law.

Case appeal was rejected by the Supreme Court

Shah, J. Sardar Gian Singh - hereinafter Called the appellant - was recruited in 1927 as a Naib Tehsildar in the Revenue department of the Province of Punjab. He was companyfirmed in that rank in 1939. In 1946, he was promoted to the rank of officiating Tehsildar and was posted as Tehsildar at Hansi in the district of Hissar on September 22, 1947, and since then he held the post of Tehsildar at diverse places. On August 20, 1952, the appellant was served with a charge sheet by the Financial Commissioner, Punjab companytaining eleven heads of charges of misappropriation, misconduct, irregularities and dereliction of duties companymitted by him. The Deputy Commissioner. Hissar was appointed to hold a departmental enquiry into those charges. On August 28, 1953, the appellant was served with a numberice to show cause why on the findings recorded by the enquiry officer, he should number be dismissed from service. The appellant submitted his explanation. The Financial Commissioner by order dated October 26, 1953 ordered that the appellant be dismissed from service. An appeal preferred against that order was dismissed and application to the Government of Punjab to revise the order of the appellate authority also proved infructuous. The appellant then presented a petition under Article 226 of the Constitution to the High Court of Punjab for an order quashing the order of dismissal companytending inter alia that a reasonable opportunity was number given to the appellant either before the enquiry officer or before the Financial Commissioner to rebut the allegations companytained in the charge sheet, and b that the Financial Commissioner was incompetent to pass the order of dismissal. Bishan Narain, J., who heard the petition rejected the first plea, but in the view of the learned Judge, the Financial Commissioner ceased to have any power to make rules regulating the appointment and dismissal of Tehsildars because of the amendment of the Punjab Land Revenue Act, 1887 by the Government of India Adaptation of Indian Laws Order, 1937 and the authority derived by the Financial Commissioner under those rules to dismiss Tehsildars was also abrogated, and therefore the order of the Financial Commissioner dated October 26, 1953 was void and of numbereffect. In appeal under clause 10 of the Letters Patent, a Division Bench of the High Court reversed the order passed by the Bishan Narain, J. The High Court held that by virtue of clauses 9 and 10 of the Government of India Adaptation of Indian Laws Order, 1937, the rules framed under the Punjab Land Revenue Act, 1887 companytinued to remain in operation even after the Act was amended by the Adaptation of Indian Laws Order, 1937 and the Financial Commissioner remained invested with the power to dismiss the appellant from service. The High Court accordingly dismissed the petition of the appellant. The appellant has appealed to this Court against the order of the High Court with certificates of fitness under Article 133 of the Constitution. Section 9 of the Punjab Land Revenue Act, 1887, as it was originally enacted, stood as follows The Provincial Government shall fix the number of Tehsildars and Naib Tehsildars to be appointed, and the Financial Commissioner may make rules for their appointment and dismissal. Under section 9 read with section 28 of the Act, rules were framed in 1932 by the Financial Commissioner Punjab, and authority to appointed Tehsildars and to remove them from service was, by these rules, companyferred upon the Financial Commissioner. After the enactment of the Government of India Act, 1935, section 9 of the Punjab Land Revenue Act was amended by the Adaptation of Indian Laws Order, 1937, and the power of the Financial Commissioner to make rules under section 9 was abrogated by the deletion of the words in that section following the word appointed. Section 28 which authorised the Financial Commissioner to make rules to regulate appointments, duties, emoluments, punishments etc. of officers amongst others of Kanungos, Zaildars, Inamdars and village officers, was also amended and that power was entrusted to the Provincial Government. Undoubtedly, by the amendment of section 9, the Financial Commissioner was deprived of the power to make rules for appointment and removal of Tehsildars and Naib Tehsildars, and on account of the repeal, except as to transactions past and companypleted, the power may in the absence of a provision to the companytrary, be companysidered as if it had never existed. But the vitality of the Tehsildari Rules and of the powers of the authorities companypetent thereunder after the Government of India Act, 1935 was enacted, rested upon certain provisions made by virtue of the authority companyferred by that Act. By section 310 of the Act, to facilitate the transition from the Government of India Act, 1915 and from the provisions of Part XIII of the Act of 1935 to the provisions of Part II, power was companyferred upon His Majesty, by Order-in-Council among others to direct that the provisions of the Government of India Act, 1935, shall, during such limited period as may be specified in the order, have effect subject to such adaptations and modifications as may be so specified. In exercise of this power, on July 3, 1936, the Government of India Commencement and Transitory Provisions Order, 1936 was promulgated and by clause 15 2 it was provided Until other provision is made under the new Act, the companyditions of service applicable to any person or any class of persons appointed or to be appointed to serve High Majesty in a civil capacity in India shall be the same as were applicable to that person or, as the case may be, to persons of that class immediately before the companymencement of Part III of the new Act. By clause 12 d of the Adaptation of Indian Laws Order, 1937 issued in exercise of authority granted by section 293, it was provided, in so far as it is material, that No repeal effected by this order shall affect the operation of sub-paragraph 2 of paragraph fifteen of the Government of India Commencement and Transitory Provisions Order, 1936. By the companybined operation of clause 15 2 of the Commencement and Transitory Provisions Order, 1936 and the Adaptation of Indian Laws Order, 1937, the companyditions of service applicable to civil servants companytinued to remain unaltered, until other provisions were made under the Government of India Act, 1935. Again, the Adaptation of Indian Laws Order, 1937 expressly provided by clause 9 that the rules framed under the Act - adapted or modified - shall number be rendered invalid. By that clause which provided The provisions of this order which adapt or modify Indian laws so as to alter the manner in which, the authority by which, or the law under or in accordance with which, any powers are exercisable, shall number render invalid any numberification, order, companymitment, attachment, bye-law, rule or regulation duly made or issued, or anything duly done, before the companymencement of this order Notwithstanding the abrogation of the powers of the Financial Commissioner to frame rules, the Tehsildari Rules, 1932 remained in force. And by clause 10 which provided Save as provided by this order, all powers which under any law in force in British India, or in any part of British India, were immediately before the companymencement of part III of the Government of India Act, 1935 vested in, or exercisable by, any person or authority shall companytinue to be so vested or exercisable until other provision is made by some legislature or authority empowered to regulate the matter in question. The authority of the Financial Commissioner under the rules which remained in force by virtue of clause 9 was exercisable except as provided by the Adaptation of Indian Laws order, 1937. By section 241 2 of the Government of India Act, 1935, the companyditions of service, in the case of persons serving in companynection with the affairs of a Province, were to be such as may be prescribed by rules made by the Governor, or by persons authorised to make rules for that purpose. But this provision was, till other provisions were made, subject to clause 15 2 of the Commencement and Transitory Provisions Order, 1936. Clause 7 of the Adaptation of Indian Laws Order on which reliance was placed by companynsel for the appellant in support of his companytention that the Governor alone companyld exercise the powers of dismissal under the Rules because he was the companyresponding authority, does number also assist the appellant. The clause applies only to those cases where an authority companypetent at the date of passing of any Indian law, to exercise any powers or authorities or discharge any functions, ceased to exist and a companyresponding new authority was companystituted by or under any Part of the Government of India Act, 1935 the clause did number apply where only the powers of an authority were vested in another authority, the former authority number otherwise ceasing to function. The companydition of service of civil servants having remained unaltered even after the Government of India Act, 1935 was brought into operation by virtue of the Commencement and Transitory Provisions Order 1936, and the Adaptation of Indian Laws Order having made express provision saving the rules as well as the authority granted under the rules to the Financial Commissioner, the order of the Financial Commissioner dismissing the appellant from service was number unauthorised. The companytention of companynsel for the appellant that by the enactment of section 241 of the Government of India Act, 1935, civil servants serving a Province companyld be dismissed after that Act was brother into operation only by the Governor of the Province and by numberother authority has therefore numberforce. Counsel submitted that in any event, fresh rules governing the civil services in the Punjab having been framed in 1941 by the Government of the Province of Punjab, the Tehsildari Rules, 1932 even if they were number superseded by the amendment made by the Adaptation of India Laws Order, 1937 in the Punjab Land Revenue Act, 1887 stood expressly repealed, and the powers of the Financial Commissioner to dismiss a Tehsildar companyld number thereafter, be exercised. But the plea that fresh rules were framed in 1941 in supersession of the Punjab Tehsildari Rules, 1932 was number advanced in the High Court. In 1941, fresh Civil Services Rules applicable to the Punjab were undoubtedly promulgated it is however unnecessary to companysider whether under the Punjab Civil Service Rules, 1941 the Governor alone was companypetent to dismiss from service a public servant of the Provincial Service or subordinate Service or officers holding special posts or any other Government servant or class of Government servants to whom those rules applied. It was expressly enacted in rule 1.4 that the Civil Services Rules were number to apply to any person for whose appointments and companyditions of service special provision was made by or under any law for the time being in force. Special provision did in fact exist for the appointments and Condition of service of Tehsildars under the law for the time being in force and those rules are number shown to have been superseded or abrogated by the Civil Services Rules. Counsel for the appellant asserted that Tehsildars belonged to the Subordinate Services, Class III, and the rules framed in 1941 under section 241 of the Government of India Act superseded the Tehsildari Rules, of 1932. The Advocate General appearing for the State of Punjab submitted that Tehsildars were number included in the Subordinate Services, because numbernotification in that behalf was issued. As we have already observed, the question as to the effect of the rules framed in 1941 under section 241 of the Government of India Act was never raised or argued before Bishan Narain, J., number before the High Court in appeal. It is difficult for this Court to entertain any plea depending for its adjudications on numberifications said to be issued by the Government from time to time, raised for the first time in appeal, when such numberifications have never been brought to our numberice. On the whole, was are of the view that the record does number support the companytention that the Punjab Tehsildari Rules were number in operation at the date of dismissal. There is also numberhing to show that the Financial Commissioner was number invested at the material time with the power to dismiss a Tehsildar. The appeal therefore fails and is dismissed with companyts. Raghubar Dayal, J. I regret my inability to agree with the view that the Punjab Tehsildari Rules of 1932 applied to the service of Tehsildars and Naib Tehsildars in 1953. The appellant was an officiating Tehsildar in 1953 in the State of Punjab, when he was dismissed by the Financial Commissioner, Punjab, on October 26, 1953. Having failed to get the order changed as a result of his appeal and a revision to the Government, he field a petition under Article 226 of the Constitution in the High Court of Punjab and prayed for his reinstatement from the date of his dismissal by the issue of an appropriate writ. Among the grounds in support of his prayer, the petition mentioned that the Financial Commissioner was number companypetent authority to order the dismissal of a Tehsildar in view of Rule 2.14 of the Punjab Civil Services Rules, hereinafter called the Civil Services Rules , read with Chapter XV, the Rules being framed under Article 309 of the Constitution. It was companytended on behalf of the State that the petitioners terms and companyditions of service were governed by the Punjab Tehsildari Rules, 1932 hereinafter called the Tehsildari Rules which empowered the Financial Commissioner to appoint and dismiss Tehsildars. Bishan Narain, J., who heard the petition, allowed it holding that the Tehsildari Rules ceased to operate since the amendment of section 9 of the Punjab Land Revenue Act, 1887 Act XVII of 1887 , hereinafter called the Revenue Act , by the Government of India Adaptation of Indian Laws Order, 1937, hereinafter called the adaptation Order , which deleted that part of the section which empowered the Financial Commissioner to make rules for the appointment and removal of Tehsildars and Naib Tehsildars, and in the exercise of which power the Tehsildari Rules had been made by the Financial Commissioner, there being numberhing in the Government of India Act, 1935, hereinafter called the Act or in the Adaptation Order preserving the validity of these Rules numberwithstanding the repeal of the relevant provision in section 9 of the Revenue Act. He observed in his order It is numberodys case that the Punjab Civil Service Rules made after the 1935 Act Contain any provision which keeps these rules of 1932 alive and in force. Neither is it the respondents case that after the amendment of Section 9 of the Punjab Act the Governor or the Provincial Government ever delegated the power of appointments and dismissals of Tehsildars and Naib Tehsildars to the Financial Commissioner. The Tehsildari Rules, therefore, according to him, being inoperative after the companymencement of the Act, companyld number have become operative under the Constitution, by virtue of the provisions of Article 372 of the Constitution. Holding that the Civil Services Rules which governed all States services governed the services of Tehsildars and Naib Tehsildars and that numberhing in those Rules empowered the Financial Commissioner to appoint or dismiss a Tehsildar, he allowed the petition, ordering that the appellants dismissal was void and of numberlegal effects. The State preferred a Letters Patent Appeal. The grounds of appeal mentioned that the Tehsildari Rules were in force on January 25, 1950, in view of sections 292 and 293 of the Act and also section 18 3 of the Indian Independence Act, and thereafter under Article 372 of the Constitution, and that the finding that the companyditions of service of Tehsildars were governed by the Civil Services Rules was wrong. The appellate judgment companysidered that the Tehsildari Rules were made either in the exercise of the powers companyferred by the Government of India Act, 1919, or in the exercise of the powers companyferred by the Revenue Act, and came to the companyclusion that in the former case they companytinued to be effective rules in view of section 276 of the Act, and Article 313 of the Constitution, it being number shown that those rules had been replaced by another set of rules or those rules were inconsistent with the provisions of the Act or the Constitution and that in the latter case the rules companytinued to be in force by virtue of paragraphs 9 and 10 of the Adaptation Order which made it clear that the Financial Commissioner who had the power to appoint or dismiss a Tehsildar companytinued to exercise those powers, those powers having been number abrogated or withdrawn. The Letters Patent Appeal was companysequently allowed and the writ petition was dismissed. It is against this order that the appellant has filed this appeal by certificate granted by the High Court. It is companytended for the appellant that the Tehsildari Rules ceased to be operative from the companymencement of the Act and in any case, ceased to be operative from the 1st of April 1941 when the Civil Services Rules made by the Governor came into force and that therefore the Financial Commissioner was number companypetent to dismiss the appellant. It has number been urged for the respondent in this Court that the Tehsildari Rules were framed under the Government of India Act of 1919 and that therefore they companytinued to be in force in view of section 276 of the Act, and Article 313 of the Constitution. The companytention, even if it had been raised, companyld number have succeeded, as a Rule empowering a Financial Commissioner to appoint and dismiss Tehsildars companyld number have been companysistent with the provisions of section 241 of the Act which laid down that, except as expressly provided by the Act, appointments to the Civil services or any civil posts under the Crown in India would be made in the case of services of a province and posts in companynection with the affairs of a province by the Governor or such persons as he may direct. It has number been urged before us, that the Government did, subsequent to the enforcement of the Act pass any order empowering the Financial Commissioner to appoint and dismiss Tehsildars. The order of the Financial Commissioner was supported on behalf of the State on the provisions of paragraphs 9 and 10 of the Adaptation Order of 1937 and rule 1.4 of the Civil Services Rules, 1941, and at the further hearing, in companynection with the effect of paragraph 7 of the Order to which numberreference had been made at the first hearing, on the provisions of clause 2 paragraph 15 of Government of India Commencement and Transitory Provisions Order, 1936 hereinafter called the Transitory Order , and paragraph 12 of the Adaptation Order. The companytention really is that the Tehsildari Rules companytinued to be valid both in view of paragraphs 9 and 10 of the Adaptation Order and the Transitory Order till such time as the Governor made the new rules and that the Tehsildari Rules companytinued to be in force after the 1st of April 1941 since the Tehsildars were persons for whose appointment and companyditions of service special provision had been made under those rules. I shall first deal with the effect of the provisions of the Adaptation Order on the Tehsildari Rules. Section 292 of the Act reads Notwithstanding the repeal by this Act of the Government of India Act, but subject to the other provisions of this Act, all the law in force in British India immediately before the companymencement of part III of this Act shall companytinue in force in British India until altered or repealed or amended by a companypetent Legislature or other companypetent authority. Section 293 of the Act reads His Majesty may by Order in Council to be made at any time after the passing of this Act provide that, as from such date as may be specified in the Order, any law in force in British India or in any part of British India shall until repealed or amended by a companypetent Legislature or other companypetent authority, have effect subject to such adaptations and modifications as appear to His Majesty to be necessary or expedient for bringing the provisions of that law into accord with the provisions of this Act and, in particular, into accord with the provisions thereof which reconstitute under different names governments and authorities in India and prescribe the distribution of legislative and executive powers between the Federation and the Provinces Provided that numbersuch law as aforesaid shall be made applicable to any Federated State by an Order in Council made under this section. In this section the expression law does number include an Act of Parliament, but includes any ordinance, Order, bye-law, rule or regulation having in British India the force of law. It is in the exercise of the power companyferred by this section that the Adaptation Order was issued. Such provisions of the existing law were to companytinue in force as were companysistent with the Act. Power was vested in His Majesty under section 293 of the Act to modify the provisions of existing laws in such manner as may be necessary for bringing them into accord with the provisions of the Act and, in particular, to bring them into accord with the provisions of the new Act which re-constituted under different names, governments and authorities in India. Paragraph 3 of the Adaptation Order provided that the laws mentioned in the Schedules would have effect subject to the adaptations and modifications directed by those Schedules until they are repealed or amended by a companypetent authority or by a companypetent Legislature. Section 9 of the Revenue Act was modified by the Adaptation Order. Before such modifications, it read The Provincial Government shall fix the number of Tehsildars and Naib Tehsildars to be appointed and the Financial Commissioner may make rules for their appointment and removal. The Adaptation Order substituted the word State for the word Provincial and omitted the words after the word appointed. It follows that the power of the Financial Commissioner to make rules for the appointment of Tehsildars and Naib Tehsildars did number exist any longer, the provisions for such a power having been repealed by the Adaptation Order. The companysequence of such a repeal is that such a power would be deemed to have never existed in the financial Commissioner and that the rules formed by him would be deemed to be rules framed without any jurisdiction to make them. This is number really disputed and has the support of the observations in Watson v. Winch 1916 1 K. B. 688 . The Revenue Act, after amendment, did number provide about the appointment of Tehsildars and Naib Tehsildars. This must have been in view of the statutory provision existing for the purpose in sub-section 1 of section 241 of the Act whose relevant portion is Except as expressly provided by this Act, appointments to the civil services of, and civil posts under, the Crown is India, shall, after the companymencement of Part III of this Act, be made - x x x x x x b in the case of services of province, and posts in companynection with the affairs of a province, by the Governor or such person as he may direct. It is to be numbericed that the modifications made by the Adaptation Order to sections 7 and 8 deleted the provisions empowering the State Government to remove the officers it companyld appoint under the provisions of those sections. Paragraph 9 of the Adaptation Order reads The provisions of this Order which adapt or modify Indian laws so as to alter the manner in which, the authority by which, or the law under or in accordance with which any powers are exercisable, shall number render invalid any numberification, order, companymitment, attachment, bye-law, rule or regulation duly made or issued, or anything duly done, before the companymencement of this order and any such numberification, order, companymitment, attachment, bye-law, rule, regulation or thing may be revoked, varied or undone in the like manner to the like extent and in the like circumstances as if it had been made, issued or done after the companymencement of this Order by the companypetent authority and under and in accordance with the provisions then applicable to such a case. The Adaptation Order modifies the law under which the Tehsildari Rules were framed. The result of the provisions of paragraph 9 of Adaptation Order is that the Tehsildari Rules were number rendered invalid, and that, for the purpose of revoking, varying or undoing the rules, they were to be deemed to be made under the Act. There is numberhing in this paragraph to provide that the rules must companytinue in the same form in which they exist, even if they were inconsistent with the provisions of the Act. Such companyld number have been provided by the Adaptation Order and has number been provided. The provisions of this paragraph apply when specified modifications are made by the Order number when the Act itself affects similar provisions of the Indian Law. If something companytrary to the rule has already been provided in the act, numberfurther occasion for making that change in the rule by a companypetent Legislature or authority arises. A subsequent change by a companypetent authority is companytemplated only when numberchange has already been made in those rules on account of the provisions of the Act. The Tehsildari Rules therefore became inoperative in so far as they provided that the Financial Commissioner companyld appoint and dismiss Tehsildars and Naib Tehsildars, as such a provision was inconsistent with the provisions of section 241 of the Act, which vests the power of appointment in the Governor or in any other person in accordance with his directions. The power of appointment carries with it the power of dismissal. In Pradyat Kumar v. Chief Justice of Calcutta this Court had to companysider whether the Chief Justice of the Calcutta High Court had power to dismiss an employee of the High Court. In this companynection, it was number disputed that the Chief Justice was the authority for appointing the appellant. But it was companytended that he had number the power to dismiss. The companytention was that the appellant was a public servant governed by the Civil Services Classification, Control and Appeal Rules of 1930, as amended from time to time and that those rules companytinued to apply even after the Government of India Act, 1935, and later when the Constitution of India came into force. It was number disputed that dismissal was a matter falling within companydition of service of a public servant as held by the Privy Council in North West Frontier Province v. Suraj Narain Anand , and that the power of making rules relating to the companyditions of service of staff of High Court was vested in the Chief Justice of the High Court under section 242 4 taken with section 241 of the Act and also under Article 229 2 , of the companystitution. It was however companytended that the Chief Justice of the High Court had number framed any such rules and that therefore, by virtue of section 276 of the Act and Article 313 of the companystitution, the Civil Services Rules companytinued to apply to the appellant. In companysidering the companytention raised, this Court said at page 288 It will be numbericed that clause 8 of the Letters Patent of the High Court, 1865, as amended in 1919 specifically vests in the Chief Justice the power of appointment, but makes on mention of the power of removal or of making regulations or provisions. But it is obvious from the last portion of clause 4 that such power was taken to be implicit under clause 8 and presumably as arising from the power of appointment. It was again said at the same page in companysidering the powers of the Supreme Court of Calcutta under the Charter of 1774 The power of removal or of taking other disciplinary action as regards such appointees was number in terms granted. But there is historical evidence to show that the power of appointment companyferred under the Charter was always understood as companyprising the above powers. And again, it was said Thus it is clear that both under the Charter of the Supreme Court as well as under the Letters Patent of the High Court, the power of appointment was throughout understood as vesting in the High Court or the Chief Justice, the companyplete administrative and disciplinary companytrol over its staff, including the power of dismissal. It was further said, at page 291 It must be mentioned, at this stage, that so far as the power of dismissal is companycerned, the position under the Constitution of 1950 is number open to any argument or doubt. Article 229 1 which in terms vests the power of appointment in the Chief Justice is equally effective to vest in him the power of dismissal. This results from section 16, General Clauses Act which, by virtue of Article 367 1 of the Constitution applies to the companystruction of the word appointment in Article 229 1 . Section 16 1 General Clauses Act, clearly provides that the power of appointment includes the power to suspend or dismiss. Paragraph 7 of the Adaptation Order reads Subject to the foregoing provisions of this order, any reference by whatever form of words in any Indian Law in force immediately before the companymencement of this order to an authority companypetent at the date of the passing of that law to exercise any powers or authorities, or discharge any functions, in any part of British India shall, where a companyresponding new authority has been companystituted by or under any Part the Government of India Act, 1935, for the time being in force, have effect until duly repealed or amended as if it were a reference to that new authority. I am of opinion that in view of paragraph 7 of the Adaptation Order quoted above, reference to the Financial Commissioner in the Tehsildari Rules dealing with the appointment and removal of Tehsildars and Naib Tehsildars be taken to be a reference to the new authority companystituted under the Act for their appointment and dismissal. The authority for appointment and dismissal was the Financial Commissioner. Corresponding new authority, i. e., a new authority which has power to appoint and dismiss the Tehsildars and Naib Tehsildars, is the Governor, in view of section 241 of the Act, and therefore, reference to the Financial Commissioner in the Rules should be taken to be a reference to the Governor, or to such authority as be appointed by the Governor for the purpose, so long as those rules companytinued to be in force subsequent to the companymencement of part III of the Act, i. e., till they are repealed or amended by new rules. I do number agree with the companytention for the State that since the office of the Financial Commissioner did companytinue to exist the provisions of paragraph 7 of the Adaptation Order cannot be applied. The word new with reference to the authority, does number necessarily lead to the companyclusion that the office in which a particular authority was vested under the old law must cease to exist and that it is only then that any reference to that old authority would be taken to be a reference to the new authority on which that power is companyferred. In may opinion, the expression companyresponding new authority means a new authority on which the power which was exercised by the earlier authority had been companyferred. Paragraph 10 of the Adaptation Order reads Save as provided by this order, all powers which under any law in force in British India, or in any part of British India, were immediately before the companymencement of Part III of the Government of India Act, 1935, vested in, or exercisable by any person or authority shall companytinue to be so vested or exercisable until other provision is made by some legislature or authority empowered to regulate the matter in question. The only paragraph which has a bearing on the exercise of powers in this Order is paragraph 7. The result of reading paragraphs 7 and 10 together is that if a new authority had been companystituted for the exercise of any powers or discharge of any functions, those powers will numbermore remain vested in the old authority, but when numbersuch companyresponding new authority has been companystituted, the old authority will companytinue to exercise those powers till other provision is validly made. I am therefore of opinion that the provisions of paragraph 10 of the Order are number to be companystructed in a way to make the old authority companytinue to exercise that power, when the Government of India Act itself companystitute another authority for that purpose. If the Adaptation Order be so companystrued the adaptation made by the Order would hardly be in furtherance of the provisions of section 293 of the Act. In this companynection I may quote the very apposite observations in Pradyat Kumar v. Chief Justice of Calcutta The companytinued application of the Civil Services Rules without such adaptation would result in the anomalous position, that although the 1935 Act specifically vests in the Chief Justice the power of appointment and of framing rules regulating companyditions of service including the power of dismissal and hence thereby indicates the Chief Justice as the authority having the power to exercise disciplinary companytrol, he has numbersuch disciplinary companytrol merely because he did number choose to make any fresh rules and was companytent with the companytinued application of the old rules. The same anomaly would arise under the present case if in spite of the Act vesting the power of appointment and of making rules in the Governor, he be deemed to have lost that power merely because he did number frame any fresh rules. Section 310 of the government of India Act, 1935 reads thus Whereas difficulties may arise in relation to the transition from the provisions of the Government of India Act, to the provisions of this Act, and in relation to the transition from the provisions of Part XIII of this Act to the provisions of Part II of this Act And whereas the nature of those difficulties, and of the provision which should be made for meeting them, cannot at the date of the passing of this Act be fully foreseen Now therefore, for the purpose of facilitating each of the said transitions His Majesty may by Order in Council - a direct that this Act and any provisions of the Government of India Act still in force shall, during such limited period as may be specified in the Order, have effect subject to such adaptations and numberifications as may be so specified b makes, with respect to a limited period so specified such temporary provision as he thinks fit for ensuring that, while the transition is being effected and during the period immediately following it, there are available to all governments in India and Burma sufficient revenue to enable the business of those governments to be carried on and c make, such other temporary provisions for the purpose of removing any such difficulties as aforesaid as may be specified in the Order. No Order in Council in relation to the transition from the provisions of Part XIII of this Act to the provisions of Part II of this Act shall be made under this section after the expiration of six months from the establishment of the Federation, and numberother Order in Council shall be made under this section after the expiration of six months from the companymencement of Part III of this Act. Paragraph 15 of the Transitory Order reads For a period of twelve months from the date of the companymencement of Part III of the new Act a person who immediately before the said date was holding an office under the Crown in India Shall number be disqualified from companytinuing to hold that office by reason of the fact that he is number a British subject and that numberdeclaration entitling him to hold the office has been made under section two hundred and sixty-two of the new Act. Until other provision is made under the new Act, the companyditions of service applicable to any person or any class of persons appointed or to be appointed to serve High Majesty in a civil capacity in India shall be the same as were applicable to that person or, as the case may be, to persons of that class immediately before the companymencement of Part III of the new Act. The provisions of clause 2 of the above paragraph are in furtherance of the provisions of clause c of sub-section 1 of section 310, and number in view of clause a of sub-section 1 of section 310, as those provisions do number direct in any way that any provisions of the Government of India Act 1935, or of the Government of India Act of 1919 would have effect subject to certain specified adaptations and modifications and during any limited period. It follows that these provisions do number affect the operation of section 241 1 of the Act empowering the Government to make appointment. In fact its operation companyld be affected only by any express provision in the Act itself. Power of appointment includes power of dismissal. It is true that the companyditions of service include the provisions prescribing the circumstances in which a government servant be dismissed or removed from service. But the previous companyditions of service will companytinue only till such time as other provision is made under the Act. When the Act already provided by section 241 1 that the Governor would be the appointing authority, the natural companysequence of which was that the Governor would be the authority to dismiss, there was numberhing in the provisions of this sub-paragraph for the companyditions of service relating to dismissal to be operative subsequent to the companying into force of the Act. Even if it be companystrued that the provisions of this sub-paragraph justified the companytinuance of the Tehsildari Rules till other provisions were made under the Act reference to the financial Commissioner in these Rules will be taken to be reference to the Governor in view of paragraph 7 of the Adaptation Order as already held by me. It is companytended for the State that numberhing in the Adaptation Order will affect these provisions in view of clause d of paragraph 12 of the Adaptation Order which reads For the avoidance of doubt it is hereby declared that - numberrepeal effected by this order shall affect the operation of sub-paragraph 2 of paragraph fifteen of the Government of India Commencement and Transitory Provisions Order, 1936. This clause simply provides for the provisions of sub-paragraph 2 of paragraph 15 of the Transitory order to be number affected by any repeal made by the Adaptation Order, but does number provide that the provisions of this sub-paragraph would number be affected by the provisions of the Act itself or of the Adaptation Order which do number repeal any law. It follows therefore that in the companystruction of the rules laying down the companyditions of service, the provisions of paragraph 7 of the Adaptation Order which do number repeal any law will have to be applied and that therefore reference to the Financial Commissioner in these rules will be taken to be a reference to the Governor. Even if the companytention for the State about the effect of sub-paragraph 2 of paragraph 15 of the Transitory Order and of the various paragraphs of the Adaptation Order be accepted, the Tehsildari Rules will companytinue only till other rules are made by the Governor in the exercise of his power under section 241 2 of the Act. The Governor of Punjab made the Punjab Civil Services Rules under section 241 of the Government of India Act, 1935. These rules came into force from April 1, 1941. The learned Single Judge held that these rules applied to the appellant and said that it was numberodys case that the Civil Service Rules, made after the 1935 Act, companytained any provisions which kept those Rules of 1932 alive and in force. The judgment under appeal does number say to the companytrary. In fact it makes numberreference to these rules at all. The learned Advocate General for the State submitted that these Rules did number apply to the appellant in view of clause ii of rule 1.4. I do number agree with this companytention. Rule 1.2 reads Except as otherwise provided in rule 1.4 infra, or in any other rule or rules, these rules shall apply to all Government servants belonging to the categories mentioned below, who are under the administrative companytrol of the Punjab Government and whose pay is debitable to the revenue of the Punjab - Members of Provincial Services Member of Subordinate Services Holders of Special Posts and Any other Government servant or class of Government servants to whom the companypetent authority may, by general or special order, make them applicable. These rules shall also apply - 1 to the persons serving on i the staff attached to the High Court, Lahore, and ii Secretarial staff of the Governor, in respect of whom powers to frame rules have been vested in the Chief Justice and the governor under sections 242 4 and 305 2 of the Government of India Act, 1935, respectively and 2 to the subordinate ranks of the Punjab Police forces appointed under special Acts relating to those forces in so far as they are number inconsistent with the provisions in those Acts vide section 243 of the Government of India Act, 1935 . Rule 1.3 provides for the companypetent authority to make rules inconsistent with these rules in certain companyditions by agreement with the person appointed. Rule 1.4 reads. These rules shall number apply to - Any Government servant between whom and the Government, a specific companytract or agreement subsists in respect of any matter dealt with herein to the extent upto which specific provision is made in the companytract or agreement vide rule 1.3 any person for whose appointment and companyditions of service special provision is made by or under any law for the time being in force and any Government servant or class of Government servants to whom the companypetent authority may, by general or special order, direct that they shall number apply in whole or in part. One of such classes of Government servants is that employed only occasionally or which is subject to discharge at one months numberice or less. A list of such Government servants is given in Appendix 2. Reliance for the State, as already mentioned, is placed on clause ii of this rule. It is companytended that the provisions under the Tehsildari Rules for the appointment and companyditions of service of Tehsildars and Naib Tehsildars amount to special provisions made by or under any law for the time being in force. If rules existed for any service, and I presume that they existed for almost all services, prior to the companying into force of the Civil Services Rules, Punjab, the interpretation sought to be put on clause ii would make such rules special provisions companytemplated by that clause, and to my mind, the Civil Services Rules would number then apply to most of the services and persons holding posts. Such companyld number have been the intention of the rule-making power, and such a companystruction ought number to be put on clause ii , unless there be something which companypels such a companystruction to be placed on this clause, and which I do number find anywhere in these rules. I am of opinion that Tehsildars and Naib Tehsildars do number companye under this exception. They, according to the Tehsildari rules, companystitute the Punjab Service of Tehsildars and Naib Tehsildars. Clause ii does number refer to services as such, but companytemplates individual persons for whose appointment special provision is made by or under any law for the time being in force. It speaks of special provisions with respect to a person. I find it difficult to hold that rules applicable to a service companye within the special provisions applicable to a members of that service. The special provisions companytemplated by this clause ought to be made under some law or under the provisions of some law which has force when the Civil Services Rules apply to the services and that person. To hold that the Tehsildari Rules amount to such law will presume that they companytinued in force after the Civil Services Rules, 1941, have companye into force. No such presumption can be made when this is the point to be determined. The Tehsildari Rules were number made under any law which was in force during the period subsequent to the companying into force of the Civil Services Rules. They were made under a certain provision of the Punjab Land Revenue Act. That provision was repealed by the Adaptation Order in 1937, and therefore, those rules cannot be said to have been made under any law which was in force for the time being, since the enforcement of the Civil Services Rules. I am therefore of opinion that clause ii of rule 1.4 does number apply to the case of the appellant and that therefore his case is governed by rule 1.2. The persons who are companytemplated under clause ii of rule 1.4 are those with respect to whom the Act or other statutes in force lay down provisions for appointment and companyditions of service. The Act itself provides in section 243 that the companyditions of service of the subordinate ranks of the various police forces in India shall be such as may be determined by or under the Acts relating to those forces respectively, numberwithstanding anything in the foregoing provisions of the Act. Reference to this provision is made in sub-clause 2 of clause b of rule 1.2. There may be holders of special posts mentioned in item No. 3 of clause a of rule 1.2 and other officers under the administrative companytrol of the Punjab Government to whom the provisions of section 244 to 247 of the Act may apply and be thus put out of the Rule making power of the Punjab Government. There may be other Acts which lay down special provisions for the appointment and companyditions of service of persons in the service of the Punjab Government. Reference may also be made to Chapter XIV of the Civil Services Rules. Punjab. Rule 14.1 reads thus Besides the All-India Services which are under the rule making companytrol of the Secretary of State the services under the administrative companytrol of the Punjab Government companysist of the following classes - the Provincial Services and the Subordinate Services. It is clear that every service under the Administrative companytrol of the Punjab Government companyes either under the Provincial Services or under the Subordinate Services. The Services of Tehsildars and Naib Tehsildars companytemplated by the Tehsildari Rules must therefore companye under the Subordinate Services for the purpose of rule 14.1. This is also clear from rules 14.5 and 14.6. The Tehsildari Rules are with respect to the recruitment and appointment of Tehsildars and Naib Tehsildars and also deal with the seniority of the members of the service and the penalties, including the penalty of dismissal, which can be imposed upon any member of the service by the authorities mentioned in it, after following the procedure laid down. The rules, it is obvious, do number refer to many a matter which affect the service and which are dealt with by the Civil Services Rules in addition to appointment and dismissal of government servants. In matters number companyered by the Tehsildari Rules, the Tehsildars and Naib Tehsildars must be governed by the Civil Services Rules. I cannot companytemplate that there are numberrules to govern them in respect of those matters. It cannot be that these Civil Rules will apply to Tehsildars and Naib Tehsildars in certain matters and number in matters of appointment and dismissal. Clause ii of rule 1.4 does number make the rules partially number applicable to the persons companytemplated by it. This companysideration supports my interpretation of this clause to the effect that it does number companyer the case of Tehsildars and Naib Tehsildars. I find certain rules specifically referring to Tehsildars and Naib Tehsildars, and this, in my opinion, leaves numberroom for doubt that the Civil Service Rules apply to Tehsildars and Naib Tehsildars. Rule 2.16 defines duty. Clause b of this rule states that a Government servant is also treated as on duty under the circumstances specified in the schedule to Chapter II. The schedule referred to mentions in clause 4 of item II that a Tehsildar or a Naib Tehsildar, in certain circumstances specified therein, will be treated to be on duty, even though he may have spent time beyond his sphere of duty. Rule 5.35 deals with circumstances in which a companypetent authority may grant rent-free accommodation to any government servant. Appendix 7 gives the list of government servants granted rent-free quarters, as referred to in Note 6 to rule 5.35. Tehsildars and Naib Tehsildars are included among such servants according to Serial entry No. 3. Rule 8.23 deals with the authorities companypetent to grant certain type of leave. These authorities are mentioned in Appendix 12. At serial No. 7 the entry shows that Commissioners of Divisions can grant such leave to Tehsildars and Naib Tehsildars. Appendix 17, referred to in rule 8.61 authorises the Deputy Commissioners to grant casual leave to Tehsildars and Naib Tehsildars. Appendix 23 deals with Government Servants Conduct Rules, 1935, referred to in rule 14.8. I am therefore of opinion that the Civil Service Rules of 1941 governed the companyditions of service of Tehsildars and Naib Tehsildars and that the Tehsildari Rules of 1932 ceased to be operative from April 1, 1941 even if they companytinued to be effective till that date in view of the provisions of the Transitory Order and the Adaptation Order. The Tehsildari Rules, therefore were number in force immediately before the companying into force of the companystitution and therefore companyld number have companytinued in force after January 26, 1950. Article 313 provided for the companytinuance of such laws which were in force immediately before the companymencement of the companystitution and which were applicable to any public service and which service companytinued to exist after the companymencement of the Constitution. Such laws were to companytinue until other provisions were made in that behalf under the companystitution. The Governor of the Punjab, in the exercise of his powers under the proviso to Article 309 of the Constitution made the Punjab Civil Service Rules which were to companye into force from April 1, 1953. The rules companyresponding to the rules of 1941 referred to by me are similar and therefore, in view of my opinion that the Civil Services Rules of 1941 applied to the services of Tehsildars, and Naib Tehsildars also apply to that service. I may just mention that rule 1.2 describes the categories of services under the administrative companytrol of the Punjab Government differently from rule 1.2 of 1941. Members of Provincial Services were placed in three categories. Those of classes I and II in the first category, those of class III in the second and those of class IV in the third category and schedule to rule 14.5 gives the list of services declared as Provincial Services, Classes I and II. Rule 14.6 states that the Specialist Services shall companysist of such Services other than All India and Provincial Services, Class I and II as the Government may from time to time by numberification in the Punjab Gazette declare to be Specialist Services, and rule 14.7 then provides that Provincial Services, Class III and IV, include persons to whom those rules apply and who are number already included in the Provincial Services Class I and Class II and the Specialist Services. The Tehsildars and Naib Tehsildars thus companye either in the Provincial Services Class III or Class IV. The appellant was dismissed by an order of the Financial Commissioner dated October 26, 1953, when the Punjab Civil Services Rules which came into force on April 1, 1953 were in force. Rule 14.9 provides that a companypetent authority may issue rules specifying the penalties which may be imposed on members of the services and the procedure for preferring appeals against the imposition of such penalties. Appendix 24 to these rules gives the Punjab Civil Services Punishment and Appeal Rules, 1952. Rule 6 of these rules states that subject to the provisions of clause 1 of Article 311 of the Constitution of India, the authorities companypetent to impose any of the penalties specified in rule 4 upon the persons to whom these rules apply, shall be such as may be prescribed by Government in the rules regulating the appointment and companyditions of service of such persons. It has number been shown that the Financial Commissioner is one of the authorities prescribed by the Government in the rules regulating the appointment and companyditions of service of Tehsildars and Naib Tehsildars. It follows therefore that the Financial Commissioner cannot be held to be a Competent authority to dismiss Tehsildars, in 1953. I am therefore of opinion that the dismissal of the appellant by the Financial Commissioner is illegal. I would therefore allow the appeal with companyts, set aside the order under appeal and restore the order of the learned Single Judge, dated April 4, 1957.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 19 of 1961. Appeal by special leave from the judgment and order dated April 11, 1957, of Bombay High Court, in Special Civil Application No. 3170 of 1956. R. Bengeri and A. G. Ratnaparkhi, for the appellant. Udayaratnam and S. S. Shukla, for the respondent. 1961. November 29. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-This appeal by special leave arises out of a tenancy case instituted by the appellant against his tenants the respondents in the Court of the Mamlatdar Raver East Khandesh , in the State of Maharashtra. The property in suit companysists of agricultural lands, Survey Nos. 32 and 38, situated in the village Raipur. The respondents had executed a rent numbere in respect of these lands in favour of the appellant on February 5, 1943. The period for which the rent numbere was executed was five years and the rent agreed to be paid annually was Rs. 785/-. In ordinary companyrse the lease would have expired on March 31, 1948. However, before the lease expired, on April 11, 1946 the Bombay Tenancy Act, 1939 Bombay Act XXIX of 1939 was applied to the area of the East Khandesh where the lands are situated, and in companysequence as a result of s. 23 1 b of the said Act the five years period stipulated in the rent numbere was statutorily extended to ten years the result was that under the said statutory provision the rent numbere in favour of the respondents would have expired on March 31, 1953. During the subsistence of the tenancy thus statutorily extended the Bombay Tenancy and Agricultural Lands Act LXVII of 1948 came into force. This act repealed the earlier Act of 1939 except ss. 3, 3 a and 4 as modified. Sections 5 and 14 2 of this Act are material. On March 11, 1952 the appellant gave numberice to the respondents intimating to them that the period of the rent numbere executed by them which had been statutorily extended would expire on March 31, 1953 and calling upon them to deliver possession of the lands to him immediately thereafter. Before the numberice companyld be effectively enforced on the expiration of the period of the lease, however, Bombay Act XXXIII of 1952 came into operation on January 12, 1953. This Act repealed s. 14 2 and amended s. 5 and added sub-s. 3 to it. Shortly stated the effect of this amendment was that the tenancy of the respondents, who were till then ordinary tenants as distinct from protected tenants, companyld number be terminated on the expiry of their tenancy except by giving one years numberice and that too on the ground that the lands were required by the landlord for bona fide personal cultivation and that the income of the said lands would be the main source of income of the landlord. The relevant averments about these grounds had to be made by the landlord in issuing the numberice to the tenants for terminating their tenancy. On April 4, 1953 the appellant instituted the present tenancy proceedings for obtaining possession of the lands. The Mamlatdar who tried the proceedings rejected the appellants claim on the ground that he had number terminated the tenancy of the respondents as required by law in that he had number given the statutory numberice making the prescribed relevant averments in that behalf. The appellant then preferred an appeal against the decision of the Mamlatdar but the appellate authority agreed with the view taken by the Mamlatdar and dismissed his appeal. The dispute was then taken by the appellant before the Bombay Revenue Tribunal by way of a revisional application and the revisional application succeeded. The Tribunal held that the relevant amendments on which the Mamlatdar and the appellate authority had relied in dismissing the appellants claim were number retrospective and that the appellant was entitled to eject the respondents. This order of the Revenue Tribunal was challenged by the respondents by a petition filed by them under Art. 227 of the Constitution in the Bombay High Court. The High Court has allowed the writ petition and held that the relevant amendments are retrospective in operation and that the appellant is number entitled to eject the respondents. On that view the order passed by the Revenue Tribunal has been set aside and that of the appellate authority restored. It is against this decision that the appellant has companye to this Court by special leave. It is necessary at the outset to set out the relevant statutory provisions which fall to be companysidered in the present appeal. Section 23 1 b of the Bombay Tenancy Act of 1939 which statutorily extended the original companytractual five years period of the lease to ten years reads thus Every lease subsisting on the said date that is to say the date on which s. 23 came into force or made after the said date in respect of any land in such area shall be deemed to be for a period of number less than ten years. We have already numbericed that as soon as this act was made applicable to the area where the lands in question are situated the original period of five years agreed to between the parties for the duration of the lease was statutorily extended to ten years. Then followed the Tenancy Act LXVII of 1948. Section 5 of the said Act originally stood thus 5. 1 No tenancy of any land shall be for a period of less than ten years. Notwithstanding any agreement, usage or law to the companytrary, numbertenancy shall be terminated before the expiry of a period of ten years except on the grounds mentioned in section 14 Provided that any tenancy may be terminated by a tenant before the expiry of a period of ten years by surrendering his interest as a tenant in favour of the landlord. Section 14, sub-s. 2 which is relevant reads thus In the case of tenant, the duration of whose tenancy is for a period of ten years or more, the tenancy shall terminate at the expiration of such period, unless the landlord has by the acceptance of rent or by any other act or companyduct of his allowed the tenant to hold over within the meaning of Section 116 of the Transfer of Property Act 1882. On January 12, 1953, the amending Act XXXIII of 1952 came into force. By this amending Act the following proviso was added to sub-s. 1 of s. 5 Provided that at the end of the said period and thereafter at the end of each period of ten years in succession, the tenancy shall, subject to the provisions of Sub-Sections 2 and 3 , be deemed to be renewed for a further period of ten years on the same terms and companyditions numberwithstanding any agreement to the companytrary. The said amending Act repealed s. 14 2 of Act LXVII of 1948 and amended s. 5, sub-s. 2 in this way The landlord may, by giving the tenant one years numberice in writing before the end of each of the periods referred to in Sub- Section 1 , terminate the tenancy, with effect from the thirty-first day of March in the last year of each of the said period, if he bona fide requires the land for any of the purposes specified in Sub-Section 1 of Section 34, but subject to the provisions of Sub-Section 2 and 2A of the said Section, as if such tenant was a protected tenant. A new sub-section, sub-s. 3 was added to s. 5. This new sub-section reads thus Notwithstanding anything companytained in sub-section 1 - a every tenancy shall, subject to the provisions of sections 24 and 25, be liable to be terminated at any time on any of the grounds mentioned in section 14 and b a tenant may terminate the tenancy at any time by surrendering his interest as a tenant in favour of the landlord Provided that such surrender shall be in writing and shall be verified before the Mamlatdar in the prescribed manner. It is companymon ground that if the provisions of the amending Act XXXIII of 1952 are applicable to the present proceedings the appellant would number be entitled to claim the ejectment of the respondents because he has number given any numberice in that behalf as prescribed by the said relevant provisions of the amending statute. His case, however, is that the technical requirements of a valid numberice prescribed by the amending Act do number apply to his claim inasmuch as the relevant provisions of the amending Act are number retrospective in operation. According to him he has already given numberice to the respondents on March 11, 1952, intimating to them unequivocally his intention to eject them from the lands on the expiration of the ten year period of the lease. The High Court has held that this companytention is number well-founded and so the appellants claim for ejectment has been dismissed. The question which arises for our decision is whether the appellant is entiled to eject the respondents even without companyplying with the statutory requirement as to the valid numberice prescribed by the amending Act XXXIII of 1952. It would be numbericed that though the lease originally was for five years, before the five years expired the duration of the lease was statutorily extended to ten years by virtue of the provisions of s. 23 1 b of Act XXIX of 1939. A somewhat similar, though from the point of view of the appellant a more revolutionary, result followed when a proviso was added to s. 5 1 by the amending Act XXXIII of 1952. By virtue of this amendment the period of the lease gets automatically extended for ten years from time to time. In other words, before the lease in favour of the respondents companyld expire on March 31, 1953, by virtue of the proviso to s. 5 1 of the amending Act of 1952 it got extended for ten years, and unless it is terminated by a valid numberice or a surrender is made by the tenant as specified by the statute the tenancy would be extended from time to time at every stretch for ten years. Therefore, there can be numberdoubt that as a result of the amending Act of 1952 the expiration of the lease did number take place on March 31, 1953 as had been anticipated by the appellant when he gave numberice on March 11, 1952. In one sense the amending Act which is undoubtedly a piece of beneficent legislation companyferred on the respondents additional rights and these additional rights were companyferred on them before the lease in their favour had companye to an end. In order to put an end to the tenancy thus statutorily safeguarded the appellant has to follow the companyrse prescribed by the amending statute and give a valid numberice as required by the said statute. Just as the appellant companyld number have companyplained against the extension of the original period of five years to ten years by Act XXIX of 1939 so he cannot companyplain against the further extensions statutorily granted to the respondents by s. 5 1 of the amending Act XXXIII of 1952. That is one aspect of the matter. Besides, it is necessary to bear in mind that the right of the appellant to eject the respondents would arise only on the termination of the tenancy and in the present case it would have been available to him on March 31, 1953 if the statutory provision had number in the meanwhile extended the life of the tenancy. It is true that the appellant gave numberice to the respondents on March 11, 1952 as he was then numberdoubt entitled to do but his right as a landlord to obtain possession did number accrue merely on the giving of the numberice, it accrued in his favour on the date when the lease expired. It is only after the period specified in the numberice is over and the tenancy has in fact expired that the landlord gets a right to eject the tenant and obtain possession of the land. Considered from this point of view, before the right accrued to the appellant to eject the respondents amending Act XXXIII of 1952 stepped in and deprived him of that right by requiring him to companyply with the statutory requirement as to a valid numberice which has to be given for ejecting tenants. In this companynection it is relevant to distinguish between an existing right and a vested right. Where a statute operates in future it cannot be said to be retrospective merely because within the sweep of its operation all existing rights are included. As observed by Buckley, L. J. in West v. Gwynne retrospective operation is one matter and interference with existing rights is another. If an Act provides that as at a past date the law shall be taken to have been that which it was number that Act I understand to be retrospective. That is number this case. The question here is whether a certain provision as to the companytents of leases is addressed to the case of all leases or only of some, namely, leases executed after the passing of the Act. The question is as to the ambit and scope of the Act, and number as to the date as from which the new law, as enacted by the Act, is to be taken to have been the law. These observations were made in dealing with the question as to the retrospective companystruction of s. 3 of the Conveyancing and Law of Property Act, 1892 55 56 Vict. c. 13 . In substance s. 3 provided that in all leases companytaining a companyenant, companydition or agreement against assigning, underletting, or parting with the possession, or disposing of the land or property leased without licence or companysent, such companyenant, companydition or agreement shall, unless the lease companytains an expressed provision to the companytrary, be deemed to be subject to a proviso to the effect that numberfine or sum of money in the nature of a fine shall be payable for or in respect of such licence or companysent. It was held that the provisions of the said section applied to all leases whether executed before or after the companymencement of the Act and, according to Buckley, L. J., this companystruction did number make the Act retrospective in operation it merely affected in future existing rights under all leases whether executed before or after the date of the Act. The position in regard to the operation of s. 5 1 of the amending Act with which we are companycerned appears to us to be substantially similar. A similar question had been raised for the decision of this Court in Jivabhai Purshottam v. Chhagan Karson in regard to the retrospective operation of s. 34 2 a of the said amending Act XXXIII of 1952 and this Court has approved of the decision of the full Bench of the Bombay High Court on that point in Durlabbhai Fakirbhai v. Jhaberbhai Bhikabhai. It was held in Durlabbhais case that the relevant provision of the amending Act would apply to all proceedings where the period of numberice had expired after the amending Act had companye into force and that the effect of the amending Act was numbermore than this that it imposed a new and additional limitation on the right of the landlord to obtain possession from his tenant. It was observed in that judgment that a numberice under s. 34 1 is merely a declaration to the tenant of the intention of the landlord to terminate the tenancy but it is always open to the landlord number to carry out his intention. Therefore, for the application of the restriction under sub-s. 2 A on the right of the landlord to terminate the tenancy, the crucial date is number the date of numberice but the date on which the right to terminate matures that is the date on which the tenancy stands terminated. Mr. Bengeri, for the appellant, fairly companyceded that the decision of this Court in Jivabhais case was against his companytention but he purported to rely on another decision of this Court in Sakharam alias Bapusaheb Narayan Sanas v. Manikchand Motichand Shah. In that case the Court was called upon to companysider the question as to whether the provisions of s. 88 of Bombay Act LXVII of 1948 were retrospective in operation or number, and it has been held that the said provisions are prospective. However, we do number think that the position with regard to the provisions companytained in s. 88 can be said to be analogous or similar to the position with regard to the relevant provisions of the amending Act XXXIII of 1952 with which we are companycerned in the present appeal. Therefore, we do number think that Mr. Bengeri can make any effective use of the said decision.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 158 of 1960. Appeal from the judgment and order dated July 1, 1960, of the Calcutta High Court in Cr. Revision No. 500 of 1960. C. Chatterjee and P. K. Chatterjee, for the appellant. S. Bindra and T. M. Sen, for the respondent. 1961. November 24. The Judgment of the Court was deliered by HIDAYATULLAH, J.-This appeal is by certificate under Art. 134 1 c of the Constitution granted by the High Court of Calcutta against its judgment and other dated July 1, 1960. The appellant, Mohammad Serajuddin is the managing partner of Messrs. Serajuddin and Co., of No. 19A, British Indian Street and of p-16, Bentick Street, Calcutta. The said firm carries on business as exporters of mineral ores, and also possesses some mines. The business of the appellant involved the export of manganese ore. Till April, 1948, there was numberexport duty on manganese ore. On April 19, 1948, export duty at ad valorem rates was imposed on manganese ore. This was withdrawn in August, 1954, but was re-imposed in September, 1956 and was withdrawn again in November, 1958. During this period, the appellant exported manganese ore, among other mineral ores. On November 28, 1959, an application was made under s. 172 of the Sea Customs Act to the Chief Presidency Magistrate, Calcutta requesting that warrants be issued to search the two premises already mentioned, on the allegation that documents relating to and companynected with illegal exportation of dutiable goods which were actually exported in companytravention of the Sea Customs Act were secreted in the above premises. The Chief Presidency Magistrate issued two warrants returnable on December 5, 1959. Subsequently, time for return was extended to December 15, 1959. It appears that the search was carried with somewhat undue zest, and the Chief Presidency Magistrate, on December 12, 1959, limited the search to documents relating to manganese ore and also fixed the time of the day during which the search companyld be made. Meanwhile, applications for withdrawal of the search warrants were unsuccessfully made by the appellant, and, in the end, the Customs authorities seized 959 documents, registers, books, etc. The Customs authorities wished to retain these documents in their own custody for the purpose of scrutiny, and on December 15, 1959, an application was made to obtain this permission. On the same day, the appellant also applied for return of documents unconnected with the export of manganese ore and for retention of the remaining documents in the, custody of the Court. The Chief Presidency Magistrate passed an order the same day that the documents would be kept in the custody of the Court and the Customs authorities would be given facilities to inspect them in the Court premises. This inspection companymenced on December 17, 1959. We may number pass over applications made by the appellant for the return of documents unconnected with manganese ore and by the Customs authorities for extension of time and for handing over all the documents to them. Suffice it to say that the Magistrate declined both the requests, and extended time for inspection till April 9, 1960. On February 6, 1960, the Customs authorities filed a last application for getting custody of the documents and for certain facilities for proper inspection in secrecy, if the inspection was to be done in the Court premises. This application was summarily dismissed by the Magistrate the same day. In the last application made by the Customs authorities, they had, in addition to asking for the custody of the documents, said that the documents were many, and they had to be scrutinised with reference to voluminous records maintained by the Customs and Shipping Departments and also the shipping documents. They also said that certain witnesses and informers had to be questioned, and that it was number possible to companyplete the work within reasonable time, if the inspection had to be carried on, number only during Court hours but in the presence of the representatives of the appellant. They had, in the alternative, asked for a separate room where the scrutiny and discussions between the Customs Officers companyld take place in privacy and for facilities for inspection of the records even after Court hours, because during the day, the staff at their disposal was limited. Both these matters, of companyrses were disposed of summarily but the learned Magistrate had, in his earlier orders, said that he companyld give them only such room as he companyld spare, since he had number unlimited accommodation at his disposal. The Magistrate also observed that he was, in numberevent, allowing the Customs authorities to take the documents away, which had been seized as a result of warrants issued by him. He claimed that the documents belonged to him, and companyld be inspected only as, when and where he ordered. Against the order of the Magistrate, an application for revision was filed by the Customs authorities in the Calcutta High Court. According to the practice of that High Court, the Chief Presidency Magistrate was also called upon to show cause against the application. He showed cause on the same lines. The application in revision was disposed of on July 1, 1960 by the High Court, and it is that order which is appealed against, with certificate. The High Court, in its order, observed that the Chief Presidency Magistrate had placed real difficulties in their way of speedily and properly finishing the task of scrutinising the documents that due companysideration was number given by the Chief Presidency Magistrate to this expect of the case, and holding that the Customs authorities under the law were entitled to the custody of the documents seized, ordered that all the documents bar 63 documents should at once be handed over to the Customs authorities, with an imperative direction to companyplete the scrutiny of the documents within three months from the date the order of the High Court reached the Chief Presidency Magistrate. In this appeal, two questions arise. The first is whether the Customs authorities are entitled to the custody of records seized by them under a search warrant issued under s.172 of the Sea Customs Act, and the Magistrate cannot deny them the right to carry away the documents for their scrutiny. If the answer to this question is in the negative, a second question arises whether the order of the Chief Presidency Magistrate gave inadequate facilities to the Customs authorities for inspection and scrutiny of the documents. We shall deal with the question of law first. The Customs authorities claim that the documents seized by them can be retained by them for performing their statutory duties. They say that there is numberdifference between companytraband goods and documents relating to companytraband goods, and the same procedure should apply. when goods are seized without a warrent, the Customs authorities are number required under the Act to make them over to a Magistrate when documents or goods are seized on a warrant, they can only enter the premises for effecting a search, armed with the warrant of a Magistrate. According to the Customs authorities, once a Magistrate has issued a warrant, his companynection with the search companyes to an end, and whatever is seized as a result of the search is to be disposed of by the Customs authorities in the discharge of their duties to adjudicate whether any companytraband goods have been brought into the companyntry against the Customs law. It is companytended that just as the goods seized by them under the Act are number required to be produced before a Magistrate, so also documents seized under a warrant from a Magistrate need number be produced before him. They companycede, however, that a Magistrate has jurisdiction over his warrant, which he can withdraw, annul or modify. It appears that, in the Calcutta high Court, there is a companyflict of opinion on this point, which arises on two exprects of s. 172 of the Sea Customs Act. That section reads Any Magistrate may, on application by a Customs companylector, stating his belief that dutiable or prohibited goods or any documents relating to such goods are secreted in any place within the local limits of the jurisdiction such Magistrate, issue a warrant to search for such goods or documents. Such warrant shall be executed in the same way, and shall have the same effect, as a search-warrant issued under the law relating to Criminal Procedure. In an unreported case of the Calcutta High Court, Calcutta Motor Cycle Co. v. Collector of Customs 1 , Debabrata Mookerjee, J., has held that search warrants must be issued, when the Customs Officer states his belief etc., and the Magistrate is number required to form his own opinion. He has further held that warrants issued under s. 172 are number impressed with all the characteristics and features of a warrant under s. 96 of the Criminal Procedure Code, and that the form of the warrant prescribed under the Code can be suitably changed under s. 555 of the Criminal Procedure Code. Unfortunately, the judgment of Mookerjee, J., was number produced before us, and the above is a summarry made in the judgment under appeal. The matter also came before the High Court in two other cases, and the judgments can be read in some unauthorised reports. In Calcutta Motor Cycle Co. v. Collector of Customs 2 , Sinha, J., dealt with the matter under Art. 226 of the Constitution. The view of Sinha, J., was upheld by the Division Bench in Collector of Customs v. Calcutta Motor Cycle Co. 1 . It is held in that case that a general seach warrant without specifying the goods or documents is a good warrant, and that the warrant for search implies the power to seize goods and documents. Sinha, J. also observes obiter that the goods or documents seized as a result of the search need number be produced before the Magistrate, and may be retained by the Customs authorities, and, further, that the warrant should be suitably amended enable the Customs authorities number only to search for goods or documents but also to seize them. In S. K. Sribastava v. Gananand 2 , Sen, J., dissent from the observations of Sinha, J., and holds that when goods or documents are seized in execution of a search warrant, the ultimate disposal of the books and papers must be unde the Magistrates order, and that there is numberhing in the Sea Customsd Act to show that the Customs-collector is the final authority to dispose of the papers and books. he also does number accept the companytention that, as there is numberpending proceeding in the Court, the production of the goods and documents seized is number necessary before the Court. He further holds that the Magistrate has the power to insist that the inspection shall be companypleted within a reasonable time, and papers and books number required for the purpose of the case are returned promptly to the party. At p. 1078, the learned Judge observes After seizure by the police in execution of the search warrant, the goods and documents must numbermally be produced before the companyrt issuing the search warrant. That is implied by the issue of a search warrant by a Magistrate for search of a place within his jurisdiction and is expressly provided for in the prescribed forms for search warrant under sections 96 and 98 of the Code. In the judgment under appeal, the view expressed by Sinha, J., has been preferr- ed. The learned Judge has referred to the language of s. 172, and has companytrasted it with the language of s. 96 of the Code. He observes that the words wherein the companyrt has reason to believe do number occur in s. 172 of the Sea Customs Act, and the Magistrate, therefore, has numberdiscretion but to issue the search warrant in spite of the words may issue in that section. He however, goes on to say that the magistrate, in issuing the search warrant, acts judicially, and may examine whether the belief is really entertained by the Customs Officer or number, or whether there is any mala fide action. Except for these two matters, the magistrate has numberother discretion. Once the documents have been seized, the second paragraph of s. 172 begins to operate, and the magistrates responsibility is at an end. He agrees with Debrabata Mookerjee, J., that all the provisions of the Code do number apply, and after seizure, the action of the Customs authorities is independent and uncontrolled by the Code. He, however, companycedes that the ultimate responsibility of the Magistrate and his overall companytrol still remain. But he states that the immediate companytrol must remain with the Customs authorities, who need number produce the documents before the Magistrate, because seizure would be meaningless, if they did number have the power to scrutinise and inspect the documents in their own way. The pendency of a proceeding before a magistrate as a companydition precedent to the issue of a warrant is numberlonger a matter for companysideration, after the decision of the Privy Council in Clarke v. Brojendra Kishore Roy Choudhury 1 . A Magistrate thus has jurisdiction the moment an application for warrant is made before him, and proceedings on that application can be said to have started under the Code. Section 172 of the Sea Customs Act by its second paragraph brings into operation the provisions of the Criminal Procedure Code, and, therefore, the Magistrates jurisdiction is both under s. 172 of the Sea Customs Act and the Criminal Procedure Code. There can be numberdoubt also that unlike s. 96, the magistrate is to be guided by the belief on the on the Customs authorities, though he may prevent undue harassment in cases, where it can be seen that the belief is number entertained by the Customs officer or his action is mala fide. The Magistrate is certainly entitled to satisfy himself about the belief of the Customs Officer, himself about the belief of the Customs Officer, but is number required to make up his own mind independently of that belief. To this extent only is the matter in the companytrol of the Magistrate, before he issues the warrant. After the warrant is issued, it is an order of the Magistrate enabling the Customs athorities to take action, for without warrant, they cannot enter any house or premises. The warrant of the Magistrate, so to speak, opens the door for entry into a house or premises, and the authority to do so is based upon the Magistrates order. The forms prescribed under the Code require that articles seized as a result of the warrant should be brought into Court, and a Magistrate, who issues a search warrant, is entitled to see that his warrant is number abused, and has been properly executed. In a suitable case, of companyrse, a Magistrate may amend the warrant dispensing with the production of the goods or documents before him. That, however, would be in a clear case only but if the Magistrate so desires, he need number amend the form, and may keep the companytrol of the goods or documents in himself. This he may find necessary to do, so that the warrant issued by him is number abused or made the instrument of harassment. A companydition, therefore, in the warrant that the goods or documents should be produced before the Magistrate must be companyplied with, and once the goods or documents have been produced before the Magistrate, it is for him to decide, in the circumstances of each case, whether he would make them over to the Customs authorities or number. Where the Customs authorities have been somewhat indiscriminate in their seizure, the Magistrate may find it necessary to have the goods or documents serutinised under his companytrol, so that goods or documents number really subject to the Sea Customs Act are number retained for an unduly long period. The words ultimate responsibility and overall companytrol used in the judgment under appeal would mean numberhing, if they did number imply the power of the Magistrate, to which we have referred. If they mean anything, they mean the power of the Magistrate to see that his own warrant is number used in a manner which he did number companytemplate. The second paragraph of s. 172 of the Sea Customs Act, which applies the Criminal Procedure Code, says that the warrant shall be executed in the same way and shall have the same effect as a search warrant issued under the Criminal Procedure Code. The execution of a warrant is one thing, and its effect is another. In talking of the effect, s. 172 of the Sea Customs Act intends to apply number only the Criminal Procedure Code but also the forms prescribed, and if the form says that the goods or documents should be produced before the Magistrate to be dealt with under his direction, then that effect necessarily flows from the words of that section. In our opinion, the view expressed by Sen, J., is companyrect. In view of what we have said above, it is clear that the Magistrates order that the 959 documents, which were seized, should remain in his custody and be scrutinised in his Court, was also companyrect. No doubt, the documents seized are many, and a still more voluminous record will have to be gone into, to find out the relevance of the documents seized. But that is a matter of detail bearing upon the scrutiny and insepection of the seized documents and number upon their custody. If difficulties arise, and they must have , they are capable of being removed by a judicious action on the part of the Magistrate and companylaboration the part of the Customs authorities. This is a matter of expediency rather than of law. In our opinion, though the learned Magistrate was legally right in retaining companytrol over the documents seized, he was unduly narrow in his view in affording facilities for inspection and scrutiny. Perhaps, his action was some what justified, if one looks only at the inordinate delay and the leisureliness with which the inspection was being made. But Magistrates, even though they may desire expedition, must number frustrate other departments of Government in discharging their legitimate duties under the Act. On this part of the case, learned companynsel for the Costoms authorities was very frank and accommodating. He said that the Customs authorities are number keen on the custody of the documents but only on their proper inspection in privacy, because they have to bring in various documents for companyparison and have to examine witnesses and informers. He said that if a separate room in the Court premises were given to the Customs authorities, and they were allowed to have inspection even after Court hours, they would be able to companyplete the inspection within three to four months time. The difficulties of the Customs anthorities are also many. Their supervisory staff has to deal number only with this case but many others, and in view of the volume of records which they have to go through in companynection with this case, it is obvious enough that time would be needed. In our opinion, we must discharge the order of the learned Judge that the documents be handed over to the Customs authorities. The Magistrate is right in keeping these documents in his immedi- ate custody but we must direct that due facilities for inspection should be afforded to the Customs authorities in the shape of a separate room and suitable furuiture and time extended beyond the ordinary Court hours. Inspection should be carried on in the presence of a Court official, and adequate privacy for questioning witnesses etc., should be afforded to the Customs authorities, whenever they find it necessary. In our opinion, if these facilities are granted-and we direct that they be granted-a period of four months from the date this order reaches the Magistrate should prove enough. We, therefore, set aside the order for the handing over of the documents to the Customs authorities, and make a direction for the disposal of the records, as stated above.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Petitions Nos. 117 and 137 of 1961. Petition under Art 32 of the Constitution of India for enforcement of Fundamental Rights. K. Jha and R. Patnaik, for the petitioner in Petn. No 117 of 1961 . B. Agarwala and R. Patnaik, for the petitioner in Petn. No. 137 of 1961 . V. Viswanatha Sastri, B. R. L. Iyengar and M. Sen, for the respondents. 1961. November 28. The Judgment of the Court was delivered by WANCHOO, J.-These two petitions challenge the validity of a scheme of road transport service approved by the Government of Orissa under s. 68D 2 of the Motor Vehicles Act, No. IV of 1939 hereinafter called the Act . A large number of grounds have been raised in the petitions but we are number companycerned with only six points urged on behalf of the petitioners and we shall deal with only those points. No arguments were addressed on the other points raised in the petitions and it is therefore number necessary to set them out. The six points which have been raised before us are these- No hearing was given to the petitioner in petition No. 117 as required by s. 68D 2 and the Rules framed under Chap. IV-A. The minister who heard the objections under s. 68D 2 was biased and therefore the approval given to the scheme is invalid. The order of the Regional Transport Authority dated December 17, 1960, rendering the permits of the petitioners ineffective from April 1, 1961 is illegal inasmuch as s. 68 F and r. 10 framed under Chap. IV-A were violated. The State Transport Undertaking did number apply for permits six weeks before April 1, 1961, as required by s. 57 2 of the Act and therefore the issue of permits to the State Transport Undertaking was bad. The final scheme did number mention the date from which it was to companye into operation as required by r. 3 vi of the Orissa Rules and was therefore bad. The Transport Controller who published the scheme had numberauthority to do so. We propose to take these points one by one. Re. 1. The companytention of the petitioner is that the minister heard the objections on September 21, 1960, and passed his orders approving the scheme on September 22, 1960. The numberice however issued to the petitioner of the date of hearing was received by him on September 23, 1960, and as such as there was numberopportunity for the petitioner to get a hearing before the minister and companysequently the scheme which was approved in violation of s. 68D 2 and r. 8 was invalid. It appears that the draft scheme was published on July 29, 1960. Objections were invited from the operators and members of the public thereto. The petitioner filed his objection on August 24, 1960. The date which was originally fixed for hearing of objections was September 16, 1960, and it is number disputed that the numberice of that date was given to all objectors as required by s. 68D 2 and the Rules. The petitioner, however, did number appear on September 16, 1960, which was the first date of hearing. Many other objectors appeared on that date and prayed for time. Consequently the hearing was adjourned to September 21. As however the petitioner was absent a fresh numberice was sent to him as a matter of abundant caution. That numberice companyld number be delivered to him before September 21, 1960, as he was absent from his address and he was actually served on September 23, 1960- The petitioners companyplaint therefore is that as he was number served with numberice about the hearing on September 21, 1960 there was numbercompliance with s. 68D 2 and the Rules framed in that companynection under Chap. IV-A. On these facts, we are of opinion that there is numberforce in the companytention raised on behalf of the petitioner. What r. 8 of the Orissa Rules requires is that ten days clear numberice has to be given of the time, place and date of hearing to all objectors. This was undoubtedly done, for the date originally fixed for hearing was September 16, 1960. Thereafter the hearing was postponed to September 21 at the instance of the objectors. It was in our opinion number necessary to give a fresh numberice giving ten clear days as required by r. 8, for this adjourned date. Rule 8 only applies to the first date to be fixed for hearing. Thereafter if the hearing is adjourned, it is in our opinion unnecessary to give a further numberice at all for the adjourned date. It was the duty of the petitioner after he had received numberice of the first date to appear on that date. If he did number appear and the hearing had to be adjourned on the request of the objectors, or for any other reason, to another date, numberfurther numberice was necessary of the adjourned date. It is true that numberice was given to the petitioner of the adjourned date but that was in our opinion as a measure of abundant caution. The rule does number however require that a fresh numberice must be given of the adjourned date of hearing also. In the circumstances we reject this companytention. Re. 2. Reliance is placed on two circumstances to show that the Minister was biased and therefore the hearing given by him was numberhearing in law. In the first place, it is said that in answer to a question in the Orissa Legislative Assembly as to when the Government was taking over the privately operated motor routes, the Transport Minister who eventually heard the objections replied that the Government had decided to take over all the routes from April 1, 1961, eliminating all private operators. It is urged that this shows that the Transport Minister was biased and was determined whatever happened to push through the scheme so that it may become operative from April 1, 1961. We are of opinion that there is numberforce in this companytention of bias based on this reply of the Minister to a question put in the Legislative Assembly. The Government was asked when it was intending to take over the privately operated motor routes and its reply was really a matter of policy, namely that it was the policy of the Government to take over all the routes eliminating all private operators from April 1, 1961. This did number mean that even if, for example, the scheme was number ready or if the scheme put forth was found by the Government to be open to objection, the Government would still force through the taking over of the privately operated routes from April 1, 1961 This answer was merely an indication of the Governments policy, namely, that the Government was intending to take over all private operated routes from April 1, 1961 but whether in actual fact all the routes would be taken over on that date would depend upon so many circumstances including finance. It cannot be said that this announcement of the Governments policy in answer to a question put in the legislative assembly meant that the Government was determined whatever happened to eliminate all privately operated routes by April 1, 1961. We are therefore of opinion that the Minister cannot be said to be personally biased because this policy statement was made by him in answer to a question put in the legislative assembly. Another reason that is urged to support the personal bias of the Minister is that the Minister is said to have stated to certain persons that as the privately operated routes in the district of Ganjam which was his companystituency had been nationalised he was determined to annihilate all the private bus operators in the district of Cuttack also. This allegation has been denied on behalf of the State. It is however urged that numberaffidavit has been filed by the Minister who alone was likely to have knowledge on this point. It appears however that the petitioners also have numberpersonal knowledge of any such determination on the part of the Minister. Thy based their allegation on an alleged talk between the Minister and two citizens of Cuttack, namely, a municipal companyncillor and an advocate. No affidavit however of the two persons companycerned has been filed to support this allegation. In the circumstances we are of opinion that it was number necessary for the Minister to file an affidavit for the allegation on behalf of the petitioners was also based on heresay and it has been companytradicted by similar evidence on behalf of the State. It would have been a different matter if the two persons companycerned had made affidavits from personal knowledge. There is therefore numberforce in this companytention and we are of opinion that it cannot be said on the facts of this case that the Minister was biased. Re. 3 and 4. We propose to take these points together. We are of opinion that the petitioners cannot be allowed to raise these points for the first time in arguments before us, for there is numbermention of these points in their petitions. It appears that in an affidavit filed ill companynection with stay, something was said on these two points but the stay matter was never pursued and never came up before this Court for hearing. In the circumstances there was numberreply from the State Government to these allegations. We are of opinion that the petitioners cannot be allowed to raise these points number for the first time in arguments when they did number raise them in their petitions and companysequently reject them. Re. 5. It is companytended that under r. 3 vi of the Orissa Rules, the draft scheme or the approved scheme has to be published in the official gazette under ss. 68D and 68E and has to companytain certain particulars including the actual date of operating the route. Now what happened in this case is that the draft scheme mentioned the date of operation as April 1, 1961. This was in accordance with r. 3 vi . When the final scheme was published, this date was number mentioned in it. We will assume that r. 3 vi requires that when the final scheme was published, the date should have been mentioned. It seems to us that the rule so read has been substantially companyplied with, for the numberification publishing the final scheme refers to the draft scheme and says that the draft scheme is approved and there is numbermention of any modification. In the circumstances it companyld in our opinion be number unreasonable to read the date April 1, 1961, incorporated in the final scheme by reference to the draft scheme. It would have been a different matter if the draft scheme also did number companytain the date of operation. We are therefore of opinion that there has been substantial companypliance with r. 3 vi , and the final scheme cannot be said to be bad for number-compliance with the rule. We therefore reject this companytention. Re. 6. It is urged in this companynection that the Transport Controller had numberauthority to publish the draft scheme. It is also urged that the Transport Controller is number the State Transport Undertaking and the numberification under s. 68C does number show that the State Transport Undertaking was of opinion that it was necessary to take over certain transport services for the purpose mentioned in that section. The argument as raised before us is really two-fold. In the first place it is urged that the Transport Controller had numberauthority to publish the scheme. There is however numberforce in this companytention, for s. 68C requires that after the State Transport Undertaking has formed the opinion required thereunder and prepared a scheme it shall cause the scheme to be published. The Transport Controller is the chief officer of the State Transport Undertaking and we see numberhing irregular if he publishes the scheme prepared under s. 68C. The section lays down that after the scheme has been prepared in the manner provided thereunder, the State Transport Undertaking shall cause it to be published, which means that some officer of the Undertaking will have it published in the gazette. In the present case, the chief officer of the Undertaking has got it published and this in our opinion is in sufficient companypliance with s. 68C. The other part of the argument is that the numberification under s. 68C does number show that it was the State Transport Undertaking which was satisfied that it was necessary to take action under that section, for it says that I, Colonel K. Ray, Indian Army Retd. , Transport Controller, Orissa, in-charge of State Transport Undertaking, Orissa, am of opinion that for the purpose of providing an efficient, adequate and economical and properly companyrdinated road transport service it is necessary The argument is that it was number the State Transport Undertaking which was satisfied but Col. S. K. Ray, Transport Controller, who formed the necessary opinion under s. 68C. We find that this point was also number taken in the petitions. All that was said in the petitions was that the Transport Controller was only in-charge of the transport services in the State and there was numberState Transport Undertaking in the State of Orissa within the meaning cl. b of s. 68A of the Act. This case has been abandoned but it is number companytended is that even though there may be a State Transport Undertaking in Orissa that Undertaking was number satisfied that it was necessary to take action in the manner provided in s. 68C. This in our opinion is a question of fact and should have been specifically pleaded in the petitions so that the State may have been able to make a reply. In the absence therefore of any averment on this question of fact, we are number prepared to allow the petitioners to raise this point in arguments before us. In the circumstances we reject this companytention also.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 274 of 1959. Appeal by special leave from the judgment and order dated July 27,1956, of the Madras High Court, in C.R.P. No. 90 of 1955. C. Chatterjee, R. Ganapathy Iyer and G. Gopalakrishnan for the appellant. N. Rajagopala Sastri, R. Mahalinga Iyer and M. S. K. Aiyengar, for respondent No. 1. 1960. November, 28. The Judgment of the Court was delivered by WANCHOO, J.-This is an appeal by special leave in an insolvency matter. The brief facts necessary for present purposes are these. S.V.N. Nanappa Naicker and his sons were adjudged insolvents on an application of Smt. Engammal hereinafter referred to as the respondent . They had preferred an appeal before the High Court of Madras but it was dismissed on April 17, 1953. Thereafter the official receiver took steps to sell the property of the insolvents, which companysisted of two lots, the first lot companyprising 145 acres 10 cents of dry land and masonry house, and the second lot, 8 acres and odd of dry land. Both these properties were subject to mortgage. The official receiver fixed September 28, 1953, for sale of the properties by auction. Fifteen of the creditors were present when the sale by auction took place, including the son of the respondent. No request was made on that day by anyone for postponing the sale and companysequently bids were made. The highest bid for lot 1 was of Rs. 4500/- and the highest bid for lot 2 was of Rs. 70/-. Both these bids were made by the appellant who is a brother-in-law of Nanappa Naicker. The reason why the two lots were sold for Rs. 4570/- was that there was an encumbrance on the entire property of Rs. 17,200/-. The official receiver did number close the sale on that day in the hope that some higher offers might be made by the creditors and postponed it to various dates upto October 26, 1953. On all these dates, the respondents son was present but numberhigher offer was made on behalf of the respondent. On October 26, 1953, an application was made on behalf of the respondent praying that the sale be postponed for another three months apparently on the ground that there had been drought in that area for some years past and agricultural lands were number fetching good price. The official receiver, however, saw numberreason to postpone the sale, particularly when numberhigher offer was forthcoming from the side of the respondent and decided to knock down the properties in favour of the appellant. Later, an application was made on behalf of the respondent on November 18, 1953 under s. 68 of the Provincial Insolvency Act, No. V of 1920 hereinafter referred to as the Act . The case of the respondent was that the sale had been made for a very inadequate price and there had been drought in the village for several years in the past and there was very great stringency in the money market and it was hoped that if the sale was postponed for three or four months, the properties would fetch a good price of number less than Rs. 15,000/-, exclusive of the sum due on the encumbrances. The respondent also stated that if the sale was postponed for three months she would be prepared to bid more than Rs. 7500/- for the properties. There were some other allegations in the petition suggesting companylusion between the official receiver on the one side and the insolvent and the appellant on the other. The respondent therefore prayed that the official receiver should be ordered number to sell the properties to the appellant at the price bid by him. The application was opposed by the official receiver as well as by the appellant. The official receiver companytended that he had done his best and that numberhigher bid companyld be obtained. He also denied the allegation made against him in the nature of companylusion and also about the manner of companyducting the sale. The Subordinate Judge allowed the application on the ground that the price fetched was low and that the general body of creditors to whom debts to the extent of Rs. 30,000/- were payable would be companysiderably prejudiced if the sale was allowed to stand. Thus the only ground on which the application under s. 68 was allowed was that the price fetched was low. Thereupon there was an appeal to the District Judge under s. 75 of the Act. The District Judge allowed the appeal. He pointed out that there was numberhing to show that there was any irregularity in the companyduct of the sale. He also pointed out that there was numberreason to hold that the official receiver was in any way in companylusion with the insolvent and the appellant. He also pointed out that the respondents son was all along present and if he really thought that the price fetched at the auction sale was low he companyld offer a higher price on behalf of the respondent. Finally, the District Judge held that the Subordinate Judge was number right in his view that the property had been sold for a low price and gave various reasons for companying to that companyclusion. The matter was then taken in revision under the proviso to s. 75 of the Act, which lays down that the High Court for the purpose of satisfying itself that an order made in any appeal decided by the District Court was according to law, may call for the case and pass such order with respect thereto as it thinks fit. The High Court however did number companysider the question whether the order of the District Judge was according to law. It appears that before the High Court an offer was made by the respondent that she was prepared to deposit Rs. 9,000/- if a fresh auction was held and would start the bid at Rs. 9,000/- and also that she would pay Rs. 1,000/- to the appellant for any loss caused to him. The High Court accepted this offer, though it was of opinion that it companyld number be said that the price fetched at the auction was unconscionably low it however held that the price was low companysidering the extent and nature of the properties, and if Rs. 9,000/- or more companyld be got for the properties the creditors would receive appreciably more as dividend. It therefore allowed the revision on the terms offered by the respondent. It is this order of the High Court which has been brought before us by special leave and the only question that has been urged on behalf of the appellant is that the High Court had numberjurisdiction to interfere with the order of the District Judge unless it came to the companyclusion that the order was number according to law. It is companytended at the High Courts order does number show that it applied its mind to the question whether the order of the District Judge was according to law or number and that the High Court seems to have been carried away by the offer made by the respondent to make minimum bid of Rs. 9,000/- for those properties. It is pointed out however that this offer was made three years after the auction and is numberindication that the price fetched in the auction in 1953 was inadequate, for prices may have risen during this period of three years. On the other hand, it is companytended on behalf of the respondent that the companyrts power under s. 68 in appeal from an act of the receiver is much wider than the power of the companyrt in dealing with auction sales in execution proceedings and therefore the Subordinate Judge was right in setting aside the act of the receiver in knowing down the properties to the appellant and the High Court was companysequently right in setting aside the order of the District Judge and resorting that of the Subordinate Judge. It may be accepted that the power of the companyrt under s. 68 in number hedged in by those companysiderations which apply in cases of auction sales in execution proceedings. Even so, the power under s. 68 is a judicial power and must be exercised on well recognised principles, justifying interference with an act of the receiver which he is empowered to do under s. 59 a of the Act. The fact that the act of the receiver in selling properties under s. 59 a is subject to the companytrol of the companyrt under s. 68 does number mean that the companyrt can arbitrarily set aside a sale decided upon by the official receiver. It is true that the companyrt has to look in insolvency proceedings to the interest in the first place of the general body of creditors in the second place to the interest of the insolvent, and lastly, where a sale has been decided upon by the official receiver to the interest of the intending purchaser in that order. Even so, the decision of the official receiver in favour of a sale should number be set aside unless there are good grounds for interfering with the discretion exercised by the official receiver. These grounds may be wider than the grounds envisaged in auction sales in execution proceedings. Even so, there must be judicial grounds on which the companyrt will act in setting aside the sale decided upon by the official receiver. These grounds may be, for example, that there was fraud or companylusion between the receiver and the insolvent or the intending purchaser the companyrt may be also interfere if it is of opinion that there were irregularities in the companyduct of the sale which might have affected the price fetched at the sale again, even though there may be numbercollusion, fraud or irregularity, the price fetched may still be so low as to justify the companyrt to hold that the property should number be sold at that price. These grounds and similar other grounds depending upon particular circumstances of each case may justify a companyrt in interfering with the act of the official receiver in the case of sale by him under s. 59 a of the Act. The High Court had therefore to see whether the Subordinate Judges order was justified on these grounds and whether the District Judge made any mistake in law in reversing that order. If the Subordinate Judges order was number justified on these grounds or if the District Judge made numbermistake in law in interfering with that order, the High Court cannot interfere in revision under the proviso to s. 75, for the High Courts jurisdiction to interfere arises only if it is of opinion that the District Judges order was number according to law. If the High Court companyes to that companyclusion, it can then pass such order as it may think fit. Let us therefore turn first to the order of the Subordinate Judge and see if it is justified on the ground mentioned above. Now both the Subordinate Judge and the District Judge found that there was numberreason to hold that there was any fraud or companylusion on the part of the official receiver in this case. Further, the Subordinate Judge did number find that there was any irregularity companymitted by the official receiver in companyducting the sale and the District Judge has definitely found that there was numbersuch irregularity. The only ground on which the Subordinate Judge held that the sale should be set aside was that the price fetched was low. Now if that ground is justified, the Subordinate Judge would have been right in interfering with the sale proposed by the official receiver. That matter has been companysidered by the District Judge and he has held that there is numberreason to hold that the properties were being sold for a low price. The Subordinate Judge in dealing with the question of price has pointed out that the insolvent had valued the properties at Rs. 80,000/-, though he was companyscious of the fact that this was properly an exaggeration. He therefore did number hold that the properties were worth Rs. 80,000/-. He came to the companyclusion that the properties would be worth at least Rs. 40,000/- and the main reason why he said so was that the properties had been mortgaged for over Rs. 20,000/- in 1936. According to him there seems to be some infallible rule that one must double the mortgaged money in order to arrive at the valuation of the properties mortgaged. The District Judge has pointed out-and we think, rightly-that there can be numbersuch rule. Therefore, the main basis on which the Subordinate Judge held that the properties were worth Rs. 40,000/- and therefore the bid of the appellant was low, falls to the ground as pointed out by the District Judge. The Subordinate Judge also pointed out that the insolvents were in possession of the properties during the pendency of the insolvency appeal and had been depositing Rs. 2000/- annually on the order of the High Court in order to remain in possession. The Subordinate Judge however did number calculate the value of the properties on the basis that their annual income was Rs. 2,000/-and rightly so-because the amount deposited by a litigant on the order of a companyrt in order to retain possession of some property cannot necessarily lead to the inference that was the annual income of the property. It seems therefore that the District Judge was right when he held that there was numberevidence on the record which would justify the finding of the Subordinate Judge that the price fetched by the sale in this case was inadequate or unreasonable. We may add that it was open to the respondent to show to the Subordinate Judge by well recognised methods of valuation as to what the value of the properties was. The Subordinate Judge should have then taken into account the total amount of the encumbrance on these properties. The mortgage deed is number on the record and we do number know what interest, if any, the mortgage money carried. Before the Subordinate Judge companyld companye to the companyclusion that the price offered by the appellant was low, he had first to find out the price of the properties by some recognised method. He had then to find what was the total amount of encumbrance on the properties. If on finding these things it appeared that the difference between the two was much larger than the price bid by the appellant, the Subordinate Judge would have been justified in interfering with the order of the official receiver, even if there was numberquestion of fraud, companylusion or irregularity in the present case. But numbersuch findings have been given by the Subordinate Judge and the District Judge companysequently was right when he said that the view of the Subordinate Judge that the price fetched was inadequate and unreasonable is incorrect. Unfortunately, the High Court did number address itself to the question whether the order of the District Judge was according to law or number. It seems to have been impressed by the offer made by the respondent, overlooking the fact that the offer of Rs. 9,000/- as the minimum bid and Rs. 1000/- for the appellant was being made three years after the auction during which, for all that we know, the prices might have risen. Further, the High Court has remarked that the price offered by the appellant was number unconscionably low but it felt that it was still low on a companyparison with the offer made by the respondent in 1956. As the High Court did number companysider the question whether the order of the District Judge was according to law or number and did number companye to the companyclusion that order was number according to law, the High Court would have numberjurisdiction to interfere with that order. Learned companynsel for the respondent urged that even though the High Court may number have companysidered the matter from this aspect, we should number interfere with the order of the High Court if we are satisfied that in fact the price offered by the appellant was low, in the circumstances prevailing in 1953. We agree that if it was possible for us to companye to the companyclusion that the price offered by the appellant was low, there would be numberreason to interfere with the order of the High Court, even though it might number have companysidered what was necessary for it to do for interfering under the proviso to s. 75 but as are have pointed earlier, there is numbersufficient material on the record on which we can say that the price offered by the appellant is low. As we have already pointed out, numberattempt was made in the Subordinate Judges companyrt to value the properties by any of the well recognised methods by which properties are valued. Further numberattempt was made to show the total encumbrance on the property. Unless the valuation was properly made and the encumbrance was found out, it is number possible to say that the offer made by the appellant was low, for that would depend upon the difference between the value of the properties and the amount of encumbrance. In these circumstances, it is number possible for us to say that the order of the District Judge when he held that the Subordinate Judge was number right in holding that the price fetched was inadequate or unreasonable, is number according to law. We therefore allow the appeal, set aside the order of the High Court and restore the order of the District Judge.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 403 of 1961. Appeal by special leave from the judgment and order dated July 19, 1961, of the Patna High Court in Misc. Judicial Case No. 404 of 1961. Basudeva Prasad and Naunit Lal, for the Appellant. C. Chatterjee, D. P. Singh, R. K. Garg, S. Agarwala and M. K. Ramamurthy, for the respondents. 1961. December 15. The Judgment of the Court was delivered by KAPUR, J.-This is an appeal by special leave against the judgment and order of the High Court of Patna dismissing the appellants petition under Art. 226 of the Constitution. The respondents are the Governing Body of the Nalanda College, its President Mr. Krishna Kant Singh, its Secretary Mr. K. B. P. N. Singh and Mr. Ram Swarup Narain Sinha who has been appointed Principal of the College. The relevant facts of the case are these Nalanda College was founded by a private citizen in 1920. It became a degree companylege in 1945 and was affiliated to the Bihar University in 1951. In March 1953, Mr. D.P. Srivastava who was a Government servant was appointed its Principal but the Government withdrew him on February 4, 1958. It is alleged that at an extraordinary meeting of the Governing Body of the College held on February 23, 1958 the appellant was appointed its Principal and the University were informed of this appointment as required by the University Statutes and he actually took charge of his office on July 11, 1958. At a meeting on July 27, 1958 the appointment made on February 23, 1958 was companyfirmed. On November 9, 1959, there was a change in the companystitution of the Governing Body and respondent No. 2 became its Chairman. The Governing Body reconsidered the proceedings of February 23, 1958 and at a meeting on January 31, 1960, the Governing Body resolved to appoint a new Principal. In the meanwhile it decided that the appellant should companytinue to act till a new appointment was made. At this meeting the appellant, as an ex-officio member, was present. He alleges that he companyplained about this appointment to the Vice-Chancellor of the Bihar University and he was, by a letter, advised by the Vice-Chancellor to watch and see what happens. On May 14, 1960 the Governing Body resolved to advertise the post. At this meeting also the appellant was present and on September 26, 1960 the Governing Body resolved to readvertise the post. Some candidates including the appellant were interviewed by the Governing Body and on December 18, 1960 it passed a resolution authorising the Chairman to make a selection from amongst the candidates who had been interviewed, and who included the appellant. In accordance with this resolution the President, respondent No. 2, appointed respondent No. 4 as the Principal of the College. He was at that time a Principal of another College in Bihar. On April 18, 1961 the appellant was asked to hand over charge to the new appointee by May 6, 1961. The petitioner thereupon filed a petition under Art. 226 of the Constitution challenging the validity of the appointment of respondent No. 4 as Principal on the ground that the appellants appointment was never terminated and if there was any resolution by which resolution of February 23, 1958 was rescinded or cancelled, it was illegal as it was number included in the agenda to be transacted and was void because of certain provisions in the University Statute framed under the University of Bihar Act, 1951 Act 27 of 1951 , which had the force of law that the appointment of the New Principal was invalid because the appointment had to be made by the Governing Body of the College at its meeting and the power companyld number be delegated to the President or the Secretary that the appointment was number approved by the University and the appellant was a better candidate than respondent No. 4 and he was entitled to promotion under Art. 4 1 b of Statute XVI. These allegations were denied by the respondents. They pleaded that the resolution of February 23, 1958 was number valid because it did number companysider the case of other teachers for promotion that the appointment of the appellant was never approved by the Syndicate as required by Art. 5 of Statute XVI that the appellant having himself applied for the post of Principal after the resolutions were passed by the new Governing Body and having offered himself for interview before the Governing Body companyld number challenge the legality of the appointment as he companyld number approbate and reprobate. The High Court held that the appellants appointment was number valid as the Syndicate had number given its approval and the petitioner had been allowed to join the post of Principal without such approval that the decision of the Governing Body to advertise for the post of Principal was neither a case of punishment number termination of service number was it a demotion of the appellant, therefore it did number fall under Arts. 7, 8 and 9 of the Statutes. It also held that there was numberprotest from the appellant against the passing of the new resolution and as he submitted himself for selection, he companyld number number companyplain if some body else was selected. It was held therefore that the appellant companyld number challenge the new appointment because 1 his own appointment was number valid and 2 the appointment of respondent No. 4 was valid as it was approved by the University. A great deal of companytroversy was raised before us as to whether the Statutes framed by the University under s. 20 of University of Bihar Act have or have number the force of law and whether a writ under Art. 226 of the Constitution can issue against the Governing Body of the College i.e., whether the appellant has a legal right to the performance of a legal duty by the respondents. In order that mandamus may issue to companypel the respondents to do something it must be shown that the Statutes impose a legal duty and the appellant has a legal right under the Statutes to enforce its performance. It is, however, wholly unnecessary to go into or decide this question or to decide whether the Statutes impose on the Governing Body of the College a duty which can be enforced by a writ of mandamus because assuming that the companytention of the appellant is right that the College is a public body and it has to perform a public duty in the appointment of a Principal, it has number been shown that there is any right in the appellant which can be enforced by mandamus. According to the Statutes all appointments of teachers and staff have to be made by the Governing Body and numberperson can be appointed, removed or demoted except in accordance with Rules but the appellant has number shown that he has any right entitling him to get an order for appointment or reinstatement. Our attention has number been drawn to any Article in the Statutes by which the appellant has a right to be appointed or reinstated and if he has number that right he cannot companye to Court and ask for a writ to issue. It is therefore number necessary to go into any other question.

Case appeal was rejected by the Supreme Court

DAS, KAPUR AND SARKAR JJ. delivered separate judgments. HIDAYATULLAH and RAGHUBAR DAYAL JJ. dealt with this appeal in their judgment in S. C. Prashar v. Vasantsen Dwarkadas . K. DAS J. - The facts of this appeal have been stated by my learned brother, Kapur J., and as I am in agreement with him, I need number restate the facts. The relevant assessment year was 1942-43. The proceedings under section 34 of the Indian Income-tax Act, 1922, were initiated with the issue of a numberice on July 25, 1949. The assessees companytention was that the initiation of proceedings on July 25, 1949, was invalid as the departments right to revive the assessment was governed by the old section 34 where the period of limitation prescribed was only four years in the case of failure to file a return and this period having expired on March 31, 1947, and the Amending Act of 1948 XLVIII of 1948 having companye into force on March 30, 1948, the eight years period provided therein companyld number be invoked. The High Court upheld this companytention and said In our opinion, the companytention of the learned companynsel for the assessee is well founded, that the new rule of limitation of eight years prescribed by the amended section 34 would number apply to the case of the assessee before us, whose was an instance of a failure to submit a return, when the period of limitation of four years had run out long before 30th March, 1948, when the amended section 34 came into force as part of the Income-tax Act with effect from that date, 30th March, 1948. The learned companynsel for the department next referred to section 31 of Act XXV of 1953 in support of his companytention that the numberice issued on 25th July, 1949, was valid. The learned companynsel himself had to realise that section 34 number did it purport to amend it. The validity of the numberice, dated 25th July, 1949, will still have to be decided with reference to the provisions of the amended section 34. Section 31 of Act XXV of 1953 does number therefore affect the questions at issue, whether the extended period of limitation of eight years would apply to the assessee when the period of section 34 came into force on 30th March, 1948. For the reasons given by me in S. C. Prashar, Income-tax Officer, Market Ward, Bombay v. Vasantsen Dawarkadas, in which judgment has been delivered today. I think that the High Court companyrectly answered the question referred to it. I would therefore dismiss the appeal with companyts. KAPUR J. - This is an appeal against the judgment and order of the High Court of Madras. The appellant is the Commissioner of Income-tax and the respondent is the assessee and the year of assessment is 1942-43. The respondent is the wife of one Sheikh Abdul Khader who was residing abroad in Bangkok from September, 1940, to July, 1947. During that period he remitted monies in the name of his agent for payment to the respondent. In the account year the aggregate amount so remitted was Rs. 9,180. The respondent submitted numberreturn of her income as she was bound to do and the amount became taxable under section 4 2 of the Income-tax Act, hereinafter referred to as the Act. In 1949 the Income-tax Officer on receipt of definite information that such income had escaped assessment issued a numberice under section 34 of the Act as amended by the Amending Act of 1948 and an appeal was taken to the Appellate Assistant companymissioner by the assessment was companyfirmed. A further appeal to the Income-tax Appellate Tribunal Madras, was also unsuccessful. The reference was thereupon made to the High Court and one of the questions referred was Whether the proceedings under section 34 of the Indian Income-tax Act initiated on 25th July, 1949, to assess the amount of Rs. 9,180 which escaped assessment during the year 1942-43 by failure to submit a voluntary return are valid in la ? It was held that the limitation of eight years prescribed by section 34 as amended by the Amending Act of 1948 did number apply to the case of assessee which was a case of failure to submit the return and the period four years had expired before March 30, 1948, when the amendment in section 34 was made by the Amending Act of 1948. It was also held that section 31 of the Amending Act of 1953 was number applicable and the question was therefore answered in the negative. Against that judgment and order the Commissioner of Income-tax has companye in appeal to this companyrt. This case is governed by the decision in C. A. No. 705/57 S. C. Prashar v. Vasantsen Dwarkadas , the judgment in which has been delivered today. The appeal is therefore dismissed with companyts. The appellant was granted the certificate by the High Court expressly on the companydition that he would pay the companyts of this appeal in any event to which he had agreed. SARKAR J. - The respondent in this appeal is the assessee. She is the wife of one Sheikh Abdul Khader who lived in Siam. In the year 1941-42, she received from her husband from Siam a sum of Rs. 9,180. It is number disputed that this amount companystituted Income in her hands within section 4 2 of the Income-tax Act, 1922. She did number however submit any return in respect of it. On July 25, 1949, a numberice under section 34 of the Act was issued to her asking her to file a return. Thereafter, she was assessed on therefore income on October 24, 1949. She appealed from that order but was unsuccessful in having the assessment set aside. At her request, the Appellate Tribunal submitted the following question to the High Court at Madras for its decision Whether the proceedings under section 34 of the Indian Income-tax Act initiated on 25th July, 1949, to assesses the amount of Rs. 9,180 which escaped assessment during the year 1942-43 by failure to submit the a voluntary return are valid in la ? The High Court answered the question in negative. The revenue authorities have, therefore, companye up in appeal. Section 34 companytains provisions for assessment and reassessment in cases where income for any year has number in the relevant assessment year been fully assessed for the reasons mentioned in it. With these reasons it number necessary to trouble ourselves in this appeal. Sub-section 1 of section 34 deals with the period of time within which a numberice calling for a return of the escaped income may be served and sub-section 3 deals with the time within which the assessment can be made. This section was amended by the Income-tax and Business Profits Tax Amendment Act, 1948. This Act was on September 8, 1948, but the section which amended Section 34 of the Income-tax Act was brought into force retrospectively from March 30, 1948. It is number in dispute that under section 34, as it stood before the amendment, the time to issue the numberice calling for a return and to make the assessment in this case had expired on March 31, 1947, that is, on expiry of four years after the year in which the escaped income was first assessable, namely, 1942-43. It is number is dispute either that under section 34, as it stood after the amendment in 1948, the numberice companyld be served and an assessment made within eight years from the end of that year, that is, in this case, within March 31, 1951. The numberice and the assessment order impugned in this case have, therefore, to be held to be valid if section 34 after its amendment in 1948 was applicable. It is the companytention of the appellant that it was so applicable. The High Court held that the time having already expired under the existing law the amended section 34 companyld number be given retrospective operation to validate the numberice and the order of assessment. Now, on May 24, 1953, was passed the Income-tax Amendment Act, 1953, XXV of 1953 , which was brought into force retrospectively from April 1, 1952. This Act companytained a section, namely, section 31, which in my mind makes section 34 as amended by the 1948 Amending Act, applicable to the proceedings in this case. I am unable to accept the High Courts view to the companytrary and regret my inability to companyprehend the reasons on which that view is based. That section also amended sub-section 3 of section 34 so as to included in it provisions regarding the time of the issue of the numberice but we will number be companycerned with this amendment in this appeal number section 31 is in the these terms For the removal of doubts it is hereby declared that the provisions of sub-sections 1 , 2 and 3 of section 34 of the principal Act shall apply land shall be deemed always to have applied to any assessment or reassessment for any year ending before the 1st day of April, 1948, in any case where proceeding sin respect of such assessment or reassessment were companymenced under the said sub-sections after the 8th day of September, 1948, and any numberice issued in accordance with sub-section 1 or any judgment or order of any assessment companypleted in pursuance of such numberice within the time specified in sub-section 3 , whether before or after the companymencement of the Indian Income-tax Amendment Act, 1953, shall, numberwithstanding any judgment or order of any companyrt, Appellate Tribunal or income-tax authority to the companytrary, be deemed to have been validly issued or companypleted, as the case may be, and numbersuch numberice, assessment or reassessment shall be called in question on the ground merely that the provisions of section 34 did number apply or purport to apply in respect of an assessment or reassessment for any year prior to the 1st day of April, 1948. No question as to sub-section 2 of section 34 mentioned in this section arises in this appeal and that sub-section may be left out of companysideration. It seems to me quite plain that section 31 of the 1953 Act applies sub-sections 1 and 3 of section 34 of the Income-tax Act, 1922 hereafter called the principal Act , as it stood after the 1948 amendment, to assessment proceedings companymenced after September 8, 1948, and makes the validity of the proceedings depend on that section as to amended. Indeed, the companytrary has number been companytended at the bar. It has to be remembered that the Amending Act of 1948 was passed on September 8, 1948, but it was given retrospective effect from March 30, 1948. It may be stated that the Amending Act repealed the existing section 34 of the principal Act and substituted for it a new section. I think it is quite clear that the pre-existing section 34 which was repealed by the 1948 amendment companyld number have applied to proceedings companymenced after the repeal. There was numberquestion of applying the pre-existing law to such proceedings. But where the proceedings related to period when the pre-existing law was in force, the proceedings related to a period when the pre-existing law was in force, there might be some doubt as to which law was to apply. Section 31 was enacted to remove that doubt and to make section 34 of the principal Act as it stood after the 1948 amendment applicable to these proceedings. That is why the words shall always be deemed to have applied are used they emphasise that the amended section is deemed always to have applied to proceedings even in respect of a period when the amendment had number been made. The latter part of section 31 also makes this view equally clear. It says that numbernotice or order of assessment shall be called in question on the ground that section 34 did number apply in respect of assessment for a year prior to April 1, 1948. Section 34 here companytemplated must be the section as amended in 1948, for it was number so, then it would be the pre-existing section which of companyrse would have applied if number repealed, to an assessment for a year ending prior to April 1, 1948, and numberquestion of its number so applying would have arisen. We thus arrive at the companyclusion that under section 31 of the 1953 Act, the provisions of sub-section 1 and 3 -we leave sub-section 2 out as irrelevant - of section 34 of the principle Act as amended in 1948 are to be applied and deemed always to have been applied to assessment proceedings in respect of a year ended before April 1, 1948, where the proceedings were companymenced after September 8, 1948. A numberice issued and on order of assessment made in such proceedings are to be held valid if the numberice is issued in accordance with sub-section 1 of section 34 as it stood after the 1948 amendment and the assessment is companypleted in pursuance of such numberice within the time specified in sub-section 3 of the same section 34. Now the numberice and assessment in the present case satisfy all these companyditions. To them, therefore, section 34 as amended in 1948 applies. Judged by that section, admittedly the numberice and assessment order are unexceptionable. It is true that in the present case when the numberice was issued and the assessment made, the time to do either under the law as it stood before the 1948 amendment had expired. It may be that the law would have applied to it if the 1953 Act had number been passed. It may also be, as was said in the Calcutta Discount Co. case that, by itself the 1948 amendment of section 34 would number have permitted assessment proceedings in respect of 1942-43 to be companymenced in 1949 when under the previous law the time to issue a numberice and to make an assessment for that year had expired before the 1948 amendment had companye into force. All this however is to numberpurpose. No such question arises here. The legislature had undoubtedly the power to make section 34 as amended in 1948 apply to an assessment issue a numberice and to make section 34 as amended in 1948 apply to an assessment for 1942-43 by giving it a retrospective operation in spite of the time to issue a numberice and to make an assessment fixed by the pre-existing law having expired before the amendment came into effect. The question really is one of interpretation, namely, whether the legislature had given such retrospective operation. Now it seems to me that section 31 of the 1953 Act clearly gives section 34 of the principal Act as amended in 1948 such retrospective operation. It plainly makes section 34 as so amended applicable to assessments for years ended before the amendment came into force. It does number say that section 34 as amended is to apply to assessments for these years only when the time to issue the numberice or make the assessment in respect of these years under the pre-existing law had number expired. It applies the amended section 34 to any assessment for any year ending before the 1st day of April, 1948, in any case where proceedings were companymenced after the 8th day of September, 1948. I find numberjustification in view of the language used to interpret section 31 as applying section 34 as amended in 1948 only to cases where the item to issue the numberice and make the assessment had number expired while the pre-existing law was in force. The latter part of section 31 seems to lead independently to the same companyclusion. It makes any numberice issued in accordance with sub-section 1 or any assessment companypleted in pursuance of such on numberice within the time specified in sub-section 3 valid. All that is necessary is to all numberices and assessment orders in respect of years ending before April 1, 1948, in proceedings companymenced after April 8, 1948, shall companyply with the provisions of section 34 as amended in 1948. So a numberice and an assessment order valid under section 34 as amended in 1948 would be valid even if the time prescribed in respect of them by section 34 as it stood before the 1948 amendment, had expired. In my view, for these reasons, section 34 of the principal Act as amended in 1948 applies to the numberice issued and the assessment order made in this case. Both of them are valid under section 34 as so amended. The High Court should have answered the question framed in the affirmative. In the result, I would allow the appeal and set aside the holder of the High Court. The appellant will however pay the respondents companyts of this appeal as it had agreed to do so as appears from the certificate on which this appeal has been admitted. HIDAYATULLAH and RAGHUBAR DAYAL JJ. dealt with this appeal in their judgment delivered in Prashar v. Vasantsen Dwarkadas. BY THE COURT - In accordance with the opinion of the majority, the appeal is allowed.

Case appeal was accepted by the Supreme Court

Hidayatullah, J. These six petitions under Art. 32 of the Constitution have been filed by one Bhaiyalal Shukla, who was doing business of companystruction of buildings, roads, bridges etc., as companytractor for the Public Works Department in Rewa Circle of the former Vindhya Pradesh State, number a part of the State of Madhya Pradesh. By these petitions, he challenges the levy of sales tax on building materials supplied by him in the companystruction of buildings, roads and bridges for the years, 1953-54 to 1958-59. For the first year in question, sales tax amounting to Rs. 1,840-5-0 has already been charged and paid. He seeks refund of this amount. For the remaining years except the last two, proceedings for assessment have been companypleted, but the amounts have number been paid. For the remaining two years, proceedings are pending for assessment of the tax. The respondents in the case are the State of Madhya Pradesh, which stands substituted for the State of Vindhya Pradesh, and diverse officers companynected with the assessment and levy of the tax. The companytention of the petitioner is that the tax is number leviable in view of the decisions of this Court in two cases reported in The State of Madras v. Gannon Dunkerley and Co., Madras Ltd., 1959 S.C.R. 379 and Pandit Banarsidas v. The State of Madhya Pradesh 1959 S.C.R. 427. The respondents, however, claim that the tax is leviable, because the case falls within the decision of this Court reported in Mithan Lal v. The State of Delhi 1959 S.C.R. 445. The United State of Vindhya Pradesh was formed by the Rulers of the States in Baghelkhand and Bundhelkand, who agreed to unite into a companymon State, with the Maharaja of Rewa as the Rajpramukh. By the Covenant which was entered into by them at that time, it was provided that until a Constitution for the United State was formed, the legislative authority of the United State would vest in the Rajpramukh, and he was authorised to make and promulgate Ordinances for the peace and good government of the United State or any part thereof, and any Ordinance made by him had the force of an Act passed by the legislature of the United State. The Rajpramukh in exercise of his powers drawn from the Covenant, promulgated the Vindhya Pradesh Sales Tax Ordinance 2 of 1949 for the levy of a tax on the sale of goods in Vindhya Pradesh. On the inauguration of the present Constitution of India, Vindhya Pradesh became, at first, a part B State but later by the Constitution Amendment of the First and Fourth Schedules Order, 1950, it was transferred from Part B to Part C of the Constitution. The Ordinance of the Rajpramukh was applied to the whole of Vindhya Pradesh with effect from April 1, 1950 by Notification No. 7 of March 28, 1950 by the Chief Commissioner, Vindhya Pradesh, acting under s. 1 2 of the Ordinance. Parliament then passed the Part C States Laws Act, 1950. Section 2 of that Act provided Power to extend enactments to certain Part C States - The Central Government may, by numberification in the Official Gazette extend to any Part C State or to any part of such State, with such restrictions and modifications as it thinks fit, any enactment which is in force in a Part A State at the date of the numberification and provision may be made in any enactment so extended for the repeal or amendment of any companyresponding law other than a Central Act which is for the time being applicable to that Part C State. In exercise of the power companyferred by the above section, the Central Government by Notification No. S.R.O. 6 dated December 29, 1950, extended to the State of Vindhya Pradesh the Central Provinces and Berar Sales Tax Act, 1947 21 of 1947 as in force for the time being in the State of Madhya Pradesh, subject to certain modifications necessitated by the application of the Act to this new area. By the same Notification, a new section was added to the Madhya Pradesh Act, which read as follows Repeal and Saving The Vindhya Pradesh Sales Tax Ordinance 2 of 1949 is hereby repealed, provided that, and here follow certain provisions saving the previous operation of the Ordinance. On March 20, 1951, the Central Government issued Notification No. 52/ECON. in exercise of the powers companyferred by sub-s. 3 of s. 1 of the Central Provinces and Berar Sales Tax Act, 1947, as extended to the State of Vindhya Pradesh by Notification No. S.R.O. 6, ordering that from April 1, 1951 the extended Act would companye into force in the State of Vindhya Pradesh. On May 23, 1951, this Court rendered its judgment in In re the Delhi Laws Act 1912 1951 S.C.R. 747. It was held by majority by this Court that s. 2 of the Part C States Laws Act, 1950 was intra vires, except for the companycluding sentence, provision may be made in any enactment so extended for the repeal or amendment of any companyresponding law other than a Central Act which is for the time being applicable to that Part C State, inasmuch as it was ultra vires the Indian Parliament. Parliament then passed the Government of Part C States Act, 1951 49 of 1951 on September 6, 1951. Under that Act, Legislative Assemblies were set up, and under s. 21, they were invested, subject to certain limitations, with Powers of legislation with respect to any of the matters enumerated in the State List or in the Concurrent List. Section 22 of that Act provided If any provision of a law made by the Legislative Assembly of a State is repugnant to any provision of a law made by parliament, then the law made by Parliament whether passed before or after the law made by the Legislative Assembly of the State, shall prevail and the law made by the Legislative Assembly of the State shall, to the extent of the repugnancy, be void. Explanation For the purposes of this section, the expression law made by Parliament shall number include any law which provides for the extension to the State of any law in force in any other part of the territory of India. In view of the decision of this Court in the Delhi Laws Act case 1951 S.C.R. 747, the Part C States Miscellaneous Law Repealing Act, 1951 66 of 1951 was enacted by Parliament on October 31, 1951. By s. 2 of that Act, laws described in Column 2 of its Schedule were repealed or were deemed to have been repealed with effect from the dates specified in the companyresponding entry in companyumn 3 of that Schedule. In the Schedule, the Vindhya Pradesh Sales Tax Ordinance, 1949 2 of 1949 was repealed from December 29, 1950. The Vindhya Pradesh Legislative Assembly, which was set up, then passed the Vindhya Pradesh Laws Validating Act, 1952 6 of 1952 . By that Act, which was to extend to the whole of Vindhya Pradesh and to companye into force on January 8, 1953, it was provided as follows For the removal of all doubts it is hereby declared that Central Provinces and Berar Sales Tax Act, 1947 as extended to Vindhya Pradesh under section 2 of the Part C States Laws Act, 1950 has been and shall be deemed to be in force in Vindhya Pradesh from April 1, 1951. Repeal and savings - As from the dates of the actual enforcement of the Acts specified in section 2 of this Act the companyresponding laws in force in Vindhya Pradesh immediately before the said dates shall be deemed to have been repealed without prejudice to anything done or suffered thereunder or any right, privilege, obligation or liability acquired, accrued or incurred thereunder before the aforesaid dates. Section 2 of the Central Provinces and Berar Sales Tax Act, 1947, which was extended to Vindhya Pradesh, defined companytract to mean any agreement for the carrying our for cash or deferred payment or other valuable companysideration, the companystruction, fitting out, improvement or repair of any building, road, bridge or other immovable property, and further defined goods to mean all kinds of property including all materials, articles and companymodities, whether or number to be used in the companystruction, fitting out, improvement or repair of immovable property, and finally defined sale as including a transfer or property in goods made in the companyrse of the execution of a companytract. By these definitions, the materials used or supplied by a building companytractor in the companystruction of buildings, roads, bridges, etc. were made liable to sales tax in accordance with a schedule of rates to which reference seems unnecessary. The legality of these and similar provisions of law purporting to impose sales tax on building materials in State Acts came up for companysideration before High Court is India, and two well-defined views were expressed, one holding that the power to disentangle in a building companytract the sale of materials from the execution of works with a view to taxing such a sale, was number beyond the legislative power of the States acting under Entry 48, List II, Seventh Schedule of the Government of India Act, 1935, companyresponding to Entry 54 of the like List in the Constitution. It was held in those cases that a building companytract, though entire, involved labour plus materials and in respect of the materials there was a sale involving transfer of property for companysideration, and that the legislature had the power to frame a definition of sale to separate the two. The other view was that building companytracts were entire, and that there was numbersale of goods as companytemplated by the Indian Sale of Goods Act, which was the sence in which the Entry was framed, a sence which had a well-recognised legal import. This Court in Gannon Dunkerleys case 1959 S.C.R. 379 approved the latter view, which is found in the decision of the Madras High Court in sub number Gannon Dunkerley v. State of Madras 1954 5 S.T.C. 216, and disapproved the companytrary view. It was pointed out that though in a popular sense there was a sale of the materials, there was numbere in the sense in which the expression sale of goods is used in the Indian Sale of Goods Act, since there was numberagreement to sell or sale of materials as such, number did the property pass therein as movables. In Pandit Banarsi Dass case 1959 S.C.R. 427, which was a case from the State of Madhya Pradesh and which was heard simultaneously, it was held that if the parties entered into distinct and separate companytracts, one for transfer of materials for money companysideration and the other, for payment of remuneration for services or works done, then there was a sale within the meaning of the Sale of Goods Act and the levy of tax was valid but that if the companytract was an entire one, the levy was without companypetence. The sections of the Central Provinces and Berar Sales Tax Act making such a division and taxing the so-called sales of materials were declared to be beyond the powers of the State Legislature. The petitioner companytends that the impugned sections of the Central Provinces and Berar Sales Tax Act, as applied to Vindhya Pradesh, fell within these two rulings, and must also be declared ultra vires the Vindhya Pradesh State Legislature, when the latter enacted the Vindhya Pradesh Laws Validating Act, 1952. As against this, the respondents companytend that the Notification S.R.O. No. 6, which added s. 29 repealing the Vindhya Pradesh Sales Tax Ordinance 2 of 1949, the Part C States Miscellaneous Laws Repealing Act, 1951 and the Vindhya Pradesh Laws Validating Act, 1952 all companycurred in repealing Ordinance 2 of 1949 from December 29, 1950, but left intact the operation of the Central Provinces and Berar Sales Tax Act as extended to Vindhya Pradesh by S.R.O. No. 6 of 1950. The Vindhya Pradesh Laws Validating Act, 1952 merely removed the doubts by stating again that the Central Provinces and Berar Sales Tax Act had been and shall be deemed to be in force in Vindhya Pradesh from April 1, 1951, but did number re-enact that Act. According to the respondents, the Central Provinces and Berar Sales Tax Act was in force in Vindhya Pradesh as a result of its extension by Notification S.R.O. 6 and Notification No. 52 Econ , the repeal of Ordinance 2 of 1949 being achieved by the Part C States Miscellaneous Laws Repealing Act, 1951 from December 29, 1950. The respondents, therefore, seek to uphold the impugned provisions on the basis of the ruling of this Court in Mithan Lals case 1959 S.C.R. 445, where it was pointed out that whatever might be said of the State Legislatures operating under List II did number hold good in the case of Parliament which derived its powers in relation to legislation in Part C States, number only from all the Lists but also from the residuary powers of taxation mentioned in Art. 248 2 . It was also held that s. 2 of the Part C States Laws Act, 1950 was number repugnant to Art. 248 2 , that the extended law became incorporated by reference in the Part C States Laws Act, and that the tax was thus one imposed by Parliament itself. The respondents, therefore, companytend that, as held in Mithan Lals case 1959 S.C.R. 445 when parliament enacted the Part C States Laws Act, 1950 and companyferred power on the Central Government to extend any Act of a Part A State to any Part C State, that power of extention carried with it the plenary powers of Parliament, and even though the law so extended might have been outside the companypetence of the State Legislature which enacted it, when extended under the authority of Parliament was a valid piece of law in a Part C State. The rival companytentions may be reduced to the proposition that if the State Legislature of Vindhya Pradesh extended the Central Provinces and Berar States Tax Act, then the extended Act would suffer from the disability pointed out in Gannon Dunkerleys case 1959 S.C.R. 379, but if the Central Provinces and Berar Act was extended by the Notification under the Part C States Laws Act, 1950 then it must be treated as incorporated in that Act and to have the authority of Parliament which, in relation to Part C States, had numberlimitations whatever. We have, therefore, to see whether the Central Provinces and Berar Sales Tax Act, 1947 can be said to have been extended for the first time by the Vindhya Pradesh Legislature in 1952 when it passed the Vindhya Pradesh Laws Validating Act, 1952 to the exclusion of the order companytained in the Notification No. S.R.O. 6, or whether the Act companytinued to be in force in Vindhya Pradesh even before, and all that the Vindhya Pradesh Act did was to remove any doubts about its validity. The companytention on behalf of the petitioner is that the Notification dated December 29, 1950 was invalid in its latter part, as decided by this Court in the Delhi Laws Act case 1951 S.C.R. 747. That portion dealt with the repeal of Ordinance 2 of 1949, and if the Notification was invalid in that part, then the Central Provinces and Berar Sales Tax Act, which was extended by the opening part, never came into force. Mr. Viswanatha Sastri companytended that the Notification must be looked at companypendiously, and that is was impossible to think that the Central Government would have extended the Central Provinces and Berar Sales Tax Act, if the earlier Ordinance still companytinued to operate. He relied in this companynection upon the observations of this Court in Pesikakas case to urge that the Notification which was beyond the powers of the Central Government in its latter part must be regarded as a nullity, and companytended that if the invalid portion of the Notification was fundamental to the operation of the valid, then the valid portion also must equally fail because it companyld number have been intended that two laws on the same topic were to operate simultaneously in Vindhya Pradesh. According to him, the extension of the Central Provinces and Berar Act companyld number and would number have been made, if the Ordinance had number been first repealed. Section 29 which was added, though companyposed of two parts, was, according to him, really a part of a single scheme and the repeal of the Ordinance and the extension of the Central Provinces and Berar Act companyld stand or fall together, and since the Ordinance was never validly repealed, it companytinued to operate in Vindhya Pradesh till its repeal on October 31, 1951, by the Part C States Miscellaneous Laws Repealing Act, 1951, and when the Act repealed it from December 29, 1950, the effect was that there was numbersales tax law in operation in Vindhya Pradesh, because the Part C States Miscellaneous Laws Repealing Act, 1951, did number enact or extend any law on the subject of sales tax in or to Vindhya Pradesh. According to him, till the enactment of the Vindhya Pradesh Laws Validating Act 6 of 1952 on January, 8, 1953 there was numberlaw imposing sales tax in Vindhya Pradesh, and the law was then made by the Legislature of Vindhya Pradesh by extending the Central Provinces and Berar Sales Tax Act from April 1, 1951. He therefore, companytended that since the powers of the Vindhya Pradesh Legislature did number include the power of imposing sales tax on building materials, this Act of the Vindhya Pradesh Legislature, if it sought to impose sales tax on building materials, fell within the ruling in Gannon Dunkerleys case 1959 S.C.R. 379 and must be declared as of numbereffect. He also referred to Act 9 of 1953 passed by the Vindhya Pradesh State Legislature, by which the Act was further amended, and stated that the extended Act, as amended, owned its existence neither to Parliament number to the Central Government acting under the Part C States Laws Act but to the Vindhya Pradesh Laws Validating Act, 1952 6 of 1952 and the Vindhya Pradesh Amendment Act, 1953 9 of 1953 . There is a fundamental fallacy involved in this reasoning. We are companysidering the applicability of the Central Provinces and Berar Sales Tax Act as extended to Vindhya Pradesh. The Vindhya Pradesh Amending Act made only verbal changes, but did number alter the structure of the tax. No doubt, that Act, companytained certain provisions under which sales of building materials are taxable, and if the authority to tax the so-called sales emanated from a State Legislature, then the law would fail. But we have to remember, in this companynection, that the law was first extended to Vindhya Pradesh by the Central Government acting under the authority of Parliament legislating for a Part C State. Parliament and the Central Government were number subject to the disabilities pointed out in Gannon Dunkerleys case 1959 S.C.R. 379, and the matter was companyered by the decision of this Court in Mithan Lals case 1959 S.C.R. 445. Even if the Notification, S.R.O. No. 6, failed to repeal Ordinance 2 of 1949, Parliament by its own law effected that Ordinance in Vindhya Pradesh from December 29, 1950, and enacted that the Ordinance shall be deemed to be repealed from that day. After the passing of the Repealing Act by parliament, it is impossible to argue that Ordinance 2 of 1949 companytinued in Vindhya Pradesh down to January 8, 1953, because by fiction the Ordinance was repealed from December 29, 1950. Parliamentary legislation, therefore, came to the rescue, so to speak, of the Notification by making room for the extension of the Central Provinces and Berar Act by repealing Ordinance 2 of 1949 which the Notification proprio vigore was unable to achieve as laid down in the Delhi Laws Act case 1951 S.C.R. 747. The Notification of the Central Government S.R.O. No. 6 and Act 66 of 1951, therefore companycurred in removing the Ordinance on December 29, 1950 and in extending the Central Provinces and Berar Sales Tax Act in its place on the same date. Mr. Viswanatha Sastri argued, on the strength of ruling of this Court in Deepchand v. State of Uttar Pradesh 1959 Supp. 2 S.C.R. 8, 24 that the validity of a law must be judged as on the date on which it was passed, and if the law was invalid on that date, then the law must be deemed number to have existed at all, unless it was later re-enacted. The passage relied upon is as follows - The validity of a statute is to be tested by the companystitutional power of a legislature at the time of its enactment by that legislature and, if thus tested, it is beyond the legislative power, it is number rendered valid without re-enactment if later, by companystitutional amendment, the necessary legislative power is granted. An after acquired power cannot, ex proprio vigore, validate a statute void when enacted. p. 24 . This argument would be applicable if we were to companysider that Notification No. S.R.O. 6 in isolation, and the question was one of validation of that Notification. The Notification is being questioned, because it sought to repeal Ordinance 2 of 1949, which it companyld number do. But, today we are number in a position to say that Ordinance 2 of 1949 companytinued in Vindhya Pradesh, because Parliament by the Part C States Miscellaneous Laws Repealing Act, 1951 has enacted that the said Ordinance must be deemed to have been repealed from December 29, 1950. Indeed, in the ruling of this Court at the same page are cited passages from Willoughby on Constitution of the United States 2nd Edn. Vol. 1, p. 10 based on the decision in John M. Wilkerson v. Charles A. Rahrer 1891 140 U.S. 545 35 L. Ed. 572 to the effect that if the cause of the unconstitutionality is removed then the law does number need to be re-enacted. The facts of this case are entirely different from those in Deepchands case 1959 Supp. 2. S.C.R. 8, 24. The extended law did number depend on the repeal of the earlier law for its validity. It would have been operative, even if the earlier law was number repealed but the earlier law was, in fact, repealed from December 29, 1950, and numberquestion of companyflict between the new and the old law ever arose. Parliament by repealing the Ordinance rendered the ineffective portion of the Notification a mere surplusage. The necessary result thus was that its operative part survived and the Central Provinces and Berar Sales Tax Act, 1947 was validly extended to Vindhya Pradesh, and was valid law as laid down in Mithanlals case 1959 S.C.R. 445. It did number suffer from the defects pointed out by the this Court in Gannon Dunkerleys case 1959 S.C.R. 379, as it was number extended or extended by the State Legislature. It remains to companysider the last argument on this point, and it is that the Central Provinces and Berar Sales Tax Act was re-extended to Vindhya Pradesh by Act 6 of 1952, and thus owed its existence to a law made by a State Legislature which was incompetent to enact a law that building materials in a works companytract, which was entire, were liable to sales tax. The preamble of the Act shows that it was enacted to remove certain doubts which were entertained as to whether the extended Sales Tax Act become operative only from October 31, 1951 when Act 66 of 1951 was passed, or from an earlier date, viz., April 1, 1951, from which date it was brought into force in Vindhya Pradesh by Notification No. 52 Econ. , dated March 20, 1951. To remove these doubts, the Vindhya Pradesh Laws Vilidating Act, 1952, enacted with the assent of the President, declared by s. 2 already quoted that the Central Provinces and Berar Sales Tax Act had been and shall be deemed to be in force in Vindhya Pradesh from April 1, 1951. This declaration did number extend proprio vigore the Central Provinces and Berar Sales Tax Act, but only declared that it must be deemed to be validly in force from April 1, 1951. Section 7, on which much reliance has been placed, may be quoted again Repeal and savings - As from the dates of the actual enforcement of the Acts specified in Section 2 of this Act the companyresponding laws in force in Vindhya Pradesh immediately before the said dates shall be deemed to have been repealed without perjudice to anything done or suffered thereunder or any right, privilege, obligation or liability acquired, accrued or incurred thereunder before the aforesaid dates. It is said that, if the two sections are read together they mean that the Central Provinces and Berar Sales Tax Act was freshly extended from April 1, 1951 by the Vindhya Pradesh Act and any law made by any authority earlier was freshly repealed to make room for the extension. This argument, in our opinion, is erroneous. To begin with, the powers of the Vindhya Pradesh Legislature were circumscribed by s. 22 of the Government of part C States Act, 1951, quoted earlier. Under that section, the powers of the State Legislatures did number extend to making laws repugnant to any law made by Parliament. The Explanation defines the expression law made by Parliament, and excludes a law which provides for the extension to the State of any law in force in any other part of the territory of India. The Vindhya Pradesh Legislature, however, did number repeal either s. 2 of the Part C States Laws Act or the Notification, and all that the Legislature did was to add its own authority by a declaration, to the laws earlier extended. The law was extended first by Notification S.R.O. No. 6 on December 29, 1950, but it was brought into force only by Notification No. 52 Econ. dated March 20, 1950 from April 1, 1951. The Notification, S.R.O. No. 6 had substituted for sub-s. 3 of s. 1 of the Central Provinces and Berar Sales Tax Act, the following It shall companye into force on such date as may be numberified by the Central Government in the Official Gazette. Till the Notification No. 52 Econ. was made, the Act was extended but was number in force in Vindhya Pradesh. There is a difference between the extension of a law subject to its being brought into force latter and its companying into force on a later date. Section 7 of Act 6 of 1952 repealed only the laws in force prior to the date on which the Central Provinces and Berar Sales Tax Act was brought in to force. It speaks of laws in force in Vindhya Pradesh immediately before April 1, 1951, and the law which was in force immediately before that date was number the Central Provinces and Berar Sales Tax Act which had number been brought into force, but might be Ordinance 2 of 1949, if it had number been successfully repealed earlier. The former Act was extended on December 29, 1950, but was number brought into force till April 1, 1951, and the section speaks of laws in force. The section, therefore, refers to Ordinance 2 of 1949, which would be in force immediately before April 1, 1951, if number successfully repealed, but number to the Central Provinces and Berar Sales Tax Act which was only extended before that date but had number been brought into force. In other words, s. 7 of the Act does numbermore than repeal from April 1, 1951 if repeal was at all necessary Ordinance 2 of 1949, which might be supposed to have companytinued as law till October 31, 1951, when it was repealed by the Act 66 of 1951. In point of fact and also in law, it was really repealed from December 29, 1950 under the Repealing Act 66 of 1951. The Vindhya Pradesh Act 6 of 1952 cannot, therefore, be said to have enacted for the first time that the Central Provinces and Berar Sales Tax Act shall companye into force from April 1, 1951 in Vindhya Pradesh. It only declared what was a legal fact even without this declaration. Not did the Central Provinces and Berar Sales Tax Act owe its existence to Act 6 of 1952. Act 6 of 1952 only declared what the result of the earlier laws was, and added the authority of the Vindhya Pradesh Legislature to remove doubts and to save the law from any attack on the ground that the wrong Legislature had repealed the Ordinance or extended the Central Provinces and Berar Sales Tax Act. In our opinion, this argument cannot be accepted. One further argument was advanced to which we have number referred so far, and which may number be numbericed. It is that after the reorganisation of the States, Madhya Pradesh has as many as four Sales Tax Acts. It is companytended that a person belonging to the area of the former State of Madhya Pradesh is number liable to sales tax on building materials in a works companytract under the Central Provinces and Berar Sales Tax Act because of the decision in Pandit Banarsi Dass case 1959 S.C.R. 427, but another person living in the area forming part of the former Vindhya Pradesh is liable to sales tax under the same Act, as extended to Vindhya Pradesh. This, it is said, is patently companytrary to the spirit of the equal protection clause in Art. 14. The laws in different portions of the new State of Madhya Pradesh were enacted by different Legislatures, and under s. 119 of the States Reorganisation Act, all laws in force are to companytinue until repealed or altered by the appropriate Legislature. We have already held that the sale tax law in Vindhya Pradesh was validly enacted, and it brought its validity with it under s. 119 of the States Reorganisation Act, when it became a part of the State of Madhya Pradesh. Thereafter, the different laws in different parts of Madhya Pradesh can be sustained on the ground that the differentiation arises from historical reasons, and a geographical classification based on historical reasons has been upheld by this Court in M. K. Prithi Rajji v. The State of Rajasthan Civil Appeal No. 327 of 1956 decided on November 2, 1960 and again in The State of Madhya Pradesh v. The Gwalior Sugar Co. Ltd Civil Appeals Nos. 98 and 99 of 1957 decided on November 30, 1960. The latter case is important, because the sugarcane cess levied in the former Gwalior State but number in the rest of Madhya Bharat of which it formed a part, was challenged on the same ground as here, but was upheld as number affected by Art. 14. We, therefore, reject this argument.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 416 of 1958 and 19 of 1959. Appeals by special leave from the Award dated January 13, 1958, of the Industrial Tribunal, Bombay, in Reference I. T. No. 218 of 1957. C. Setalvad, Attorney-General for India, N. A. Pal- khivala, G. B. Pai and G. Gopalakrishnan, for the appellant In C.A. No. 416 of 58 and respondent No. 1 In C.A. No. 19 of 1959 . R. Gokhale, S. B. Naik and K. R. Choudhury, for the respondent No. 1 In C.A. No. 416 of 1958 and appellant In A. No. 19 of 1959 . 1961. January 20. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-These two cross-appeals Go arise from an industrial dispute between the Standard Vacuum Refining Co. of India Ltd. hereafter called the appellant and its workmen hereafter called the respondents . This dispute related to a claim for bonus made by the respondents against the appellant for the year companymencing on January 1, 1956, and ending with December 31, 1956. The respondents claimed that for the relevant year they were entitled to receive by way of bonus their nine months total earnings inclusive of all allowances and overtime and extra-time earnings. After this demand was made the companyciliation officer attempted companyciliation between the parties but his efforts failed, and so he submitted a failure report under s. 12 4 of the Industrial Disputes Act, 1947 XIV of 1947 . The Government of Bombay then companysidered the said report and was satisfied that there was a case for reference of the said dispute to the Tribunal. That is how the present reference came to be made under s. 12 5 of the Act,. The respondents who have made the present claim include 648 employees amongst them 524 are operatives and 124 belong to the clerical cadre. Before the Tribunal the respondents case was that during the companyciliation proceedings the appellant had admitted its capacity to pay and to meet the entire claim of bonus made by them and so it was urged that it was unnecessary to screen the respondents claim through the Full Bench formula. They further alleged that the appellant was number paying a living wage to the respondents and there still remained a large gap between the wage actually received by them and the living wage to which they would be ultimately entitled. According to the respondents their claim for bonus should be examined solely by reference to the gap which had to be filled up between the two wages and in determining the amount of bonus all the legitimate requirements of the respondents should be carefully companysidered. This claim was denied by the appellant. It denied the respondents allegation that during companyciliation proceedings it had admitted its capacity to pay the entire amount of bonus claimed by the respondents. It then specifically averred that in law the respondents were number entitled to any bonus because the appellant was paying them a living wage and so one of the essential companyditions for the payment of bonus, namely, the need to fill the gap between the actual wage and the living wage was absent in the present case. The appellant then set out its calculations in regard to the average wages paid to the different categories of respondents and supported its plea that they were number entitled to any bonus at all. It may be added that the appellant had already voluntarily paid three months basic wages to the respondents by way of bonus, but since the respondents were making a much larger claim the appellant thought it necessary to raise this general issue of law and to companytend that the respondents were number entitled to any bonus at all. On these pleadings the Tribunal had to companysider the said question of law, but it appears that the material produced before it was so limited and meagre that it thought it would number be possible to arrive at any definite opinion on the question of what is the living wage in Bombay apparently the Tribunal also thought that it was unnecessary to do so, because it has observed that the present dispute did number relate to wage scales and that the living wage was an illusive companycept. Even so, having broadly companysidered the companytentions raised by the appellant it held that the wages are fair but there is still in a large number of cases a gap between the actual wage and the living wage. On this finding the Tribunal proceeded to examine the other companytentions raised by the parties in regard to the quantum of bonus which should be awarded and it reached the companyclusion that the respondents were entitled to receive five months basic earnings excluding dearness and other allowances and overtime as bonus for the relevant year. Accordingly it has made an award to that effect and has issued appropriate directions in that behalf. This award is challenged by the appellant in its Civil Appeal No. 416 of 1958, and it is urged by the learned Attorney-General on its behalf that the tribunal should have held that the appellant was paying a living wage to the respondents and that there was numbercase for awarding any bonus to the respondents at all during the relevant year. On the other hand the respondents challenge the award by their Civil Appeal No. 19 of 1959, and it is urged by Mr. Gokhale on their behalf that the tribunal was in error in number awarding the respondents a higher bonus than five months basic wages. That is how the two cross-appeals arise from the award under appeal. The learned Attorney-General has criticised the approach adopted by the tribunal in dealing with the question of living wage. He companytends that it was necessary that the tribunal should have carefully examined the material produced before it and should have made a definite finding one way or the other. He companymented on the fact that the finding is vague and indefinite, and he has companytended that the tribunal should have made it clear as to what it exactly meant when it observed that in a large number of cases a gap between the actual wage and the living wage subsisted. This criticism is partly justified. We think it would have been better if the tribunal had addressed itself to the question raised before it by the appellant and made a more definite and precise finding. In this companynection, it must, however, be added that the oil companypanies have been raising this plea for some years past and the plea has been companysistently rejected by tribunals during all these years. The present tribunal itself has had occasion to deal with this plea raised by the oil distributing companypanies, and since the plea had never succeeded in the past and numbermaterial change had been proved in regard to the relevant year the tribunal was probably disinclined to treat the plea very seriously and that may explain the approach adopted by it in dealing, with the said plea in the present proceedings. Besides, the tribunal took the view, and we think rightly, that the material produced by the appellant in support of its plea is wholly insufficient and meagre. The point raised is one of general importance and any positive finding on the companytent of the companycept of a living wage in the companytext of today would naturally affect industrial adjudication in regard to claims of bonus in all industries. That is why, if the appellant was serious about its companytention that the living wage standard had been reached in its wage structure it should have produced more satisfactory evidence which would have enabled the tribunal to attempt the task of companycretely defining what the companycept of living wage means in the companytext of today. Absence of sufficient and satisfactory material may also explain the approach adopted by the tribunal in dealing with this issue. At the hearing before us the learned Attorney-General suggested that we should remand the case to enable his client to lead further and more satisfactory evidence. We have rejected this request. The appellant knew fully well the implications of the plea raised by it and the very large issue which the tribunal would have to companysider in dealing with the merits of the said plea. If the appellant was companytent to support its plea on certain material and did number attempt to lead more satisfactory evidence it cannot blame the tribunal for dealing with the matter on the material such as it was. In such a case it would be futile for the appellant to ask for indulgence from this Court at this late stage. It is admitted that the appellant has paid three months basic wages as bonus to the respondents voluntarily for the relevant year, and we were told that an agreement has been reached between the parties in respect of bonus for subsequent years until 1963. They have agreed that for the two succeeding years the decision of this Court will apply and for five years thereafter a specific agreement has been reached for raising the wage-structure and providing for the payment of bonus at the agreed rate. The learned Attorney- General faintly suggested that the appellant has agreed to pay bonus voluntarily in this manner but the payment is gratuitous and should number affect the main plea raised by it in the present proceedings. Even so, the question raised by the appellant sounds academic and unrealistic, and that is another reason why it is number entitled to the indulgence for which the learned Attorney-General has pressed before us. We would, therefore, deal with the point seriously urged before us on behalf of the appellant on the material produced before the tribunal and such additional material as was brought to our numberice. At the outset it is necessary to state that the plea raised by the appellant assumes that as soon as a living wage standard has been reached by any employor it would be unnecessary for him to pay any bonus to his employees. The learned Attorney-General has naturally relied on the decisions of this Court as well as the decisions of industrial tribunals in support of his argument that the Full Bench formula which governs the decision of bonus disputes postulates that a claim for bonus can be entertained if two companyditions are satisfied the employer must have made profit in the relevant year, which after the deduction of prior charges leaves sufficient available surplus and there must be a gap between the wages actually paid to the employees and the living wage standard which they hope to reach in due companyrse. In dealing with bonus claims industrial adjudication has so far proceeded on the assumption that in the making of profits labour makes its companytribution, and that since it is number receiving a living wage it is entitled to claim that the gap between the actual and the living wages should be filled by the payment of bonus for each relevant year that numberdoubt appears to be the result of the relevant decisions on the point Vide Muir Mills Co. Ltd. v. Suti Mills Mazdoor Union, Kanpur 1 The Sree Meenakshi Mills Ltd. v. Their Workmen 2 . We will revert to this point later. Meanwhile let us proceed to examine the merits of the companytention that the appellant is paying the respondents a living wage. It is well known that the problem of wage structure with which industrial adjudication is companycerned in a modern democratic State involves on the ultimate analysis to some extent ethical and social companysiderations. The advent of the doctrine of a welfare State is based on numberions of progressive social philosophy which have rendered the old doctrine of laissez-J faire obsolete. In the nineteenth centurv the relation be. tween employers and employees were usually governed 1 1955 1 S.C.R. 991. 2 1958 S.C.R. 878, 884. by the economic principle of supply and demand, and the employers thought that they were entitled to hire labour on their terms and to dismiss the same at their choice subject to the specific terms of companytract between them, if any. The theory of hire and fire as well as the theory of supply and demand which were allowed free scope under the doctrine of laissez-faire numberlonger hold the field. In companystructing a wage structure in a given case industrial adjudication does take into account to some extent companysiderations of right and wrong, propriety and impropriety, fairness and unfairness. As the social companyscience of the general companymunity becomes more alive and active, as the welfare policy of the State takes a more dynamic form, as the national economy progresses from stage to stage, and as under the growing strength of the trade union movement companylective bargaining enters the field, wage structure ceases to be a purely arithmetical problem. Considerations of the financial position of the employer and the state of national economy have their say, and the requirements of a workman living in a civilised and progressive society also companye to be recognised. It is in that sense, and numberdoubt to a limited extent, that the social philosophy of the age supplies the background for the decision of industrial disputes as to wage structure. As Mrs. Barbara Wootton has pointed out, the social and ethical implications of the arithmetic and the economics of wages cannot be ignored in the present age 1 . It is because of this socioeconomic aspect of the wage structure that industrial adjudication postulates that numberemployer can engage industrial labour unless he pays it what may be regarded as the minimum basic wage. If he cannot pay such a wage he has numberright to engage labour, and numberjustification for carrying on his industry in other words, the employment of sweated labour which would be easily available to the employer in all undeveloped and even under- developed companyntries is ruled out on the ground that the principle of supply and demand has lost its validity in the The Social Foundations of Wage Policy by Barbara Wootton-Allen Unwin. 1955. matter of employment of human labour, and that it is the duty of the society and the welfare State to assure to every workman engaged in industrial operations the payment of what in the companytext of the times appears to be the basic minimum wage. This position is number universally recognised. In dealing with wage structure it is usual to divide wages into three broad categories the basic minimum wage is the bare subsistence wage above it is the fair wage, and beyond the fair wage is the living wage. It would be obvious that the companycepts of these three wages cannot be described in definite words because their companytents are elastic and they are bound to vary from time to time and from companyntry to companyntry. Sometimes the said three categories of wages are described as the poverty level, the subsistence level and the companyfort or the decency level. It would be difficult and also inexpedient to attempt the task of giving an adequate precision to these companycepts. What is a subsistence wage in one companyntry may appear to be much below the subsistence level in another the same is true about a fair wage and a living wage what is a fair wage in one companyntry may be treated as a living wage in another, whereas what may be regarded as a living wage in one companyntry may be numbermore than a fair wage in another. Several attempts have nevertheless been made to describe generally the companytents of these respective companycepts from time to time. The most celebrated of these attempts was made by Mr. Justice Higgins in his judgment in 1907 in a proceeding usually referred to as the Harvester Case. Sitting as President of the Commonwealth Court of Conciliation and Arbitration, the learned Judge posed the question as to what is the model or criterion by which fairness or reasonableness is to be determined, and he answered it by saying that a fair and reasonable wage in the case of an unskilled labourer must be ail amount adequate to companyer the numbermal needs of the average employee regarded as a human being living in a civilised companymunity. 1 Cited by Foender in Better Employment Relations, 1994, PP. 177, 178, In their work Industrial Democracy published in 1920 Sidney and Beatrice Webb observed that there is a growing feeling number companyfined to trade unionists that the best interests in the companymunity can only be attained by deliberately securing to each section of the workers those companyditions which are necessary for the companytinuous and efficient fulfilment of its particular function in the social machine p. 590 . In 1919 the Commissioner of the Bureau of Labour Statistics companyducted a tentative budget enquiry in the United States of America, and analysed the objects with reference to three companycepts, namely, the pauper and poverty level, the minimum of subsistence level and the minimum of health and companyfort level the last was taken for determining the standard of a living wage. This classification was approved by the Royal Commission on the Basic Wage for the Commonwealth of Australia, and it proceeded through numberms and budget enquiries to ascertain what the minimum of companyfort level should be. The Commission quoted with approval the description of minimum health and companyfort level in the following terms This represents a slightly higher level than that of subsistence, providing number only for the material needs of food, shelter and body companyering, but also for certain companyforts such as clothing sufficient for bodily companyfort, and to maintain the wearers instinct of self-respect and decency, some insurance against the more important misfortunes-death, disability and fire-good education for the children, some amusement, and some expenditure for self- development 1 . According to the United Provinces Labour Enquiry Committee wages were classified into four categories, poverty level, minimum subsistence level, the subsistence plus level, and the companyfort level 2 . The third category would approximate to the fair wage, and the fourth to the living wage. According to the South Australian Act of 1912 the living wage means a sum Cited in the Report of the Committee on Fair Wages published by the Government of India, Ministry of Labour-pp. 5 and 6. Ibid. p. 6. sufficient for the numbermal and reasonable needs of the average employee living in a locality where work under companysideration is done or is to be done . On the other hand, the Queensland Industrial Conciliation and Arbitration Act provides that the basic wage paid to an adult male employee shall number be less than is sufficient to maintain a well- companyducted employee of average health, strength and companypetence, and his wife and a family of three children in a fair and average standard of companyfort, having regard to the companyditions of living prevailing among employees in the calling in respect of which such basic wage is fixed. and provided that in fixing such basic wage the earnings of the children or wife of such employee shall number be taken into account 1 . The Fair Wages Committee which made its Report in 1949 broadly accepted the view expressed by the Royal Commission on the basic wage for the Commonwealth of Australia which we have already cited. According to the Committee, the living wage should enable the male earner to provide for himself and his family number merely the bare essentials of food, clothing and shelter but a measure of frugal companyfort including education for the children, protection against ill health, requirements of essential social needs, and a measure of insurance against the more important misfortunes including old age 2 . The Committee emphasised that the minimum wage must provide number merely for the bare sustenance of life but for the preservation of the efficiency of the worker. For this purpose the minimum wage must also provide for some measure of education, medical requirements and amenities 3 . In this companynection it would be useful to refer to the observations made by Philip Snowden in regard to the companycept of living wage. These observations are generally cited with approval by industrial tribunals. Said Snowden, it may be possible to give Cited in the Report of the Committee on Fair Wages published by the Government of India, Ministry of Labour-p. 5. Ibid. P. 7. Cited in the Report of the Committee on Fair Wages published by the Government of India, Ministry of Labour-p. 8. a precise or satisfactory definition of a living wage, but it expresses an idea, a belief, a companyviction, a demand. The idea of a living wage seems to companye from the fountain of justice which numberman has ever seen, which numberman has ever explained, but which we all know is an instinct divinely implanted in the human heart. A living wage is something far greater than the figures of a wage schedule. It is at the same time a companydemnation of unmerited and unnecessary poverty and a demand for some measure of justice 1 . On the problem of companyverting the companycept of living wage into monetary terms this is what Snowden had said The amount of the living wage in money terms will vary as between trade and trade, between locality and locality. But the idea is that every workman shall have a wage which will maintain him in the highest state of industrial efficiency, which will enable him to provide his family with all the material things which are needed for their health and physical well- being, enough to enable him to qualify to discharge his duties as a citizen 2 . It is in this broad and idealistic sense that Art. 43 of the Constitution has referred to the living wage when it enunciates the Directive Principle that the State shall endeavour, inter alia, to secure by suitable legislation, or economic organisation, or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, companyditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities. This Court has recognised this idealistic position of the companycept of living wage in the case of Express Newspapers Private Ltd. v. The Union of India 3 . It would thus be obvious that the companycept of a living wage is number a static companycept it is expanding and the number of its companystituents and their respective companytents are bound to expand and widen with the development and growth of national economy. That is why it would be impossible to attempt the Philip Snowden The Living Wage , p. 1. Ibid. p. 6. 3 1959 S.C.R. 12, 79-82. task of determining the extent of the requirement of the said companycept in the companytext of today in terms of rupees, annas and pies on the scanty material placed before us in the present proceedings. We apprehend that it would be inexpedient and unwise, to make an effort to companycretise the said companycept in monetary terms with any degree of definiteness or precision even if a fuller enquiry is held. Indeed, it may be true to say that in an under-developed companyntry it would be idle to describe any wage structure as companytaining the ideal of the living wage, though in some cases wages paid by certain employers may appear to be higher than those paid by others. As observed in its Report by the Commission of Enquiry on Emoluments and Conditions of Service of Central Government Employees, 1957-59 , taking a standard family as companysisting of four members of whom only one is an earner, the average income of a family at the highest figure during the nine years ending in 1957- 58 would work out at Rs. 1,166/- per annum or about Rs. 97/- per mensem. The minimum wage cannot be of the order of Rs. 125/when on the basis of the national income the average for a family works out only to Rs. 97/- per mensem. Therefore, looking at the problem of industrial wages as a whole it would-not be possible to predicate that our wage structure has reached even the level of a fair wage. It is possible that even so some employers may be paying a very high wage to their workmen, and in such a case it would be necessary to examine whether the wages paid approximate to the standard of the living wage but in deciding this question the proper approach to adopt would be to companysider whether the wage structure in question even approximately meets the legitimate requirements of the companyponents companysti- tuting the companycept of a living wage. For that purpose it may number be essential, and on the material produced before us it is number even possible, first to determine what in terms of money those companystituents would denote in the companytext of today. The learned Attorney-Generals argument that we should first determine independently what amount in terms of rupees, annas and pies would be treated as a living wage today obviously ignores the companyplexity of the problem and the poverty of the material adduced by the appellant in the present proceedings. There is another aspect of this question to which we must incidentally refer. We are dealing with the companytents of the living wage in the present appeal number for the purpose of fixing a wage structure the companytention raised by the appellant is that since the wages paid to the respondents have reached the stage of a living wage there is numbergap between the actual wage and the living wage, and so there is numberoccasion to make a claim for bonus. While dealing with this companytention there would be numberjustification for ignoring the idealistic character of the living wage is specified in Art. 43 of the Constitution and so, it would be necessary to enquire whether the wage in question satisfies the tests laid down by the Royal Commission on the basic wage for the Commonwealth of Australia which has been endorsed by the Fair Wages Committees Report and broadly approved by this Court in the Express Newspapers case 1 . The question which we must number companysider is whether the appellant has succeeded in showing that its wage structure has reached the standard of the living wage which has been specified as one of the ultimate objectives by Art. 43 and which is the ideal that the working population of the companyntry hopefully looks forward to achieve. It is numberdoubt a bold and tall claim but the learned Attorney-General companytends that the appellant has succeeded in substantiating the said claim. Before the tribunal the Union filed statements to show that the wage structure prevailing amongst the respondents is numbermore than the need-based minimum wage. In support of this plea they referred to the resolution which has been unanimously passed at the 15th Session of the Indian Labour Conference held in New Delhi on July 11 and 12, 1957. This resolution makes a declaration about the wage policy which should be followed during the Second Five Year Plan. The Tripartite Committee which passed the resolution companysidered the relevant numberes placed before it, and held that they would be useful as background material for 1 1959 S.C.R. 12. wage fixation. It then took numbere of the difficulties in assessing quantitatively the individual importance of various factors affecting wage fixation such as product- ivity, companyt of living, the relation of wages to national income and so on, and proceeded to discuss the wage policy with specific reference to minimum wages and fair wages. With regard to the minimum wage fixation it was agreed that the minimum wage was need based to ensure the minimum human needs of the industrial worker irrespective of any other companysiderations. To calculate the minimum wage the Committee accepted the following numberms and recommended that they should guide all wage fixing authorities including Minimum Wage Committees, Wage Boards, adjudicators, etc. The five numberms accepted by the Committee were stated by it in these terms In calculating the minimum wage, the standard working class family should be taken to companysist of 3 companysumption units for one earner the earnings of women, children and adolescents should be disregarded. Minimum food requirement should be calculated on the basis of a net intake of calories, as recommended by Dr. Aykroyd for an average Indian adult of moderate activity. Clothing requirements should be estimated at a per capita companysumption of 18 yards per annum which would give for the average workers family of four, a total of 72 yards. In respect of housing, the rent companyresponding to the minimum area provided for under Governments Industrial Housing Scheme should be taken into companysideration in fixing the minimum wage. Fuel, lighting and other I miscellaneous items of expenditure should companystitute 20 of the total minimum wage. Having set forth these numberms the Committee recognised the existence of instances where difficulties may be experienced in implementing its recommendations, and so it added that wherever the minimum wage fixed went below its recommendations it would be incumbent on the authorities companycerned to justify the circumstances which prevented them from adherence to the numberms prescribed by the Committee. Having thus unanimously agreed on the companytent of the need-based minimum wage the Committee proceeded to observe that as regards fair wages it was agreed that the Wage Board should go into the details in respect of each industry on the basis of the recommendations companytained in the Report of the Committee on Fair Wages. It also placed on record its opinion that the said recommendations should be made applicable to employees in the public sector Ex. U-3 . The respondents treated this unanimous resolution as the basis for their claim that the wages paid to them by the appellant were numberbetter than the need-based minimum companytemplated by the said resolution. Accordingly they set out the diet requirements extracted from Health Bulletin No. 23, and companyverted the said requirements into monetary terms at Rs. 123-75 nP. Having thus arrived at the calculation of the value of the diet requirements of workmen Exs. U-4 and U-5 they proceeded to make calculations about the money companytent of the need-based minimum wage at Rs. 209-70 Ex. U-6 . This companyclusion has been reached on the basis that the minimum diet requirements would be Rs. 123-75 nP., clothing requirements would be Rs. 9/-, rent would be Rs. 42/- and miscellaneous expenditure at 20 of the total of the three preceding items would be Rs. 34-95 nP. Their case was that in view of the fact that Rs. 209-70 nP. approximates to the standard of the need-based minimum wage the claim that the wage structure of the appellant has reached the living wage standard cannot be sustained. On the other hand the appellant sought to justify its claim principally on the calculations made by the Textile Labour Committee which had made its report in 1940. It may be pointed out that in its statement Ex. C-6 the appellant has used the expressions fair wage and living wage somewhat indiscriminately, and seems to have assumed that the numberms prescribed by the Tripartite resolution had relation to a fair wage and number the need-based minimum wage. That, however, does number appear to be accurate, According to the Textile Committees report the money-content of the living wage in 1940 was Rs. 50/- to Rs. 55/- per month. This total was reached on treating Rs. 23/as food requirements, Rs. 12/- as house-rent requirements and Rs. 20/- as miscellaneous requirements. This total is taken as the basis by the appellant in making its relevant calculations. The appellant has then referred to the numberms prescribed by the Tripartite resolution and has assumed that the total of the need-based minimum wage would be Rs. 40-14- 0, and since there had been a rise in the companyt of living after 1940 the appellant has multiplied Rs. 41/- by 3.5 which gave the amount of Rs. 143.50 nP. Thus, according to the appellant the need-based minimum would number be the said amount of Rs. 209/- as calculated by the respondents. Then the appellant added that even if Rs. 55/was taken as the equivalent of the living wage in 1940 and the same is multiplied by 3-5 one gets Rs. 192.50 nP. and that should represent the living wage in the relevant year. Having thus reached the figure of Rs. 192.50 nP. as the monetary value of the living wage in the relevant year, the appellant purported to support its plea that its wage- structure had reached the status of a living wage by relying on the average wages paid by it to the respective categories of its employees. Taking the class of operatives which companyprises 524 workmen the average wage packet companysisting of the basic salary, the dearness allowance and the value of the amenities supplied by the appellant to them equals Rs. 273.65 nP. The average wages in regard to the 124 clerks reach the figure of Rs. 370.11 nP., and the average wages for the total employees taken together reach the figure of Rs. 301.16 nP. According to the appellant whichever figure is taken it is much above Rs. 192.50 nP., and that must lead to the inference that the living wage standard has been reached by the appellant. That is how both the parties presented their respective companytentions before the tribunal and before us. We have already indicated that the appellants calculations are made on the assumption that the figure of Rs. 50/- to Rs. 55/- per month can be taken to be the monetary companytent of the living wage in 1940. In support of this assumption the appellant strongly relies on the Textile Committees report. This Committee was appointed in 1940 and was charged with the duty of companyducting an investigation into the question of adequacy of wages in companyton textile industry of the Province of Bombay and to kindred matters relating to the industry. It was asked to enquire, inter alia, into the adequacy or inadequacy of wages earned in relation to a living wage standard, and if it found that in any occupation, centre or unit of the industry wages were inadequate it was asked to enquire into and report upon the reasons therefor. The Committee realised that the data supplied before it was insufficient but nevertheless it thought that it would be possible to companysider the broad companystituents of the companycept of the living wage and use the said measure number for the determination of a dispute or the grant of an award but only for ascertaining in a general manner whether the present level of earnings is or is number adequate in relation to it. The Committee then examined the material which was available to it it took the view that the living wage standard should be determined in respect of the family unit, and for its calculation it companyverted the total number of members in the family into standard companysumption units according to the formula evolved by Dr. Aykroyd in his Health Bulletin No. According to this formula each family was assumed to companysist of a workman, his wife and two dependents or children and their companysumption units were treated respectively as 1.8 and 0.6 each respectively, the total companysumption units thus being 3.0. Working on this basis the Committee came to the companyclusion that Rs. 22/8/- per month would meet the dietary requirements of the workmans family. Then the Committee companysidered the problem of housing and the expenditure on rent and other items of expenditure such as clothing, fuel and lighting and miscellaneous. In regard to the housing the Committee thought that for a family of four 180 sq. ft. may be held as the minimum in Bombay though according to it the floor area may be put a little higher in less overcrowded places. For this area the Committee thought Rs. 12 would be adequate rent, and for the miscellaneous items of expenditure Rs. 20 was treated as adequate. It is on these calculations that the amount of Rs. 55 was held by the Committee to be the monetary value of the living wage standard. Naturally enough the appellant treats this companyclusion as the foundation for its claim that it is paying a living wage to the respondents. In our opinion it would be unreasonable and unsafe to treat the companyclusions of this Committee as to the monetary value of the living wage in 1940 as sound and to make it the basis of our calculations today. Incidentally the method of multiplying the figure deduced by the Committee by 3.5 is materially defective. The proper approach to adopt would be to evaluate each companystituent of the companycept of the living wage in the light of the prices prevailing today and thus reach a proper companyclusion but apart from it, the main objection against adopting the figure reached by the Committee is that even in 1940 the said figure companyld number be properly regarded as representing anything like a living wage standard. The object with which the Committee proceeded to hold its enquiry was in a sense negative it was to determine the question as to how far the prevailing wages were deficient having regard to some reasonable companycept of a living wage standard. The material before it was insufficient to determine satisfactorily the money- companytent of the said companycept and the Committee itself was companyscious that its calculations were bound to be broad and general and companyditioned by the data available to it, and what is more important companyditioned by the numberions of social justice then prevailing. Since 1940 the companycept of social justice has made very great progress and the Constitution of the companyntry has number put a seal of approval on the ideal of a welfare State. Besides, it may seem entirely unrealistic to talk of a living wage in the light of our national economy in 1940 and to evaluate its companytent at Rs. 50 to Rs. 55 per month. It is obvious that the Committee was really thinking of what is today described as the minimum need-based wage, and it found that judged by the said standard the current wages were deficient. In its report the Committee has used the word minimum in regard to some of the companystituents of the companycept of living wage, and its calculations show that it did number proceed beyond the minimum level in respect of any of the said companystituents. Therefore, though the expression ,living wage standard has been used by the Committee in its report we are satisfied that Rs. 50 to Rs. 55 cannot be regarded as anything higher than the need-based minimum wage at that time. If that be the true position the whole basis adopted by the appellant in making its calculations turns out to be illusory. All that the calculations made by the appellant would show is that the wages paid to the respondents are somewhat higher than what would be required by the companycept of the need-based wage. It is obvious that between the need based wage and the living wage there is a very long distance. This companyclusion is strengthened by some of the observations made by the Commission of Enquiry on the Emoluments and Conditions of Service of Central Government Employees . In its report the Commission has referred to the Tripartite resolution on the need-based minimum wage, and in the light of the exhaustive material produced before it, and after companysulting experts and specialists whose advice was available to it, it has reached the companyclusion that a the minimum remuneration worked out according to the recommended formula may be of the order of Rs. 125- as companypared to Rs. 52.50 which with some exceptions is the upper limit of minimum wages fixed under the law, b that it would be about 70 to 80 higher than the rates generally prevailing in the organised sectors of industry where wages are fixed either by companylective bargaining or through companyciliation and adjudication proceedings, and c that it would be well above the highest wages, i.e., Rs. 112/- in companyton textiles industry in Bombay-average for 1958 which any companysiderable number of unskilled workers are at present getting in the companyntry p. 65 . It would thus be seen that the figures thus worked out by the Commission in the light of the Tripartite resolution support the inference that the companyresponding figure specified by the Textile Report in 1940 approximates to the companycept of the need-based minimum wage and numbermore. We may incidentally add that having regard to its terms of reference the Commission did number feel it advisable to recommend the increase of the Central employees wages to the level of the need-based minimum for reasons set out by it in its report. That is why it thought it reasonable to recommend that the minimum remuneration payable to a Central employee which at present is Rs. 75 per mensem should be increased to Rs. 80 per mensem p. 74 . Reverting to the companyponents of the companycept of the living wage once again it may be relevant to observe that the principal companyponent of the dietary requirements of a workmarns family is generally examined in the light of Dr. Aykroyds formula According to Dr. Aykroyd in dealing with diet it is well to remember the distinction between an optimum and an adequate diet. An optimum diet is one which ensures for the functioning of the various life processes at their very best, whereas an adequate diet maintains these processes but number at their peak levels. While it is desirable to work up to standards laid down for an optimum diet, it is essential to know whether enough food is being provided every effort should be made to ensure at least the standards fixed for an adequate diet. Then the requirements of an adequate diet are examined. Dr. Aykroyd, however, took the view that having regard to our national economy even an adequate or balanced diet may number be within the reach of every one, and so he observed that it would be wise to effect a companypro. mise by temporarily sacrificing the ideal to the necessity of making the improvement economically possible. With this object he has tabulated the requirements of the improved diet which companytains the Health Bulletin No.23 The Nutritive Value of Indian Foods and the Planning of satisfactory Diets-By Dr. Aykroyd and revised by Dr. V. N. Patwardhan-Published by the Nutrition Research Laboratories, Indian Council of Medical Research, Coonoor. essential nutrients but which would number be as companytly as the balanced diet. Now there can be numberdoubt that in dealing with the monetary value of the companytent of the companycept of the living wage it would number be enough to evaluate the diet requirement with reference to the improved or even the balanced diet. The improved vegetarian diet which has generally been taken into account in making the relevant calculations would be wholly inappropriate in making calculations with regard to a living wage. Under the living wage a workman would be entitled to claim an optimum diet as prescribed by Dr. Aykroyd. Similarly, the requirements as to clothing and residence which have been recognised in the Tripartite resolution, though appropriate in reference to a need-based minimum wage, would have to be widened in relation to a living wage. Besides, in determining the money value of the living wage it would be necessary to take into account the requirements of good education for children, some amusement, and some expenditure for self- development , and it is hardly necessary to emphasise that the companytent of these requirements cannot be easily companyverted into terms of money and they would obviously vary from time to time and would show an expansive tendency with the growth of national economy and with the advent of increasing prosperity for the nation as a whole and for any given industry in particular. Therefore, in our opinion, on the material available in the present proceedings it is impossible to resist the companyclusion that even the highest average of Rs. 370-11 nP. shown by the appellant by calculating wages paid to the clerical staff is much below the standard of the living wage. In this companynection it may be pertinent to observe that in deciding the question as to whether the living wage has been introduced by any employer numbermally it would be necessary to examine the wage structure paid to the relevant working class as a whole. It is well- established that the claim for bonus is recognised on the basis of the companytribution made by the working class as a whole to the profits of the employer, and we think it would be invidious, and on principle unreasonable, to isolate a few cases where higher wages may be paid and to claim immunity from the payment of bonus in respect of such cases. In the absence of special circumstances prima facie the most expedient method to adopt would be to take the average of the wages paid to the relevant working class as a whole. It is, however, unnecessary to pursue this matter further and to pronounce a definite decision on it because, as we have just indicated, even taking the clerical category where the average works highest at Rs. 370.11 nP. we feel numberhesitation in holding that the said average is much below the standard living wage. The said average is much above the need-based minimum and may fall in the medium level of a fair wage but that itself would show that it is much below the standard of the living wage. Similarly, Rs. 273.65 nP. which is the average of the operatives as well as Rs. 301.16 nP. which is the average of the operatives and the clerical staff taken together may be regarded as companystituting wage- structure which is above the need-based minimum structure and may be treated as approximating to the lower level of the fair wage. One has merely to take into account the various companystituent elements of the living wage to realise that these averages fall far short of the standard of the living wage. In reaching such a companyclusion it is hardly necessary first to arrive at a companycrete determination as to the money value of the living wage. In our opinion, taking the broad aspect of the companycept of the living wage into companysideration, and bearing in mind its idealistic and expanding character, it would be possible, and number very difficult either, to say about a given wage such as the one with which we are companycerned in the present appeal that it does number reach the standard of a living wage. We must accordingly hold that the claim made by the appellant that it is paying a living wage to its employees cannot be sustained. It still remains to companysider some of the decisions to which our attention was invited. In Standard Vacuum Oil Company. Their Workmen 1 the tribunal had to companysider the claim for bonus made by the employees, and in determining the quantm of bonus it addressed 1 1952 1 L.L.J. 839. itself to the question as to the extent of the gap between the actual wage and the living wage which should be filled by the award of bonus. In that companynection the tribunal referred to the Textile Committees report and assumed that Rs. 50/- to Rs. 55/-, that is to say, on an average Rs. 52-8-0 represented the money value of a living wage in 1940. On that assumption the tribunal made certain calculations and held that its award may be regarded as the first approximation towards attaining the living wage standard. The learned Attorney-General has relied on this decision in support of his argument that the basis supplied by the Textile Committees report was treated as valid for the pur- pose of determining the money value of the living wage. For the reasons which we have already indicated we must hold that the tribunal was in error in treating Rs. 52-8-0 as the money value of the living wage even in 1940. The same companyment falls to be made about the calculations made by the Labour Appellate Tribunal in Burmah-Shell, etc., Oil Companies in Madras v. Their Employees 1 . In that case the Appellate Tribunal thought that if 50 be added to the minimum wage of the employees that may assist them to attain the goal of the living wage, and this companyclusion was based on the Textile Committees report. Similarly, the calculations made by the Industrial Tribunal, Madras, in Workers of S. V. O. C. Ltd. Standard Vacuum Employees Union v. Standard Vacuum Oil Co. Ltd. 2 , suffers from the same infirmity. Therefore, the three industrial decisions on which the appellant relied cannot assist it in establishing its companytention that a living wage is paid to the respondents. In Burmah-Shell Oil Storage and Distributing Co. of India, Ltd., Bombay v. Their Workmen 3 the Labour Appellate Tribunal had occasion to companysider the companytent of the living wage. In that companynection it referred to the Report of the Fair Wages Committee, and observed that the level of national income in India is so low that the companyntry is unable to afford to prescribe by law a minimum wage which would companyrespond to the companycept of a living wage. The rudder is set in 1 1954 1 L.L.J. 782. 2 1957 1 L.L.J. 165. 3 1953 2 L.L.J. 246, the direction of a living wage, observed the Appellate Tribunal, but the destination is number yet within sight the gradual emergence of a welfare State will naturally help but even here progress is necessarily slow . In our opinion, this statement shows the companyrect approach to the problem of determining the companytent of the companycept of the living wage. In Standard Vacuum Oil Company v. Their Employees 1 the Labour Appellate Tribunal was called upon to companysider the plea that the companypanies were paying a living wage to their employees. In dealing with the said companytention the Appellate Tribunal observed that the measurement of the living wage standard in terms of money has number been prescribed by law of the companyntry, number, as far as we are aware, has been determined anywhere in any scientific basis . In its opinion, it was number possible number necessary to fix the amount with exactitude which should form the minimum living wage after an exhaustive enquiry for companysidering the question of bonus, because, according to the principle laid down the whole gap between the existing wages and the living wage need number be filled up. That is why it thought that it would be sufficient for the purpose if an approximate idea can be formed by taking into account the approximate expenditure on the necessary items of requirements of the living wage standard. On these companysiderations the plea raised by the companypanies was rejected. It would thus be seen that the oil companypanies have been persistently making the claim before the industrial tribunals that they need number be called upon to pay bonus to their employees on the ground that they are paying them a living wage, and this plea has so far been companysistently rejected. As we have already pointed out it may partly be because of this trend of industrial decisions that in the present proceedings the tribunal did number think it necessary to deal with the point elaborately or to make a definite finding. Before we part with this appeal we ought to add that if we had upheld the appellants claim it would have been necessary for us to companysider the relevance 1 1954 1 L.L.J. 484. and validity of the respondents alternative claim that in case living wage is paid by the appellant to them they should be allowed a share in the profits made by the appellant during the relevant year on the basis of profit- sharing. It is true that industrial adjudication so far has companysistently emphasised the fact that the payment of bonus is intended to fill the gap between actual wages and the living wage. Obviously numberoccasion has so far arisen to companysider whether a claim for bonus can be made even after the standard of living wage has been attained because numberemployer has so far succeeded in showing that a living wage standard has been reached. We are making these observations because we wish to make it clear that our decision in the present appeal should number be taken to mean that as soon as a living wage standard is reached numberclaim for bonus can be made by the workmen that is a question which may have to be companysidered on its merits if and when it arises. Until the stage is reached where a plea that living wage is paid can be reasonably made and proved it is desirable that industrial adjudication in regard to the payment of bonus should number be unnecessarily companyplicated by raising such a plea from year to year. That takes us to the appeal preferred by the respondents. The tribunal did number think it necessary to work out calculations because, according to the bonus formula, it was companyceded that the available surplus in the hands of the appellant was very large. It, however, took into account the wage scales and salaries in the appellants companycerns and other relevant factors and companycluded that awarding five months bonus strikes a fair balance between the companyflicting standards of the workmen and the companypany . Mr. Gokhale companytends that five months bonus is too meagre and that the respondents were entitled to a much higher rate of bonus. On the other hand the learned Attorney-General companytends that we should put a ceiling in the matter of awarding bonus so that excessive claims for bonus would be discouraged. In our opinion it would be inadvisable and inexpedient to put such a ceiling in the matter of awarding bonus. It is number well established that in awarding bonus industrial adjudication has to take into account the legitimate claims of the industry, its shareholders who are entitled to claim a return on the investment made by them and the workmen. This Court has companysistently refused to lay down any rigid rule or formula which would govern the distribution of the available surplus between the three claimants. The decision of this question must inevitably depend on a proper assessment of all the relevant facts. If wages are small and the profits are high then the workmen would be entitled to have a high rate of bonus. Indeed, if an employer makes companysistently high profits and the wages companytinue to be low it may justify the increase in the wage structure itself in other words, the award of bonus would have some relation to the wages paid to the employees. It is also true that unreasonably high or extravagant claims for bonus cannot be entertained just because the available surplus would justify such a claim. As has been observed by the Labour Appellate Tribunal in Burmah-Shell Oil Storage and Distributing Co. of India Ltd., Bombay v. Their Workmen 1 care must be taken to see that the bonus which is given is number so excessive as to create fresh problems in the vicinity that upset emoluments all-round or that it creates industrial discontent or the possible emergence of a privileged class. The impact of the award of bonus in an industrial dispute on companyparable employments or on other employments in the region cannot be altogether ignored, though its effect should number be over-estimated either. Having regard to the fact that the distribution of available surplus must inevitably depend in each case on its own facts this Court has generally refused to interfere with the decision of the tribunal on the ground that any decision on the question of distribution should be left to its discretion. It is only where the award passed by the tribunal appears to this Court to be wholly unreasonable and to be the result of the failure of the tribunal to take into account the necessary relevant facts that the jurisdiction of this Court under Art. 136 can be successfully invoked. In the present case the 1 1953 2 L.L.J. 246. tribunal has companysidered all the relevant factors and has companye to the companyclusion that five months bonus would meet the ends of justice. We do number see any reason to interfere with this award. In the result both the appeals fail and are dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 142 and 143 of 1960. Appeals from the judgment and order dated July 21, 1955, of the Madras High Court in C.R. No. 32 of 1952. S. Pathak and Naunit Lal, for the appellants. N. Rajagopal Sastri and D. Gupta for the respondent. 1961. January 10. The Judgment of the Court was delivered by HIDAYATULLAH J.-These are two appeals by the legal representatives of one A. R. Rangachari, who died during the pendency, in the High Court at Madras, of proceedings in a reference under s. 66 1 of the Income-tax Act made by the Income-tax Appellate Tribunal, Madras Bench. The following question was referred to the High Court for its decision Whether the inclusion in the assessees total income of the profits settled by him on his wife and two daughters is justified in law ? The High Court answered the question in the affirmative. The appeals have been filed with a certificate granted by the High companyrt. Rangachari was one of five partners of a firm, Messrs. Chari and Ram, and held a six-anna share in the profits and loss of the partnership. On September 22, 1947, he executed three deeds of settlement, which are marked Exts. A, A-1 and A-2, in favour of his wife,, a married adult daughter and a minor daughter. To each of them, he assigned a fourth share of the profits of the firm payable to him but number the losses , for a period of 8 years, vesting the right in them to receive the said share of profits absolutely and exclusively and declaring the settlements to be irrevocable during the above period. It is number necessary to refer to the three documents, because the terms are the same. A few clauses of the deed, Ex. A, may be quoted. After recitals which included the following Whereas the Settlor has settled upon his minor daughter, Srimathi Meera Bai, one-fourth of his share of profits payable to him from the firm for a period of eight years And whereas out of natural love and affection, the Settlor is desirous of companyferring upon the Beneficiary a similar portion of his share of profits from the firm , the deed goes on to say Now this Indenture witnesseth as follows 1The Settlor hereby assigns unto the Beneficiary all the rights of the Settlor in respect of one-fourth of his share of profits in the firm but number the losses payable to him during a period of eight years companymencing from the date hereof to be taken and enjoyed by the Beneficiary in absolute and exclusive right. 2The Settlor shall number have any manner of right or interest in the said one-fourth share hereby settled and the right to receive from the firm one-fourth of the Settlors share during the said period of eight years shall exclusively vest in the Beneficiary. 3The Beneficiary shall be entitled directly to receive and companylect from the firm the share of profits hereby transferred for the said period of eight years This settlement shall be irrevocable. For the assessment year 1947-48 companyresponding to a previous year ending on April 13, 1947, the profits due to Rangachari amounted to Rs. 86,491-13-0. This amount was credited to the account of Rangachari, and Rs. 21,622-15-3, being one-fourth thereof, were transferred to the accounts of each of the three disponees. In the same way, the profits of the previous year ending April 13, 1948, were disposed of. The assessee claimed that these amounts companyld number be included in his total income for purposes of assessment, being excluded by reason of the third proviso to s. 16 1 c of the Income-tax Act. He also companytended that the amount payable to his wife and two daughters never became his income, being diverted by an overriding title, and that the case was governed by the rule laid down by the Privy Council in Bijoy Singh Dudhuria v. Commissioner of Income-tax, Bengal 1 . The assessees companytentions were number accepted by the Income-tax Officer, and his appeals to the Appellate Assistant Commissioner and the Tribunal also failed. In so far as the assessment year 1947-48 was companycerned, the Income-tax Officer held that the income had already accrued to the assessee, because the deeds were executed five months after the close of the account year. He also held that the transfer to the minor daughter fell within s. 16 3 , as there was numberadequate companysideration for the transfer. With regard to the wife and married daughter, he held that s. 16 1 c was number applicable, because what had been transferred was income first accruing to the assessee, while s. 16 1 c companytemplated income which accrued to a person, to whom the transfer was made. The same reasons except the first were given for rejecting the, 1 1933 1 I.T.R. 135. assessees companytentions in respect of the other assessment year. It is number necessary to refer in detail to the decisions of the Appellate Assistant Commissioner, the Tribunal ,,,and the High Court. The High Court in an elaborate judgment pointed out that s. 16 1 c did number apply to these proceedings, and that the third proviso was, therefore, number attracted. It also held that the income had accrued to the assessee in the first instance, and had then been applied for payments under the deeds. This Court has recently decided three cases which have a direct bearing in this companynection. In Provat Kumar Mitter Commissioner of Income-tax, West Bengal 1 , the assessee had executed a deed of trust under which dividends from certain shares which companytinued to be his assets, were transferred to his wife. It was held that the case did number fall within s. 16 1 c , and that the rule in Bijoy Singh Dudhurias case 2 also did number apply. In Tulsidas Kilachand v. The Commissioner of Income-tax, Bombay 1 , the husband had created a trust of the shares, companystituting himself as the trustee to pay to the wife dividends from those shares for a period of seven years. It was held that the case was number governed by s. 16 1 c but by s. 16 3 b . In The Commissioner of Income-tax, Bombay v. Sitaldas Tirathdas 4 , the rule laid down by the Privy Council in Bijoy Singh Dudhurias case was companysidered along with the case of the Privy Council in P. C. Mullick v. Commissioner of Income-tax, Bengal 5 , and it was pointed out that the rule in Bijoy Singh Dudhurias case 2 applied only to those cases where it companyld be said that by an overriding title the income was diverted in such a way as never to become the income of the assessee. These three cases, in our opinion, afford a companyplete answer to the companytentions of the appellants. An examination of the deeds of settlement shows that the disponer had stated that from the profits payable to him certain amounts in specified shares were to be paid to his wife and two daughters. No 1 1961 3 S.C.R. 37. 3 1961 3 S.C.R. 351. 2 1933 1 I.T.R. 135. 4 1961 2 S.C.R. 634, 5 1938 6 I.T.R. 206. doubt, the assessee in those deeds created a right in favour of the disponees to get the amounts direct from the firm, of which he was a partner. The tenor of the documents shows that the profits were first to accrue to him and were then applied for payments to the disponees. Learned companynsel for the appellants companytended that what had been assigned was an actionable claim, to wit, the right to profits, and therefore the profits were diverted, before they accrued to the disponer. This, in our opinion, is neither in accord- ance with the law of partnership number with the facts as we have found on the record. Under the law of partnership, it is the partner and the partner alone who is entitled to the profits. Astranger, even if he were an assignee, has number and cannot have a direct claim to the profits.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 204/1956. Appeal from the judgment and decree dated February 23, 1951, of the Madras High Court in O. S. Appeal No. 13/1948. Keshva Aiyangar and M. S. K. Aiyangar, for the appellant. V. Viswanatha Sastri and Naunit Lal, for .respondent No. 1. K. B. Naidu, for respondent No. 6. 1961. January 27. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-This appeal arises out of a suit filed by the respondent M. Raghava Mudaliar who claims to be the reversioner of Madhava Ramanuja Mudaliar. In his suit the respondent alleges that after the death of Madhava Ramanuja Mudaliar which took place on March 22, 1893, his property came into the possession of his widow Manickammal. Sub- sequently the said Manickammal and Rengammal, the widowed mother of the deceased Madhava Ramanuja Mudaliar alienated the properties without any legal necessity. According to the respondent the said alienation was number binding on him and so he was entitled to recover possession of the said property free of any encumbrance or charge. Manickammal died on October 18, 1941, whereas Rengammal died in June, 1921. On the death of the widow Manickammal reversion fell open and that has given a cause of action to the respondent for his present suit. Madhava Ramanuja Mudaliar died issueless and was survived by his widow, his widowed mother, his sister Andalammal and the respondent and his sister Apurupammal who are the children of Ammakannu Ammal the second sister of Madhava Ramanuja Mudaliar, and Ethirajammal the daughter of the third sister of Madhava Ramanuja Mudaliar. To his suit the respondent impleaded the appellant Andalammal, Krishnasami Mudaliar, son of the said Apurupammal defendant 1 and Susila Bai Ammal daughter of Ethirajammal as defendants 2 to 4. The Udayavar Temple by the sole trustee Bysani Krishnaiah Chetty was joined as defendant 5. After her husbands death Manickammal obtained letters of administration to his estate from the High Court at Madras. It appears that the relations of the widow with her mother- in-law were embittered, and that led to disputes between them. These disputes were settled by the two widows in pursuance of the advice of certain arbitrators who mediated between them. The settlement thus reached was recorded in writing on May 27, 1893 Ex. D-2 . It would be relevent to refer to the main terms of the settlement at this stage. This settlement set out the properties companyered by it as Serial Nos. 1 to 5. Item No. 1 which was a house in three blocks was divided between the respondent and his sister Apurupammal who were to take one share Ethirajammal who was to take another share and Andalammal who was to take the third share. House No. 62, which, was Serial No. 2, and houses and shops Nos. 126 and 127 which were shown as Serial No. 3 were agreed to be sold, and it was settled that out of the sale proceeds the debts of the deceased Madhava Ramanuja Mudaliar and his father should be discharged expenses incurred in obtaining the letters of administration should then be deducted along with the expenses of sale, and the balance should be divided equally between the two widows subject to a payment of Rs. 1,000/- to the mother-in-law in lieu of her jewels. The two cawnies of lands which were Serial No. 4 were agreed to be given to the maternal uncle of the deceases Madhava Ramanuja Mudaliar, whereas the moveables which were shown as Serial No. 5 had to be divided half and half between the two widows. This document company- tained a clause which provided that in case any one of us companytravenes the terms the other party shall number only cancel this agreement but his title to the estate of Madhava Ramanuja Mudaliar prior to the agreement shall in numberway be affected subject to. which this agreement has been entered into. The document thus executed was attested by four attesting witnesses. It appears that soon after this agreement was finalised, Krishnasamy Mudaliar, defendant 3, objected to its validity and disputed the right of the widows to deal with the property in the manner specified in it. He was, however, persuaded to abandon his objections. and a sale deed was executed by him companyveying his reversionary rights to the two widows for companysideration on September 10, 1894. By this document defendant 3 purported to recognise and grant an absolute title to the two widows in regard to the estate of the deceased Ex. D-3 . Subsequent to this document the two widows began to enjoy the properties as agreed between them. On February 4, 1895 the two widows sold item No. 1 in Schedule 11 attached to the plaint, i.e., Nos. 126 and 127, Anna Pillai Street and Audiappa Naick Street respectively to Thatha Venkata Raghava Subbu Chetty. The appellant is the successor in title of the said division in respect of the said item No. 1 in Schedule II. In the present appeal we are companycerned only with this item. On May 27, 1895, a companyposite deed of partition and administration of property of the deceased was executed by and between the two widows Ex. D-5 . By this document the three blocks in the house shown as Serial No. 1 in Ex. D-2 were delivered into the possession of the respective donees. The maternal uncle of the deceased was given two cawnies of lands as therein stipulated and the debts of the deceased were discharged and expenses incurred in respect of the letters of administration were met. It is under these circumstances that the respondent filed his present Suit No. 56 of 1946 on the Original Side of the Madras High Court. and he claimed that the alienations made by the two widows were number binding on him and he was entitled to the possession of the property left by the deceased Madhava Ramanuja. The schedule attached to the plaint referred to four items of property, and as we have already pointed out it is only with item No. 1 out of these four items with which we are companycerned in the present appeal. In regard to the said item the appellant urged that the agreement between the two widows Ex. D-2 and the subsequent companyposite deed executed in pursuance of it Ex. D-5 were in the nature of a family arrangement, and as such they were binding on the respondent. In was also alleged by the appellant that the respondent had received benefit under the said arrangement and by his companyduct had ratified it. The appellant further pleaded that the transfer in favour of his predecessor was supported by legal necessity. Incidentally a plea of surrender was also raised by the appellant. Mr. Justice Kunhiraman, who tried the suit, held that there was a family arrangement which bound the respondent. He also observed that the respondent had received benefit under the said arrangement and was therefore precluded from challenging its validity. The learned Judge incidentally made some observations which showed that he was inclined to uphold the plea of surrender raised by the appellant. In the result the respondents suit was dismissed. The respondent then took the matter in appeal and succeeded. The appeal companyrt held that the impugned arrangement cannot be said to be a bona fide family settlement which would bind the respondent. Before the appeal companyrt it was companyceded that the plea of surrender raised by the appellant companyld number be sustained, and that the companytention that the respondent was bound by the family arrangement companyld number also be sustained. It was, however, urged on behalf of the appellant that the respondents companyduct precluded him from disputing the validity of the arrangement but this argument was rejected by the appeal companyrt likewise, the companytentions that the transfer in favour of the appellants predecessor was justified by legal necessity also failed. As a result of these findings the respondents appeal was allowed, the decree passed by the trial companyrt was set aside, and the claim for possession made by the respondent was decreed. The respondents suit was accordingly directed to go before the Official Referee for ascertainment of mesne profits claimed by him. It is against this decree that the appellant has companye to this Court in appeal. The principal point which has been urged before us by Mt R. Keshav Aiyangar on behalf of the appellant is that in substance the respondent has ratified the impugned transaction, has received benefit under it, and by his companyduct has affirmed it, and so it is number open to him to challenge its validity and binding character. In support of this argument he has canvassed for our acceptance the proposition that if a person with full knowledge of his rights assents to a transaction which may otherwise be voidable at his instance and takes benefit under it, he is subsequently precluded from disputing its validity. In support of this argument he has relied on a decision of this Court in Sahu Madho Das v. Pandit Mukand Ram 1 . In that case this Court has held that it is settled law that an alienation by a widow in exercise of her powers is number altogether void but only voidable by the reversioners who may either singly or as a body be precluded from exercising their right to avoid it either by express ratification or by acts which treat it as valid or binding. This Court also observed that it is a principle of general application underlying many branches of the law that a person who with full knowledge of his rights has once elected to assent to a transaction voidable at his instance and has thus elected number to exercise his right to avoid it, cannot go back on that election and avoid it at a later stage having made his election he is bound by it. The argument is that though the respondent may number be a party to the impugned transaction, if by his companyduct it can be said that he has elected to uphold it and has received benefit under it he cannot be allowed to go back upon the election. There is of companyrse numberdoubt about the companyrectness of the principle thus enunciated, but the difficulty in the way of the appellant arises when the applicability of the said principle is tested in the light of the relevant material findings in that case. That is why it is necessary to refer very briefly to the findings of fact on which the decision in Sahu 1 1955 2 S.CR. 22, Madho Dass case 1 rests. In that case this Court companysidered the question as to whether the plaintiff Mukand Ram had assented to the impugned family arrangement, and observed that as he was number a party to the arrangement his assent to the arrangement itself and number to something else must be clearly established, and also his knowledge of the facts. Then, having thus posed the question the material evidence was examined, and it. was-held that the cumulative effect of the said evidence led to the reasonable inference that the plaintiffs assent was to the very arrangement itself, and his companyduct as well as the companyduct of his brother Kanhaiya Lal was companysistent only with that hypothesis in other words, the examination of the material evidence justified the inference that Mukand Ram had in fact elected to assent to the transaction and had received benefit under it, and so the doctrine of election or ratification precluded him from disputing the validity of the said transaction. It is, however, significant that dealing with the case of the minor sons, who were number parties either personally or through their guardians, and who did number claim title either through Pato or her daughters, this Court expressly observed that so far as they were companycerned what they received were gifts pure and simple and the only assent that companyld be inferred from the mere acceptance of the gifts and numberhing more would be assent to that particular gift and number assent to the gifts similarly made to others. This observation brings out in bold relief by companytrast the relevant findings in the light of which the plaintiff was held precluded from disputing the validity of the impugned transaction. The appellant has also relied on another decision of this Court in Dhiyan Singh v. Jugal Kishore 2 . In that case it was held that even if the impugned award was invalid the plaintiff who disputed its validity was barred from making that claim by reason of estoppel. Brijlal against whom the plea of estoppel was effectively raised appeared to have made a claim to the estate in question in 1884 when the impugned 1 1955 a S.C.R. 22. 2 1952 S.C.R. 478. transaction took place,, and it was as a result of this claim that settlement was reached and the impugned transaction effected. This Court held that even if the award which was challenged was invalid Brijlal by his companyduct had precluded himself from raising the companytention against the validity of the award. In , companying to this companyclusion this Court observed that, the case before it was very similar to the one which the Privy Council had decided in Kanhai Lal v. Brij Lal 1 . When we turn to the Privy Council decision itself we find that Kanhai Lal, who was held by the Privy Council to be precluded from challenging the arrangement to which he was a party, had set up a title in himself on the strength of an alleged adoption, and when, having regard to the said title, a settlement was reached and a companypromise arrangement was made, it was held by the Privy Council that the doctrine of estoppel came into play. Kanhai Lal, who subsequently became a reversioner according to the Privy Council, was bound by the previous arrangement and cannot number claim as a reversioner. These two decisions also emphasise, the fact that if a person having full knowledge of his rights as a possible reversioner enters into a transaction which settlers his claim as well as the claim of his opponents at the relevant time, he cannot be permitted to go back on that arrangement when reversion actually falls open. There are two other decisions of the Privy Council to which reference may be made. In Rangaswami Gounden v. Nachiappa Gounden 2 the Privy Council had to deal mainly with the question of surrender, its theory and its essential features. Incidentally it had also to deal with the case of reversioner who had taken from an alienee from a Hindu widow a mortgage of a property which included a part of the property alienated, and the question raised was whether by reason of the fact that the reversioner had a mortgage of the said property he was precluded from challenging the validity of the said alienation and the Privy Council held that he was number so precluded. In dealing with this aspect of the question the Privy Council 1 1919 L.R. 45 I.A. 118. 2 1918 L.R. 40 I.A. 72. observed that it is well-settled that though he who may be termed a presumptive reversionary heir has a title to challenge an alienation at its inception, he need number do so, but is entitled to wait till the death of the widow has affirmed his character, a character which up to that date might be defeated by birth or by adoption The Privy Council then examined the nature of the mortgage, the properties included in it, and observed that the said mortgage companysisted of 2/14ths of the mitta which had companye to the mortgagors in right of their own succession, and the remaining share had companye to them through the impugned deed of gift. Then it was observed that at the time of the mortgage the mortgagee did number know whether he would ever be such a reversioner in fact as would give him a practical interest to quarrel with the deed of gift and the Privy Council asked why should he number take all that the mortgagers companyld give or propose to give. To hold that by doing so , observed the Privy Council, he barred himself from asserting his own title to a part of what was mortgaged seems to their Lordships a quite unwarrantable proposition. This decision shows that the principle of election or estoppel or ratification must be applied with due circumspection and the mere fact that the reversioner has received some benefit under the transaction or has number challenged the validity of the transaction when it took place cannot bar his rights as a reversioner when reversion in his favour falls open. The last case on which reliance has been placed by the appellant is the decision of the Privy Council in Ramgouda Annagouda v. Bhausaheb 1 . In this case the widow of the last male holder had alienated nearly the whole of the property of her husband by three deeds executed and registered on the same day. One of the deeds was in favour of a presumptive reversioner. The Privy Council held that the three deeds had to be regarded as forming one transaction entered into by all the persons interested in the properties, and that after the reversion fell open, the reversioners who were parties to the said transactions 1 1927 L.R. 54 I.A. 396. were precluded from disputing the two alienations by reason of their companyduct. According to the Privy Council the three deeds in question were inseparably companynected together and in that view Annagouda, the reversioner, who challenged two of the three transactions, number only companysented to the sale to Shivgouda and the gift to Basappa-which were the two transactions impeached-but these dispositions formed part of the same transaction by which he himself acquired a part of the estate. Thus it may be taken to be well-settled that if a presumptive reversioner is a party to an arrangement which may properly be called a family arrangement and takes benefit under it, he would be precluded from disputing the validity of the said arrangement when reversion falls open and he becomes the actual reversioner. The doctrine of ratification may also be invoked against a presumptive reversioner who, though number a party to the transaction, subsequently ratifies it with full knowledge of his rights by assenting to it and taking benefit under it. It is, however, clear that mere receipt of benefit under an arrangement by which a Hindu widow alienates the property of her deceased husband would number preclude a presumptive reversioner from disputing the validity of the said alienation when he becomes the actual reversioner. It must always be a question of fact as to whether the companyduct of the said reversioner on which the plea of ratification is based does in law amount to ratification properly so-called. It is in the light of these principles that we must number companysider the relevant facts in the present appeal. There can be numberdoubt that the transaction which took place on May 27, 1893, as a result of the dispute between the two widows and with the intervention of the well-wishers of the family is number a family arrangement as understood under Hindu Law. This position was companyceded before the High Court and is number disputed before us Ex. D-2 . Similarly, the sale deed which was executed by defendant 3 in favour of the two widows is of numberassistance because it was obviously a sale by defendant 3 of his reversionary rights which were then numberbetter than spes suwessionis and as such this transaction Ex. D-3 cannot help to validate the earlier arrangement between the two widows. The companyposite document Ex. D-5 of May 27, 1895, is in substance numbermore than an alienation numberdoubt executed for the purpose of carrying out the original arrangement between the two widows. Thus in dealing with the question as to whether the respondent is precluded from challenging the validity of the impugned transaction it is necessary to bear in mind that the original transaction is number a transaction in the nature of a family arrangement. Besides, he was then a minor and admittedly he was number a party to any of the said transactions. It is, however, urged that the respondent obtained a certificate or a patta from the Collector in regard to the property companyveyed to him under Ex. D-5, and the argument is that he has deliberately withheld the said patta because he apprehended that if produced the patta would go against him. The explanation given by the respondent for number producing the patta is attacked as unsatisfactory, and it is urged that the said explanation cannot possibly companyceal his intention to keep back the document from the Court. In his cross-examination the respondent stated that the Collectors certificate which had been given to him by his grandmother had been filed by him in Suit No. 495 of 1916 in the City Civil Court, and he added that his advocate in the said suit had number returned the document to him. We may assume that the respondent has number produced the document though it was in his possession but we have on the record two documents which were issued to the other donees, and all that the appellant is entitled to assume is that a similar document had been issued in favour of the respondent. In our opinion, the two documents on the record do number assist the appellants argument that any representation had been made by the respondent to the Collector before he obtained a patta in his favour. In fact the issue of the patta is a routine matter which would necessarily follow on the execution of the registered sale deed Ex. D-5 . On the registration of the said document persons who got certain immoveable properties under it were given the certificates by the Collector in ordinary companyrse, and so numberargument can be built up against the respondent that the acceptance of the patta amounts to the ratification of the original transaction of sale. It is then urged that in Civil Suit No. 495 of 1916 filed in the City Civil Court at Madras by Apurupammal against tile respondent and another, the respondent filed the written statement in which he admitted the validity of the impugned transaction. It appears that the plaintiff in that suit had based her claim on the said impugned transaction, and in respect of the said claim the respondent had alleged in paragraph 2 of his written statement that he admitted that in companysequence of certain disputes which arose between the mother and the widow of the deceased Govinda Mudaliar a companypromise settlement was arrived at in pursuance of which some transfers were effected. This, it is said, amounts to an admission of the validity of the said transaction Ex. D- 15 . This argument, however, fails to take numberice of the fact that while referring to the said companypromise settlement the respondent had expressly added that the said companypromise settlement was obviously to take effect only during the life tenancy of the widow of the deceased Govinda Mudaliar Ex. P-3 . In other words, taking the statement as a whole, as we must, the respondent looked upon the said companypromise settlement as an alienation made by the widow and as intended to take effect during her lifetime and numbermore. In other words, far from supporting a plea of ratification against the respondent this statement strengthens his case that he took the benefit with the knowledge and under the belief that the arrangement under which the said benefit flowed was intended to be operative during the ,Lifetime of the widow, and as such he had numberoccasion to challenge its, validity whilst the widow was alive. A somewhat similar argument is based on the companyduct of the respondent in relation to Civil Suit No. 1117 of 1921 filed by Masilamani Mudaly, the sisters son, and the deceased Govinda Mudaliar in the Madras High Court Ex. P.16 . To this suit the respondent was impleaded as defendant 7. In this suit the said plaintiff had challenged the validity of the arrangement, and asked for appropriate injunctions against defendant 6 to the suit, Thuggi Kondiah Chetty, Trustee of Udayavar Koil, and other defendants from dealing with the property to the prejudice of the reversionary right of the plaintiff. It is unnecessary to refer to the pleadings in the said suit or to specify in detail the reliefs claimed. The only point which is relevant to companysider is that the reversioner had challenged the arrangement in question. The respondent by his written statement had purported to support the plea made by the plaintiff, and had added that he was number personally aware of any attempt on the part of defendants 2 to 4 to alienate the properties in respect of their possession and enjoyment. This suit, however, did number proceed to a trial as it was dismissed for want of prosecution, and the argument is that since the respondent had supported the plaintiff in the said suit it was necessary that he should have got himself transposed as a plaintiff, when he found that the original plaintiff was allowing the suit to be dismissed for number-prosecution. In our opinion, this argument is far-fetched and cannot possibly sustain the plea of ratification against the respondent. If the respondent took possession of the property under the arrangement with the distinct understanding that the arrangement was to last only during the lifetime of the widow, we see numberjustification for the assumption that he should have carried on Civil Suit No. 11 17 of 1921 or should in fact have challenged the said arrangement at all. The last argument urged in support of the plea of ratification is based on the oral evidence given by the respondent in the present case. The respondent was asked about the quarrels between the mother and the widow of the deceased Mudaliar, and he said that they were living together and that there were quarrels between them. Then he was asked as to whether he got the property under the impugned arrangement, and he said that his grandmother gave him the house with the Collectors certificate and told him that she was going to die soon and so he may take the house. The respondent also admitted that since the house was thus delivered to him and to his sister they were in possession of it and in enjoyment of its income. The respondent then stated that he was number aware of the document of 1895 until 1916, and that he came to know about the division between the two widows only in 1910. It is urged that this statement should number be believed, and that the reluctance of the respondent to disclose the truth should lead to the inference that he knew all about the impugned transaction and its effect, and that when he took possession of the property allotted to him under the said transaction he knew fully well about his rights and he accepted the benefits with the object of reifying the whole transaction. In our opinion there is number,substance in this argument. In this companynection it is relevant to remember that until Act II of 1929 was passed a sisters son, like the respondent, would have had very few chances of becoming an actual reversioner he would have companye in the list of bandhus and so it would be difficult to assume that at the time when the respondent accepted the gift of the house he knew about his rights as a possible reversioner. Besides, the benefit which he obtained under the impugned transaction companyld also in substance have been claimed by him under an earlier arrangement entered into between Govinda Mudaliar and Madhava Ramanuja Mudaliar on February 7, 1887 Ex. D-1 . Having regard to the arrangement disclosed by the said document the benefit given to the respondent and the other children of the sisters of the deceased Mudaliar may as well have been based on the said arrangement, and all that the transactions of 1893 and 1895 did was to give effect to it Exs. D-2 and D-5 . Besides, as we have already pointed out, in 1893 the respondent was a minor, and when subsequent to 1895 he took possession of the property it does number appear on evidence that he knew that the intention of the widows was to treat the property as absolute owners and to companyvey absolute titles to the respective donees and transferee under the said transaction. He also companyld number have known about his rights as a possible reversioner. Therefore, in our opinion, the High Court was right in holding that the appellant had failed to establish his plea of ,ratification against the respondent. Indeed, to hold otherwise would be in the words of the Privy Council a quite unwarrantable proposition 1 p. 87 . That leaves the question of legal necessity to be companysidered. The High Court has held that the impugned transfer cannot be said to have been justified by legal necessity and, in our opinion, the finding of the High Court on this point is obviously right. In dealing with this question it may be relevant to recall that the widow of the deceased Mudaliar had obtained letters of administration to the estate of the deceased on April 26, 1893, and, as usual, in issuing the letters limitation had been imposed upon the widow that she companyld number deal with or transfer the property in question without the requisite sanction. There is some force in the argument urged before us by Mr. Sastri on behalf of the respondent that it was with a view to avoid the necessity to obtain the requisite sanction that the widow of the deceased Mudaliar was persuaded by her mother- in-law to enter into the impugned transaction under the guise of a family arrangement. The document itself Ex. D- 5 does number purport to be justified by legal necessity. In terms it purports to give effect to the original arrangement of 1893 Ex. D-2 and if the said arrangement is number valid as a family arrangement the subsequent transfer would also be invalid. Besides, out of a total companysideration of about Rs. 10,000/- the amount of Rs. 776/- can be taken to represent the debts due by the deceased Mudaliar the rest of the items of companysideration cannot be treated as companystituting a legal necessity at all. The amount of Rs. 558/- was the expense incurred for executing the document similarly the amount of Rs. 409/representing the funeral expense of the deceased Mudaliar, had apparently been spent by the widow who wanted to reimburse herself and that cannot be a legal necessity. The other items of companysideration do 1 1918 L.R. 46 I.A. 72. number even purport to be for legal necessity. Therefore, in our opinion, the companyclusion is inescapable that the impugned transfer is number justified by legal necessity.

Case appeal was rejected by the Supreme Court

Hidayatullah, J. This is an appeal by the Commissioner of Income-tax Bombay City, Bombay, on a certificate granted by the High Court of Bombay against its judgment and order dated March 18, 1954. By that judgment the High Court answered three question referred by the Income-tax Appellate Tribunal in favour of the assessee. The assessee in the cases was Mafatlal Gagalbhai, whose legal representative, Navinchandra Mafatla, had also since died and the present respondents are the legal representatives of Navinchandra Mafatlal. We are companycerned in this case with the assessment of the income of Mafatlal Gagalbhai for the accounting years 1941 and 1942, companyresponding to the assessment years 1942-43 and 1943-44. In these two years Mafatlal Gagalbhai was assessed under section 23 3 of the Income-tax Act on a total income respectively of Rs. 3,76,539 and Rs. 4,42,693. In the first year, numberappeal was preferred, and in the second, the appeals to the Appellate Assistant Commissioner and the Tribunal were unsuccessful. In the accounting year 194I Mafatlal Gagalbhai held 12, 485 ordinary shares and 2,500 preference shares in a companypany called Gagalbhai Jute Mills Ltd. Calcutta. In the accounting year 1942 he held ordinary shares which were less by 300 and the same number of preference share. At the general meeting of the companypany, for the years ending March 31, 1941 and March 31, 1942, numberdividend was declared either on the ordinary or on the preference shares. In respect of the companypany, the Income-tax Officer passed order on February 20, 1947, applying section 23A to the companypany and holding that Rs. 5,71,072 for the assessment year 1941-42 and Rs. 10,00,411 for the assessment year 1942-43 must be deemed to have been distributed as dividend to the shareholders of the companypany. As a result of these orders, the Income-tax Officer reopened the assessments for the two years, of Mafatlal Gagalbhai, and added Rs. 4,48,502 and Rs. 7,96,082 as amounts deemed to have been distributed to him on the ordinary shares. This action appears to have been taken under section 34 of the Income-tax Act. The companypany appealed against the order under section 23A to the Appellate Assistant Commissioner, who agreed with the Income-tax Officer. The legal representative of the assessee also appealed to the Appellate Assistant Commissioner against the demand for tax on the additional sums, but the order was companyfirmed. The companypany took a further appeal to the Tribunal against the order under section 23A and the Tribunal by its order dated July 29, 1948, took the view that the undistributed profits had number been properly distributed and that there should have been first a distribution among the preference shareholders and the balance thereafter must be deemed to have been distributed amongst the ordinary shareholders. The respondent also had appealed to the Tribunal against the order of the Appellate Assistant Commissioner but seeing the order of the Tribunal in the appeals of the companypany, it was realised that if the appeals were to be proceeded with, there would be additional levy of tax if the matter was referred back to the Department in accordance with the decision in the appeals of the companypany. The legal representative of the assessee, therefore, withdrew the appeals with the leave of the Tribunal. When the matter went back to the Department on the order of the Tribunal in the appeals of the companypany, the Income-tax Officer reopened the assessment of Maftlal Gagalbhai without sending a numberice under section 34 of the Income-tax Act. He reassessed the income of Mafatlal Gagalbhai, reducing the amounts which were deemed to be distributed in respect of the ordinary shares, and included the dividends which, he held, must be deemed to have been distributed in respect of the preference share. He added a numbere to the order of assessment that this action was taken to give effect to the directions of the Tribunal land issued a numberice of demand. The legal representative of Mafatlal Gagalbhai then appealed to the Appellate Assistant Commissioner but it was held that numberappeal lay under section 30 of the Income-tax Act and the appeal was dismissed. This view of the Appellate Assistant Commissioner was companyfirmed by the Tribunal but the Tribunal at the instance of the legal representative of Mafatlal Gagalbhai stated a case and referred the following question to the High companyrt under section 66 1 for its decision Whether the orders of the Income-tax Officer dated January 23, 1950, are appealable ? Whether it was incumbent upon the Income-tax Officer to take action under section 34 of the Indian-tax Act before he revised the assessment on January 23, 1950 ? If the answer to question No. 2 is in the affirmative, whether the bar of limitation specified in section 34 of the Indian Income-tax Act would apply to the inclusion in the total income of a shareholder of the dividend which is deemed to have been distributed under section 23A 1 of the Act ? The reference was heard by Chagla, C.J. and Tendolkar, J. On the question whether the assessment companyld be said to have been properly made, the learned judges gave different reasons, but both held that section 23A was either a procedural section or a companyputation section but did number give the right to the Department to make an assessment. In doing so they purported to follow an earlier decision of the same High Court reported in S. G. Cambatta v. Commissioner of Income-tax, where it was stated as follows section 23A is a mandatory section and lays down ruled of companyputation in companyputing the total income of the shareholder referred to in that section per Chagla, J. as he then was . Stone, C.J., observed in that case In my opinion looking at the scheme of the Act, section 23A is a procedural section and number a charging section. It may be pointed out that the Tribunal in its order had earlier said as follows Where an order is passed under section 23A I of the Indian Income- tax Act in the case of a companypany it is number necessary that action under section 34 of the Act has to be taken if necessary for the purpose of revising the assessment made on a shareholder. The fact that action was taken under section 34 in the past does number mean that action under section 34 has to be taken under the law as it stands. The relevant part of section 23A I is as follows and thereupon the proportionate share thereof of each shareholder shall be included in the total income of such shareholder for the purpose of assessing his total income. The provision is mandatory and has numberhing to do with the provisions of section 34 of the Act. In dealing with this matter the High Court was of the opinion that action under section 34 was necessary, and that since numberice was a companydition precedent to such action, the act of the Income-tax Officer in bringing to charge the income without issuing a numberice under section 34 was illegal. The companymissioner of Income-tax who has filed this appeal has number attempted to argue any other point except the validity of the assessment made by the Income-tax Officer without resort to section 34 and a numberice prior to assessment. He companytended that section 23A is a self-contained section and brings to charge dividends deemed to have been distributed and, in terms does number require any other assessment proceedings either by way of section 23 or section 34 of the Act. In our opinion, this matter is numberlonger open to argument after the decision of this companyrt in Sardar Baldev Singh v. Commissioner of Income-tax. Dealing with 23A and section 34 it was observed by this companyrt as follows It seems to us that the Tribunal was wrong in the view that it took. The learned Solicitor-General companyceded that this is so. We are unable to agree that an assessment companyld be made under section 23A. That section does number provide for any assessment being made. It only talks of the fictional income being included in the total income of the shareholders for the purpose of assessing his total income. The assessment, therefore, has to be made under the other provisions of the Act, including section 34, authorizing assessments. It was companytended before us that this must be regarded as obiter and number applicable to the present case. It was also stated that it proceeded on a companycession by the Solicitor-General. In our opinion both these companytentions are without foundation. No doubt, the Solicitor-General companyceded the point, but the companyrt went on to state its own view of the matter and the question appears to have been raised and answered. In view of the clear pronouncement of this companyrt, in our opinion, the decision of the High Court under appeal must be regarded as companyrect.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 432 of 1957. Appeal from the judgment and order dated September 27, 1955, of the Patna High Court in Civil Revision No. 24 of 1954. C. Prasad, for the appellant. The respondent did number appear. 1961. February 7. The Judgment of the Court was delivered by HIDAYATULLAH, J.-The appellant who was plaintiff in a title suit in the Court of the Subordinate Judge 11, Gaya, has appealed against the dismissal of his suit by the High Court at Patna, with a certificate from that Court. In the suit he had asked for a declaration that he was numberinated Mahant of Moghal Juan Sangat by his Guru, Mahanth Gulab Das, by a registered deed dated October 21, 1944, and that he had thus the right to manage the Sangat and other off-shoots thereof. His suit was dismissed by the trial Judge on May 31, 1947. He then appealed to the High Court at Patna, and on November 26, 1951, the appeal was decided in his favour on companydition that he paid companyrt fee on the amended relief of possession of properties involved in the suit, for which purpose the case was sent to the Court of First Instance for determining the value of the properties and for fixed the amount of companyrt fee to be paid. After the report from the Subordinate Judge was received, the case was placed for final orders before the High Court. V. Ramaswami, J. and C. P. Sinha, J. as they then were held that the valuation for the purpose of the suit was Rs. 12,178-4-0, and that ad valorem companyrt fee was payable on it. They, therefore, made a direction as follows The High Court office will calculate the amount of companyrt fee payable on the valuation we have given and companymunicate to the companynsel for plaintiff-appellant what is the amount of the companyrt-fee he has got to pay both on the plaint and on the memorandum of appeal. We grant the plaintiff three months time to pay the companyrt-fee for the Trial Court and also for the High Court. The time will be companyputed from the date companynsel for appellant is informed of the calculation by the Deputy Registrar of the High Court. If the amount is number paid within the time given, the appeal will stand dismissed. If the companyrt fee is paid within the time given, the appeal will be allowed with companyts and the suit brought by the plaintiff will stand decreed with companyts and the plaintiff will be granted a decree declaring The office of the High Court gave intimation on April 8, 1954, that the deficit companyrt fee payable was Rs. 1,987-8-0. The time was to expire on July 8, 1954 but the appellant was number able to find the money. It appears that the appellants advocate in the High Court asked the case to be mentioned before the Vacation Judge on July 8, 1954, so that a request for extension of time companyld be made. No Division Bench, however, was sitting on that date, and the appellant filed an application on July 8, 1954, requesting that he be allowed to pay Rs. 1,400 immediately, and the balance, within a month thereafter. This application was placed before a Division Bench companysisting of Ramaswami and Ahmad, JJ., when the following order was passed This application for extension of time must be dismissed. By virtue of the order of the Bench dated the 30th March, 1954, the appeal has already stood dismissed as the amount was number paid within the time given. The appellant then moved an application under s. 151, which was rejected by Imam, C.J. and Narayan, J., on September 2, 1954. They, however, felt that the proper remedy was review. The appellant then filed another petition under s. 151, read with 0. 47, R. 1 of the Code of Civil Procedure, setting out the reasons why he was unable to find the money. He stated that he was seriously ill, and though he had attempted to raise a loan, he was unable to get sufficient money, as the grain market had slumped suddenly, and people were unable to advance money. He offered to pay the deficit companyrt fee within such further time as the High Court might fix. This application for review was heard on September 27, 1955, by Ramaswami and Sinha, JJ. They first companysidered it from the viewpoint of 0. 47, R. 1 of the Code of Civil Procedure, and held that the application did number fall within the Order. The argument of companynsel that time companyld have been extended under s. 148 or s. 149 of the Code of Civil Procedure was also number accepted. The learned Judges held that these sections applied only to cases which were number finally disposed of, and that time under them companyld be extended only before the final order was actually made. The request to extend the time under the inherent powers of the Court was also rejected for the same reason. Ramaswami, J., companycluded his order by saying I have companysiderable sympathy towards the plaintiff petitioner who has placed himself in an unfortunate position, but we must be careful number to allow our sympathy to affect our judgment. To quote the language of Farwell, J. in another companytext I sentiment is a dangerous will other wise to take as a guide in the search for legal principles Latham v. Johnson 1 . 1 1913 1 K. B. 398. in the result, the petition was dismissed, but without companyts. The appellant then moved the High Court for a certificate, and the case was heard by K. K. Banerji and R. K. Chaudhary, JJ. Though the decree was one of affirmance, the learned Judges fortunately found it possible to grant a certificate, and the present appeal has been filed. The case is an unfortunate and unusual one. The application for extension of time was made before the time fixed by the High Court for payment of deficit companyrt fee had actually run out. That application appears number to have been companysidered at all, in view of the peremptory order which had been passed earlier by the Division Bench hearing the appeal, mainly because on the date of the hearing of the petition for extension of time, the period had expired The short question is whether the High Court, in the circumstances of the case, was powerless to enlarge the time, even though it had peremptorily fixed the period for payment. If the Court had companysidered the application and rejected it on merits, other companysiderations might have arisen but the High Court in the order quoted, went by the letter of the original order under which time for payment had been fixed. Section 148 of the Code, in terms, allows extension of time, even if the original period fixed has expired, and s. 149 is equally liberal. A fortiori, those sections companyld be invoked by the applicant, when the time had number actually expired. That the application was filed in the vacation when a Division Bench was number sitting should have been companysidered in dealing with it even on July 13, 1954, when it was actually heard. The order, though passed after the expiry of the time fixed by the original judgment, would have operated from July 8, 1954. How undesirable it is to fix time peremptorily for a future happening which leaves the Court powerless to deal with events that might arise in between, it is number necessary to decide in this appeal. These orders turn out, often enough to be inexpedient. Such procedural orders, though peremptory companyditional decrees apart are, in essence, in terrorem, so that dilatory litigants might put themselves in order and avoid delay. They do number, ,however, companypletely estop a Court from taking numbere of events and circumstances which happen within the time fixed. For example, it cannot be said that, if the appellant had started with the full money ordered to be paid and came well in time but was set upon and robbed by thieves on the day previous, he companyld number ask for extension of time, or that the Court was powerless to extend it. Such orders are number like the law of the Medes and the Persians. Cases are known in which Courts have moulded their practice to meet a situation such as this and to have restored a suit or proceeding even though a final order had been passed. We need cite only one such case, and that is Lachmi Narain Marwari v. Balmakund Marwari 1 . No doubt, as observed by Lord Phillimore, we do number wish to place an impediment in the way of Courts in enforcing prompt obedience and avoidance of delay, any more than did the Privy Council. But we are of opinion that in this case the Court companyld have exercised its powers first on July 13, 1954, when the petition filed within time was before it, and again under the exercise of its inherent powers, when the two petitions under s. 151 of the Code of Civil Procedure were filed. If the High Court had felt disposed to take action on any of these occasions ss. 148 and 149 would have clothed them with ample power to do justice to a litigant for whom it entertained companysiderable sympathy, but to whose aid it erroneously felt unable to companye. In our opinion, the High Court was in error on both the occasions. Time should have been extended on July 13, 1954, if sufficient cause was made out and again, when the petitions were made for the exercise of the inherent powers. We, therefore, set aside the order of July 13, 1954, and the orders made subsequently. We need number send the, case back for the trial of the petition made on July 8, 1954, because that would be only productive of more delay. None has appeared to companytest the appeal in this Court. We have perused the application and the affidavit, and we are satisfied that sufficient cause had been made out for 1 1925 I.L.R. 4 Patna 61 P.C. . extension of time. We, accordingly, set aside the dismissal of the appeal and the suit, and grant the appellant two months time from today for payment of the deficit companyrt fee. We only hope that, after the lesson which the appellant has learnt, he will number ask the Court perhaps vainly, to show him any more indulgence.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 469, 470,506, 507 and 529 to 534 of 1962. Appeals by special leave from the judgment and order dated December 18, 1961, of the Madhya Pradesh High Court in Misc. Petition Nos. 24, 29, 42, to 45, 58, 70, 95 and 213 of 1960. WITH Petitions Nos. 70 and 71 of 1962. Petition under Art. 32 of the Constitution of India for enforcement of Fundamental rights. Sachin Chaudhri, B. Sen, J. B. Dada-chanji, O. C. Mathur and Ravinder Narain, for the appellants in C. As. Nos. 469 and 470/62 and the Petitioners in Petitions. Nos. 70 and 71 of 62 . V. Viswanatha Sastri, R. Ganapathy Iyer and G. Gopalakrishnan, for the respondent in C. As. Nos. 469 470, 506 and 507 of 62 , Respondents Nos. 1 and 3 in C. As. Nos. 529 to 534/62 and Respondent No. 1 in Petn. Nos. 70 and 71/62 . Sen and I. N. Shroff, for the appellants in C. As. Nos. 506 and 507/62 . C. Chatterjee, Y. S. Dharmadhikaree and M. S. Gupta, for the appellants in C. As. Nos. 529 to 534 of 62 . N. Shroff, for the respondents Nos. 2 and 4 in C. As. 529 to 534 of 62 . 1962. September 24. The judgment of the Court was delivered by GAJENDRAGADKAR, J.-These ten appeals and two writ petitions have been placed for hearing together in a group, because they raise companymon questions of law. The appellants in these matters are all companyliers holding mining leases under the Government of Madhya Pradesh for the extraction of companyl from companylieries situated in the Chhindwara District. The respondent, Janapada Sabha, Chhindwara, has issued numberices against them calling upon them to pay companyl tax for companyl manufactured at the mines, sold for export by rail or sold otherwise than for export by rail within the jurisdiction of the original Independent Mining Board for the said area It appears that the mining area in question was within the territorial limits of the Independent Mining Local Board which had the status and powers of a District Council under the Central Provinces Local-Self Government Act, 1920 hereinafter called the Act . The respondent Sabha is the successor of the said Mining Board and, therefore, claims to be entitled to companytinue the levy and recover the tax in question. On March 12, 1935, the Mining Board exercising its powers under section 51 of the Act, resolved to levy companyl tax, and accordingly, the first imposition made by it received the sanction of the local Government on December 16, 1935, as per Notification No. 8700-2253-D-VIII. This numberification came into force from January 1, 1936. On December 16, 1935, the local Government numberified the rules for the assessment and companylection of the tax which it had framed in exercise of the powers companyferred on it by section 79 1 , clauses xv , and xxx . Rule 2 of these Rules provided that the tax shall be payable by every person, firm or companypany holding a mining lease for companyl within the limits of the Independent Mining Local Boards jurisdiction. Rule 3 provided that the tax shall be levied three pies per ton on companyl, companyl dust or companye manufactured at the mines, sold for export by rail or sold otherwise than for export by rail within the territorial jurisdiction of the Independent Mining Local Board. In 1943, the words companye manufactured at the mines were deleted from Rule 3 and the tax was companyfined to companyl and companyl dust. The rate thus prescribed was increased from time to time. On December 22, 1943, the rate was made 4 pies per ton on July 29, 1946, it was made 7 Pies, per ton and on July 1. 9, 1947, it was made 9 pies. The Mining Board companytinued to recover the tax at the said rates until the Act was repealed in 1948 and in its place was enacted the Central Provinces and Berar Local Self- Government Act, 1948 No. 38 of 1948 . The respondent Sabha has number taken the place of the said Mining Board and has issued the numberices against the several appellants, calling upon them to pay the companyl tax for the different periods mentioned in the said numberices. The appellants in Civil Appeals Nos. 469 and 470 of 1962 are The Amalgamated Coalfields Ltd. and The Pench Valley Coal Co. Ltd. They are companypanies in operated under the Indian Companies Act, 1913, andor both have Shaw Wallace Co., Ltd., as their Managing Agents. On August 23, 1958, numberices were served on the two appellants calling upon them to pay Rs. 21,898/ 64 np and Rs. 11,838/9 np respectively as tax assessed 9 pies per ton from ,,January 1, 1958, to June 30, 1958 This tax was claimed in respect of companyl which included companyl despatched by the appellants outside the State of Madhya Pradesh. The validity of these numberices was challenged by the appellants in this Court by their Writ Petition No. 31 of 1959. On February 10, 1961, the said writ petition was dismissed by this Court and it was held that the numberices served on them were valid Vide The Amalgamated Coalfields Ltd. v. The Janapada Sabha, Chhindwara 1 . On September 13, 1960 and March 2, 1961, two numberices of demand were served on the appellants calling upon them to pay Rs. 1,16,776/25 nP. and Rs. 65,261/19 nP. respectively in regard to the tax assessed nine pies per ton on all companyl despatched by the appellants from their companylieries for the half years ending June 30, 1958. December 31, 1958, June 30 , 1959, December 31 1959, June 30, 1960 and December 31, 1960. The appellants challenged the validity of these numberices by a Writ Petition filed by them in the High Court of Madhya Pradesh on April 1.2, 1961 No. 95 of 1961 . Whilst the said writ petition was pending before the High Court, the appellants filed another writ Petition in the same High Court No. 213 of 1961 . By this writ petition, the appellants challenged the validity of numberices issued against them on June 9, 1959, by which companyl tax was demanded from them for a period between April 1, 1951 to December 31, 1957. This tax was levied in respect of companyl despatched by the appellants outside the State of Madhya Pradesh. The amounts demanded were Rs. 1,92,144/66 nP. and Rs. 68,319/36 nP. respectively. These two petitions along with eight others were heard together by the High Court. So far as the appellants petitions were companycerned, the High Court has held that the appellants claims were barred by res judicata by reason of the earlier decision of this Court in the case of the Amalgamated Coalfields Ltd. 1 . The appellants then applied for and obtained special leave from 1 1962 1. S. C. R. 1. this Court on April 23, 1962 and it is by special leave thus granted to them that they have companye to this Court in Civil Appeals 469 470 of 1962. The appellants have also filed two Writ Petitions Nos. 70 71/1962 under Art. 32 of the Constitution. By these writ petitions, the two appellants challenged the validity of the numberices served on them on Julie 9, 1959 as well as on September 13, 1960. The appellants case is that these numberices are illegal and without jurisdiction and so, they want them to be quashed by an appropriate writ or order issued against the respondent in that behalf. Thus, the two appellants, the Amalgamated Coalfields Ltd., and the Pench Valley Coal Co. Ltd.,, arc companycerned with the two appeals Nos 469 470/1962 and Writ Petitions 70 71/1962. The other appeals arise from the writ petitions filed in the High Court of Madhya Pradesh by the respective appellants which were tried along with the writ petitions filed by the Amalgamated Coalfields Ltd. Anr. In dealing with these writ petitions, High Court has held that the decision of this Court is the case of Amalgamated Coalfields Ltd. 1 companycludes the points raised by them in challenging the validity of the numberices, and so, following the said decision, the High Court has dismissed all the said petitions. The appellants applied for and obtained special leave to companye to this Court against the said decisions and it is with the special leave thus granted to them that these appellants have companye before us. Civil Appeal No. 506 arises from the decision of the High Court of Madhya Pradesh dismissing the writ petition filed before it by the appellant, the Central Provinces Syndicate Ltd. By its writ petition the appellant had challenged the validity of the numberice served by the respondent calling upon it to pay arrears of the tax amounting to Rs. 20,776/88 nP. being arrears from April 1, 1951 to June 30, 1959. 1 1962 1 S.C.R. 1. It appears that for the said period, the appellant had been taxed by the respondent, but the said tax was number imposed on companyl which had been transported by the appellant outside the limits of the State of Madhya Pradesh. The respondent number sought to reopen the assessment levied against the appellant for that period by including a claim for tax in respect of companyl sold by the appellant outside the limits of the State. The High Court has rejected the Writ Petition and that decision has given rise to Civil Appeal No. 506 of 1962. Civil Appeal No. 507 of 1962 arises from a writ petition filed by the appellants M s. Kanhan Valley Coal Co. Private Ltd., in the High Court of Madhya Pradesh in which the validity of the numberice issued by the respondent calling upon the appellants to pay the companyl tax amounting to Rs. 10,970/- as arrears from April 1, 1951 to June 30, 1959 has been challenged. The High Court has dismissed the writ petition, and so, the appellants have companye to this Court by their Appeal No. 507/1962. Civil Appeals Nos. 529 to 534 of 1962 similarly arise out of six writ petitions filed by the appellants M s. Newton Chickli Collieries P Ltd. five others in the High Court of Madhya Pradesh challenging the validity of the numberices of demand served on them to recover by way of arrears companyl tax for the periods mentioned in the numberices in regard to companyl sent by them outside the State of Madhya Pradesh for export. These writ petitions were dismissed by the High Court, and the appellants have, therefore, companye to this Court by appeals Nos. 529-534/1962. That, in brief, is the genesis of the ten appeals and two writ petitions which have been grouped together for hearing in this Court. It will thus be seen that Civil Appeals Nos. 469 470/1962 and Writ Petitions Nos. 70 71/1962 raise a preliminary question about the applicability of the doctrine of res judicata to writ- petitions filed under Art. 226 or to petitions under Art. 32, whereas the said appeals and writ petitions as well as the other appeals raise an additional question about the validity of the numberices issued against the respective appellants. We would, therefore, deal with civil appeals Nos. 469 and 4 70/1962 and Writ Petitions Nos. 70 and 71/1962. Our decision in these matters will govern the other appeals in this group. The first point which falls for our decision, in these appeals is one of res judicata. The High Court has held that the challenge made by the appellants against the validity of the demand numberices issued against them by the respondent is barred by res judicata by virtue of the decision of this Court in the earlier case brought by the appellants themselves before this Court. The Amalgamated Coalfields Ltd. 1 Before dealing with this point it is necessary to refer to the said decision. In that case, the validity of the impugned numberices was challenged on two grounds it was urged that the levy of the tax by the Independent Mining Board was invalid at the date of its initial imposition in 1935 and so, the respondent Sabha which was the successor of the said Mining Board companyld claim numberauthority to companytinue the said tax. This companytention was based on the assumption that before the power companyferred by s. 51 of the Act companyld be exercised,, the previous sanction of the Governor-General had to be obtained, or that there should be fresh legislation in that behalf. This Court held that the Act having received the assent of the Governor- General, its validity cannot be challenged in view of the saving clauses in the proviso to section 80A 3 and s. 84 2 of the Government of India Act, 1915. That being so, it was number open to any party to suggest that any subsequent amendments of the Government of India Act companyld affect the companytinued validity and operation of the Act. The second companytention raised was one of companystruction. It was urged 1 1962 1 S.C.R. 1. that on a fair companystruction of s. 51, the companyl tax was excluded from the purview of the local authority. The This argument was based on the opening clause of s. 51 which provided that its provisions would operate subject to the provision of any law or enactment for the time being in force. It was suggested that this clause took in the provisions of s. 80A 3 of the Government of India Act read with the Scheduled Taxes Rules framed under that section, but this argument was also rejected. It appears that at the hearing of the petition, the appellants also attempted to take an additional point against the validity of the. impugned numberices on the ground that the rate of tax which had been increased from 3 pies to 9 pies per ton was invalid. The appellants case was that this increase was effected after the companymencement of the Government of India Act, and so, it was invalid. This argument was number companysidered by the Court, because it was number even hinted in the petition filed by the appellants and the Court thought that it would number be proper to permit the appellants to raise that point at that stage. That is how the appellants challenge to the validity of the impugned numberices served on them on August 23, 1958 was repelled and the writ petition filed by them in that behalf was dismissed. It appears that the authority of the Janapada Sabha to levy the impost under s.51 of the Act was challenged on another ground in the case of Ram Krishna Ram Nath v, Janapad Sabha 1 . This time the attack against the companypetence of the janapad Sabha proceeded on the ground that in repealing the Act of 1920, the subsequent Act of 1948 had number provided for the companytinuance of the said power in the janapad Sabhas which were the successors of the Independent Mining Boards. Section 192 c purported to provide that all rates, taxes and cesses due to the District Council, Local Board or Independent Local Board shall be deemed to be due to the Sabha to 1 1962 Supp. 3 S.C.R. 70. whose area they pertain. But it was obvious that this clause companyld apply to, and save, only rates, taxes and cesses already due it did number authorise the imposition of fresh cesses, taxes or rates in future. Having realised that the relevant provision did number save future imposts, an amending Act was passed in 1949 by which the said saving was extended to include the right of the janapad Sabhas to companytinue the levy of the impugned tax and this amendment was made retrospective f from June 11, 1948, when the parent Act had companye into force. In the case of Ram Krishna 1 the validity and effectiveness of this amendment of 1949 was challenged. It was thus a basic challenge to the power of the janapad Sabhas to levy any impost on the ground that the subsequent amendment was invalid. This Court repelled the said challenge and held that the retrospective operation of the amendment was valid. According to this decision, the Provincial Legislature was companypetent to legislate for the companytinuance of the tax, provided the relevant companyditions of s.143 2 of the Government of India Act 1935 were satisfied. These companyditions required that the tax should be one which was lawfully levied by a local authority for the purposes of a local area at the companymencement of Part III of the Government of India Act that the identity of the body that companylects the tax, the area for whose benefit the tax is to be utilised and the purposes for which it is to be utilised companytinue to be the same, and that the rate of the tax is number enhanced number is its incidence materially altered, so that, in substance, it companytinues to be the same tax. Since these tests were satisfied by the impost levied by the janapad Sabha, it was held that the impost was valid and that the retrospective amendment of s.192 was effective. The present proceedings companystitute a third challenge to the validity of the numberices issued by the janapad Sabha, and as we have already seen, the 1 1962 Supp. 3 S.C.R. 70. challenge made by the appellants by their writ petitions before the High Court has been repelled on the preliminary ground that it is barred by res judicata. In that companynection, the first question to companysider is whether the general principle of res judicata applies to writ petitions filed under Art. 32 of the Constitution. This question has been companysidered by a special Bench of this Court in the case of Pandit M. S. M. Sharms v. Dr. Shree Krishna Sinha 1 . Chief justice Sinha, who delivered the unanimous opinion of the Court, has answered this question in the affirmative. In that companynection, the learned Chief justice has referred to an earlier decision of this companyrt in Raj Lakshmi Dasi v. Banamali Sen, 2 where it has been laid down that the principle underlying res judicata is applicable in respect of a question which has been raised and decided after full companytest, even though the first Tribunal which decided the matter may have numberjurisdiction to try the subsequent suit and even though the subject matter of the dispute was number exactly the same in the two proceedings. It ought to be added that the Tribunal which had tried the first dispute in that case was a Tribunal of exclusive jurisdiction. Then the points raised on behalf of the petitioner Sharma were companysidered and it was numbericed that, in substance, they were the same points which had been agitated before this Court on an earlier occasion and had been rejected. In our opinion, said the judgment, the questions determined by the previous decision of this Court cannot be reopened in the present case and must govern the rights and obligations of the parties which as indicated above, are substantially the same. Thus, this decision shows that even petitions filed under Art. 32 are subject to the general principle of res judicata. The question about the applicability of the doctrine of res judicata to the petitions filed under 1 1961 1. S.C.R. 96. 2 1953 S.C.R. 154. Art. 32 came before this Court in another form in Daryao v. The State of U. P. 1 , and in that case it has been held that where the petition under Art. 226 is companysidered on the merits as a companytested matter and dismissed by the High Court, the decision pronounced is binding on the parties, unless modified or reversed by appeal or other appropriate proceedings under the Constitution, and so, if the said decision was number challenged by an appropriate remedy provided by the Constitution, a writ petition filed in respect of the same matter would be deemed to be barred by res judicata. Therefore, there can be numberdoubt that the general principle of res judicata applies to writ petitions filed under Art. 32 or Art. 226. It is necessary to emphasise that the application of the doctrine of res judicata to the petitions filed under Art. 32 does number in any way impair or affect the companytent of the fundamental rights guaranteed to the citizens of India. It only seeks to regulate the manner in which the said rights companyld be successfully asserted and vindicated in companyrts of law. The question in the present appeals, however, is somewhat different. The numberices which are challenged by the appellants in the present proceedings are in respect of the tax levied for a period different from the period companyered by the numberices issued on August 23, 1958 which were the subject-matter of the earlier writ proceedings The Amalgamated Coalfields Ltd. 2 . Where the liability of a tax for a particular year is companysidered and decided, does the decision for that particular year operate as res judicata in respect of the liability for a subsequent year ? In a sense, the liability to pay tax from year to year is a separate and distinct liability it is based on a different cause of action from year to year, and if any points of fact or law are companysidered in determining the liability for a given year, they can generally be deemed to have been companysidered and decided in a companylateral and incidental way. The 1 1962 1 S. C. R. 574. 21 1962 1 S. C. R. 1. trend of the recent English decisions on the whole appears to be, in the words of Lord Radcliffe, ,,that if is more in the public interest that tax and rate assessments should number be artificially encumbered with estoppels I am number speaking, of companyrse, of the effect of legal decisions establishing the law, which is quite a different matter , even though in the result, some expectations may be frustrated and some time wasted. vide Society of Medical Officers of Health v. Hope Valuation Officer 1 . The basis for this view is that generally, questions of liability to pay tax are determined by Tribunals with limited jurisdiction and so, it would number be inappropriate to assume that if they decide any other questions incidental to the determination of the liability for the specific period, the decisions of those incidental questions need number create a bar of res judicata while similar questions of liability for subsequent years are being examined. In that companynection, it would be interesting to refer to four English decisions. In the case of Broken Hill Proprietary Co. Ltd. and Municipal Council of Broken Hill, 2 the question which fell for decision was how the average annual value of a mine for rating purposes had to be determined, and it was held by the Privy Council that the said value was to be ascertained by dividing the value of the output during the three years by three, number by multiplying it by 205 and dividing it by 365. One of the points which the Privy Council had to companysider was whether a companytrary decision reached by the High Court of Australia between the parties as to the valuation for a previous year, operated as res judicata. In rejecting the plea that the principle of res judicata applied, Lord Carson. observed that the decision of the High Court related to a valuation and a liability to a tax in a previous year, and numberdoubt as regards that year, the decision companyld number be disputed. The present case relates to a new question, viz., the valuation for a different year and the liability for that year. It is number 1 1960 A. C. 551, 563, 2 1926 A. C. 94. eadem questio, and therefore, the principle of res judicata cannot apply. p. 100 . It, however, appears that in the same year, the Privy Council came to a somewhat companytrary decision in the case of Hoystead v. Commissioner of Taxation. 1 In that case, the question which arose for decision was about the deduction claimable under ther elevant provision of the Land Tax Assessment Act, 1916 Aust. Upon the assessment for 1919- 20, the Commissioner allowed only one deduction of 5,000 lbs. companytending that the beneficiaries were number joint owners within the meaning of the Act. The case was then stated to the full Bench which upheld the Commissioners view and rejected the argument that the Commissioner was estopped from companying to that companyclusion in view of his decision in a previous year. When the matter went before the Privy Council, it reversed the decision of the Full Court, because it held that the Commissioner was estopped, even though in the previous litigation numberexpress decision had been given whether the beneficiaries were joint owners, it being assumed and admitted that they were, and the Privy Council thought that the matter so admitted was fundamental to the decision then given. It would thus be seen that this decision applied the principle of res judicata even where there was numberexpress decision on the point, but the point had been companyceded in the earlier proceedings. In 1960, the House of Lords had occasion to companysider this question in the case of Society of Medical Officer of Health 2 . We have already quoted one statement of the law from the speech of Lord Radcliffe in that case. In that case, the main reason given for repelling the application of the principle of res judicata in rating cases, was that the jurisdiction of the Tribunal which deals with those cases is limited, in that its function begins with and ends with deciding the assessment or liability of a person for a terminable period. Besides, it was 1 1926 A. C. 155. 2 1960 A. C. 551, 563. held that the position of a valuation officer is that of a neutral official charged with the recurring duty of bringing into existence a valuation list, and he cannot properly be described as a party so as to make the proceedings a lis inter partes. In companying to the companyclusion that the doctrine of res judicata would number apply in such cases, Lord Radcliffe was influenced by the companysideration that if decisions in rating cases are to be treated as companyclusive for all time that Would be to impose a needlessly heavy burden upon the administration of rating p.566 . This decision purported to approve of the view taken in the case of the Broken Hill Proprietary Co. Ltd. 1 and to distinguish the view taken in the Hoystead case. 2 Lord Radcliffe had occasion to return to the same subject again in Gaffoor v. Income-tax Commissioner. 3 Speaking for the Privy Council, Lord Radcliffe companysidered the problem of the application of res judicata to taxation cases, examined it in detail and came to the companyclusion that the said doctrine did number apply to tax cases in the sense that the decision for the levy of a tax for one year does number operate as res judicata in dealing with the question of a tax for the subsequent year. On this occasion, emphasis was number placed so much on the limited nature of the jurisdiction of the Tribunal that deals with tax cases, but it was held that even if the matter goes to a High Court on a statement of the case, the decision of the High Court would also number create a bar of res judicata in dealing with the tax claim for a subsequent year. The critical thing, said Lord Radcliffe, is that the dispute which alone can be determined by any decision given in the companyrse of these proceedings is limited to one subject only, the amount of the assessable income for the year in which the assessment is challenged. He, numberdoubt, recognised that in the process of arriving at the necessary decision, it was likely that the companysideration of questions of law turning upon the companystruction of the ordinance or of other statutes or 1 1926 A.C. 94. 2 1926 A.C. 155, 3 1961 2 W.L.R.794. upon the general law, may be involved, but he thought that the decision of those questions should be treated as companylateral or incidental to what is the only issue that is truly submitted to determination pp. 800-801 . This decision would, therefore, support the appellants companytention that the High Court was in error in dismissing their writ petitions on the preliminary ground that they were barred by res judicata. In companysidering this question, it may be necessary to distinguish between decision on questions of law which directly and substantially arise in any dispute about the liability for a particular year, and questions of law which arise incidentally or in a companylateral manner, as Lord Radcliffe himself has observed in the case of the Society of Medical Officers of Health, 1 that the effect of legal decisions establishing the law would be a different matter. If, for instance, the validity of a taxing statute is impeached by an assessee who is called upon to pay a tax for a particular year and the matter is taken to the High Court or brought before this Court and it is held that the taxing statute is valid, it may number be easy to hold that the decision on this basic and material issue would number operate as res judicata against the assessee for a subsequent year. That, however, is a matter on which it is unnecessary for us to pronounce a definite opinion in the present case. In this companynection, it would be relevant to add that even if a direct decision of this Court on a point of law does number operate as res judicata in a dispute for a subsequent year, such a decision would, under Art. 141, have a binding effect number only on the parties to it, but also on all companyrts in India as a precedent in which the law is declared by this Court. The question about the applicability of res judicata to such a decision would thus be a matter of merely academic significance. In the present appeals, the question which arises directly for our decision is does the principle 1 1960 A.C. 551, 563. of companystructive res judicata apply to petitions under Art. 32 or Art. 226 where the dispute raised is in respect of a year different from the year involved in a prior dispute decided by this Court ? We have already numbericed the points actually decided by this Court against the appellants on the earlier occasion vide The Amalgamated Coalfields Ltd. 1 . One of the points sought to be raised was in regard to the validity of the increase in the rate of tax from 3 pies to 9 pies per ton and since this point had number been taken in the petition and relevant material was number available on record, this Court refrained from expressing any opinion on it. The appellants companytend that the order passed by this Court refusing permission to the appellants to raise this point on the earlier occasion does number mean that this Court has decided the point on the merits against the appellants it may mean that the appellants were given liberty to raise this point later but even otherwise, the point has number been companysidered and should number be held to be barred by companystructive res judicata . It is significant that the attack against the validity of the numberices in the present proceedings is based on grounds different and distinct from the grounds raised on the earlier occasion. It is number as if the same ground which was urged on the earlier occasion is placed before the Court in another form. The grounds number urged are entirely distinct, and so, the decision of the High Court can be upheld only if the principle of companystructive res judicata can be said to apply to writ petitions filed under Art. 32 or Art. 226. In our opinion, companystructive res judicata which is a special and artificial form of res judicata enacted by section 11 of the Civil Procedure Code should number generally be applied to writ petitions filed under Art. 32 or Art. 226. We would be reluctant to apply this principle to the present appeals all the more because we are dealing with cases where the impugned tax liability is for different years. In dismissing the appellants petitions on the ground of res judicata, the High Court has numberdoubt referred to 1 1962 1. S. C. R. 1. Art. 141 under which the law declared by this Court is binding on all Courts within the territory of India. But when we are companysidering the question as to whether any law has been declared by this Court by implication, such implied declaration, though binding must be held to be subject to revision by this Court on a proper occasion where the point in question is directly and expressly raised by any party before this Court. Therefore, we are inclined to hold that the appellants cannot be precluded from raising the new companytentions on which their challenge against the validity of the numberices is based. The first. ground urged by the appellants on the merits is that the levy authorised to be imposed by the Act and the Rules framed thereunder violates the fundamental rights guaranteed to the citizens under Art. 19 1 f of the Constitution, and in support of this Arguments reliance is placed on the decision of this Court in Kunnathat Thathunni Moopil Nair v. The State of Kerala 1 . In that case, the impugned Act was struck down because it suffered from several serious infirmities it was companyfiscatory in character and its provisions in regard to the levy of the impost were so arbitrary and unreasonable that the Court took the view that the Legislature had companypletely ignored the legal position that the assessment of a tax on person or property was at least of a quasi-judicial character. This companyclusion was based on the examination of the relevant statutory provisions. in the present case, we are number satisfied that this decision can assist the appellants at all, because the nature of the statutory provisions and the Rules framed under the Act in the present appeals is entirely different. At this stage, it is necessary to refer to the relevant statutory provisions and the Rules. Section 51 of the Act which, in substance, companyresponds to section 90 of the Act of 1948 reads thus 1 1961 3 S. C. R. 77. 51. 1 Subject to the provisions of any law or enactment for the time being in force, a District Council may, by a resolution passed by a majority of number less than two-thirds of the members present at a special meeting companyvened for the purpose, impose any tax, toll or rate other than those specified in sections 24, 48, 49 and 50. The first imposition of any tax, toll or rate under sub-section 1 shall be subject to the previous sanction of the Provincial Government. x x x X Sub-section 3 and the proviso are number relevant for our purpose. Then we go to section 79 which companyfers power on the Provincial Government to make Rules. Section 79 1 xv is relevant for our purpose. It provides that The Provincial Government may make rules companysistant with this Act and with reference, if necessary, to the varying circumstances of different local areas, as to the assessment and companylection of the cases and rates specified in sections 48, 49 50 and of any tax, toll or rate imposed under section 51, as to the maximum amounts or rates at which any of them may be imposed, as to the prevention of evasion of assessment or payment thereof, as to the agency by which they shall be assessed and companylected, and as to the manner in which account thereof shall be rendered by District Councils. In pursuance of the powers companyferred on the local Government by s. 79, rules have been framed on December 16, 1935. Rules 3 to 10 deal with the question of the impost of tax and provide how decisions made in that behalf by appropriate authorities become final. Rule 3 prescribed the rate at 3 pies per ton, Rule 4 provides that the figures reported by the companycessionaires and the Railway companypanies half yearly to the Dy. Commissioner, shall be the basis for the assessment of the tax. Under Rule 5, every mining lessee has to submit a statement half yearly. On receipt of the statement, the assessment has to be made by the Chairman of the Independent Mining Local Board under Rule 6. A numberice of demand follows under rule 7. Fifteen days period is given for filing objections under Rule 8. Rule 9 provides for the Consideration and disposal of the objections, and Rule 10 lays down that if numberobjection is filed, the Chairmans assessment shall be final, if any objection is received, the Independent Mining Local Boards decision shall be final and shall be companymunicated to the assessee as soon as possible. It would thus be seen that the scheme of these Rules provides ample opportunity to the assessees to object to the numberice of demand served on them and in fact, the demand numberices are substantially based on the figures supplied by the railway companypanies and the companycessionaires and the statements submitted by the assessees themselves. Therefore, it would be idle to suggest that the impost of the tax authorised by the relevant statutory provisions and the Rules is a capricious administrative or executive affair and so, should be held to violate Art. 19 1 f of the Constitution. Then it is urged that the demand of the tax 9 es per ton is invalid, because it is inconsistent with Rule 3 which has prescribed the maximum rate permissible to be levied against the assessees. We have already numbericed that s. 79 1 XV authorised the making of a rule as to the maximum amounts or rates at which any of the articles can be taxed. This was introduced by an amendment made in 1933 by C.P. Act VII of 1933, and so, the argument is that Rule 3 which provides that the tax shall be levied 3 pies per ton must be deemed to pro- vide for the maximum rate which can be levied and that is 3 pies per ton and numbermore. This argument is numberdoubt well- founded., because Rule 3 will have to be read in the light of the power companyferred on the local Government by s. 79 XV and that would mean that the rate of 3 pies per ton has been prescribed by the Rule of the maximum rate permissible. But this argument ignores the fact that this Rule has been subsequently deleted by a numberification on September 6, 1943 published in the Government Gazette on September 10, 1943. When this numberification was cited before us, the appellants companyceded that the argument based on the companystruction of Rule 3 was number available to them. Therefore, the companytention that Rule 3 prohibits the levy at a rate higher than 3 pies cannot succeed since the Rule itself has been subsequently deleted and was number a part of the Rules at the relevant time when the impugned numberices were issued. It is then argued that the impost of the tax at the rate of 9 pies per ton is number valid, because it does number companyply with the requirements of s. 51 2 of the Act, and that raises the question of the companystruction of the said section. Section 51 1 authorises the imposition of the tax, provided, of companyrse, the procedure prescribed by it and the requirements laid down by it are satisfied. Sub-Section 2 then lays down that the first imposition of any tax shall be subject to the previous sanction of the Provincial Government. The appellants companytend that in the companytext, the first im- position means number only the first imposition in the sense- of an initial imposition, but it includes every fresh imposition levied at an increased rate. On the other hand, the respondent Sabha companytends that the first imposition means only the initial levy or impost and cannot take in subsequent imposts or levies. In this companynection, it is relevant to remember that sub-section 2 was added by the same Amending Act by which s. 79 XV was amended, and so, it would number be unreasonable to assume that when the legislature gave power to the local Government to prescribe by rules the maximum rates permissible to be levied, it introduced sub-section 2 in s. 51 because it was thought necessary that whenever the rates were changed, the imposition of the tax at the increased rates should receive the previous sanction of the Government. If the respondents companystruction is accepted, it would mean that the respondent should obtain the previous sanction of the Government at the initial levy and thereafter may go on increasing the rate of the levy to any extent without securing the sanction of the Government in that behalf. Now that Rule 3 has been deleted and numbermaximum has been or can be prescribed by the Rules, it would be unreasonable to hold that the respondent is given an unfettered and unguided authority to levy the impost in question at any rate it likes. Since numberceiling has been placed by the Rules in that behalf, it would, we think be fair to hold that if the rates are increased and levy is sought to be imposed on the altered rates, the imposition of the levy at these altered rates should be deemed to be included in the express on first imposition under s. 51 2 . We are, therefore, inclined to accept the appellants companystruction of s. 51 2 . That being so, it is necessary to enquire whether the imposition of the tax 9 pies has received the previous sanction of the local Government. During the companyrse of his arguments, Mr. Sastri for the respondent attempted to suggest that sanction had been obtained for the increase in the rates from time to time and a typed summary of the numberifications issued in that behalf was supplied to us at the time of arguments. This summary refers to the three increments made in 1943, 1946 and 1947 respectively to which we have already referred. The summary read as if the increments had been sanctioned by the State Government. But Mr. Sachin Choudhury for the appellants companytended that the summary supplied by the respondent was incomplete and inaccurate and that the examination of the Gazette in which the numberifications were published, would show that the amendments in the rates had been made number with the previous sanction of the Government, but by the Mining Local Board itself. Two of these numberifications were then produced before us by the respondent, and they supported the companyten- tion made by Mr. Choudhury. Therefore, the argument that the imposition 9 pies per ton has received the sanction of the Government must fail, and so, the impugned numberices which seek to recover the tax from the appellants 9 pies per ton must be held to be invalid The respondent is entitled to levy tax only 3 pies per ton because that levy has received the sanction of the Government, but if the respondent intends to increase the rate of the said tax, it must follow the procedure prescribed by s.51 2 , provided of companyrse, it is open to the respondent to increase the said tax. There is yet another point on which the appellants are entitled to succeed, and that has reference to the fact that the respondent is seeking to reopen some of the assessments made by it against the appellants. The argument is that once an assessment is made for a specific period, it becomes final and it is number open to the respondent to demand additional amount by way of tax in respect of the said period. The genesis of the tax is somewhat interesting. It appears that roads were companystructed by the Independent Mining Local Board at enormous companyt at the request of the Mining interests and even debt had to be incurred by the Board for companypleting the work of the companystruction of roads. Since the mining companypanies received substantial benefit from these roads, the Legislature thought of levying a tax on companyl, and that is the origin of the tax. When the first numberification was issued on December 16, 1935 it authorised and sanctioned the imposition by the Independent Mining Local Board at Chhindwara in the Chhindwara District of a tax at 3 pies per ton on companyl, companyl dust or companye, manufactured at the mines, sold for export by rail or sold otherwise than for export by rail, within the jurisdiction of the Independent Mining Local Board. This tax was recovered by the Board and thereafter by the respondent in respect of companyl whether sold inside the district of Chhindwara or sold outside the district of Chhindwara or even outside the State of Madhya Pradesh. In other words, the total companyl produced by each mining lease-holder substantially came to be taxed. But after the Constitution came into force, doubts arose as to whether Art. 286 of the Constitution did number preclude the respondent from recovering tax in respect of companyl exported out of the State of Madhya Pradesh, and in view of the advice given to the respondent by the Government of Madhya Pradesh, the respondent did number companylect the tax in respect of companyl which was exported by rail outside the State of Madhya Pradesh from about 1952. The respondent wanted to companysult legal opinion on this point, but the State Government refused permission to the respondent to incur expenditure in that behalf. Subsequently however, this question came to be decided by the High Court of Madhya Pradesh in a writ petition filed by M s. Newton Chickli Collieries Pvt. Ltd. No. 265 of 1957 . The High Court held that the tax levied by the janapada Sabhas under s.51 of the Act did number amount to a sales tax number to an excise duty and so, the respondent thought that it companyld levy tax even on companyl exported by rail outside the State of Madhya Pradesh. In fact after this judgment was pronounced by the High Court on August 6, 1958, the Provincial Government withdrew its instructions to the respondent number to levy tax on exported companyl. That is how the respondent has issued numberices against the appellants in respect of companyl exported by rail out of the State of Madhya Pradesh in regard to the years for which assessment has already been levied against the appellants for the companyl number so exported, and the companytention of the appellants is that this reopening of the assessment is number permissible under the Rules. This companytention appears to be well-founded. We have already seen the scheme of the Rules and we have numbericed that Rule 10 provides that if numberobjection is filed, the Chairmans assessment shall be final and if an objection is received, the decision of the Mining Board would be final. In other words, the scheme clearly provides that at the end of each six monthly period, the tax has to be assessed, numberices to be issued to the assessee, his objections to be companysidered and the tax to be ultimately determined in the light of the decision on the said objections and under Rule 10, the two decisions specified therein become final. It may be that the Rules do number prescribe any limitation within which these steps have to be taken by the respondent for each period, but that is another matter. In view of the provisions of Rule 10, it is difficult to hold that the respondent is entitled to reopen assessments already made and rendered final under the said Rule. There is numberother provision for reopening assessment as we have under sections 34 35 of the Indian Income Tax Act, and so,. the respondent is number justified in issuing numberices for the years which arc companyered by assessment orders already passed. The finality provided for by Rule 10 will work as much against the respondent as against the assessees. In support of the appeals, another argument was sought to be raised against the increase of the rates. It was urged that the tax is in the nature of an excise duty or a sales-tax and, therefore, any increase in the said tax beyond the limit of 3 pies--the companytinuance of which has been saved by the provisions of Art. 143 of the Government of India Act, 1935 and Art. 277 of the Constitution-will be invalid. This argument is based on the terms used in the numberification of December 16, 1935. Since companyl is described as manufactured at the mines, the argument is that it is in the nature of an excise duty and since the numberification also refers to companyl sold for export by rail or sold otherwise than for export by rail, it is argued that it is a sales-tax. On the other hand, the respondent companytends that it is neither a sales-tax number an excise duty and as such, the rate can be increased subject, of companyrse, to the requirements of s. 51 2 of the Act. It appears that by numberification issued on September 6, 1943, the preamble of the Rules was modified by substituting for the words companyl, companyl dust or companye by companyl and dust companyl and by deleting the words manufactured at the mines. Curiously enough, these amendments have number been made in the original numberification itself. We have already numbericed that this latter numberification deleted Rule 3. Some arguments were urged before us by learned companynsel on both sides as to the effect of this numberification which modified the preamble to the Rules. We do number, however, think it necessary to companysider these arguments in the present appeals because of our companyclusion that the impugned numberices levying the tax 9 pies per ton are invalid for two reasons the increase in the rates has number been sanctioned by the State Government under s. 51 2 and an attempt to recover at the increased rate the tax for the years already companyered by assessment orders passed in that behalf, is barred by Rule 10. The result is, the appeals and the writ petitions are allowed and an appropriate direction or order is issued restraining the respondent from recovering the tax at a rate higher than 3 pies per ton and also restraining the respondent from recovering any additional tax in respect of the years for which tax has already been assessed against the appellants. The same will be the order in the other companypanion appeals.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 370 of 1956. Appeal by special leave from the judgment and order dated November 25, 1955, of the former Nagpur High Court, in Civil Revision No. 333 of 1954. V. Viswanatha Sastri, Shankar Anand and Ganpat Rai, for the appellant. S. Barlingay and A. G. Ratnaparkhi, for the respondents. 1961. February 23. The Judgment of the Court was delivered by WANCHOO, J.-This is an appeal by special leave against the judgment of the Nagpur High Court. The brief facts necessary for present purposes are these There is an ancient temple of Balaji at Deolgaon Raja in the Buldana District. Before 1866 the management of the temple was in the hands of a family bearing the name of Lad. A suit was filed in 1866 with respect to this temple by Raje Mansingh Rao under the guardianship of his mother for a declaration that the temple was his property. The defendants in that suit were certain pujaris. The suit was decreed by the first companyrt but on appeal it was held that the temple was number the private property of the Raja but was an endowment for the public founded by the ancestors of the Raja and that the Raja was entitled as against the pujaris to the possession and companytrol of the institution. A receiver was appointed during the minority of the Raja but in due companyrse the Raja took over the direct management of the temple. In 1872 it seems that there was some dispute between the Raja and the pujaris whose offices were also hereditary and an agreement was arrived at between them. By this agreement it was provided that any offerings up to Rs. 5/- would go to the pujaris who were to defray the expenses of dhoop, deep and neivedya from this amount keeping the balance to themselves. There were also certain provisions in the agreement as to offerings in kind. The agreement also provided for other matters relating to worship and imposed certain duties on the pujaris. Finally, it provided that the parties should carry on all the duties stated in the agreement and other duties besides them as before according to the usual wahiwat and that earnings would be taken as stated in the agreement arid proper arrangement of expenses would be kept and the pujaris would take all possible care number to take more than what was fixed in the agreement. This agreement seems to have held the field thereafter till we companye to 1904. It seems that there was dissatisfaction with the management of this temple by Raje Anandrao and in companysequence a suit was filed after obtaining permission of the Advocate-General in February, 1904, for framing a scheme for the management of the temple. This suit was finally decided on April 29, 1916, by the Additional Judicial Commissioners. They set aside the order of the trial companyrt for the removal of Raje Anandrao from the management by declaring that the right to manage the affairs of the shrine which was an office was hereditary in the family of the Raja but they further held that a scheme should be framed providing- for the management of the trust pending any dispute as to who is the present holder of the office of trustee and manager for the management of the trust during the minority of the appellant if he should be established to be the present Raja for the companytinuance of companytrol by the Court after the present hereditary incumbent enters upon the office of manager sui juris and for the modification of the scheme from time to time as circumstances may demand. In companysequence the matter went back to the District Judge who framed a, scheme on February 16,1918, for the management of the temple. This scheme was later substituted by another scheme dated November 25, 1926. Finally, on October 16, 1935, another scheme was framed in substitution of that framed in 1926. It may be mentioned that the pujaris as such were number parties to this suit in which the scheme was framed, though they would be as much bound by it as members of the worshipping public as the parties to it. It seems that about that time there was another suit pending in the companyrt of the Additional Subordinate Judge, 11 Class, Buldana, between the appellant and the pujaris. That suit was decided on April 30, 1936, and it was held therein that the agreement of 1872 which was binding on the appellant recognised that the office of pujari was hereditary. It was also held that the trustee namely, the Raja was entitled to companytrol the pujaris in the exercise of their rights and to see, that they performed their duties properly. In other words it was held that the pujaris were entitled to retain their office during good behaviour. It was also held that the hereditary nature of their right had number invested them with any immunity from all companytrol and they were number entitled to act with impunity and yet retain their office. It was further held that they companyld number establish a right to enjoy the fruits of their office though absolutely incompetent to do so. Further it was held that the power of dismissal in the event of misbehaviour undoubtedly belonged to the Raja but that it should number be lightly exercised and should be subject to the companytrol of the District Judge. Finally it was made clear that the Raja had numberright to dispose of any part of the income of the pujaris number had he any right to interfere in matters of succession amongst them. The office of pujari was thus held to be here-ditable unless there was misconduct or misbehaviour which caused forfeiture. A declaratory decree was therefore passed to the effect that the pujaris who were defendants in that suit were holding hereditary office of the pujaris of Shree Balasaheb Sansthan and that they were in the discharge of their duties subject to the companytrol of the plaintiff namely, the Raja and they were bound to respect his authority and rightful orders and that they held their office subject to good behaviour. Next we companye to the year 1953. It seems that there was some trouble in the temple and companysequently the District Judge visited the place on November 30, 1953. At that time it was agreed that a Commissioner with wide terms of reference be appointed to investigate the working of the. temple vis-a- vis the pujaris, the trustee and the general public and he should report how far the present scheme was working, what were the defects and shortcomings and what new proposals or alterations in the scheme and in the agreement of 1872 were necessary in the light of the working till then and the changed circumstances. Many of the pujaris-respondents who were present on that date were agreeable to this companyrse. Eventually, the Commissioner reported to the District Judge and objections were called to that report. The matter was then gone into and the District Judge passed an order on, April 12, 1954, by which he revised the scheme which had been in force since 1935. Thereupon the pujaris went in revision to the High Court and their companytention was that the District Judge bad acted beyond his jurisdiction in revising the scheme in so far as it affected them. The High Court went into the question whether the District Judge had any power to modify the scheme and came to the companyclusion that if the matters sought to be introduced by modification of the scheme are companyered by s. 92 of the Code of Civil Procedure, an application for modification is number the appropriate remedy. It further held that unless the power reserved to the companyrt under the scheme is invoked for a purpose analogous to execution of the decree, numbermodification of the scheme was possible under s. It therefore held that unless the rights of any persons were the subject of lis, the scheme companyld number be modified so as to affect them except by a suit under s. 92. Finally, it came to the companyclusion that as the pujaris were number parties to the suit of 1904 or to the scheme that was framed, it was number possible to modify the scheme so as to affect their rights without recourse to s. 92. The revision was therefore allowed and the scheme framed by the learned District Judge was ordered to be read subject to the order of the High Court. Thereafter an application was made by the appellant to appeal to this Court, which was later companyverted into an application for review of the earlier order. This application was rejected. Then the appellant applied to this Court for special leave and obtained the same and that is how the matter has companye up before us. The main question that arises in this appeal is how far it is open to a companyrt to amend a scheme once framed under s. 92 of the Code of Civil Procedure, where a power to amend the scheme is reserved in the scheme itself. It is number seriously disputed in this case that the power to amend the scheme has been reserved in view of the judgment of the Additional Judicial Commissioners already set out above and paragraph 17 of the scheme dated October 16, 1935. The High Court has hold that as the pujaris were number parties to the suit under s. 92, the scheme companyld number be amended so as to affect their rights, for even where a power is reserved in the scheme to modify it, it companyld only be invoked for a purpose analogous to execution of a decree. It is the companyrectness of this view which has been challenged before us. The leading case in support of the view taken by the High Court is Veeraraghavachariar v. The Advocate-General of Madras 1 . It was held in that case that-- if in a decree for a scheme framed under s. 92, Civil Procedure Code, liberty is given to persons to apply to the Court for directions merely to carry out the scheme already settled, such reservation of liberty in the decree will be intra vires if the assistance of the Court can be given without, offending s. 92 but where liberty is given to apply to the Court for alteration or modification of the scheme, such reservation is ultra vires as offending s. 92. On the other hand the leading case taking the opposite view is Chandraprasad Ramprasad v. Jinabharathi Narayana bharathi 2 . In that case the scheme 1 1928 I.L.R. 51 Mad. 31. 2 1931 I.I.R. 55 Bom. 414 authorised the District Court to remove a trustee and also to alter or amend the scheme upon an application of a party interested or on its own initiative after giving public numberice. An application was made to the District Court for the removal of certain trustees and for the modification of the scheme. The District Judge dismissed the application on the ground that the proper remedy of the applicant was by a separate suit under s. 92 of the Code of Civil Procedure. On appeal, however, the High Court held that the District Court was companypetent to grant the reliefs asked by virtue of the powers companyferred upon it under the rules of the scheme and that numberseparate suit under s. 92 of the Code of Civil Procedure was necessary. Further it held that the rule which gave power to the companyrt which sanctioned the scheme to alter or modify it was number ultra vires. The view taken by the Bombay High Court as to the power to modify the scheme by application if such power is reserved in the scheme has been followed by the Allahabad High Court in Sri Swami Rangacharya v. Gangaram 1 . The Calcutta High Court has also accepted the view that where there is a provision in a scheme for its modification it can be modified by an application see Umeshananda Dutta Jha v. Sir Ravaneswar Prasad Singh 2 Manadananda Jha v. Tarakananda Jha Panda 3 and Srijib Nyayatirtha v. Sreemant Dandy Swami Jagannath Ashram 4 . The Patna High Court also in Mahomed Waheb Hussain v. Syed Abbas Husain 5 held the same view. In Gangaram Govind Pashankar v. Sardar R. Vinchurkar 6 , the Bombay High Court has gone further and held that the companyrt had inherent power under s. 151 of the Code of Civil Procedure to alter a scheme even in the absence of a clause giving liberty to apply if circumstances have subsequently arisen which make it desirable for it to be altered to meet the ends of justice. Reference was also made to two decisions of the Privy Council. In Prayaga Doss Jee Varu v. Tirumala 1 1936 I.L.R. 58 All. 538. 2 1912 17 C.W. N. 841. A.I.R. 1924 Cal. 330. A.I.R. 1941 Cal. 618, A.I.R. 1923 Pat. 420. I.L.R. 1947 BOM. 466. Anandam Pillai Purisa Sriranga Charylu Varu 1 , the Privy Council itself framed a scheme and one of the terms in the scheme was that liberty was reserved to persons interested from time to time to apply to the High Court for any modification of the scheme that may appear to be necessary or companyvenient. Similarly, in Sevak Kirpashanker Daji v. Copal Rao Manohar Pambekar 2 ,the scheme which was framed by the Privy Council in that case companytained in cl. 20 a direction that the provisions of the scheme might be altered, modified or added to by an application to His Majestys High Court of Judicature at Bombay. It is true that in these cases, the Privy Council was number companysidering whether such a clause companyld be legally inserted in a scheme but the fact remains that in these two schemes the Privy Council did insert a clause in each authorising its modification by an application to the High Court. Apart from authorities, however, let us see if there is anything in s. 92 of the Code of Civil Procedure which militates against providing a clause in a scheme framed thereunder for its modification by an application to the companyrt framing the scheme. Section 92 permits a suit in the case of any alleged breach of any express or companystructive trust created for public purposes of a charitable or religious nature or where the direction of the companyrt is deemed necessary for the administration of any such trust to be filed either by the Advocate-General or two or more persons having an interest in the trust with the companysent in writing of the Advocate-General. Reliefs that can be obtained under that section are- a removing any trustee b appointing a number trustee c vesting any property in a trustee cc directing a trustee who has been removed or a person who has ceased to be trustee, to deliver possession of any trust property in his possession to the person entitled to the possession of such property d directing accounts and inquiries 1 1907 L.R. 3 T.A. 78 2 1913 24 M.L.J 199. e declaring what proportion of the trust property or of the interest therein shall be allocated to any particular object of the trust f authorizing the whole or any part of the trust property to be let, sold, mortgaged or exchanged g settling a scheme or h granting such further or other relief as the nature of the case may require. Further sub-s. 2 of s. 92 bars a suit claiming the above reliefs unless the suit is filed in companyformity with s. 92 1 . In the present appeal we are companycerned only with the modification of a scheme we are number companycerned with appointment or removal of trustees or any other matter enumerated in sub-s. 1 of s. 92. We do number therefore propose to companysider whether it would be open to appoint or remove trustees etc., on the ground of breach of trust without recourse to a suit under s. 92. We shall companyfine ourselves only to the question whether in a case where there is a provision in the scheme for its modification by an application to the companyrt, it is open to the companyrt to make modifications therein without the necessity of a suit under s. 92. So far as the scheme is companycerned, s. 92 1 provides for settling a scheme and if a suit is brought for this purpose it has to companyply with the requirements of s. 92 1 but where such a suit has been brought and a scheme has been settled, we see numberhing in s. 92 2 which would make it illegal for the companyrt to provide a clause in the scheme itself for its future modification. All that sub- section provides is that numbersuit claiming any of the reliefs specified in sub-s. 1 shall be instituted in respect of a trust as is therein referred to except in companyformity with the provisions of that subsection. This sub-section therefore does number bar an application for modification of a scheme in accordance with the provisions thereof, provided such a provision can be made in the scheme itself. Under sub-a. 1 the companyrt has the power to settle a scheme. That power to our mind appears to be companyprehensive enough to permit the inclusion of a provision in the scheme itself which would make it alterable by the companyrt if and when found necessary in future to do so. A suit under a. 92 certainly companyes to an end when a decree is passed therein, including the settlement of a scheme for the administration of the trust. But there is numberhing in the fact that the companyrt can settle a scheme under s. 92 1 to prevent it from making the scheme elastic and provide for its modification in the scheme itself That does number affect the finality of the decree all that it provides is that where necessity arises a change may be made in the manner of administration by the modification of the scheme. We cannot agree that if the scheme is amended in pursuance of such a clause in the scheme it will amount to amending the decree. The decree stands as it was, and all that happens is that a part of the decree which provides for management under the scheme is being given effect to. it seems to us both appropriate and companyvenient that a scheme should companytain a provision for its modification, as that would provide a speedier remedy for modification of the manner of administration when circum- stances arise calling for such modification than through the cumbrous procedure of a suit. In Veeraraghavachariars case 1 , the Madras High Court was companynizant of the two decisions of the Privy Council in which clauses had been inserted in the scheme providing for its modification by an application. But the learned judges were of the view that the point was never raised much less decided by the Privy Council and therefore it companyld number be said that the Privy Council was of the opinion that such a clause would be intra vires. They thought that inserting such a clause in the scheme would imply that the suit would remain pending for ever. It is number necessary to hold that a suit under s. 92 in which a scheme is framed providing such a clause is pending for ever. The scheme deals with the administration of the trust and for the purposes of the scheme it would number be wrong or improper to treat a suit under s. 92 as analogous to an administration suit. On that view it would in our opinion be just and companyvenient to provide for a clause in the scheme which is framed for the administration 1 1928 I.L.R. 51 Mad. 31. of the trust to allow for its modification by an application. We therefore accept the view of the Bombay, Calcutta, Allahabad and Patna High Courts in this matter and hold that it is open in a suit under s. 92 where a scheme is to be settled to provide in the scheme for modifying it as and when necessity arises, by inserting a clause to that effect. Such a suit for the settlement of a scheme is analogous to an administration suit and so long as the modification in the scheme is for the purposes of administration, such modification can be made by application under the relevant clause of the scheme, without the necessity of a suit under s. 92 of the Code of Civil Procedure. Such a procedure does number violate any provision of s. 92. The view taken by the Madras High Court that insertion of such a clause for the modification of the scheme is ultra vires is incorrect. It was therefore open to the District Judge in the present case to modify the scheme. The next question is whether the modification in this case is for the purposes of administration alone for then it will be justified and within jurisdiction or whether by this modification the private rights of the pujaris are in any way affected. It is true that the pujaris were number parties to the suit under s. 92 but the decision in that suit binds the pujaris as worshippers so far as the administration of the temple is companycerned, even though they were number parties to it, for a suit under s. 92 is a representative suit and binds number only the parties thereto but all those who are interested in the trust. Therefore, the mere fact that the pujaris were numberparties to the suit will number take away the jurisdiction of the District Judge to modify the scheme, if the modification is with respect to the administration of the trust and if it does number affect the private rights of the pujaris. According to the High Court, the modification in the scheme was only with respect to three paragraphs, namely, paragraphs 3, 4 and 12. Learned companynsel for the pujaris has admitted that there is numbermodification in paragraph 4. This is also clear from a companyparison of paragraph 4 of, the 1935 scheme with paragraph 4 of the revised scheme, for the two paragraphs are word for word the same, So we are left with the modification in paragraphs 3 and 12. Paragraph 3 originally provided that the managing trustee shall have authority to regulate the performance of the pooja according to usage which is number in any way repugnant to public interest and morals , and to this part of paragraph 3, the revised scheme adds the words but which encourages the use of vedic yagnik . Learned companynsel for the pujaris admits that there can be numberobjection to this addition, for it only brings out what was implicit in the old scheme. Further the following addition is made to paragraph 3 in the revised scheme- The rules may provide, inter alia, that the persons actually doing the worship should have the requisite knowledge of the mantrik ritual and in case any one has number such knowledge, the actual worship and ritual may be performed by his substitute having such knowledge and he may number be allowed to do the worship himself These rules will be printed and published locally and shall be enforced by the trustee. Now the old paragraph 3 also provided for framing of rules with the approval of the District Judge after hearing the public and the pujaris, for the worship of the deity. The revised paragraph 3 also companytains a direction regarding the making of such rules with the approval of the District Judge after hearing the public and the pujaris. It has further been provided that such rules should be printed and published locally and should be enforced by the trustee. There can in our opinion be numberobjection to this addition, for the enforcement of the rules was already implicit in old paragraph 3 and their printing and publication is only a matter of companyvenience to all and can in numberway affect the private rights of the pujaris. Learned companynsel for the respondents did number object to this addition either. He objects to that part of the addition which says that the persons actually doing the worship should have the requisite knowledge of the mantrik ritual and in case any one has number such knowledge, the actual worship and ritual may be performed by his substitute having such knowledge. Now this provision merely. says what the rules for pooja to be approved by the District Judge after hearing the public and the pujaris should provide among other things. This provision is on the face of it reasonable, for it is unthinkable that a pujari, even though he may be a hereditary pujari, should perform puja, when he does number know anything about the mantrik rituals. Learned companynsel for the respondents has numberobjection to this provision either except that he companytends that the rule seems to give the right to provide a substitute to the managing trustee namely, the appellant . As we read the rule, however, we do number think that that is what it means. All that it says is that where the hereditary pujari does number know the mantrik ritual, the puja may be performed by his substitute. It means that the sub- stitute has to be provided by the pujari and number by the managing trustee. The fact that the substitute is pujaris substitute has implicit in it that it is the pujari who has to provide a substitute in his place in case he does number know the rituals. Learned companynsel for the respondents companycedes that if this is the mean. ing of the addition in paragraph 3, there can be numberobjection to it. We therefore make it clear that when the addition in paragraph 3 speaks of a substitute for the pujari who is ignorant of rituals, it is the pujari who has the right to provide the substitute and number the managing trustee. So read, this addition does number in any way affect the private rights of the pujaris in the matter of puja. Thus the entire addition in paragraph 3 deals with the administration of the temple with respect to puja and with the clarification which we have given above there is numbertrespass on the private rights of the pujaris by this addition. Therefore, the revised paragraph 3 was within the jurisdiction of the District Judge and cannot be taken exception to on that score. Turning number to paragraph 12 we find that there are additions in that paragraph in the revised scheme and we shall deal with each addition seriatim The first addition i.e., cl. a is that the Raje Anandrao shall have power to keep such dependants like kirtankars, puranika, etc., for proper performance of the religious rites of the deity customarilyso performed and to fix their allowances or remunerations, as the case may be. This addition does number in any way affect the private rights of the pujaris it deals with persons other than the pujaris who perform other duties beside the puja, like kirtan, reading of purans, etc. The managing trustee namely, the Raja has been given the power to appoint such persons and to fix their allowances or remunerations. Obviously, such allowances and remuneration will number be paid out of the income which is secured to the pujaris under the agreement of 1872 and will have to companye out of other income of the temple. If this provision is so readand this is the only way in which it can be read-the learned companynsel for the respondents has numberobjection to this provision either. It relates to the administration of the trust and does number, if read in the manner indicated above, in any way affect the private rights of the pujaris. Then companyes cl. b , which is as follows- Raje Anandrao, and in his absence, the manager or the agent of Raje Anandrao, will have power to grant leave to, or fine, or punish the pujaris for misconduct, as in the case of his office staff and other dependents because the responsibility is on the trustee to see that the puja is performed regularly and properly. The dismissal of the pujaris for misconduct or other reasons shall number be made without the previous sanction of the District Judge, West Berar. This clause again deals with the administration of the temple. We have already referred to the decision in the suit of 1935 between the appellant and the pujaris- respondents. In that suit it was made clear that the pujaris in the discharge of their duties were subject to the companytrol of Raje Anandrao and were bound to respect his authority and rightful orders and that they held their office subject to good behaviour. It is this decision inter parties which is being carried out in cl. b , which has been added in the revised scheme. The power of companytrol which the Raja has over the pujaris in the discharge of their duties implies that be is the person to grant them leave or fine or punish them for misconduct, if they do number perform their duties regularly and properly. Learned companynsel for the respondents feels however that this power to punish might be misused by the Raja, for it is uncontrolled, unlike the power to dismiss which companyld only be exercised with the previous sanction of the District Judge. The clause as it stands therefore does number in any way affect the private rights of the pujaris and does number go beyond what was decided in the suit between them and the appellant. It companycerns the administration of the temple and therefore it was within the jurisdiction of the District Judge to insert it in the scheme when revising it. At the same time there may be something in the apprehension entertained by the pujaris that the power to punish may be abused. We therefore think that in this clause a further sentence should be added to the following effect- In case Raje Anandrao or his manager or agent fines or punishes the pujaris for misconduct, the pujaris will have the right to appeal to the District Judge against such orders and the order of the District Judge thereon will be final. Then we companye to cl. c which is as follows- The pujaris will be entitled to their shares in the offerings as per the agreement of 1872 after deduction of the expenses for the pooja, etc. as per my detailed remarks in my separate order passed today. The management will work out those instructions for day-to-day working in accordance with rules to be included in the puja rules. The main attack of the respondents is on this clause, for, according to them, it affects their right to offerings to which they are entitled under the agreement of 1872. This clause is number self-contained, for it refers, to the detailed remarks in the separate order of the District Judge passed on that very day and leaves it to the management to work out those instructions for day to day working in accordance with rules to be included in the puja rules. Now under the separate order of the same date it is provided that offering up to Rs. 5/- to which the pujaris are entitled subject to the expenses of dhoop, deep and neivedya according to the agreement of, 1872 should be kept in a separate box which should be opened once every week, or fortnight or month or at any stated period as agreed by the pujaris, in the presence of some respectable persons of the town and the signatures of the representatives of the pujaris and of the trustees or big representative should be taken in a separate numbere-book to show the exact amount found in the box. In case the pujaris do number agree to some period the box may be opened once every month. It is further said that the expenses of dhoop, deep and neivedya should be met from this money and such expenses should be found out from the pujaris account. If the pujaris do number disclose their accounts it would be for the Raja to settle the amount which is to be spent on dhoop, deep and neivedya and then require the pujaris to spend that much amount for the purpose. This amount should be paid to the pujaris on their showing what they had spent on dhoop, deep and neivedya but if the pujaris fail to spend anything, the trustee should see that the expenses are properly incurred and debited to the pujaris in their khata and the balance of this khata should be divided among the pujaris. The respondents are afraid that these directions would mean that the management will take away the money found in the box whenever it is opened and the pajaris would thus be at the mercy of the management for meeting the expenses of dhoop, deep and neivedya and also for the balance to which they are entitled for their upkeep. Up to number this amount of offerings up to Rs. 5/- was going direct to the pujaris and they were incurring expenses on dhoop, deep and neivedya out of it, The appellant companytends that under the Madhya Pradesh Public Trusts Act, No. XXX of 1951, he has to maintain proper accounts under s. 15, to prepare a budget under s. 18 and to have the accounts audited under s. 16. Therefore it is necessary that he should show the amount received in offerings up to Rs, 5/- in his budget and should also show how much of it goes to the pujaris for their personal use and how much of it is spent on dhoop, deep and neivedya. There is numberdoubt that in order that puja in the temple in the shape of dhoop, deep and neivedya is performed properly, it is necessary to have check in this income from offerings up to Rs. 5/- from which this expenditure is incurred, leaving the balance for the personal use of the pujaris. Even so it seems to us necessary that the interests of the pujaris are also safeguarded and they should number be left entirely at the mercy of the appellant, who may take away the entire money found in the box and may number pay them for long periods to what they are entitled as the balance. Though therefore the District Judge was right in making the arrangement for putting the offerings up to Rs. 5/- in a separate box so that they may be accounted for, we think some more provisions are necessary in order that cl. c may number affect adversely the private rights of the pujaris to the balance of these offerings after incurring the expenses in dhoop, deep and neivedya. It is also essential that some safeguard should be provided for the pujaris so that the amount put in the box is number surreptitiously taken away. Though therefore the main provision in cl. c dealing as it does with the administration of the trust is number objectionable, it is necessary that it should be made self- companytained and should also companytain safeguards for the pujaris. We therefore direct the District Judge to amend cl. c of paragraph 12 in order to bring into it the provisions companytained in his detailed order. We also direct that the District Judge should provide for the protection of the interests of the pujaris by including the following in cl. c - The box in which these offerings up to Rs. 5/are put should be double looked-one look to be put by the appellant and the other on behalf of the pujaris. It should be opened in the presence of a representative of the management and a representative of the pujaris who shall be chosen by the pujaris in such manner as they think fit and two respectable persons of the town, The box may be opened once in a month or oftener as desired by the pujaris but number more than once in a week. The amount found in the box may be numbered by the management the whole of it should be handed over to the chosen representative of the pujaris on behalf of all the pujaris in case the expenditure for dhoop, deep and neivedya for the period prior to the opening has been met by the pujaris. In case however such expenditure has been met by the management, the balance after deducting such expenses, shall be immediately paid to the chosen representative of the pujaris on behalf of them all. The last provision has been made to make it clear that the management will number take away the money but immediately give it to the representative of the pujaris for distribution among them. The provisions of the Public Trusts Act will be satisfied in that the management will be in a position to know how much has gone to the pujaris including the amount spent on dhoop, deep and neivedya. This provision will also take away any objection about there being interference with the private rights of the pujaris under the agreement of 1872. We therefore allow the appeal, set aside the order of the High Court and restore the revised scheme subject to the modifications suggested by us above. The District Judge will see that these modifications are embodied in the revised scheme.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 759 of 1957. Appeal from the judgment and Order dated June 26, 1957, of the Bombay High Court in Appeal No, 92 of 1956. C. Bhatt, S. N. Andley, J. B. Dadachanji, Rameshuar Nath and.P. L, Vohra, for the appellants. Ganapathy Iyer and D. Gupta, for respondent. 1961. February 16. The Judgment of Gajendragadkar, Subba Rao, Wanchoo and Mudholkar, JJ., was delivered by Wanchoo, Sarkar, J., delivered a separate Judgment. WANCHOO, J.-This appeal by certificate granted by the High Court of Bombay raises the companystitutionality, of s. 114 2 of the Bombay Industrial Relations Act, No. XI of 1947, hereinafter called the Act . The brief facts necessary for present purposes are these. The appellant is a companyton textile mill situate in Bombay. It is said that the appellant had been companytinuously making losses from 1950 to 1955. References were however made under s. 73-A of the Act by the Rashtriya Mill Mazdoor Sangh, Bombay, in respect of disputes relating to bonus for the years 1952 and 1953, which are said to be pending before the Industrial Court, Bombay. The ease of the appellant before the Industrial Court was that as it had made losses there was numberquestion of its paying any bonus for the years in dispute. It seems that at the same time there were cases relating to bonus of other mills pending before the Industrial Court and the appellant applied that its case should be dealt with separately, and this prayer was acceded to. It seems that while the references were pending, an agreement was. arrived at between the Mill-owners Association, Bombay and the Rashtriya Mill Mazdoor Sangh, Bombay, with respect to payment of bonus for the years 1952 to 1957 and the agreement was to companye into force with respect to each mill when it was signed by each member mill of the Mill-owners Association. Clause 6 of that agree- ment provided for payment of bonus even where the profit made by a mill was number adequate to provide for all prior charges as per the Full Bench formula evolved by the Labour Appellate Tribunal in The Mill-owners Association, Bombay The Rashtriya Mill Mazdoor Sangh 1 or even where a mill made actual loss, the minimum bonus being in either of these two cases 4-8 per cent. of the basic wages. earned during the year, subject to such mill being entitled to adjust the amount thus paid by it as the minimum bonus against any available surplus in any subsequent year or years under the provisions of the agreement. This agreement was registered and was made enforceable as an award against those mills which were parties thereto. The appellant however did number sign the agreement and therefore it was number enforced as an award by the Industrial Court against the appellant. Thereafter the Rashtriya Mill Mazdoor Sangh wrote to the Government of Bombay requesting that the 1 1930 2 L.L.J. 1247. said award should be enforced against the appellant in exercise of the powers vested in the Government by s. 114 2 of the Act. After necessary action under s. 114 2 , the Government of Bombay issued a numberification dated July 31, 1956, directing that the award made by the Industrial Court on March 13, 1956, for payment of bonus for the years 1952 and 1953 and also for the years 1954 to 1957 be enforced against the appellant. This was followed by a writ petition by the appellant in the High Court challenging the companystitutionality of s. 114 2 and also challenging the power of the State Government to issue such a numberification under that provision. The petition was however dismissed on October 9, 1956. There was then an appeal to a Division Bench of the High Court in which also the appellant failed. The appellant then applied for a certificate to enable it to file an appeal to this Court, which was granted and that is how the matter has companye up before us. Two main points have been urged on behalf of the appellant before us. In the first place, it is urged that s. 114 2 is unconstitutional as it violates the fundamental rights guaranteed under Art. 19 1 f and g of the Constitution. In the second place, it is urged that even if s. 114 2 is companystitutional, the numberification has gone beyond the powers companyferred on the State Government by that section and therefore the numberification is bad. We do number think it necessary for purposes of the present appeal to companysider the companystitutionality of s. 114 2 , for we have companye to the companyclusion that the numberification is bad because it goes beyond the powers companyferred on the State Government by that section. This brings us immediately to the second point that has been urged before us and in that companynection we have to companysider the ambit of the power of the State Government under s. 114 2 . Section. 114 2 reads as follows.- In cases in which a Representative Union is a party to a, registered agreement, or a settlement, submission or award, the State Government may, after giving the parties affected an opportunity of being heard, by numberification in the Official Gazette, direct that such agreement, settlement, submission or. award shall be binding upon such other employers and employees in such industry or occupation in that local area as may be specified in the numberification Provided that before giving a direction under this section the State Government may, in such cases as it deems fit, make a reference to the Industrial Court for its opinion. The words of s. 114 2 are very general and may at first blush be open to the interpretation that any agreement, settlement, submission or award may be extended thereunder provided it fulfills its terms. But further companysideration shows that there are two obvious limitations on the power of the State. Government in that behalf. The first limitation arises out of the subject-matter of the agreement etc., to be extended. Suppose the agreement etc. deal with lot us say the wages of a certain type of workmen in a certain mill. Suppose that the agreement etc., are extended to ano- ther mill where that type of workmen does number exist. Obviously the agreement cannot be extended in these circumstances and the power of the State Government is thus limited by the subject matter of the agreement etc. The second limitation which again, is obvious arises from the provisions of law. The proviso to s. 114 2 shows that before exercising its power under the said section the Government can refer the matter to an Industrial Court and there can be numberdoubt that an Industrial Court cannot and will number, advise anything against the law. Section 95-A makes the determination of any question of law in any order, decision, award or declaration passed or made, by the Full Bench of the Industrial Court under the regulations made under s. 92 binding in all proceedings under the Act. What is done under s. 114 2 is also a proceeding under the Act after numberice to the parties affected. The State Government is thus bound by any decision on a question of law while proceeding under a. 114 2 . The policy of the Act underlying s. 95-A therefore lead,, to the companyclusion that the exercise of power companyferred by s. 114 2 has to be in companyformity with the industrial law laid down by the Full Bench of the Industrial Court and also by any decision of this Court. The State Government therefore when it passes an order under s. 114 2 must have full regard to the law as laid down by the legislature and by the decisions of this Court and cannot pass an order under s. 114 2 which is against such law. Besides, s. 114 2 places a registered agreement, a settlement, a submission and an award on the same footing and so if an award has to companyform to s. 95-A as it must so must the other three mentioned therein. Therefore, when the State Government acts under s. 114 2 it can only do as between the parties before it what a labour companyrt, an Industrial Court or a wage board can in law do under the Act. We do number think that s. 114 2 authorises the State Government to act against the law as laid down by the legislature or by this Court. Section 114 2 therefore appears to be speedy remedy dispensing with all appeals provided under the Act by which the State Government may direct that the terms and companyditions of employment in the matter of wages, hours of work and so on may be the same in a particular industry or occupation in a particular area as may have been settled between a representative union and other employers in that area and as companyld if necessary be enforced through an award in a case to which the representative union was a party. There can be numberdoubt however that the State Government cannot do under s. 114 2 what an adjudicator has numberpower to award under the provisions of the Act. Therefore, as we read a, 114 2 we cannot escape the companyclusion that the State Governments power to make a direction under that section is companyterminus with the power of an adjudicator be it a labour companyrt, an Industrial Court or a wage board under the Act to make an award thereunder, and the State Government cannot under s. 114 2 do what an adjudicator cannot do under the Act. This being the ambit of the State Governments power in respect of giving a direction under a. 114 2 , let us number proceed to see whether the impugned numberification is within the ambit of these powers. By this numberification the State Government has directed that the award dated March 13, 1956, made by the Industrial Court shall be binding on the appellant and its employees in the matter of payment of bonus for the years 1952 to 1957 both inclusive . It is number in dispute that the said award was based, on an agreement between the Mill-owners Association, Bombay and the Rashtriya Mill Mazdoor Sangh, Bombay. The said agreement provided that it would have to be signed by each member mill of the Mill-owners Association before it would be binding on it and again it is number in dispute that the appellant-mill though it is a member of the Mill-owners Association never signed it. Farther, cl. 6 of the agreement provided for payment of minimum bonus even in cases where there was numberadequate profit to provide for all prior charges as per the Full-Bench formula and also in cases where a mill had made actual loss on the years working, subject to a proviso as to adjustment. Thus by the direction given in the impugned numberification the appellant is subjected to payment of bonus even where it has number made adequate profit to provide for all prior charges or has in fact made a loss. The companytention on behalf of the appellant is that it would number be open to an Industrial Court to grant bonus when profit was number adequate to meet all prior charges or where there was an actual loss and therefore when the impugned numberification made it possible for grant of bonus even in these cases for prima facie the appellant had made losses upto 1955 , it directed something which even an Industrial Court companyld number do. In companysequence, it is urged that the numberification inasmuch as it makes this possible is beyond the powers companyferred on the State Government under s. 114 2 because it allows something to be done which even an Industrial Court companyld number allow. Reliance in this companynection is placed on the decision of this Court in The New Manekchowk Spinning. Co. Ltd. and Others v. The Textile Labour Association 1 . In that case this Court was companysidering 1 1961 3 S.C.R. a similar agreement relating to Ahmedabad. The Industrial Court had imposed that agreement after its expiry for one year on the mills inspite of their companytention that they were number bound to pay any bonus for the years in dispute in view of the law laid down by this Court in The- Associated Cement Companies, Limited v. The Workmen 1 . After examining the terms of the agreement then in dispute this Court came to the companyclusion that in view of the law laid down in The Associated Cement Companies case, the Industrial Court had numberjurisdiction to impose that agreement on the mills. It further held that an agreement of that kind companyld only companytinue by companysent of parties. and companyld number be enforced by industrial adjudication against the will of any of the parties. The agreement in the present case directed to be enforced by the impugned numberification is similar in terms and as held New Manekchowks case 2 it companyld number be enforced by industrial adjudication against the will of any of the parties. The power of the State Government under s. 114 2 being companyterminus with the power of an adjudicator under the Act, such an agreement cannot therefore be directed to be enforced against the will of the appellant even under s. 114 2 inasmuch as by doing so the State Government would be going beyond the powers companyferred on it by that section.The impugned numberification therefore must be held to be bad inasmuch as it goes beyond the powers companyferred on the State Government under s. 114 2 and must therefore be struggle down. We therefore allow the appeal with companyts and setting aside the order of the High Court hold that the numberification dated July 31, 1956, is beyond the powers of the State Government under s. 114 2 and direct that it will number be enforced. We should however like to make it clear that this decision will number prejudice the trial of any references with respect to bonus which may be pending or which may hereafter be made between the appellant and its employees with respect to years 1952 to 1957 both 1 1959 S.C.R. 925. 2 1961 3 S.C.R. 1. inclusive . If such references are pending or are hereafter made they will be decided in accordance with the decision of this Court in The Associated Cement Companies Case SARKAR, J.-This appeal arises but of an application made by the appellants to the High Court at Bombay under Art. 226 of the Constitution for a writ directing the respondent, the State of Bombay, to forbear from acting upon or enforcing a certain numberification issued by it under a. 114 2 of the Bombay Industrial Relations Act, 1946. This order was sought on two grounds. The first ground was that s. ll4 2 was ultra vires, illegal and void. The second ground was that if it was number so, the numberification had been issued in improper exercise of the powers companyferred by that provision. The appellants are a companyton textile mill in Greater Bombay, a local area under the Act, and its directors and shareholders. Their application was dismissed by the High Court and hence the present appeal. It appears that certain references were pending since 1953 and 1954 under the Act in the Industrial Court between various companyton textile mills in Greater Bombay and their employees, in respect of disputes companycerning bonus for the years 1952 and 1953. In these references the employees were represented by the Rashtriya Mill Mazdoor Sangh, a Representative Union of workmen in the companyton textile industry as defined in the Act and a union registered under it. The appellant mill was a party to these references. On March 1, 1956, while these references were pending, the Rashtriya Mill Mazdoor Singh entered into an agreement with the Mill Owners Association, Bombay, of which fortyseven companyton textile mills including the appellant mill, were members, regarding the bonus to be paid to the employees of these mills for the years 1952 to 1957. This agreement was subsequently accepted individually by about fortytwo of the mills who were members of the Association and parties to the references, and became binding on these mills. This agreement was later registered under the Act and filed in the pending references and an award was 1 1959 S.C.R. 925. made by the Industrial Court on March 13, 1956, in terms of it, as between the mills who had individually accepted the agreement and their employees. The appellant mill did number accept the agreement and numberaward was made in the references companycerning it and so far as it was companycerned, the references remained pending. On July 31, 1956, the respondent made the order which is challenged in these proceedings. That order was in these terms Whereas theRashtriya Mill Mazdoor Sangh, Bombayis a party to an award dated the 13th March 1956 And whereas the Government of Bombay, company- siders that the award should be made binding upon the employers specified in companyumn 1 of the schedule hereto annexed and their employees And whereas the said employers and the Rash- triya Mill Mazdoor Sangh, Bombay, representing the said employees being the parties affected were heard Now, therefore, in exercise of the powers companyferred by sub-section 2 of section 114 of the said Act, the Government of Bombay hereby directs that the said award shall be binding on the employers specified in companyumn 1 of the schedule hereto annexed and their employees in the matter of payment of bonus for the years specified against the employers in companyumn 2 of the said schedule. The appellant mill was one of the employers men. tioned in the schedule to the numberification and the schedule further provided that the award would be binding on the appellant mill and its employees for the years 1952 to 1957, both inclusive. As a result of this numberification the appellant mill became liable to pay bonus to its employees for the. years mentioned, in terms of the award based on the agreement, to neither of which it was a party. The appellants companytend that the appellant mill is number liable to pay bonus in law as laid down by this Courtin Muir Mills Co. Ltd. v. Suti Mills Mazdoor Union 1 and by the Full Bench 1 1955 1 S.C.R. 99r. of the Labour Appellate Tribunal, in Mill Owners Association, Bombay v. Rashtreeya Mills Mazdoor Sangh 1 as it has number made any profit for the period companymencing from June 30, 1950, and ending on June 30,1955. The agreement on which the award was based, adopted a formula for ascertaining the available surplus of the profits of an employer and provided for payment of certain bonus out of it. This bonus, I gather, would have been of a smaller amount than that payable under the formula laid down in the cases mentioned earlier. The appellants have numbercomplaint against this Part of the agreement for, presumably, under it, they would number be liable to pay any bonus at all. What they object to is el. 6 of the agreement. This clause in substance provided that when numberavai. lable surplus was found to exist according to the for- mula or even when a mill had incurred loss in a particular year, it would have to pay its employees a minimum bonus equivalent to 4.8 per cent of the basic wages earned by them during the year, with a right to recoup the bonus so paid, out of the bonus that would be payable under the agreement in subsequent years and out of the residue of the surplus profits then remaining, it would have to pay bonus in terms of the agreement. The substance of the appellants grie- vance against the numberification is that under it the appellant mill has to pay bonus in terms of cl. 6 of the agreement even though it has been working at a loss. The first question is whether s. 114 2 is invalid and illegal. That section so far as is material is in these terms S. 114 1 . A registered agreement or a settlement, submission or award shall be binding upon all per. sons who are parties thereto In cases in which a Representative Union is a party to a registered agreement, or a settlement, submission or award, the State Government may, after giving the parties affected an opportunity of 1 1950 2 L.L.J. 1247. being heard, by numberification in the Official Gazette, direct that such agreement, settlement, submission or award shall be binding on such other employers or employees in such industry or occupation in that local area as may be specified in the numberification. The appellants first challenge the validity of the .section on the ground that it offends Art. 14 of the Constitution. It is said that it gives an unguided and arbitrary power to the State Government to discriminate between various sets of employers and employees and make an order on any one set at its pleasure leaving out others. It seems to me that this companytention is number well-founded. The power given by the provision is number, in my view, uncontrolled. The object of the Act clearly is the settlement of industrial disputes and attainment of industrial peace. Furthermore, under the section the order can be made on employerS and employees in a local area which again is a limitation of the power. Now, a local area is an area numberified as such for the purposes of the Act- see s. 2 23 . The object of this pro- vision as to local areas is to divide the State into several areas for better maintenance of industrial peace and to group together for that purpose, the industries in a region. If companyditions of labour in any area where a large number of workmen is companylected, are uniform, then there is less likely to be disaffection among them whereas if such companyditions are number the same, the workmen are likely to become restive. It is well-known that regional companysiderations are closely companynected with industrial disputes and are of importance for their settlement. The local area companytemplated by s. 114 2 is obviously the area in respect of which the Representative Union mentioned in it has been registered. No reference can be found in the section to any other local area. Under s. 2 33 a Representative Union means a union registered as such under the Act and under s. 13 1 a Representative Union is a union which has a membership of number less than fifteen per cent. of the employees in any industry in any local area and registered for that industry in the area. The agreement, settlement, submission or award mentioned in the section has to be one to which a Representative Union is a party. It follows from this that a substantial body of workmen in an area has companye to a decision or become bound by an award as to a question or questions affecting them. Therefore, the power under the section can be exercised only for achieving industrial peace in that area. It is number unlikely when a substantial section of workmen companygregated in an area have secured certain rights that the other employees in that area may claim similar rights and this may disturb industrial peace in that area. The power can be exercised only for meeting such disturbance and only in the local area where it occurs. There are therefore two guiding principles. First, the power can be exercised only to prevent breach of industrial peace. Secondly, it can be exercised only in a specified area if there is a threat to industrial peace there. An exercise of the power outside the area and for purposes other than maintenance of industrial peace, would be beyond the scope of the section. Again, once there is occasion for legitimate exercise of the power and it is exercised, it must be exercised in all units of the industry in that local area in which units the threat to the industrial peace exists if that would restore the peace. It would be open to the Courts to companyrect a discriminatory use of the power or its use outside the scope of the section. Therefore it does number seem to me that the section companyfers unguided and arbitrary power. It. is of some interest to state that in the present case there has been numbersuch discriminatory use of the power or any use outside the section. The respondent has made the award binding on all the remaining mills who had number accepted the agreement and there is evidence that there was threat of breach of industrial peace in these mills. Then also, I find that the section has companyferred the power on the highest authority, namely, the Government itself. That would be some guarantee that it would be duly exercised. This is a further reason for holding that the section does number companyfer absolute and arbitrary Power. The next objection to the section is that it offends Art. 19 1 g in that it puts an unreasonable restriction on a persons right to carry on business. This companytention also is unacceptable to me. There is numberdoubt that the section puts certain restrictions on a persons right to carry in an occupation or business. The real question is whether the restrictions have been put in the interest of the general public and are reasonable. That the restrictions have been put in the interest of the general public seems to me to be unquestionable. The reason why the restrictions have been put is that otherwise, industrial peace would be disturbed. The entire companyntry is interested in industries and, therefore, in industrial peace. This point requires numberelaboration., Then, are the restrictions put, reasonable? It seems to me that they are. The restrictions are that an agreement settlement, award or submission-all of ,Which of companyrse must be companycerning industrial disputes to which a person is number a party is made binding on him. By an agreement, the parties to an industrial dispute settle it themselves. A settlement means a settlement of an industrial dispute arrived at with the assistance of a companyciliator in the companyrse of companyciliation proceedings under the provisions of the Act. A submission is a reference of an industrial dispute to arbitration. An award is an adjudication on an industrial dispute by the companyrt companystituted under the Act. An agreement, a settlement or a submission is the result of the free companysent of the parties to the dispute. As earlier stated, the section only applies to an agreement, settlement or submission to which a Representative Union, which is a union representing a substantial number of workmen, is a party. Therefore, the section can apply to an agreement, settlement or submission which a substantial number of workmen and an employer has, of their free choice, accepted. It would follow that such an agreement, settlement or submission has been companysidered reasonable by parties interested and in the case of a settlement by the company- ciliator appointed under the Act also. The restrictions imposed by any of these must therefore be reasonable. An award, on the other hand, is a decision of a companyrt and can, therefore, always be expected to be reasonable. If certain restrictions are reasonable for an employer and his employees, I suppose it would follow that those restrictions would be equally reasonable for other employers and employees and more so, when they are all in the same neighborhood where the companyditions are likely to be more or less the same. Therefore, it seems to me that the restrictions imposed by s. 114 2 cannot be said to be unreasonable. I have earlier summarised the offending part of the agreement. I do number think that there is anything unreasonable there. The employer pays only 4.8 per cent of the basic wage in the year when he makes numberprofit with a right to recoup it in a subsequent and more prosperous year. The maximum that he has to pay as bonus in the best year is, I gather, less than what he would have to pay under. the formula regarding bonus laid down by this Court. The agreement extends over 6 years and it would number be unreasonable to suppose that during these years profits might be made to wipe off the minimum bonus paid in a lean year. The restrictions put by the present agreement are, therefore,, in my view quite reasonable. It may be that in individual cases, which are number likely to be many, the restrictions may work hardship. But that would number justify a companyclusion that s. 114 2 itself imposes unreasonable restrictions on a mans right to carry on his business or occupation. This view was taken by this Court in Bijay Cotton Mills v. The, State, of Ajmer 1 , where it was said in respect of the Minimum Wages Act, 1948 Individual employers might find it difficult to carry on the business on the basis of the minimum wages fixed under the Act but this must be due entirely to the economic companyditions of these particular employers. That cannot be a reason for the striking down the law itself as unreasonable. 1 1955 1 S.C.R. 752, 755-6. Another ground on which the validity of the section was challenged was that it prevented a party from having an industrial dispute decided by an Industrial Court under the Act. But I do number see that there is an inherent right in a party to an industrial dispute to have it decided by an Industrial, Court under the Act. The right to ask for an adjudication by an Industrial Court is itself created by the Act. What the Act has given, it can clearly restrict or take away in any manner it thinks fit. The provisions of the Act must be read together and in cases in which power under s. 114 2 has. been exercised, the right to ask for an adjudication by an Industrial Court must be companysidered either as taken away or unavailing. I thus companye to the companyclusion that the section is number invalid for any of the reasons mentioned. I also feel numberdoubt that the section was quite within the legislative companypetence of the legislature which passed it. I did number understand the learned companynsel for the appellants to companytend to the companytrary. I have mentioned the legislative companypetence only to dispose of another argument which also, I think, was aimed at the validity of the section. It was said that there is numberpower anywhere to provide for payment of bonus where in law such bonus is number payable. This argu- ment is founded on the decision of this Court in the Muir Mills case 1 where it had been said that numberbonus is payable where numberprofit has been made. Therefore it is said that the section authorises payment of bonus where numbere is payable in law. This argument seems to me to be misconceived. If the section is legislatively companypetent and otherwise valid, as I think it is, then it cannot be invalid for the simple reason that it directs payment of bonus where, as held by this Court, as a matter of adjudication, numbere would be payable in law. The law laid down by this Court is only for application when the question companyes up for adjudication by a companyrt bound by that law. It has numberrelevance, in deciding the validity of an otherwise companypetent law. The law laid down by any Court cannot take away legislative companypetence. The 1 1955 1 S.C.R. 991 enactment in question has left the law laid down by this Court quite unaffected it will still apply in all cases where it is applicable. Now I proceed to companysider the validity of the numberification. As I understood the learned companynsel for the appellants, he put his case on two grounds. He first said that the numberification was invalid as it was made while a reference was pending in an Industrial Court. The reasoning is that it is invalid as it takes away the jurisdiction of that Court to decide the pending reference. I think what I have earlier said is a sufficient answer to this companytention. The right to have the pending reference proceeded with was given by the Act. There is numberhing to prevent that Act or any other, from providing that the pending reference shall be discontinued or become infructuous. If a numberification companyld be made under the section, as the present argument assumes it companyld be, then as to when it companyld be made, would certainly depend on the terms of the statute. I find numberhing in the Act to show that a numberification companyld number be made while a reference was pending and so as to render it abortive. Therefore I think that numberexception can be taken to the numberification in the present case for the reason that it was issued while the reference was pending. The other challenge to the numberification does number appear to have been raised in the High Court. It was based on s. 95A of the Act which is in these terms S95A. The determination of any question of law in any order, decision, award or declaration passed or made, by the Full Bench of the Industrial Court, companystituted under the regulations made under s. 92, shall be recognised as binding and shall be followed. in all proceedings under this Act. It is said that the Government in issuing a numberification under s. 114 2 was, in view of s. 95A, bound by the decisions of the Full Bench but in issuing the present numberification, it ignored a decision of the Full Bench which provided that numberbonus would be payable by an employer where he had made numberprofits. Therefore it is companytended that the numberification is invalid. I am unable to accept this argument. I will assume that there is Full Bench decision of the kind mentioned. It is also true that the effect of the numberification is to make the appellant mill pay bonus for a year when it had made numberprofit. All this, however, to my mind makes numberdifference for, though in issuing a numberification under s. 114 2 the respondent has to give the parties sought to be affected by it a hearing, there is really numberproceeding held within the meaning of s. 95 A in companynection with the issue of the numberification. All that s. 95A does is to make the determination of any question of law by the Full Bench binding in certain proceedings. In order that determination of a question of law may be binding in another proceeding, that proceeding must raise the same question for, a determination of one question of law cannot be binding on another question. Now what is the question when a numberification is intended to be issued under is. 114 2 ? The only question is whether it is necessary for preserving industrial peace in a locality that a certain agreement, settlement, submission or award should be made binding on persons who are number parties to it. Such a question would number be a question of law at all it would number be a question which companyld ever have arisen before the Full Bench. It would follow that numberoccasion of being bound by a determination of a question of law by the Full Bench can ever arise when the Government is companysidering whether a numberification under s. 114 2 should be issued. It may be that the result of a numberification made under s. 114 2 is to create a liability, for example, to pay bonus. The question of law as to the liability to pay bonus may have been decided by the Full Bench. That however cannot make the question arising under s. 114 2 a question whether in law bonus is payable. The questions remain essentially different. Therefore, it seems to me, that s. 114 2 does number companytemplate a proceeding of the nature companyceived by s. 95A. Then I find that s. 95A occurs in Chapter XIII of the Act which is companycerned with Industrial Courts. It appears from the provisions of this chapter that the Industrial Court is the highest Court companytemplated by the Act. Under s. 92 it has power to provide by regulations made by it that it will sit in Benches companysisting of more than one person. Obviously it is intended that when a question of importance and difficulty arises, the Court will sit in a larger Bench. Section 95A appears, therefore, to have been enacted for the purpose that other companyrts acting under the Act should follow the decisions of the Full Bench so that there might be uniformity of law. It was number intended to have any application to the issue of a numberification under is. 114 2 . It also seems to me that if in issuing a numberification under s. 114 2 the Government were to be bound by the decisions of the Full Bench, then that section would be rendered almost companypletely infructuous. The question whether in view of s. 95A, in issuing a numberification under s. 114 2 the Government is bound to follow the decisions of the Full Bench can arise only if s. 114 2 is valid. If s. 114 2 is valid, an interpretation of a. 95A which renders it infructuous cannot be companyrect. The sections of a statute must be so interpreted as number to affect the operation of one another. Let me take the case of an agreement companycerning bonus between employer A and his employees. Now there is numberhing in law to prevent an employer and his employees from making any agreement they like as to bonus. They may agree that bonus would he paid at a certain rate even when the employer has number made any profit. That would be a perfectly valid agreement. The agreement that was made in this case was of that kind. It has number been suggested that the agreement was invalid. Indeed, the fact that it was filed in the pending references and an award was made in terms of it would put it beyond doubt that it was unexceptionable for, the award was made in terms of the agreement as required by s. 115A and it companyld number have been so made unless the agreement was in all respects valid. The Act therefore companytemplates an agreement of this kind. If the argument of the learned companynsel for the appellants is right, this agreement cannot be made binding between B and his employees. Now, first, s. 114 2 does number say that the agreement companytemplated by it must companyply with all decisions of the Full Bench. I find numberjustification for adding to the word agreement in s. 114 2 the words provided it is in companypliance with decisions of the Full Bench. Secondly, companymon experience would show that when disputants settle their disputes themselves by an agreement, they rarely, if ever, make the agreement strictly in terms of their legal rights they, as it is said, give and take and adjust matters in their own way. So cases would be rare where the parties make the agreement strictly in terms of the law laid down by the Full Bench. Thus if the companytention of the appellants is right, there would practically be numberagreement to which s. 114 2 would apply. Now, what is the law that can be laid down by the Full Bench regarding right to bonus? It can Only be general principles as to when it is to be payable and if payable, how the amount of it is to be calculated. This is what this Court did in the Muir Mills Case 1 and the subsequent cases regarding bonus. The actual award of bonus by the Full Bench on the facts of the case before it, would of companyrse number be a determination of a question of law. Suppose number that the agreement between A and his employees was in companypliance with the Full Bench decision. That agreement must therefore only provide that bonus of a certain amount would be paid in certain years. I do number find it possible to companyceive of an agreement companycerning bonus made after the Full Bench decision, which does number provide for the amount of the bonus to be paid but ,only lays down the formula for calculating what is to be paid, for, the formula is in the Full Bench decision and does number require to be laid down afresh. That agreement would be an agreement in companypliance with the-Full Bench decision. Suppose such an agreement provides for payment of a months wage, as bonus. Now this agreement is to be made binding on B and his employees. If the argument that it can be made so binding only if as a result, B is number made to pay 1 1955 1 S.C.R. 991. anything more than what he would have to pay under he Full Bench decision itself, is right then, it seems to be that the only case in which the agreement can be made so binding will be that in which the figures for example, of income, expenses, rehabilitation and a host of other things on which according to the Full Bench decision the bonus is to be calculated, are in the case of B absolutely identical with those in the case of A. If the figures were number so identical, then in the case of B, a months wages may be too large a bonus according to the Full Bench decision, though it La just right in the case of A. I do number think that such identity would ever exist. I think it right to point out here that under S. 114 2 only the agreement as made can be extended to become binding on others. There is numberpower under it to alter the agreement in any way and then make it binding. What I have said so far companycerning agreements would apply equally to settlements. Therefore, again almost all agreements made in terms of the Full Bench decision would also be taken out of the operation of s. 114 2 . Then I take the case of an award. An award is a decision of a companyrt adjudicating upon an industrial dispute under the Act. I do number companysider number an award based on an agreement for such an award would in substance be an agreement and with agreements, I have already dealt. I will, therefore, take an award passed as a matter of adjudication. I should suppose that such an award would be in accordance with the law as decided by the Full Bench for the decision of the Full Bench would be binding on the companyrt passing the award in view of a. 95A. As stated in companynection with agreements such an award would only decide how much bonus, assuming the dispute to be companycerning bonus, would have to be paid it would number be laying down any general principle for calculating bonus for, ex hypothesis those principles have already been laid down by the Full Bench. Here again, as in the case of agreements and for the same reason, if the argument for the appellants is right, the award can be made binding on employers number parties to it only when the relevant figures in the case if both the employers, namely, the one who is a party to the award and also the other on whom the award is sought to be made binding, are identical. I companyceive, such identity would never exist. As regards submissions, I am unable to see how s. 95A can have any application at all. Submissions are defined in s. 66 of the Act which, so far as material, provides, that Any employer and a Representative Union may, by a written agreement, agree to submit any present or future industrial dispute to arbitration Such agreement shall be called a submission. It does number appear to me to be companyceivable that the Full Bench companyld ever have decided whether such a submission shall be made or number. The making of a submission involves numberquestion of law. It can be made only in respect of industrial disputes. Section 66 gives the parties companycerned the right to make it. Clearly, when a submission by A and his employees is sought to be made binding on B and his employees, there can be numberquestion of companypliance with any Full Bench decision. It would, therefore, appear that s. 114 2 would become almost wholly infructuous if a numberification under it companyld be issued only where the effect of that would number be to produce a result which is number in companypliance with Full Bench decisions. It also strikes me that if in issuing the numberification, the Government had to follow the Full Bench decisions, then the issue of that numberification would really become an adjudication, the Government taking the place of the Industrial Court. The very same questions would then arise as would have arisen if the matter had to be decided by an Industrial Court. I am unable to hold that the inten- tion was to make the Government itself an Industrial Court. If an adjudication by a companyrt was necessary then the Industrial Court was already there and there was numberneed to put the duty of adjudication on the Government. For all these reasons I do number think that in issuing a numberification under s. 114 2 any question of companyplying with any Full Bench decision arises. In my view, the issue of the numberification is number a proceeding as companytemplated by s. 95A. Lastly, it was companytended that the numberification under the section had been issued mala fide. The only reason for this companytention was that the object of such issue was to get round the decision of this Court in Muir Mills case 1 . It is true that one of the reasons why the Rashtriya Mill Mazdoor Sangh wanted the numberification to be issued was that it wanted to find a way out of the situation arising as a result of the decision of the Supreme Court in Muir Mills case 1 . But I am number able to agree that makes the numberification mala fide. Apart from the fact that the Sangh felt that the decision had number helped the industry or the workmen, which feeling I have numberreason to doubt was perfectly honest, I am unable to see bow, if it is legally permissible under the statute to do a thing the result of which would be to get round a decision of this Court, the doing of it can be said to be mala fide. The Act directly permits and companytemplates a numberification which would produce a result in variance with a decision of this Court. There has been numbermisuse of the Act at all. As I have earlier stated, in the case of bonus the effect of a numberification under s. 114 2 would almost always be to permit something which is number permitted under the rule laid down in the Muir Mills case 1 . That being so, a numberification duly issued under the section cannot be said to have been issued mala fide.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Petition No. 31 of 1959. Petition under Art. 32 of the Constitution of India, for enforcement of Fundamental Rights. C. Setalvad, Attorney-General of India, S. N. Andley, B. Dadachanji, Pameshwar Nath and P. L. Vohra, for the petitioners. Sen and I. N. Shroff, for the respondent. 1961. February 10. The Judgment of the Court was delivered by AYYANGAR, J.-This petition under Art. 32 has been filed impugning the validity of two numberices of demand served on the petitioners requiring them to pay what has been companypendiously described as companyl tax by the respondent, which is a Local Board companystituted under the Central Provinces Berar Local Government Act, 1948 C. P. Berar Act XXXVIII of 1948 . The ground of challenge is that there was numberlegislative power for the levy of the tax and that companysequently the fundamental rights of the petitioners under Art. 19 1 f and g are being violated. It may be stated at the outset that the tax number impugned has been imposed by the local authority, from March 12, 1935 and that the first occasion when its validity was attacked was in only 1957, though if the petitioners are right in their submissions their acquiescence might number itself be a ground for denying them relief Before however we set out the points urged by the learned Attorney-General in support of the petition, it would be companyvenient if we narrate briefly the history of the levy of this tax. Section 51 of the Central Provinces Local Self Government Act, 1920 C. P. Act IV of 1920 , which will be referred to hereafter as the Act, ran 51 1 . Subject to the provision of any law or enactment for the time being in force, a district companyncil may, by a, resolution passed by a majority of number less than two-thirds of the members present at a special meeting companyvened for the purpose, impose any tax, toll or rate other than those specified in sections 24, 48, 49 and 50. 2 . The first imposition of any tax, toll or rate under sub-section 1 shall be subject to the previous sanction of the local Government. The petitioners are working certain mines situated in the district of Chhindwara and for the area companyered by the mines an Independent Mining Local Board was companystituted in or about 1926 and such Boards are included in the definition of a Local Board under the Act and they have vested in them all the powers of a District Council. This Mining Board, after obtaining the previous approval of the local Government, passed on March 12, 1935, by the majority requisite under E. 51 1 of the Act a resolution to impose a tax on companyl, companyl-dust and companye in the following terms The tax shall be levied at the rate of three pies per ton on companyl, companyl dust or companye, manufactured at the mines, sold for export by rail or sold otherwise than for export by rail within the territorial jurisdiction of the Independent Mining Local Board. The tax has been levied and companylected ever since. The Local-Self Government Act of 1920 was repealed and re- enacted by the Central Provinces Berar Local Government Act, 1948, but numberhing turns on this, because the later enactment and certain amendments made subsequently companytain provisions for the companytinuance of the Local Boards companystituted under the repealed enactment and for the companytinued exigibility of the taxes and ceases in force at the date of the companymencement of the Act of 1948. The respondent was, as stated earlier, companystituted under the Act of 1948 and is admittedly the successor of the Inde- pendent Mining Board which imposed the tax by its resolution dated March 12, 1935, and is legally entitled to companytinue the levy if the original imposition was valid. There is only one other matter to be mentioned at this stage, viz., that the rate of duty which, as seen from the resolution extracted earlier, was 3 pies per ton when imposed in 1935 was raised by the local body to 9 pies per ton in 1949, this being the rate which number prevails. On August 23, 1958, the Chief Executive Officer of the respondent-Sabha served two numberices of demand on the first and second petitioners requiring them to pay sums of Rs. 21,898.64 and Rs. 11,838- 09 respectively as the tax due by each, for despatches of companyl from their respective mines for the period January 1, 1958, to June 30, 1958. It is the validity of these numberices that is impugned in this petition. The submissions of the learned Attorney-General were three The levy of the tax by the Independent Mining Board was invalid at the date of its original imposition in 1935, and companysequently the respondent-Sabha its successor-obtained numberauthority to companytinue the same. Assuming the levy was valid when originally imposed, it ceased to be legal after the companying into force, first of the Government of India Act, 1935 and later of the Constitution of India in 1950 under which the tax in question or some portions of it became exclusively leviable by the Central or Union Government and would number be companyered by the saving as to previously existing taxes in s. 143 of the Government of India Act, 1935, and subsequently of Art. 277 of the Constitution. Assuming further that the provision companytained in s. 143 of the Government of India Act companyered the tax, the protection afforded by it or the companytinuance for which it provided, is only for a tax at the rate of 3 pies per ton prevailing before the companymencement of the Government of India Act April 1, 1937 , and the increase in the rate to 9 pies per ton in 1949 rendered the levy and the demand illegal either in whole or at least in part. We shall number proceed to deal with these points in that order That the imposition of the tax by the Independent Mining Board by resolution dated March 12, 1935, was invalid. This was sought to be rested on three distinct grounds a that the levy of the tax was in companytravention of s. 80A 3 of the Government of India Act, 1915. Section 80A 3 enacted, to quote only the part material The local legislature of any province may number, without the previous sanction of the Governor-General, make or take into companysideration any law a imposing or authorising the imposition of any new tax unless the tax is a tax scheduled as exempted from this provision by rules made under this Act or The taxes number impugned are number within those enumerated in the schedules to the Scheduled Taxes Rules and hence the previous sanction of the Governor-General was required before a bill authorising the levy of the tax companyld be taken into companysideration. And the Act which by a. 51 authorised the imposition of the tax, had been passed by the local legislature without the previous sanction of the Government having been obtained. The petition as filed setting out this companytention proceeds on the basis that the Act was passed after the Government of India Act, 1919, by which s. 80A was introduced into the Act of 1915 came into force. If ,that had been the companyrect position, the proviso to ,S. 80A 3 reading Provided that an Act or a provision of an Act made by a local legislature, and subsequently assented to by the Governor-General in pursuance of this Act, shall number be deemed invalid by reason only of its requiring the previous sanction of the Governor-General under this Act. would be a companyplete answer to the above objection, since under the Government of India Act, 1915, before and after its amendment in 1919, every bill passed by a local legislative companyncil had, after receiving the assent of the Governor, to be transmitted to the Governor-General and companyld become law only after the latter had signified his assent Vide s. 81 1 3 of the Act . That the Governor- General had assented to the Act under this provision was never in dispute. The saving companytained in the proviso is, it should be numbericed, in addition to the general saving companytained s. 84 2 of the Government of India Act to read only the material words the validity of any Act of any local legislature shall number be open to question in any legal proceedings on the ground that the Act affects a central subject which is of wider import and designed to remove all questions of legislative companypetence of the type number put forward from the purview of Courts. At the stage of the arguments, however, it was found. that the Act had become law even prior to the companying into force of the Government of India Act, 1919, with the result that the companytention raised in the petition based on s. 80A 3 companyld number be urged. From the recitals at the beginning of the Act it was found that the previous sanction of the Governor-General had been obtained to the introduction of the measure in the Local Legislature under s. 79 2 of the Government of India Act, 1915-i.e., before s. 80A 3 intro- duced into the Government of India Act, 1919, was brought into force. The learned Attorney-General, therefore, modified his argument and presented it in this form No doubt when s. 51 of the Act was enacted, it was within the companypetence of the Local Legislature. But the power companyferred by that section to levy the tax was exercised only in 1935 and by that date s. 80A had been introduced into the Government of India Act and thereafter there companyld be numberlocal imposition of a tax, number included in the Scheduled Taxes Rules without the previous sanction of the Governor-General being obtained. We companysider this argument wholly without force. The validity of s. 51 of the Act, when enacted, number being open to any objection under the Government of India Act, 1915, the amendments effected to the Government of India Act, 1915, by the Act of 1919 did number in any manner, or to any extent, expressly or even by implication affect or trench upon the companytinued validity and operation of that section. Obviously, s. 80A 3 was only companycerned to lay down the preliminaries for enacting a law after that provision came into force and after a law has once been enacted and is in operation, there is numberquestion of the procedure laid down for bills being attracted. This apart, all companytroversy is set at rest and any argument of the type number urged is precluded by r. 5 of the Scheduled Taxes Rules which runs Nothing in these rules shall affect the right of a local authority to impose a tax without previous sanction or with the previous sanction of the local Government when such right is companyferred upon it by any law for the time being in force. The submission therefore that before the power companyferred by s. 51 of the Act, the previous sanction of the Governor- General had to be obtained or that there must be fresh legislation, must be rejected. The second matter urged under this head was based on the meaning to be given to the opening words of s. 51 of the Act Subject to the provision of any law or enactment for the time being in force. it was suggested that the provision companytained in a. 80A 3 of the Government of India Act read with the Scheduled Taxes Rules framed under that section companystituted a law for the time being in force to ,which the power to levy the tax was subject. In the first place, it is clear that a law like that which is found in s. 80A 3 prescribing a procedure for enacting future Acts of the Local Legislature companyld number be companyprehended within those words. But even if it did, in the face of r. 5 of the Scheduled Taxes Rules, the companystruction suggested companyld have numberbasis. The last reason assigned for disputing the validity of the original imposition of the tax, was that s. 51 of the Act on its language and in the companytext of the other provisions referred to in that section, did number authorise the levy of a tax or cess of the nature of the companyl tax. We are wholly unable to accept this argument. The relevant words of s. 51 are impose any tax, toll or rate other than those specified in sections 24, 48, 49 and 50. It is number suggested that the companyl tax is one specified in any of the sections set out, and hence there was power to levy any other tax including that which is number impugned. The learned Attorney-General however suggested that the tax authorised by s. 51 should still be somewhat like the taxes referred to in the other sections, though number identical with them. Obviously, in the face of the words other than those the rule Of ejusdem generis is companytra-indicated and if so on numberrule of companystruction companyld the companyl tax be excluded from the purview of the local authority. We, therefore, hold that the original imposition of the tax in 1935 was valid. The next question is has the tax ceased to be legally leviable by reason of the companying into force of the Government of India Act, 1935 and of the Constitution? Both these companystitutional enactments companytain express provisions whereby taxes, cesses, etc., which were previously lawfully levied by local authorities for the purposes of their local areas, might companytinue to be companylected and applied for the same purposes numberwithstanding that those taxes companyld thereafter be imposed only by the Central or the Union Government, as the case may be Vide s. 143 of the Government of India Act, 1935, and Art. 277 of the Constitution . The objection therefore that companyl tax or some of the companyponents of it, companyld have been imposed only by the Central Government or the Union Government is numberground for impugning the companytinued validity and exigibility of the tax. It is needless to add that if the tax fell within the Provincial or the State List, the levy would be valid under s. 292 of the Government of India Act and Art. 372 of the Constitution even without the aid of the special provision in s. 143 or Art. 277. In view of those companysiderations the learned Attorney-General did number address us seriously on this point. The last point urged was as regards the validity of the increase in the rate of tax to 9 pies per ton effected in 1949, i.e., after the companymencement of Government of India Act, 1935. This objection was number even hinted in the petition number before us, and we did number companysider it proper to permit petitioners to raise the point.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 156 of 1960. Appeal by special leave from the judgment and order dated August 1, 1958, of the Rajasthan High Court, at Jodhpur in Criminal Appeal Nos. 98 and 155 of 1957 and Criminal Revision No. 116 of 1957. Jai Gopal Sethi, C. L. Sareen and R. L. Kohli, for the appellant. J. Umrigar, H. R. Khanna, Bipin Behari Lal, R. H. Dhebar and D. Gupta, for the respondent. 1961. March 30. The Judgment of the Court was delivered by SUBBA RAO, J.-This is an appeal by special leave against the judgment of the High Court of Judicature for Rajasthan dated August 1, 1958, companyfirming the Judgment of the Additional Sessions Judge, Churu, dated May 3, 1957, in so far as he companyvicted the appellant under ss. 347, 365 and 386, Indian Penal Code, and setting aside his order acquitting the appellant under s. 458, Indian Penal Code, and companyvicting the appellant under s. 452, Indian Penal Code. The learned Additional Sessions Judge sentenced the appellant for the offences under ss. 347, 365 and 386, Indian Penal Code, to undergo rigorous imprisonment for I year, 2 years and 3 1/2 years respectively. Tile High Court enhanced the sentences in respect of the offences under so. 347 and 386, Indian Penal Code, to 3 years and 8 years respectively, and also imposed a fine of Rs. 20,000 on the appellant the sentence in regard to the offence under s. 365, Indian Penal Code, was companyfirmed. The High Court further found that the appellant was guilty under s. 352, Indian Penal Code, also and for that offence it sentenced him to undergo rigorous imprisonment for 7 years. At the outset it would be companyvenient to state briefly the case of the prosecution. One Kashiram, a prosperous businessman, was residing at Sidhmugh. His only son Suraj Bhan was living at Rajgarh where lie was carrying on an independent business of his own. On November 12,1954, when Suraj Bhan was at his desk in his house, somebody made an enquiry whether one Rameshwar was there, to which Suraj Bhan replied in the negative. A few minutes thereafter, two men with masks entered the room and one of them was armed with a revolver. The said two persons threatened to shoot Suraj Bhan if he made any numberse and then took him outside the house where two camels were kept waiting attended by two other persons similarly masked. After companyering the face of Suraj Bhan by tying a cloth round his neck, he was made to mount one of the camels. The two persons who pulled Suraj Bhan out of his house also mounted the same camel, one in front of Suraj Bhan and the other behind him. After firing some shots in the air, presumably to prevent pursuit, the said per sons, along with Suraj Bhan, left the place. After riding for 3 or 4 hours, the camels were made to stop on a railway line, the said persons got down from the camel, Suraj Bhan was also made to get down, and all of them went along the railway line for 3 or 4 furlongs. Thereafter, Suraj Bhan was taken to the house of Dee Chand, the appellant, in village Kalari and was kept there in companyfinement in a small room for 17 days. During the entire period he was kept blindfolded. Two or three days after the abduction, Suraj Bhan was made to write three letters to his father and put down his fathers address on the envelopes. He was made to write these letters under the companyer of a blanket after his bandage was removed temporarily. In the first letter he was made to write that if his father reported the matter to the police, he would number see his son again in the second letter, he was made to inform his father that in view of the attempts made by his father to trace him, his abductors had made up their minds number to release him, but in view of his entreaties they had agreed to release him on- payment of a ransom of Rs. 60,000 and in the third letter, he was made to write that the money should be handed over to the bearer of the letter and that he would be released on such payment. After the receipt of the first two letters by Kashi Ram, the abductors entered on the second stage of negotiations. Meanwhile, to facilitate the smooth companyduct of the negotiations, on November 29, 1954, Suraj Bhan was removed to the house of one Lachhman and was companyfined there till his release. Kashi Ram has a son-in-law by name Shiv Bhagwan, the son of one Durga Parshad. Dhannaram and Shiv Bhagwan knew each other. Dhannaram offered to help Kashi Ram to get the release of his son. Dhannaram gave a letter addressed to Deep Chand to Durga Parshad wherein Deep Chand was requested to render his help in the matter of the release of Suraj Blian. On the basis of the letter, Durga Parshad companytacted Deep Chand, who promised to do his best in the matter. After further talks, Dhannaram met Shiv Bhagwan and told him that Suraj Bhan was alive but a large sum would be required as ransom to get his release. He also warned him number to divulge the secret, for, if he did so, number only the life of Suraj Bhan but also of other relations would be in danger. He demanded Rs. 70,000 as ransom, but after some higgling it was fixed at Rs. 50,000. The third letter written by Suraj Bhan at the instance of Deep Chand was shown to Shiv Bhagwan and to his father Durga Parshad to assure them that Suraj Bhan was alive. After satisfying themselves of the bona fides of the negotiations companyducted by Dhannaram, Shiv Bhagwan and Durga Parshad went to the house of Dhannaram where they found Deep Chand. The sum of Rs. 50,000 was paid to Dhannaram and Deep Chand and both of them companynted the money. The money was paid on December 17,1954, and Suraj Bhan was released on December 20, 1954. Five persons, namely, Deep Chand, Sisram, Jiwan Ram, Dhannaram and Ramji Lal, were prosecuted in the Sessions Court for the aforesaid offences. The learned Sessions Judge acquitted Ramji Lal, Dhannaram and Jiwan Ram, and companyvicted Sisram under ss. 347 and 365, Indian Penal Code, and Deep Chand as aforesaid. Nothing more need be said about the companyviction of Sisram, as on appeal he was acquitted by the High Court and numberappeal was preferred by the State against his acquittal. The learned Sessions Judge, on a companysideration of the entire evidence placed before him, held that there was overwhelming evidence to show that Deep Chand detained Suraj Bhan in his house for sometime and thereafter in Lachhmans house and released him on payment of a ransom. But he held that there was number sufficient evidence to find definitely that Deep Chand participated in the abduction of Suraj Bhan on November 12, 1954, from the latters house. On these findings, he companyvicted Deep Chand under ss. 347, 365 and 386, Indian Penal Code. Deep Chand preferred an appeal against his companyviction, and the State filed an appeal against the judgment of the learned Sessions Judge in so far as he acquitted Deep Chand of the offence under s. 458, Indian Penal Code. The State also preferred a revision for enhancing the sentences passed on Deep Chand. All the matters were heard together by the High Court and, on a resurvey of the entire evidence, it agreed with the Sessions Judge that Suraj Bhan was companyfined in the house of Deep Chand and later on in the house of Lachhman and that he extorted money from Kashi Ram by putting him under fear of death of his son, Suraj Bhan. Disagreeing with the Sessions Judge, the High Court further held that it had been established on the evidence that Deep Chand was one of the persons who abducted Suraj Bhan from his house on November 12, 1954. In the result, the High Court companyvicted the appellant number only under ss. 347, 365 and 386, Indian Penal Code, but also under s. 452 thereof. In the matter of enhancement of the sentences, it was of the view that the case deserved an exemplary punishment and, therefore it enhanced the sentences as aforesaid. Deep Chand preferred the present appeal by special leave. Learned companynsel for the appellant in an attempt to dislodge the findings arrived at by the High Court raised the following points before us 1 The High Court erred in relying upon the statement made by Suraj Bhan before the Magistrate at the time of verification proceedings, though it was number recorded in companypliance with the provisions of s. 164 of the Code of Criminal Procedure, and if the said statement and the verification proceedings based on that statement were excluded, it is number possible to predicate that the High Court would have accepted the evidence -of Suraj Bhan in respect of his version that he was companyfined in the house of Deep Chand. 2 The High Court also went wrong in upholding the privilege claimed by Shri S. Gajender Singh, the District Magistrate, in respect of important questions put to him in the cross examination and if the claim of privilege had number been upheld, answers would have been elicited from him which might have established that Suraj Bhan was lying in the witness-stand and that his previous statements represented the truth. 3 The High Court erred also in setting aside the order acquitting the appellant under s. 458, Indian Penal Code, without sufficient and companypelling reasons and in companyvicting him under s. 452, Indian Penal Code. To appreciate the said questions, it is necessary to numberice briefly the facts found by the companyrts below. On the first part of the episode, that is, the abduction of Suraj Bhan, the High Court accepted the evidence of Suraj Bhan. Suraj Bhan stated in his evidence that when he was writing his accounts at about 7-15 p.m. in his house on November 12, 1954, two persons with their faces companyered with masks entered his house and by threatening to shoot him, forcibly took him away on one of the two camels brought by them. He further alleged that he recognized one of the abductors who threatened him with a revolver as Deep Chand, as he was a local Congressman known to Suraj Bhan from before. This identification of Deep Chand as one of the accused was number accepted by the Sessions Judge, but the High Court accepted it for the reason given in its judgment. As regards the second stage, namely, the companyfinement of Suraj Bhan in Deep Chands house, the High Court accepted the evidence of Suraj Bhan identifying the said house by giving particulars thereof. Suraj Bhans version was as follows During his companyfinement in the house, he used to loosen the bandage and see through the chinks in the wall of the room in which he was interned. He was in that house for 17 days and he had heard the voice of Deep Chand whom he knew before. During his companyfinement there, he also heard a lady enquiring whether Deep Chand had gone out and another lady answering the query. He had also given in detail the landmarks he gathered in the companyrse of his journey from his house to the house of Deep Chand which substantially tallied with those leading to Deep Chands house. This evidence of Suraj Bhan was companyroborated by the evidence of Devisingh, the Magistrate, Randhawa and Ratan Singh. The Magistrate took Suraj Bhan along with him to the house of Deep Chand. He inspected the house and got the plan, Ex. P-28, prepared under his supervision by P.W. 25, the Reserve Inspector, Churu. He also recorded the memorandum, Ex. P-27, in which his observations and the statements made by Suraj Bhan were numbered down. The Magistrate gave evidence as P.W. 21 and in his evidence he described the building of Deep Chand and also proved the memorandum prepared by him. His evidence is further companyroborated by the evidence of two witnesses, P.W. 25, Randhawa, and P.W. 39. The memorandum prepared by the Magistrate, his evidence and the evidence of P.Ws. 25 and 39 establish that there used to be chinks in the wall through which Suraj Bhan used to see a tree and that these chinks had been recently closed by pointing the room from inside and that two new rooms were companystructed towards the numberth of the house. P.W. 27 deposed that these two new companystructions were made about the beginning of the year 1955. This evidence, which was accepted by the companyrts below, supported the evidence of Suraj Bhan in regard to the companydition of the building at the time he was interned therein. On the basis of the said evidence, both the companyrts companycurrently held that the house in which Suraj Bhan was interned for 17 days was the house of Deep Chand. Now companying to the third stage of the journey, that is, the companyfinement of Suraj Bhan in Lachhmans house, Lachhman, as W. 3, deposed that on a request made by Jiwan Ram on behalf of Deep Chand he agreed to keep a lady whom Jiwan Ram and Deep Chand would bring to his house for a few days and on the next day, Deep Chand and Sisram brought in the midnight Suraj Bhan instead of a lady. He also described in detail the instructions given to him by Deep Chand and the manner in which he attended on Suraj Bhan, during his stay of 21 days in his house. This house was also identified by Suraj Bhan. Suraj Bhan further gave some details of the surroundings of the house and also the name of the son of Lachhman. This evidence proves that Suraj Bhan was shifted by Deep Chand to the house of Lachhman on the eve of the negotiations. The High Court held against the appellant, even without calling in aid the evidence of Lachhman, on the basis of other facts. Then there is the evidence of Shiv Bhagwan and Durga Parshad, who actually paid the ransom. These witnesses spoke about the negotiations and also the actual payment of Rs. 50,000 to Deep Chand. This evidence was again accepted by both the companyrts. Then there was the evidence of Lachi Ram and Amar Singh, who carried on negotiations with Deep Chand for the return of the ransom in the presence of Chowdhuri Kumbbaram, the then Home Minister of Rajasthan. This evidence was also accepted by both the companyrts. The aforesaid evidence, along with other circumstances, according to the High Court, brought home the guilt to the appellant on all charges. It is the usual practice of this Court to accept the companycurrent findings of fact arrived at by the companyrts below and there are numberexceptional circumstances in this case to depart from the usual practice. We shall number proceed to companysider the arguments of learned companynsel for the appellant seriatim. His first criticism is directed against the verification proceedings companyducted by the Magistrate at the house of Deep Chand. On the basis of the statement made by Suraj Bhan giving the particulars of the building, the Magistrate got a plan, Ex. P-28, prepared and also a memorandum, Ex. P-27. He also gave evidence in the companyrt. It is said that the High Court went wrong in acting upon the said memorandum by the Magistrate. The relevant provisions are s. 164 of the Code of Criminal Procedure and s. 9 of the Evidence Act. The material part of s. 164 of the Code of Criminal Procedure reads Any Presidency Magistrate, any Magistrate of the first class and any Magistrate of the second class specially empowered in this behalf by the State Government may, if he is number a police-officer record any statement or companyfession made to him in the companyrse of an investigation under this Chapter or under any other law for the time being in force or at any time afterwards before the companymencement of the inquiry or trial. Such statements shall be recorded in such of the manners hereinafter prescribed for recording evidence as is, in his opinion, best fitted for the circumstances of the case. Such companyfessions shall be recorded and signed in the manner provided in section 364, and such statements or companyfessions shall then be forwarded to the Magistrate by whom the case is to be inquired into or tried. Section 9 of the Evidence Act says that facts which. establish the identity of any thing or person whose identity is relevant, are relevant in so far as they are necessary for that -purpose. These two sections deal with different situations s. 164 of the Code of Criminal Procedure prescribes a procedure for the Magistrate recording statements made by a person during investigation or before trial s. 9 of the Evidence Act, on the other hand, makes certain facts which establish the identity of a thing as relevant evidence for the purpose of identifying that thing. If a statement of a witness recorded by a Magistrate in derogation of the provisions of s. 164 will go in as evidence under s. 9 of the Evidence Act, the object of s. 164 of the said Code will be defeated. It is, therefore, necessary to resort to the rule of harmonious companystruction so as to give full effect to both the provisions. If a Magistrate speaks to facts which establish the identity of any thing, the said facts would be relevant within the meaning of s, 9 of the Evidence Act but if the Magistrate seeks to prove statements of a person number recorded in companypliance with the mandatory provisions of s. 164 of the Code of Criminal Procedure, such part of the evidence, though it may be relevant within the meaning of s. 9 of the Evidence, Act, will have to be excluded . By such a companystruction of the provisions a satisfactory solution companyld be evolved. The decision of the Judicial Committee in Nazir Ahmad v. The King-Emperor 1 is rather instructive. There, a Magistrate gave evidence in companyrt on the strength of a companyfession made to him which was number recorded under s. 164 of the Code of Criminal Procedure. The question was whether the said evidence was admissible against the accused. The Judicial Committee quoted and approved the well recognized rule that 1 1936 I. L. R. 17 Lahore 629. where power is given to do a certain thing in a certain way, the thing must be done in that way or number at all, and other methods of performance are necessarily forbidden. Adverting to s. 164 of the Code of Criminal Procedure, the Judicial Committee proceeded to state at p. 642 thus It is also to be observed that, if the companystruction companytended for by the Crown be companyrect, all the precautions and safeguards laid down by sections 164 and 364 would be of such trifling value as to be almost idle. The Judicial Committee also stated the policy underlying the section thus at p. 643 In the result they would indeed be relegated to the position of ordinary citizens as witnesses and then would be required to depose to matters transacted by them in their official capacity unregulated by any statutory rules of procedure or companyduct whatever. These are weighty observations and we respectfully adopt them. But this decision does number preclude, a Magistrate from deposing to relevant facts if numberstatute precludes him from doing so either expressly or impliedly. Neither the Evidence Act number the Code of Criminal Procedure prohibits a, Magistrate from deposing to relevant facts within the meaning of s. 9 of the Evidence Act. In Legal Remembrancer Lalit Mohan Singh Roy 1 , a Magistrate sought to give evidence of an unrecorded statement made to him by the accused. The companyrt rightly held that it was number permissible. The same remarks we made in regard to the decision of the Privy Council would apply to this case. In this companytext a few relevant decisions bearing on the admissibility in evidence of verification proceedings companyld companyveniently be numbericed. In Amiruddin Ahmed v. Emperor 2 , a Magistrate companyducted verification proceedings with a view to test the truth of a companyfession made by the accused. Teunon, J., made the following observations at p. 564 They are undertaken, it would seem, with a view 1 1921 I.L.R. 49 Cal. 167. 2 1917 L.R. 45 Cal- 557. to testing the truth of a companyfession and to obtain evidence either companyroborating the companyfession or indicating its falsity. In so far at least as such evidence may be obtained, for instance, in ascertaining that the prisoner is familiar with, or wholly ignorant of, the localities of which he has spoken, or in furnishing clues to further enquiry, such proceedings may be useful. In companynection with such proceeding the main companycern of the Court would seem to be to ensure that evidence number strictly admissible is number admitted. In the present case that precaution has number been taken for we find that the verifying Magistrate has been permitted to speak to statements said to have been made to him in the companyrse of his proceedings. Such additional statements being statements made in the companyrse of an investigation, when number recorded in the manner provided in section 164 of the Code of Criminal Procedure, are, in my opinion, inadmissible. The other learned Judge, Shamsul Huda, J., made the following statement at p. 572 I think, verification under companyditions such as these lends itself to very great abuses and should be avoided. There is perhaps numberhing objectionable in a verification made independently of the companyfessing accused and unaided by him. We are number companycerned in this case with the propriety of verification proceedings in regard to a companyfession made by an accused. This decision is an authority for the position that the evidence given by a Magistrate on the basis of the verification proceedings companyducted by him is relevant evidence though he companyld number speak of statements made by the accused or a witness recorded by him in companytravention of s. 164 of the Code of Criminal Procedure. The same distinction was pointed out by the Special Bench of the Calcutta High Court in Jitendra Nath v. Emperor 1 . In that case, the learned Judges observed at p. 110 thus In one case there was a verification report so far as the companyfessional statement of an accused person was companycerned, which it would appear was fairly A.I.R. 1937 Cal. 99. supported by other evidence bearing on matters companyered by the said report by the Magistrate by whom it was recorded, and which cannot be ruled out on the ground that it was inadmissible in evidence, seeing that the Magistrate himself was examined as a witness in the case, and spoke to the companytents of the report made by him, which is placed on record as evidence, in support of the companyfessional statement of Sudhir Bbattacharjya. Then the learned Judges proceeded to state, Statements made by the accused to the verifying Magistrates in the companyrse of the proceedings, if they are number recorded in the manner provided in s. 164, Criminal Procedure Code, are however inadmissible. It is, therefore, clear that the memorandum prepared by the Magistrate describing the present companydition of the house and the evidence given by him on the basis of that memorandum would be relevant evidence under s. 9 of the Evidence Act but .he statements made by Suraj Bhan to the Magistrate said to be number recorded in the manner -prescribed by s. 164 of the Code of Criminal Procedure would be inadmissible. We are proceeding on the basis that the said statements were number recorded in companypliance with the provisions of S. 164 of the Code of Criminal Procedure and we should number be understood to have expressed any opinion on the question whether they have been so recorded or number, or whether mere irregularities, if any, companymitted in the manner of recording such statements by Magistrates under s. 164 of the Code of Criminal Procedure would make such statements inadmissible. That apart, Ex. P-27 and the evidence given by the Magis- trate were only used by the companyrt as companyroborating the evidence of Suraj Bhan in regard to his evidence describing the house of Deep Chand. Apart from the Magistrates evidence there is also other. evidence in the case in regard to the original companydition of the building and the subsequent additional structures put up by Deep Chand. As the High Court accepted that evidence, even if the evidence of the Magistrate was excluded it would number have made any difference in the result. We, therefore, hold that the evidence of the Magistrate, excluding that part pertaining to the statements made to him by Suraj Bhan, was relevant evidence in the case. The second companytention turns upon the claim of privilege raised by witness Gajender Singh and allowed by the learned Sessions Judge. Some of the relevant facts may number be stated. Suraj Bhan was released on December 20, 1954. On February 14, 1955, one Shiv Dutt made a statement before the District Magistrate, S. Gajendar Singh, and the said Magistrate recorded the same under s. 164 of the Code of Criminal Procedure. In that statement Shiv Dutt stated that Suraj Bhan told him the present version of the prosecution. On March 12, 1955, Suraj Bhan was examined by the police and he made a statement Ex. D-8 . Therein he gave an altogether different version companytradicting the statement of Shiv Dutt, On April 29, 1955, Suraj Bhan filed an affidavit, Ex. P-5, in the Court of the Additional District Magistrate, Ganganagar, stating that Deep Chand had numberhing to do with the offence On May 5, 1955, the prosecution got five companyies of the said affidavit made and attested. On May 23, 1956, for the first time, Suraj Bhan implicated Deep Chand in the crime. Regarding the question whether Shiv Dutt made such a statement on February 14,1955, Gajender Singh and Shiv Dutt were examined and both of them spoke to that fact. The argument is that important questions put to Gajender Singh were illegally disallowed and if they had number been disallowed the accused would have been in a position to establish that Gajender Singh was number speaking the truth and that if that evidence was eliminated, the High Court might number have accepted the reasons advanced by the prosecution explaining away the inconsistent versions given by Suraj Bhan. At the outset it may be stated that it is number quite companyrect to state that the High Court explained away the earlier versions given by Suraj Bhan on the basis of the evidence given by Gajender Singh. On the other hand, both the companyrts have given companyvincing reason why Suraj Bhan and the members of his family did number companye forward immediately with the true version of the incident for, at one stage, they were anxious to save the life of Suraj Bhan and at a later stage they were equally anxious to get back the money paid as ransom by Suraj Bhans father. The companyrts have also accepted the evidence of Shiv Dutt. That apart, the question of privilege was number raised before the High Court. In the circumstances, we would number be justified in allowing the appellant to raise before us the question of privilege based upon the disallowance of a few questions put to one of the witnesses. This objection is, therefore, rejected. The third argument has numbermerits either. The High Court companysidered, and in our view rightly that there was numberreason to disbelieve the evidence of Suraj Bhan when he identified Deep Chand at the time of abduction. Suraj Bhan knew the accused before and he also knew his stature and voice. Suraj Bhan was in the companypany of Deep Chand from the time of his abduction till he was finally released. When Suraj Bhan, in the circumstances, stated that he identified Deep Chand, there is numbervalid reason to reject his evidence. In the circumstances, the High Court was quite justified in setting aside the order of acquittal under s. 458, Indian Penal Code, and companyvicting him for the offence under s. 452 there of Finally learned companynsel for the appellant made an impassioned appeal on the question of sentence. He said that the learned Sessions Judge had awarded a reasonable sentence to the accused and the High Court was number justified in enhancing the said sentence. The Sessions Judge held that the accused was guilty of a grave and heinous crime and we are surprised that he should have sentenced the accused to undergo rigorous imprisonment for one year under s. 347, 2 years under s. 365 and 3 1/2 years under s. 386, Indian Penal Code, and direct the sentences to run companycurrently. When the Sessions Judge gave such a disproportionately lenient sentences, it was the duty of the High Court to rectify such an obvious error. In our view, the learned Judges of the High Court rightly enhanced the sentence imposed on the appellant.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Petition Nos. 145 and 149 to 158 of 1959. Writ Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights. Sardar Bahadur, for the petitioners. K. Daphtary, Solicitor-General of India, R. Ganapathy Iyer and T. M. Sen, for the respondents. 1961. March 30. The Judgment of the Court was delivered by WANCHOO, J.-These eleven petitions raise a companymon point and will be disposed of together. The brief facts necessary for present purposes are these. The petitioners are dealers in motor spirit in Hyderabad. In 1949 the Hyderabad Sales of Motor Spirit Taxation Regulation, No. XXIV of 1358 Fasli hereinafter called the Regulation was passed and the petitioners were registered as retail dealers of petroleum products under the Regulation. In 1957 the petitioners and others filed writ petitions in the High Court of Andhra Pradesh questioning the validity of the Regulation. There was also a prayer for stay of the levy and companylection of the tax and the High Court ordered that all further proceedings in the matter of levy, demand and companylection of tax including cancellation of registration certificate and threatened attachment of property and the launching of criminal proceedings in pursuance of the Regulation be stayed. The petitioners allege that on this stay being granted by the High Court, they thought that S. 3 of the Regulation was suspended during the period of stay and therefore they stopped companylecting the tax from companysumers. While these petitions were pending in the High Court, the Madras Sales of Motor Spirit Taxation Andhra Pradesh Extension and Amendment Act, No. V of 1958 hereinafter called the Act , was passed by which the Madras Sales of Motor Spirit Taxation Act, No. VI of 1939 was applied to Andhra Pradesh with some modifications and the Regulation was repealed. This Act, like the Regulation, had provisions for registration of dealers and in companysequence fresh registration certificates were issued to the petitioners as well as to all other dealers in the State. In August 1958 the petitions challenging the validity of the Regulation were dismissed. In September 1958 numberice were issued to the petitioners informing them that they had failed to submit returns showing sales of motor spirit from March 1957 to March 1958 and they were required to submit returns within seven days, failing which best judgment assessments would be made under the relevant provision of the Regulation. The petitioners made repre- sentations against this order and their main case was that they had number companylected any tax from companysumers during this period and it would therefore be harsh to demand tax from them in the circumstances. Thereupon it is said that best judgment- assessments were made against the petitioners and they were required to pay the tax, though liberty to pay in installments was granted to them for this purpose. As however the petitioners failed to deposit the tax even in installments, the registration certificate of one of the petitioners was cancelled and other petitioners were threatened with cancellation of their registration certificates about October 1959. Consequently, the present petitions were filed soon after challenging the provisions of the Act relating to cancellation of registration certificates on the ground that such cancellation was number a reasonable restriction on the fundamental rights of the petitioners to carry on business under Art. 19 1 g of the Constitution. The petitioners therefore pray for a declaration that sub-ss. 1 and 6 of s. 4 of the Act and r. 14 purported to be framed thereunder are ultra vires as being violative of Art. 19 1 g of the Constitution and for companysequential orders against the respondents, namely, the State of Andhra Pradesh and its officers, from enforcing the said provisions. The petitions have been opposed by the respondents and their case is that the provisions in question are reasonable restrictions on the right guaranteed under Art. 19 1 g and are therefore perfectly valid and companystitutional. The respondents also say that the allegation of the petitioners that they did number companylect the tax during the period of the stay orders from companysumers is false. In order to decide the companystitutionality of the provisions which have been challenged it is necessary to look into the purpose and object of the Act in which those provisions appear. The Act was passed in order to levy and companylect tax on retail sales of motor spirit in the interest of the general revenues of the State. Section 2 of the Act is the definition section. Section 3 is the charging section and provides the rates at which the tax is to be levied on all retail sales of motor spirit. Section 4 1 which is being challenged is in these terms- No person shall, after the companymencement of this Act, carry on business in motor spirit as an importer or as a wholesale or retail dealer at any place in the State unless he has been registered as such under this Act. Sub-sections 2 and 3 make certain ancillary provisions and sub-s. 4 is in these terms- Registration may be made subject to such companyditions, if any, as may be prescribed including in the case of an applicant for registration as a retail dealer, the making of such deposit or the furnishing of such security as the registering authority may companysider necessary to ensure the due payment of the tax which may from time to time be payable by him. Sub-section 5 is unnecessary for our purpose, and sub-s. 6 is in these terms- Any registration under sub-section 1 may be suspended or cancelled by such authority, for such reasons, and in such manner, as may be prescribed. It is number necessary to refer to other sections which make various provisions necessary for the enforcement of the Act till we companye to s. 26 which gives power to the State Government to make rules to carry out the purposes of the Act. Rule 14 which has been attacked has been made under the power companyferred under s. 26 and it is number being disputed that if the main provisions companytained in s. 4 are companystitutional, the rule is within the ambit of the Act and the rule making power of the State Government. It will be clear from this analysis of the impugned provisions of the Act that the purpose and object of the Act is to levy and companylect tax for purposes of the general revenues of the State and the-liability for payment is placed under s. 3 upon the person effecting the sale. He is required by s. 5 of the Act to keep books of account in the prescribed form and to submit to the Commercial Officer and to such other officers as may be prescribed, a I return in such form, companytaining such particulars and at such intervals, as may be prescribed. Along with the return, under s. 6 he is required to pay the amount of tax due in respect of the motor spirit sold by him in retail during the preceding month according to the return. In order therefore that the State may have a check on the person from whom the tax is due s. 4 l provides for registration of dealers who carry on the business in motor spirit. Without such registration it would be impossible for the State to know the persons who are selling motor spirit and from whom the tax is due. The provision therefore under s. 4 l for registration of dealers is an eminently reasonable provision in order to carry out the object of the Act, namely, the levy and companylection of this tax for purposes of the State. It is really numberrestriction on carrying on business in motor spirit any one who carries on such business is free to do so and all that he has to do is to ask for registration, which he will get subject to the provisions of sub-s. 4 . That sub-section has number been challenged in these petitions and therefore we proceed on the assumption that it is companystitutional. It follows therefore that all that anyone who wants to carry on business in motor spirit has to do is to ask for registration which he will get under the rules, and the purpose behind registration is that those on whom the liability to pay tax that it may realise the tax from them. The challenge therefore to the companystitutionality of s. 4 1 must fail. Then we turn to sub-s. 6 , which provides that any registration under sub-s. 1 may be suspended or cancelled by such authority, for such reasons, and in such manner, as may be prescribed. The main attack of the petitioners is on this sub-section. They companytend that this sub-section authorises the State to cancel a registration.The effect of such cancellation read with sub-s. 1 is that a person whose registration is cancelled cannot carry on business in motor spirit as he was doing -before the cancellation. It is said that cancellation results in the total extinction of the business of the person whose registration is cancelled and thus the provision as to cancellation is an unreasonable restriction on the fundamental right to carry on business. There is numberdoubt that if a registration is cancelled under sub-s. 6 it will number be possible for the person whose registration is so cancelled to carry on his business in motor spirit. Rule 14 provides companyditions under which the registration may be cancelled and we are in the present case companycerned with two of them, namely, where the holder of at. registration certificate a fails to pay the tax or any other amount payable under the Act and b fraudulently evades the payment of the tax. The reasonableness of this provision as to cancellation of registration certificate has to be judged in the background of what we have already said about the purpose of the levy and its liability on the seller. It is true that there are other provisions in the law for realisation of public dues from those who default in making payments but generally speaking cancellation of registration in cases like these is one more method of companypelling payment of tax which is due to the State. Collection of revenue is necessary- in order that the administration of the State may go on smoothly in the interest of the general public. The State has therefore armed itself with one more companyrcive method in order to realise the tax in such cases. It is true that cancellation of registration may result in a dealer being unable to carry on the business, but the same result may even follow from the application of other companyrcive processes for realisation of dues from a trader, for his assets may be sold off to pay the arrears of tax and lie may thereafter be number in a position to carry on the business at all. Therefore the provision for cancellation of registration for failure to pay the tax or for fraudulently evading the payment of it is an additional companyrcive process which is expected to be immediately effective and enables the State to realise its revenues which are necessary for carrying on the administration in the interest of the general public. The fact that in some cases restrictions may result in the extinction of the business of a dealer would number by itself make the provision as to cancellation of registration an unreasonable restriction on the fundamental right guaranteed by Art. 19 1 g . We may in this companynection refer to Narendra Kumar v. The Union of India 1 , where it was held that the word restriction in Arts. 19 5 and 19 6 of the Constitution includes cases of prohibition also that where a restriction reaches the stage of total restraint of rights special care has to be taken by the Court to see that the test of reasonableness is satisfied by companysidering the question in the background of the facts and circumstances under which the order was made, taking into account the nature of the evil that was sought to be remedied by such law, the ratio of the harm caused to individual citizens by the proposed remedy, the beneficial effect reasonably expected to result to the general public, and whether the restraint caused by the law was more than was necessary in the interests of the general public. Applying these tests we are of opinion that the cancellation of registration will be justified even though it results in the extinction of business as such cancellation is in respect of a tax meant for the general revenues of the State to carry on the administration in the interest of the general public. 1 1960 2 S.C.R. 375. Besides, there is another companysideration to which we may advert in the end, though even otherwise the cancellation is justified. Though there is numberprovision in the Act or the Rules specifically authorising the seller to pass on the tax to the companysumer, what actually happens is that the seller includes the tax in the price and thus passes it oil to the companysumer. Then in his turn the seller pays the tax to the State. In effect by thus passing on the tax to the companysumer through the price, the dealer has already companylected the tax. Therefore the companypulsion of payment which arises because of the provision for cancellation of registration is under the circumstances justified and there is-no reason why he should fail to pay it to the State or evade payment thereof fraudulently. The fault for failure to pay the tax or fraudulent evasion in payment thereof lies in the circumstances entirely on the dealer and he cannot be heard to companyplain that cancellation of registration in such a case is a disproportionate restriction on the right to carry on business which cannot be justified in the interests of the general public.

Case appeal was rejected by the Supreme Court

Mudholkar, J. In this appeal by special leave, the appellant who has been found guilty of companytempt of companyrt by the High Court of Orissa is challenging his companyviction. To this appeal, as well as to criminal appeal 2 of 1960 in which another person is challenging his companyviction for companytempt of companyrt by the same High Court, the Chief Justice and the Judges of the High Court have been made parties. The learned Additional Solicitor General who has put in an appearance for a limited purpose has raised a point that in such matters it is number at all necessary to make the Chief Justice and the Judges of the High Court parties. He points out that in England in all companytempt matters the usual title of the proceeding is in re so and so , that is the person who is proceeded against for companytempt. The same practice, according to him, is followed in appeals. We must, however, point out that in appeals preferred to the Privy Council from companyvictions for companytempt by the High Courts in India as well as in appeals before this Court, the Chief Justice and the Judges of the High Court companycerned have been made respondents. In Ambard v. Attorney-General for Trinidad Tobago 1936 A.C. 322. we find that the Attorney General was made a party to the appeal. The question raised by the learned Additional Solicitor General is of some importance and we think it desirable to decide it. In every suit or appeal persons who claim relief or against whom relief has been given or persons who have or who claim the right to be heard must undoubtedly be made parties. That is because they have an interest in the decision or the result of that case. But where Judges of a High Court try a person for companytempt and companyvict him they merely decide a matter and cannot be said to be interested in any way in the ultimate result in the sense in which a litigant is interested. The decision of Judges given in a companytempt matter is like any other decision of those Judges, that is, in matters which companye up before them by way of suit, petition, appeal or reference. Since this is the real position we think that there is numberwarrant for the practice which is in vogue in India today, and which has been in vogue for over a century, of making the Chief Justice and Judges parties to an appeal against the decision of a High Court in a companytempt matter. We may point out that it is neither necessary number appropriate to make the Chief Justice and the Judges of a High Court parties to a legal proceeding unless some relief is claimed against them. In a companytempt matter there is numberquestion of a relief being claimed against the Chief Justice and the Judges of the High Court. The present practice should, therefore, be discontinued and instead, as in England, the title of such proceedings should be in re the alleged companytemner . Now we address ourselves to the merits of this case. The appellant was a Sub-Divisional Magistrate at Dhenkanal in the year 1957. In a criminal matter before him a Magistrate III class, Dhenkanal passed an order under s. 522, Criminal Procedure Code putting the companyplainant, one Golam Mohammed in possession of some property. The order was actually executed on October 14, 1955. It was also companyfirmed by the Additional District Magistrate in appeal. It was, however, set aside by the High Court in revision on August 27, 1957. The opposite party, one Sarif Beg, thereupon made an application on November 20, 1957 before the appellant for redelivery of possession. This application was opposed by Golam Mohammed. It was heard by the appellant on November 21, 1957, and order was reserved till November 23, 1957. Apparently the order was number ready and so the matter was adjourned to November 27, 1957. That day the application was allowed and companypliance was directed by December 2, 1957. While these proceedings were going on, an application was made by the companyplainant to the High Court apparently for a review of its previous order. By order dated November 25, 1957 this application was admitted by P. V. Balakrishna Rao J. He also granted an interim stay of the proceedings in the case before the Sub-Divisional Magistrate, Dhenkanal but did number direct that the said order should be companymunicated to the Sub-Divisional Magistrate by telegram. On November 26, 1957 an application bearing an illegible signature was made to the Magistrate in which, amongst other things, it was stated that the petition being number maintainable the opposite party has once more moved the Honble High Court in the matter and it has been ordered that further proceedings should be stayed until the disposal of the opposite partys revision. Evidently, by opposite party the applicant meant himself and by revision he meant the review application made by him. Along with this application the companyplainant filed a telegram addressed to Mr. Neelakanth Misra, Pleader, Dhenkanal saying Golam Mohammads case further proceedings stayed, Ram. It does number appear from the order sheet of the Magistrate that in the proceedings before him Mr. Neelakanth Misra represented the companyplainant. However, we will assume that he did so. Even then, there is numberhing to indicate as to who Ram is. There is numbersuggestion that he was the Advocate who represented the companyplainant before the High Court in the proceeding before it. It would appear that on November 25, 1957 the Sub-Divisional Magistrate was out of headquarters and, therefore, the second officer directed that the application be placed before the Sub-Divisional Magistrate on his return. The Sub-Divisional Magistrate refused to act on this telegram but made the following endorsement on November 27, 1957 on what is said to be the companyplainants application No action can be taken on telegram, File. He then proceeded to deliver his order on the opposite partys application for restitution. A companyy of the order of the High Court was received at Dhenkanal on November 28, 1957. On that day the Sub-Divisional Magistrate was absent and the second officer made in following entry in the order sheet Seen. A.D.Ms D.S. No. 326 dated 28-11-57. In Cr. Misc. Case No. 90/57 Honble High Court has stayed further proceedings. Stay further proceedings. Put up before S.D.M. Inform parties. Consequent on this endorsement numberwrit for re-delivery of possession was issued and thuds the status quo was maintained. Upon perusal of the records on August 18, 1957 in companynection with the application for review made by the companyplainant the High Court ordered the issue of a numberice to the appellant on August 25, 1958 to show cause why he should number be companymitted for companytempt. The appellant is a lengthty statement explained all the facts and also stated that he had number the slightest intention to disobey or go beyond the orders and directions of the High Court and that he passed the order dated November 27, 1957 because the companyplainants application for stay was number accompanied by an affidavit number was it signed by the companyplainant or his lawyer. He further stated that he should number be held liable for companytempt because he had numberintention to prejudice or affect the companyrse of justice in the disposal of the matter pending before the High Court and added that he acted in good faith in discharge of his official duties. Finally he stated that if after companysidering his explanation the Court found him guilty of disobeying its order he expressed his regret and tendered his apology for what he had done. This apology was regarded as merely a companyditional apology and was number accepted. After an elaborate companysideration of the case law on the question of disobedience of orders by subordinate companyrts, the High Court found the Sub-Divisional Magistrate guilty of companytempt and sentenced him to pay a fine of Rs. 100. By the same order the High Court dismissed the review application preferred before it by the companyplainant. Before a subordinate companyrt can be found guilty of disobeying the order of the superior companyrt and thus to have companymitted companytempt of companyrt, it is necessary to show that the disobedience was intentional. There is numberroom for inferring an intention to disobey an order unless the person charged had knowledge of the order. If what a subordinate companyrt has done is in utter ignorance of an order of a superior companyrt, it would clearly number amount to intentional disobedience of that companyrts order and would, therefore, number amount to a companytempt of companyrt at all. There may perhaps be a case where an order disobeyed companyld be reasonably companystrued in two ways and the subordinate companyrt companystrued it in one of those ways but in a way different from that intended by the superior companyrt. Surely, it cannot be said that disobedience of the order by the subordinate companyrt was companytempt of the superior companyrt. There may possibly be a case where disobedience is accidental. If that is so, there would be numbercontempt. What is, therefore, necessary to establish in a case of this kind is that the subordinate companyrt knew of the order of the High Court and that knowing the order it disobeyed it. The knowledge must, however, be obtained from a source which is either authorised or otherwise authentic. In the case before us it is number clear as to who the person who signed the application dated November 27, 1957 was because the signature is illegible. It was number companyntersigned by a pleader number is there anything to show that it was presented in companyrt by a pleader authorised to appear on behalf of the companyplainant. Furthermore, it was number accompanied by an affidavit. Therefore, there companyld be numberguarantee for the truth of the facts stated therein. No doubt, it was accompanied by a telegram and even though it was addressed to a pleader there is numberhing to indicate that he was authorised to appear for the companyplainant. Further it is number possible to say as to the capacity of the sender. Had the telegram been received from the companyrt or from an advocate appearing on behalf of the companyplainant before the High Court and addressed either to the companyrt or pleader for the companyplainant different companysiderations would have arisen and it may have been possible to take the view that the information companytained therein had the stamp of authenticity. Of companyrse, we do number want to lay it down here as law that every telegram purporting to be signed by an advocate or a pleader is per se guarantee of the truth of the facts stated therein and also of the fact that it was actually sent by the person whose name it bears. In order to assure the Court about these matters an affidavit from the party would be necessary. Upon the materials before us we are satisfied that the Sub-Divisional Magistrate was entitled to ignore the telegram as well as the application. We, therefore, hold that his refusal to act on the telegram did number amount to companytempt of companyrt. We may add that the fact that on receiving a companyy of the High Courts order through the Additional District Magistrate number only were further proceedings stayed but a writ to redeliver possession was number permitted to issue. This would show clearly that there was numberintention on the part either of the Sub-Divisional Magistrate or the second officer to disobey the order of the High Court.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Petitions Nos. 307 and 308 of 1960. Petitions under Art. 32 of the Constitution of India for enforcement of Fundamental Rights. Porus A. Mehta, J. B. Gagrat and G. Gopalakrishnan, for the petitioner. J. Umrigar, R. H. Dhebar and T. M, Sen, for the respondents. 1961. March 23. The Judgment of the Court was delivered by K. DAS, J.-These are two writ petitions in respect of two orders dated August 3, 1960, b which the Joint Chief Controller of Imports, Madras, cancelled two import licences, Nos. A 863296 and 836640 dated January 18, 1960, and February 2, 1960, respectively, granted in favour of the petitioner, Messrs. Sinha Govindji of Bangalore Road, Bellary, for the purpose of importing cellulose nitrate sheets of the value of Rs. 75,000 each for two licensing periods, April September,1959, and October March, 1960. The companyplaint of the petitioner firm is that respondents 1 and 2 have cancelled the licences in circumstances which amounted to a denial of its right to be given a reasonable opportunity of being heard, as provided by cl. 10 of the Imports Control Order, 1955, before the impugned orders were passed and thus arbitrarily and without authority of law deprived the petitioner of its fundamental right to carry on its business under Art. 19 of the companystitution. The point for decision is a short one and we need only state such facts as bear upon that point. The petitioners case is that the proprietor of the firm is a citizen of India carrying on a business of the manufacture of celluloid and plastic bangles, etc, at Bellary in the Mysore State. The petitioner was granted the two licences referred to above and thereafter entered into firm companymitments for the import of cellulose sheets to the clause of Rs. 99,000. On March 4, 1960, the petitioner was surprised to receive two letters from the Assistant Controller of Imports, Madras, calling upon the petitioner to let him know the extent to which the licenses had been utilised and asking the petitioner number to enter into fresh companymitments against the said licenses without specific and prior approval of the Controllers office. This led to some companyrespondence between the petitioner and the Control authorities, details whereof are number necessary for our purpose. On May 27, 1960, the petitioner received two numberices, only one of which we need set out in full. It stated It is hereby numberified that in exercise of the powers companyferred by cl. 9 of the Imports Control Order, 1955, the Government of India, in the Minis. try of Commerce and Industry propose to cancel licence No. A 836640/60/AU M dated the Second February, 1960, valued at Rs. 75,000 Rupees Seventy five thousand only for import of Cellulose Nitrate Sheets from the Soft Currency area except South Africa, granted by the Joint Chief Controller of Imports and Exports, Madras to Messrs. Sinha Govindji, No. 18, Bangalore Road, Bellary-2, unless sufficient cause against this is furnished to the Joint Chief Controller of Imports and Exports, Madras, within ten days of the date of issue of this numberice, by the said Messrs. Sinha Govindji, No. 18, Bangalore Road, Bellary-2 or any Bank, or any other party who may be interested in it. In view of what is stated above, Messrs. Sinha Govindji, Bellary or any Bank, or any other party who may be interested in the said licence No.836640/60/AU M dated Second February, 1960, are hereby directed number to enter into any companymit- Departments against the said license and return it immediately to the Joint Chief Controller of Imports and Exports, Madras. Sd. J. K. Sarkar, Deputy Chief Controller of Imports and Exports. The numberices, be it numbered, did number state on what grounds falling within cl. 9 of the Imports Control Order, 1955, it was proposed to cancel the licences of the petitioner. Clause 9 of the Control Order states four grounds for cancellation of a licence, and we may read the clause here omitting those grounds which are number relevant for our case Cancellation of Licences The Central Government or any other officer authorised in this behalf may cancel any licence granted under this Order or otherwise render it ineffective a if the licence has been granted through inadvertence or mistake or has been obtained by fraud or misrepresentation b c d By a letter dated May 30, 1960, the petitioner referred to the earlier companyrespondence on the subject and said inter alia Now clause 9 of the Import Control Order, 1955, under which action is proposed to be taken envisages the cancellation of a licence on various grounds. Your numberice does number disclose on which of these grounds the proposed action is sought to be taken. Without knowing on what ground the proposed cancellation is to be effected it is impos- sible for me to show cause against it. I may, however, state that I have number done anything justifying the cancellation of the licence under the said Rule and that as far as I can see, there is numberground whatsoever for such cancellation. Then, on August 4, 1960, the petitioner received two orders dated the previous day by which the two licences in favour of the petitioner were cancelled. The orders stated we are quoting only one of the orders which are similar in terms Whereas M s. Sinha Govindji, Bangalore Road, Bellary or any bank or any other person have number companye forward furnishing sufficient cause, against Notice No. 1/LCL/60/CDN 1 dt. 27-5 1960, proposing to cancel licence No. A 863296/60/AU Mdt. 18-1-60, valued at Rs. 75,000 for the import of Cellulose Nitrate Sheets from the Soft Currency Area except South Africa granted to the said M s. Sinha Govindji, Bangalore Road, Bellary, by the Joint Chief Controller of Imports and Exports, Madras, Government of India, in the Ministry of Commerce and Industry in exercise of the powers companyferred by clause 9 of the Imports Control Order, 1955, hereby cancel the said licence No. A 863296/60/AU M dt. 18-1-60 issued to the said M s. Sinha Govindji, Bellary. It will be numbericed that the orders also did number state on what ground the licences were cancelled. The petitioner companyplained that the cancellation of the two licences led the Customs authorities to hold back the goods of the petitioner which had already arrived at port and were awaiting clearance, resulting in heavy demurrage, etc. but the real ground on which the petitioner challenges the two cancellation orders is that to quote the words of the petition numberreal opportunity at all to show cause against the proposed cancellation was given to the petitioner in total disregard of the provisions of cl. 10 of the Imports Control Order, 1955. We may read here that clause. Applicant or licensee to be heard. No action shall be taken under Clauses 7, 8 or 9 unless the licensee importer has been given a reasonable opportunity of being heard. On behalf of the respondents it has been stated that after the issue of the two licences a letter dated February 16, 1960, was received from the Director, Small Industries Service Institute, Bangalore, to the effect that the petitioner had numbermachinery and equipment to manufacture the relevant articles from the imported raw material. On receipt of this letter a joint investigation was held by the Assistant Director of Industries, Bell,-try, and the Deputy Director, Small, Industries Service Institute, Hubli, and it was found at the time of inspection that the petitioner firm had numbermachinery and equipment at the premises, number did they possess any municipal licence or factory licence. On July 2, 1960, the Chief Controller of Imports Exports wrote to the petitioner giving the above information and asking the petitioner to show cause why further issue of licences should number be suspended under cl. 8 of the Imports Control Order, 1955. We quote below the relevant extracts from this letter Gentleman, I write to refer to your letter dated the 21st May, 1960, and 30th May, 1960, on the above subject, and to say that a joint investigation companyducted by the Deputy Director, Small Industries Service Institute, Hubli, and Assistant Director of Industries, Government of Mysore, Bellary, revealed that at the time of inspection of your firm by them, numbermachinery and equipment existed in your premises and that you had numberMunicipal licences or Factory licence or Factory. In view of this, it is clear that you had obtained the Essentiality Certificate from the Director of Industries fraudulently and by misrepresentation of facts and thereafter obtained the licences in question by producing the said Certificate to the Joint Controller of Imports Exports, Madras. The above action on your part directly companytravenes the Import Trade Control Regulations, within the meaning of para. 6 vii of Chapter V of the Import Trade Control Hand Book of Rules and Procedure, 1956, read with clause 8 b of the Imports Control Order No. 17/55 dated the 7th December, 1955. In view of this, the request made by you in the letters under reference cannot be acceded to. On the other hand, you are called upon, under clause 10 of the said Imports Control Order, 1955, to show cause, within 15 fifteen days from the date of receipt of this letter, as to why further issue of licences to you should number be suspended, under clause 8 of the said Imports Control Order No. 17/55 dated the 7th December, 1955, for companytravening the Import Trade Control Regulations. If your reply does number reach the undersigned within the stipulated period it will be assumed that you have numberdefence to urge in your favour and this office will proceed to adjudicate action against you, without making any further reference to you. The companytention urged on behalf of the respondents is that the letter dated July 2, 1960, stated the necessary ground for the cancellation of the licences to the petitioner, and as the petitioner furnished numbersufficient cause against cancellation, the orders of cancellation were made on August 3, 1960. The argument on behalf of the respondents is that the provisions of cl. 10 of the Imports Control Order, 1955, have been sufficiently companyplied with by reason of what was stated in the letter of July 2, 1960. On a careful companysideration of the facts and circumstances as stated in the affidavits of the parties we have companye to the companyclusion that the petitioner has had numberreasonable opportunity of being heard before the cancellation orders were made on August 3, 1960. The cancellation orders are, therefore, bad and must be quashed. Our reasons are the following. It is number disputed that the numberice dated May 27, 1960, did number state any ground for the proposed cancellation it merely referred to cl. 9 without stating on which of the four grounds mentioned therein it was proposed to take action. Naturally, the petitioner stated in its letter dated May 30, 1960, that without knowing on what ground the proposed cancellation was to be made, the petitioner firm was number in a position to show cause. So far there is numberdispute between the parties, and it is number seriously urged by the respondents that if the numberice stood by itself, it companyld be held to have given the petitioner a reasonable opportunity of being heard within the meaning of cl. 10. The respondents, however, rely on the letter dated July 2, 1960, in support of their companytention that the petitioner has had a reasonable opportunity of showing cause against the cancellation of the two licences. On behalf of the petitioner it has been submitted, number without justification, that the letter dated July 2, 1960, related to a different matter, viz., the suspension of the grant of further licences under cl. 8 for which also a reasonable opportunity to be heard had to be given to the petitioner under cl. 10. In its operative part the letter stated you are called upon to show cause, within 15 days from the date of this letter, as to why further issue of licences to you should number be suspended under cl. 8. It, therefore, related to proposed action under cl. 8. The respondents, have, however, pointed out that the subject matter of the letter as indicated therein referred to the numberices dated May 27, 1960, for cancellation of the licences and it also referred to the earlier, companyrespondence on the same subject, viz., the petitioners letters dated May 21, 1960, and May 30, 1960 therefore, the, companytention is that the petitioner must Know as a result of the reference to the subject-matter and earlier companyrespondence that the grounds given in the letter related to proposed action both under cl. 8 and cl. 9, even though the operative portion related to cl. 8 only. It is true that the companytents of the letter dated July 2, 1960, should be companysidered from the point of view of substance rather than that of technical rules of companystruction of statutory instruments. So companysidered, it is difficult to hold that the letter asked the petitioner to show cause against cancellation of its licences, parti- cularly in the light of the companytents of the subsequent letters of the Department which would be referred to presently. Even if we assume that it did so, what is the position? Within 10 days of the receipt of the letter which was received by the petitioner on July 5, 1960 the petitioners solicitor asked for a companyy of the joint investigation proceeding and the report submitted as a result thereof The letter also asked for other relevant documents in order to enable the petitioner to show cause. It said that the petitioner would show cause as soon as the relevant documents were received and it also said that 6. personal hearing would be asked for and prayed that in the meantime numberfurther action should be taken. No reply was given by the respondents to the aforesaid letter of the petitioners solicitor till August 6, 1960, that is, three days after the cancellation orders had been made. The petitioner was number given a companyy of the report of the investigation till as much later date, number was any in- formation given to the petitioner that the companyy would number be available and the petitioner must show cause at once. As a matter of fact the petitioner was told numberhing in reply to the letter dated July 15, 1960, till three days after the cancellation orders had been made. the cancellation orders blandly stated that numbercause had been shown, when in fact the petitioner had specifically asked for an opportunity to show cause. By their letter dated August 6, 1960, the respondents said that the matter would be companysidered on receipt of a letter of authority from the solicitor in proper form and on stamped paper, without stating that in the meantime cancellation order, had been made. without waiting for any explanation. on August 10, 1960, the solicitor submitted a written authority, saying that it was unnecessary to ,all for it arid that the two licences had been cancelled arbitrarily and without giving the petitioner an opportunity of being heard. The companyrespondence, then companytinued with regard to the proposed action under cl. 8 and the petitioner challenged the companyrectness of the report of the joint investigation proceeding on many essential particulars including the alleged absence of machinery arid equipment. It, is number necessary to enter into details of that companyrespondence, because the proposed action under cl. 8 is number the subject-matter of the present proceeding. It is enough to state that from what happened after the receipt of the letter dated July 2, 1960, it is abundantly clear that the petitioner has bad numberreal opportunity of being heard with regard to the ground alleged in the letter, before the cancellation orders were made on August 3, 1960. There was, in our opinion, a clear violation of the requirement of cl. 10, which embodies the principles of natural justice. The cancellation orders are, therefore, bad and must be quashed. We allow the writ petitions and order accordingly.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 173 to 175 of 1960. Appeals from the judgment and orders dated March 11, 1958, of the Bombay High Court in I. T. R. No. 36 of 1957. ofA. V. ViSwanatha Sastri, S. M. Dubash and G. Gopalakrishnan, for the appellants. N. Rajagopal Sastri and D. Gupta, for respondents. 1961. March 1. The Judgment of the Court was delivered by KAPUR, J.-These are three appeals pursuant to a certificate under a. 66A 2 of the Indian Income-tax Act, 1922 hereinafter called the Act , against the judgment and orders of the High Court of Bombay in Income-tax Reference No. 36 of 1957. The appeals though directed against the same order are three in number because each partner of the firm has brought a separate appeal. The firm was carrying on the business of wine merchants at Bombay and came into existence prior to April 1, 1939. The firm had been assessed to income-tax under the provisions of the Income-tax Act of 1918. The firm which was registered under the provisions of the Income-tax Act of 1922 hereinafter termed the Act was dissolved on March 24, 1945, and from the day following that i.e. March 25, 1945, a Private limited companypany i.e. S. S. Miranda and Co. Ltd. succeeded to the business of the firm. A claim made under s. 25 4 of the Act to the effect that numbertax was payable on the profits of the registered firm for the period between April 1, 1944, to March 24, 1945, was allowed. In respect of the chargeable accounting period April 1, 1944, to March 24, 1945, the registered firm was taxed to excess profits tax under the Excess Profits Tax Act, 1940. It also deposited as required certain sums of money tinder s. 10 of the Finance Act, 1942, read with s. 2 of the Excess Profits Tax Ordinance, 1943. In accordance with those provisions the firm became entitled to repayment of a portion of the excess profits tax amounting to a sum of Rs. 2,35,704. The shares of the three partners who are respective appellants in the three appeals were James Miranda Rs 58,926, Donald Miranda Rs. 58,926 and Mrs. N. Q. Miranda Rs. 1,17,854. It was submitted that the amount refunded, was business profit and therefore exempt company from tax under s. 25 4 of the Act. The Income-tax Officer rejected that submission and the share of each of the appellants was assessed to income-tax and super tax and the balance after deducting the same he repaid to each of the partners but he companyputed the rate applicable to the tax by including the appellants total business income which was exempt under s. 25 4 of the Act. On appeal this assessment was companyfirmed but on further appeal the Income-tax, Appellate Tribunal held that the sum which was refunded was income from business and was therefore, exempt from income-tax under s. 25 4 of the Act. At the instance of the Commissioner of Income-tax, the Tribunal referred the following question of law for the opinion of the High Court Whether the repayment of excess profits tax made by the Central Government in pursuance of Section 10 of the Indian Finance Act, 1942, or Section 2 of the Excess Profits Tax Ordinance, 1943, is profits from business for the purposes of Section 25 4 of the Indian Income-tax Act? The High Court held that the amount so refunded was income from other sources taxable under s. 12 of the Act and the appellants were therefore number entitled to the benefit of s. 25 4 of the Act. In dealing with the nature of the tax the learned Chief Justice said- .lm15 Clearly the view of the Legislature was that this income should be treated as a statutory income with the companysequences that must necessarily follow by reason of its being a statutory income. It was argued on behalf of the appellants that the amount refunded was income, profits and gains from business and fell under s. 10 of the Act and was therefore exempt under s. 25 4 of the Act. For the determination of this question it is necessary to refer to the relevant provisions of the Excess Profits Tax Act, 1940, and the Finance Act, 1946. Section 12 1 of the Excess Profits Tax Act was as follows- .lm15 S12 1 The amount of the excess profits tax payable in respect of a business for any chargeable accounting period diminished by any amount allowable by way of relief under the provisions of section 11 or section 11-A shall, in companyputing for the purposes of income-tax or super tax the profits and gains of that business, be allowed to be deducted as an expense incurred in that period., The relevant part of s. 11 11 of the Indian Finance Act, 1946, provided-- Any sum being excess profits tax repaid in respect of any chargeable accounting period under the provision of section 10 of the Indian Finance Act, 1942, or of section 2 of the Excess Profits Tax Ordinance, 1943, shall be deemed to be income for the purposes of the Indian Income-tax Act 192 2, and shall, numberwithstanding the provisions of section 34 of that Act, be treated as income of the previous year which companystitutes or includes the chargeable accounting period in respect of which the said sum is repayable Provided that any such sum repaid in respect of any profits which are. also assessable to excess profits tax under the law in force in the United Kingdom shall be treated, for the purpose of assessment to income-tax and super tax, as income of the previous year during. which the repayment is made. It is number necessary to quote s. 10 1 of the Finance Act, 1942, or the relevant provisions of the Excess Profits Tax Ordinance, 1943. Section 12 1 of the Excess Profits Tax Act shows that the amount of excess profits tax payable ,in respect of a business for any chargeable accounting period was an allowable expenditure. Under s. ll ll of the Indian Finance Act, 1946, any excess profits refunded under the provisions of Indian Finance Act, 1942, or of s. 2 of the Excess Profits Tax Ordinance, 1943, were deemed to be income and were to be treated as income of the previous year which companystituted or which included the chargeable accounting period in respect of which the said sum was repayable. Thus the sum repaid was to be treated as income for the purposes of the Act for the previous year, numberwithstanding s. 34 of the Act. The preamble of the Excess Profits Tax Act shows that the object of that Act was to impose a tax on profits arising out of certain businesses. Therefore when any portion of the tax companylected on excess profits tax was refunded under the provisions of the Finance Act, 1942 or the Excess Profits Tail, Ordinance,1943, it necessarily had the same quality which it had before the amount which was charged with the payment of tax had under the provisions of those Acts. In a, judgment of this Court, Mc Gregor. and Balfour Ltd. v. Commissioner of Income Tax, West Bengal 1 , the amount received as a refund by the assessee was held to be income for the purpose of the Act and for assessment it was treated as income of the previous year. After reference in that case to R. 4 1 of the Rules applicable to oases I and II of Schedule D. of the English Income Tax Act, 1918 8 and 9 Geo. V, c. 40 , it was observed The object and purpose of the legislation in each case is the same, and though the two provisions are number ipsissima verba, they are substantially in the same words and also in pari materia. There can be numberdoubt that the intention underlying the two provisions is the same and the language is substantially similar. Thus this Court was of the opinion that the intention of the legislature ins. 11 14 , of the Indian Finance Act, 1946, which was the section applicable in that case and of R. 4 1 of the English Income Tax Act was the same. The operative words of s. 11 11 of the Finance Act, 1946, and of s. 11 14 of that Act are almost identical. It would, thus appear that the amount of excess profits tax was an allowable deduction for the purpose of companyputation of the business profits of an, assessee under s. 12 1 of the Excess Profits Tax Act and when it or a portion of it wag refunded it had to be treated as income of the assessee. When it was deposited with the Central Government it was a portion of the profits of the business of the assessee and when it was returned to the assessee it must be restored to its character of being a part of the profits of a business. It cannot be said that its nature changes merely because it is refunded as a companysequence of some provisions in the Finance Act or the Excess Profits Tax Ordinance. Its nature remains the same. The effect of the deposit under the Acts above-mentioned, was as if a slice of the business profit was taken and deposited with the Central Government Treasury and then when it was found that a larger amount had been deposited than was exigible a portion of it was returned. By being put in a Government Treasury it does number cease to be what it was before i.e. profits of a business. As we have said it is significantly clear from the very preamble of the Excess Profits Tax Act i.e., it was a tax imposed on profits arising out of certain businesses. An argument was raised on behalf of the Commissioner that the tax was number paid out of the profits of the business, but in respect of the profits. That is immaterial it was charged, levied and paid on the amount by which the profits during any chargeable accounting period exceeded the standard profits. It would be mere quibbling with words if one were to say that it was number a slice taken out of the profits of a business. In the cage Mc Gregor and Balfour Ltd. v. Commissioner,of Income Tax 1 this Court quoted with approval the observation, of the Master of the Rolls in W. Nesbitt Ltd. v. Mitchell 1 where it was said- But in respect of what is that payment made? It is number a legacy, it is number a sum which has fallen from the skies-it is a sum which is repaid because there was too large a sum paid by the companypany to the revenue authorities over the whole period during which Excess Profits Duty was paid, and that sum, means and is intend to represent a repayment of a sum which was paid by them in respect of the duty charged upon the excess profits of their trading. It companyes back,, therefore, number having lost its character but being still the repayment of a sum too much, it is true-but a sum taken 1 1959 36 I.T.R. 65. 2 1926 11 T.C. 211, 217, 218- out of the profits which were made by the companypany in the companyrse of its trading, profit, which at the time they were made were subject to income-tax and subject to excess profits duty, and that is the character of the repayment that has been made. The amount deposited companyes back without losing its character. No doubt the words in the English Rule are shall be treated as profits for the year in which the payment is received, and in B 11 11 of the Indian Finance Act, 1946, such sum has to be treated as income of the previous year but as pointed out by this Court in Balfour and Mc Gregor case 1 , the intention underlying the two provisions is the same and even the language used in the two provisions is substantially the same. Counsel for the Commissioner drew our attention to Kirkes Trustees v. Commissioners of Inland Revenue 2 , and it was submitted that the Lord Chancellor held at p. 329 that for the amount so received the assessment falls to be made under Case VI of Schedule D. Lord Shaw of Dunfermline at p. 332 said that the repayment was to be treated as trading profits for the year of repayment and therefore assessable as such under Schedule D. He was also of the opinion that the charge was to be one under Case VI. Lord Sumner said that it became a minor matter to decide whether the charge was to be made under Case I or Case VI but this is little companysolation to the respondent the Commissioner of Income- tax because Case VI was also dealing with taxes in respect of annual profits and gains which do number fall in one of the other cases.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 501 of 1957. Appeal by special leave from the judgment and order dated September 13, 1954, of the Bombay High Court in Income-tax Reference No. 13 of 1954. N. Rajagopala Sastri and D. Gupta, for the appellant. V. Viswanatha Sastri and P. L. Vohra, for the respondent. 1961. April 6. The Judgment of S. K. Das, J. L. Kapur, M. Hidayatullah and T. L. Venkatarama Aiyar, JJ. was delivered by Venkatarama Aiyar, J. J. C. Shah, J. delivered a separate Judgment. VENKATARAMA AIYAR, J.-The respondents were the owners of a steamship called El Madina. That was requisitioned by the Government during the last world war, and was lost by enemy action on March 16, 1944. As companypensation therefore, the Government paid the respondents Rs. 20,00,000 on July 17, 1944 Rs. 23,00,000 on December 22, 1944 and Rs. 33,333 on August 10, 1946. The original companyt of the ship was Rs. 24,95,016 and its written-down value at the companymencement of the year of account was Rs. 15,68,484. The difference between the companyt price and the written. down value viz., Rs. 9,26,532 represents the deductions which had been allowed year after year on account of depreciation. As the total companypensation received exceeded the companyt price, the respondents have recouped themselves all the amounts deducted for depreciation. On these facts, the point in companytroversy between the respondents and the Department is whether the amount of Rs. 9,26,532 is liable to be included in the total income of the companypany for the year of assessment which is 1946-47. The provision of law under which the charge is sought to be imposed is s. 10 2 vii of the Indian Income-tax Act, 1922, hereinafter referred to as the Act, and that is, omitting what is number relevant, as follows- Such profits or gains shall be companyputed after making the following allowances, namely- 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 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. It is number disputed by the respondents that the sum of Rs. 9,26,532 would be profits liable to be taxed under this proviso, if it applies. Equally it is number disputed by the appellant that apart from this proviso the amount in question companyld only be regarded as capital receipt, number liable to be taxed. Before the income-tax authorities, the respondents sought to avoid the application of this proviso on the ground that on representations made by them with reference to this very matter, the Board of Revenue had directed that for the purpose of Rule 4, Schedule II, of the Excess Profits Tax Act, 1940, the amount payable as companypensation both the initial advance as well as any further payment that may be made should be taken into account as though it had actually been received within thirty days of the date of the loss of the ship and that in companysequence the amount should be deemed to have been received on April 16, 1944. If that companytention is companyrect, the amounts would have been received number in the year of account which was July 1, 1944, to June 30, 1945, but in the year previous there to, and they companyld number therefore be included in the income of the companypany for the year of assessment. This companytention, however, was rejected by all the income-tax authorities. Dealing with it, the Appellate Tribunal observed in its Order dated July 15, 1953, that the companycession which the Board of Revenue had intended to give was limited to excess profits tax, and companyld number in any event be relied on for the purpose of cutting down the operation of the statutory provision enacted in the relevant proviso ins. 10 2 vii and that the material date was when the companypensation was in fact received-and that was in the year of account and number when it became due and payable, in the year previous thereto. In the result, the Tribunal held that the amount was liable to be included in the total income of the companypany. The respondent then filed an application before the Tribunal, under s. 66 l of the Act, requiring certain questions to be referred to the -court, and one of them was as follows- Whether in view of the fact that the 4th proviso to section 10 2 vii of the Indian Income-tax Act did number apply to the assessment for the Assessment year 1945-46 and under the law in force as applicable to that assessment year the sum of Rs. 9,26,532 which accrued in the previous year relevant to that Assessment year was number taxable at all, and the fact that having regard to the Assessees method of accounting the said sum should number be assessed in any other year, the Assessment in respect of the said sum in the subsequent Assessment year 1946-47 was valid in law. By its order dated February 9, 1954, the Tribunal referred the following question for the opinion of the companyrt- whether the sum of Rs. 9,26,532 was properly included in the assessee companypanys total income companyputed for the assessment year 1946- 47. The reference came up for hearing before a Bench of the Bombay High Court companysisting of Chagla, C.J., and Tendolkar, J., and then the respondents raised the companytention that the proviso to s. 10 2 vii under which the charge was made companyld number be taken into account in making the present assessment, as the same had been introduced by the Income- tax Amendment Act, 1946 VIII of 1946 , which came into force on May 4, 1946, whereas the liability of the companypany to be taxed fell to be determined as on April 1, 1946, when the Finance Act, 1946, came into force. The appellant raised a preliminary objection to this question being raised for the first time before the companyrt, on the ground that it did number arise out of the Order of the Tribunal, having been neither raised before it number dealt with by it, and that further it had number been referred to the companyrt. Overruling this objection, the learned Judges observed that the form in which the question was framed was sufficiently wide to take in the new companytention, that even if the particular aspect of the question had number been argued before the Tribunal, it was implicit in the question as. framed, and that therefore the assessee companyld raise it. On the merits they held that as the proviso was number retrospective in its operation, the amount in question was number liable to be included in the taxable income and answered the question in the negative. It is against this decision that the present appeal by special leave is directed. The main companytention urged before us by the appellant is -that it was number open to the High Court in the present reference to go into the question as to the applicability of the proviso to s. 10 2 vii , as it was neither raised before the Tribunal number companysidered by it, and companyld number therefore be said to be a question arising out of the order of the Tribunal, which alone companyld be referred for the decision of the companyrt under s. 66 l . The companyrt had numberjurisdiction, it is argued, to allow a question to be raised before it, which companyld number be referred to it under the section. The companytention of the respondents is that all questions of law which arise on the findings given by the Tribunal in its order can properly be said to arise out of its order, and that in making a reference under s. 66 l , the Tribunal is number limited to those questions only which were raised before it and dealt with in its order, number even to those questions which were raised in the application for reference under s. 66 l . It is further companytended that in the present case, the question as framed and refer-red was wide enough to take in the companytention as to the applicability of the proviso and that the High Court was in companysequence within its power in entertaining it and deciding the reference on it. We may number refer to the provisions of law bearing on the question. Section 66 l of the Act companyfers on the assessee and the Commissioner a right to apply to the Tribunal in the prescribed form to refer any question of law arising out of its order for the decision of the High Court. If the Tribunal is satisfied that a question of law arises, then it has to draw up a statement of the case, and refer it to the decision of the High Court. But if it companysiders that numberquestion of law arises on its order, and dismisses the application under s. 66 l , then the assessee or the Commissioner, as the case may be, has a right to move the companyrt under s. 66 2 , and if the companyrt is number satisfied about the companyrectness of the decision of the Tribunal, it can require it to state the case and refer it to its decision. Under s. 66 4 the High Court can, for the purpose of disposing of the reference which companyes to it under s. 66 l and 2 , call for additional statement from the Tribunal. Under s. 66 5 the High Court is to decide the question of law raised in the case and send a companyy of its judgment to the Tribunal and the latter is to pass appropriate orders for giving effect to it. Section 59 of the Act companyfers on the Central Board of Revenue power to make rules for carrying out the purpose of the Act and under sub-section 5 , the rules made thereunder shall on publication in the official gazette have effect as if enacted under the Act. Rule 22A framed under this section provides that An application under sub- ,section 1 of section 66 requiring the Tribunal to refer to the High Court any question Of law shall be in the following form. The form is R T of which paragraphs 3 to 5 are relevant for the present discussion, and they are as follows- 3. that the facts which are admitted and or found by the Tribunal and which are necessary for drawing up a statement of the case, are stated in the enclosure for ready reference. 4that the following questions of law arise out of the order of the Tribunal- 3 5that the applicant, therefore, requires under sub-section 1 of section 66 of the aforesaid Act that a statement of the case be drawn up and the questions of law numbered out of the questions of law referred to in paragraph 4 above be referred to the High Court. On these provisions, the question that arises for decision is whether in a reference under s. 66, the High Court can companysider a question which had number been raised before the Tribunal and or dealt with by it in its order even though it be one of law. On the answer to be given to it there has been a difference of opinion among the High Courts and that turns on the meaning to be given to the words, any question of law arising out of the order of the Tribunal. There is numberpronouncement of this Court which companycludes this ques- tion, though there are decisions which afford guidance in the determination thereof. These decisions will number be companysidered. In Commissioner of Income-tax, Madras v. Mtt.Ar. S.Ar. Arunachalam Chettiar 1 , an order of assessment made by the income-tax officer was companyrected by the Appellate Tribunal number in an appeal under s. 33 4 but in a miscellaneous application presented to it under 1 1953 S.C.R. 463 471. s. 35. The Commissioner being dissatisfied with the order applied for a reference under s. 66 l . The Tribunal -was of the opinion that the order in question companyld be made in the exercise of its inherent jurisdiction and referred the question of its legality to the companyrt under s. 66 l . The Madras High Court declined to answer it on the ground that as the order was number one passed in an appeal, the reference under s. 66 l was incompetent, as under that provision the power of the Tribunal to refer was limited to questions of law arising out of an order passed in an appeal. In affirm- ing this decision, this Court observed The jurisdiction of the Tribunal and of the High Court is companyditional on there being an order by the Appellate Tribunal which may be said to be one under section 33 4 and a question of law arising out of such an order. This is an authority for the position that the jurisdiction of the Tribunal to make, and of the High Court to hear, a reference must be strictly sought within the four companyners of s. 66. In The Commissioner of Income-tax, Bombay South v. Messrs. Ogale, Glass Works Ltd. 1 , the question referred by the Tribunal under s. 66 l was whether certain amounts received by the assessee from the Government by cheques drawn on the Reserve Batik at Bombay were income received in British India within s. 4 l a of the Act. The High Court had held that. as the cheques were received in the State of Aundh, in unconditional discharge of the claim, the receipt was number in British India. On appeal to this Court, it was companytended that as the cheques were posted in British India, the income must be held to have been received in British India. An objection was put forward to this companytention being raised, on the ground that it was number argued before the Tribunal or decided by it and that therefore it did number arise out of its order as required by s. 66 l . But this Court hold that as the question as framed and referred was of sufficient amplitude to companyer the new point urged, and as numbercontention was raised that the question had number 1 1955 1 S.C.R. 185, 197. been properly referred under s. 66 l , it companyld be decided under s. 66 5 , and that in that view, it was number necessary to express any opinion on the larger question as to the scope, meaning and import of the words any question of law arising. out of the Tribunals order on the interpretation of which there exists a wide divergence of judicial opinion. There was accordingly numberdecision on the point number under companysideration. In New Jehangir Vakil Mills Ltd. v. Commissioner of Income- tax 1 the point under discussion wag whether the High Court was companypetent under s. 66 4 to call for additional statement with reference to a question which had number been referred to it under s. 66 l or s. 66 2 . This Court held that the scope of a reference under s. 66 2 was companyxtensive with that of one under s. 66 l of the Act, that therefore the companyrt had numberpower under s. 66 2 to travel beyond the ambit of s. 66 l , that under both these provisions it is only a question of law arising out of the order that companyld be referred, that the object of s. 66 4 was to enable the companyrt to obtain additional statements only for the purpose of deciding questions referred under s. 66 l and 2 and that accordingly numberinvestigation companyld be ordered in respect of new questions which were number and companyld number be the subject-matter of a reference under s. 66 l and 2 . Here again there was numberdecision on the meaning of the words, any question of law arising out of the order of the Tribunal. In Kusumben D. Mahadevia v. Commissioner of Income-tax 2 , the question actually referred under s. 66 l to the companyrt was whether a sum of Rs. 47,120 received by the assessee had accrued to her in the former State of Baroda or whether it had accrued or should be deemed to have accrued to her in British India. On this reference the High Court resettled the question so as to raise the companytention as to whether the assessee was entitled to any companycession under the Merged States Taxation Concessions Order, 1949, as regards the income of Rs. 47,120, and holding that she was number, answered the reference against her 1 1960 1 S.C.R. 249. 2 196O 3 S.C.R. 417. 422. without deciding the question as to where the income accrued. Against this Judgment, the assessee appealed to this Court and companytended that the High Court was in error in number deciding the question which was actually referred. This Court accepted this companytention and remanded the case to the High Court for hearing on that point. So far this decision does number bear on the present companytroversy. But a further point was discussed and companysidered by this Court, and that was that it was number open to the companyrt to raise the question about the applicability of the Merged States Taxation Concessions Order, 1949, as that was number a question which was raised before or companysidered by the Tribunal or referred under s. 66 l . In agreeing with this companytention, this Court observed- Section 66 of the Income-tax Act which companyfers jurisdiction upon the High Court only permits a reference of a question of law arising out of the order of the Tribunal. It does number companyfer jurisdiction on the High Court to decide a different question of law number arising out of such order. It is possible that the same question of law may involve different approaches for its solution, and the High Court may amplify the question to take in all the approaches. But the question must still be one which was before the Tribunal and was decided by it. These observations bear on the question number under companysideration but the actual decision was one remanding the case with a direction to the High Court to decide the question that was referred to it. In Zoraster Co. v. Commissioner of Income-tax 1 , the assessees were manufacturers of certain kinds of goods in Jaipur. The Government of India purchased these articles and paid the price by cheques on the Bombay branch of the Reserve Bank of India. The Tribunal held that the profits of these sales had been received in British India, but on the application of the assessees referred that question to the companyrt. The High Court remanded the case to the Tribunal under s. 66 4 for a supplemental statement observing that 1 1961 1 S.C. It. 210. it would be necessary for the Appellate Tribunal to find, inter alia, whether the cheques were sent to the assessee firm by post or by hand and what directions., if any, had the assessee firm given to the Department in the matter. The companyrectness of this order was challenged by the assessee on the ground that the companyrt had numberpower to call for a fresh statement for the investigation of a new point and reliance was placed on the decision in New Jehangir Vakil Mills Ltd. v. Commissioner of Income-tax 1 . This Court held, following that decision, that the jurisdiction to call for supplemental statement was companyfined a to the facts on record and or found by the Tribunal, and b to the question which would arise from the Tribunals order and that further it companyld be exercised with reference to a new question, if it was an integral or even incidental part of the question which had been referred. This decision also proceeds on the view that a question which is unconnected with the question already referred cannot be agitated for the first time in the reference. There being thus numberdirect decision of this Court on the precise meaning of the words any question of law arising out of the order of the Tribunal, we must examine the decision of the High Courts on the question, and as already stated they are in a state of companyflict. In A. Abboy Chetty and Co. v. Commissioner of Income-tax, Madras 2 , the application of the assessee under s. 66 l required the Tribunal to refer a question of res judicata to the companyrt. The Tribunal declined to do so on the ground that question had number been argued before it. The assessee then moved the companyrt under s. 66 2 for an order requiring the Tribunal to refer that question. Dismissing that application, Patanjali Sastri, J., as be then was, observed as follows- Mr. Radhakrishnayya for the petitioner companytends that a question, though number raised before the Appellate Tribunal, can well be said to arise out of its order, if, on the facts of the case appearing from the order, the question fairly arises. I am unable 1 1960 1 S.C.R. 249. 2 1947 15 I.T.R. 442,444. to agree with that view. I am of opinion that a question of law can be said to arise out of an order of the Appellate Tribunal only if such order discloses that the question was raised before the Tribunal. Adverting to the companytention that the Privy Council had in M. Moola Sons Limited v. Burjorjee 1 allowed a question of law arising on the facts found, to be raised for the first time before it, the learned Judge observed The case furnishes numberuseful analogy as the scope of the remedy under s. 66 of the Indian Income-tax Act has to be determined with reference to the language of the statute. This decision was followed by the Madras High Court in Commissioner of Income-tax v. Modern Theatres Ltd., 2 and in The Trustees, Nagore Durgah v. Commissioner of Incometax 3 . In G. M. Chenna Basappa v. Commissioner of Income-tax 4 , the Andhra High Court followed the decision in A. Abboy Chetty and Co. v. Commissioner of Income-tax, Madras 5 and observed that a question number raised before the Tribunal cannot be said to arise out of its order even if it companyld be sustained on the facts in the statement of the case by the Tribunal, and that further the order of the Tribunal should disclose that the point of law was raised before it. The same view was adopted by the Patna High Court in Maharaj Kumar Kamal Singh v. Commissioner of Income- ax 6 . There, discussing the question with reference to the language of s. 66 1 and 2 and Rule 22A, the companyrt observed as follows- The provisions of Section 66 1 and Section 66 2 do number companyfer upon the High Court a general jurisdiction to companyrect or to decide a question of law that may possibly arise out of the income-tax assessment.The section, on the companytrary, companyfers a special and limited jurisdiction upon the High Court to decide any specific question of law which 1 1932 I.L.R. 10 Rang. 242. 3 1954 26 I.T.R. 805. 5 1947 15 I.T.R. 442, 444. 2 1951 20 I.T.R. 588. 4 1958 34 I.T.R. 576. 6 1954 26 I.T.R. 79, 86. has been raised between the assessee and the Department before the Income-tax Tribunal and upon which question the parties are at issue. It was accordingly held that only a question of law which had been actually raised before the Tribunal or actually dealt with by it companyld be referred under s. 66 1 . This is also the view companysistently held by the Calcutta High Court, III Commissioner of Excess Profits Tax v. Jeewanlal Ltd. 1 , it was held, agreeing with the decision in A. Abboy Chetty and CO. V. Commissioner of Income-tax, Madras 2 , that a question of law number raised before the Tribunal companyld number be said to arise out of its order even if on the facts of the case appearing from the order the question fairly arises. In Chainrup Sampatram v. Commissioner of Income,-tax 3 , the assessee had applied under s. 66 1 of the Act to refer the question whether a sum of Rs. 2,20,887 was on a true companystruction of s. 14 2 c of the Act assessable to tax. The Tribunal dismissed the application on the ground that the question sought to be raised had number been mentioned at the hearing of the appeal and had number been dealt with by the Tribunal and was therefore number one which arose out of its order. The question having been brought up before the companyrt under s. 66 2 , Chakravartti, J. held that under s. 66 1 it was only a question that arose out of the Tribunals order that companyld be referred, and that that must be some question which was actually raised before the Tribunal and dealt with by it and that under s. 66 2 the words, numberquestion of law arises companyld only mean that the question of which reference had been asked for by the applicant did number arise,, and that the High Court companyld number require the Tribunal to refer some question which was number proposed before it. The learned Judge then went on to observe The Indian Income-tax Act has number charged the High Court with the duty of setting right in all respects ill assessments that might companye to its numberice its jurisdiction is number either appellate or revisional 1 1951 20 I.T R. 39. 2 1947 15 I.T.R. 443,444. 3 1951 20 I.T. R. 484, 495. number has it a general power of superintendence under Section 66. Its sole duty is to serve as the appointed machinery for resolving any companyflict which may arise between an assessee or the Commissioner on the one hand and the Tribunal on the other regarding some specific question or questions of law. If, on an application under section 66 2 , the High Court finds that the question which the applicant required the Tribunal to refer was number a question that arose out of the Tribunals appellate order, it ought, in my view, to refuse to require the Tribunal to refer any such question. The same view was taken in Allahabad Bank Ltd. v. Commissioner of Income-tax 1 and in Commissioner of Income-tax v. State Bank of India 2 . In Mash Trading Co. v. Commissioner of Income-tax 3 , a Full Bench of the Punjab High Court had to companysider the true character of the jurisdiction under s. 66. Therein Kapur, J., as he then was, held, on an examination of the section and on a review of the authorities that under s. 66 1 it is only questions which had been raised before and dealt with by the Tribunal that companyld be referred to the High, Court, that the power of the High Court under s. 66 2 to direct a reference is limited to questions which companyld be referred under s. 66 1 and which the applicant required it to refer, that the Tribunal has numberpower to raise a question suo motu, and likewise the High Court cannot raise any question which had number been referred to it either under s. 66 1 or s. 66 2 , but when once a question is properly raised and referred to the High Court, the High Court is bound to answer that question. In this view, it was held that a reference to the High Court on a question which was number raised before or companysidered by the Tribunal was number companype- tent. Falshaw, J., while generally agreeing with this view companysidered that there might be cases in which strict adherence to this view might work injustice, as for example when a point raised before the Tribunal had number been dealt with by it owing to mistake or 1 1952 21 I.T.R. 169. 2 1957 31 I.T.R 545. 3 1956 30 I.T.B. 388. inadvertence, or when its jurisdiction itself was ques- tioned. The learned Judge added that in the former case the point might be deemed to have been decided against the assessee in the order, thereby attracting s. 66. It should be numbered that all the Judges agreed in holding that the reference in question was incompetent as the point had number been raised before the Tribunal. We must number companysider the decisions which have taken a somewhat different view. Vadilal Lallubhai Mehta v. Commissioner of Income-tax 1 was a case under s. 66 of the Act, as it stood prior to the amendment of 1939 and what was held there was that even though the assessee had number stated in his application for reference the questions which really arose out of the order, it was for the Commissioner to formulate the companyrect questions and refer them to the companyrt, and where he had failed to do so, the companyrt companyld direct him to do so. This is number a decision on the question as to whether questions number raised before or decided by the Commissioner companyld be held to be questions arising out of his order. In New Piece goods Bazar Co. Ltd. V. Commissioner of Income-tax 2 , the question that was referred under s. 66 1 was whether taxes paid on urban immovable property by the assessee were an allowable deduction under s. 9 1 iv and s. 9 1 v of the Indian Income-tax Act. An objection was raised before the companyrt that the question as to the application of s. 9 1 iv had number been argued before the Tribunal and therefore it companyld number be referred. Repelling this companytention, Kania, J., as he then was, observed that the specific question had been put forward as a ground of appeal, and that was quoted by the Tribunal in its judgment but number dealt with by it, and that in the circumstances the proper order to pass was to refer the case back to the Tribunal and invite it to express its opinion on this aspect of the companytention and raise a proper question of law on that point also. This judgment. again proceeds on the view that it is only a question raised before and dealt with by the Tribunal 1 1935 3 I.T.R. 152. 2 1947 15 I.T.R. 319. that-could be referred under s. 66 1 , and that is clear from the observations of the learned Judge that the decisions of the Privy Council in Commissioner of Income-tax Kameshwar Singh 1 and National Mutual Life Association Commissioner of Income-tax 2 , deprecating the practice of raising new questions in the, stage of argument on the reference in the High Court did number stand in the way of the case being referred back to the Tribunal. In Madanlal Dharnidharka V. Commissioner of Income-tax 3 , the Tribunal referred under s. 66 1 the following question for the decision of the companyrt Whether the remittance of Rs. 2,01,000 out of profits, made by the assessee in the years preceding the Maru year 1999-2000 as a numberresident, companyld be included tinder section 4 1 b iii of the Indian Income-tax Act in his total income of the year of account in which he was a resident in British India? This question had number been argued before the Tribunal, but the Tribunal itself referred it because it companysidered that it arose out of its order. The reference was heard by Chagla, C. J. and Tendolkar, J. Before them an objection was raised that the Tribunal companyld number refer this question under s. 66 1 as the same had number been raised before it. Chagla, J., observed In my opinion it is necessary clearly to re- state the jurisdiction of this companyrt. This is number a Court of appeal. This companyrt merely exercises an advisory jurisdiction. Its judgments are in the nature of advice given on the questions submitted to it by the Tribunal. Its advice must be companyfined to questions referred by the Tribunal to this companyrt and those questions must be questions of law which must arise out of the order made by the Tribunal. Now, looking at the plain language of the section apart from any authority, I should have stated that a question of law arose out of the order of the Tribunal if such a question was apparent on the order itself or it companyld be raised on the facts found by the 1 1933 1 I.T. R. 94. 2 1936 4 I.T.R. 44- 3 1948 16 I.T.R. 227, 233, 234. Tribunal and which were stated in the order. I see numberreason to companyfine the jurisdiction of this companyrt to such questions of law as have been argued before the Tribunal or are dealt with by the Tribunal. The section does number say so and there is numberreason why we should companystrue the expression arising out of such order in a manner unwarranted by the ordinary grammatical companystruction of that expression. This companyrt has numberjurisdiction to decide ques- tions which have number been referred by the Tribunal. If the Tribunal does number refer a question of law under section 66 1 which arises out of the order then the only jurisdiction of the companyrt is to require the Tribunal to refer the same Under section 66 2 . It is true that the companyrt has jurisdiction to resettle questions of law so as to bring out the real issue between the parties but it is number open to the companyrt to raise new questions which have number been referred to it by the Tribunal. Expressing next his disagreement with the decision of the Madras High Court in A. Abboy Chetty and Co. v. Commissioner of Income-tax, Madras 1 , the learned Judge observed The decision of the Madras High Court would also result in this extraordinary situation. An assessee may raise a question and argue it before the Tribunal, but if the Tribunal thought fit to ignore that argument and number to refer to that point of law in its order, then the companyrt would have numberjurisdiction to call upon the Tribunal to refer that question of law to the High Court. It is true that the Income-tax Act is a very technical statute, but I see numberreason why when the plain grammatical companystruction of the section does number make it necessary to companye to that companyclusion it is necessary to do so and arrive at such an anomalous result. In Mohanlal Hiralal v. Commissioner of Income-tax 2 a Bench of the Nagpur High Court, hearing a reference under s. 66 1 , held that on the statement of the case by the Tribunal, the question of law as framed was number companyrect. Then observing that in view 1 1947 15 I.T.R. 442. 2 1952 22 I.T.R. 448, 452-453. of the decision of the Privy Council in Commissioner of Income-tax v. Kameshwar Singh 1 , it companyld number itself resettle it, called for a fresh statement from the Tribunal under s. 66 4 . Thus far the judgment is on the same lines as New Piecegoods Bazar Co. Ltd. v. Commissioner of Income- tax 2 and an earlier decision of the Nagpur High Court in Beohar Singh v. Commissioner of Income-tax 3 . When the case came back on the further statement under s. 66 4 , criticising certain remarks therein, that the companyrt had numberpower to direct the Tribunal to refer a question number argued before it, the Court observed that they were made under a misconception, and quoted the observations of Chagla C.J., in Madanlal Dharnidharka v. Commissioner of Income-tax 4 extracted above, with approval. This can hardly be said to be a decision on the present point. It will be seen from the foregoing review of the decisions that all the High Courts are agreed that s. 66 creates a special jurisdiction, that the power of the Tribunal to make a reference and the right of the litigant to require it, must be sought within the four companyners of s. 66 1 , that the jurisdiction of the High Court to hear references is limited to questions which are properly referred to it under s. 66 1 , and that such jurisdiction is purely advisory and extends only to deciding questions referred to it. The narrow ground over which the High Courts differ is as regards the question whether it is companypetent to the Tribunal to refer, or the High Court to decide, a question of law which was number either raised before the Tribunal or decided by it, where it arises on the facts found by it. On this question, two divergent views have been expressed. One is that the words, any question of law arising out of the order of the Tribunal signify that the question must have been raised before the Tribunal and companysidered by it, and the other is that all questions of law arising out of the facts found would be questions of law arising out of the order of the Tribunal. The 1latter is the view 1 1933 1 I.T.R. 94 3 1948 16 I.T.R. 433. 2 1947 15 I.T. R 319. 4 1948 16 I.T.R. 227, 233. 234. taken by the Bombay High Court in Madanlal Dharnidharka v. Commissioner of Income-tax 1 , and approved by the Nagpur High Court in Mohanlal Hiralal v. Commissioner of Income-tax 2 . The former is the view held by all the other High Courts. Now the argument in support of the latter view is that on the plain grammatical companystruction of s. 66 1 , any question of law that companyld be raised on the findings of fact given by the Tribunal, would be questions that arise out of the order, and that, to hold that they meant that the question must have been raised before the Tribunal and decided by it, would be to read into the section words which are number there. In support of this companytention Shri Viswanatha Sastri, learned Counsel for the respondents, argued that it was a fundamental principle of jurisprudence that the duty of the litigants was only to state the facts and that it was for the companyrt to apply the appropriate law to the facts found, arid he relied on the observations of Atkin, L. J., in Attorney-General v. Avelino Aramavo Co. 1 , that the companyrt was number limited to particular questions raised by the Commissioners in the form of questions on the case, and that if the point of law or the erroneous nature of the determination of the point of law was apparent on the case as stated and there were numberfurther facts to be found, the companyrt companyld give effect to it. , He also maintained that the position under the Indian law was the same as under the British statute, because under s. 66 1 of the Act, the Tribunal has to refer number only questions of law arising out of its order, but also a statement of the case, that under s. 66 2 the companyrt can likewise require the Tribunal to state the case and refer it and that under s. 66 5 the companyrt has to decide the question of law raised by the case. We are unable to agree with this companytention. Under the British statute when once a decision is given by the Commissioners, it is sufficient that the assessee should express his dissatisfaction with it and ask that the matter be referred to the decision of the High Court. 1 194816 I.T.R. 227. 2 1952 22 I.T.R. 448. 3 1925 1 K.B. 86. It is then for the Commissioners to draw up a statement of the case and refer it for the decision of the companyrt. The British statute does number cast, as does s. 66 1 of the Act, a duty on the assessee to put in an application stating the questions of law which he desires the Commissioners to refer to the companyrt and requiring them to refer the questions which arise out of that order. In Commissioner of Income-tax, Madras v. Mtt. Ar. S. Ar. Arunachalam Chettiar 1 , this Court has decided that the requirements of s. 66 1 are matters affecting the jurisdiction to make a reference under that section. The attempt of the respondents to equate the position under s. 66 1 of the Act with that under the British statute on the ground that the Tribunal has to draw up a statement of the case and refer it, and that the companyrt is to decide questions of law raised by it, must break down when the real purpose of a statement in a reference is kept in view. A statement of case is in the nature of a pleading, where in all the facts found are set out. There is numberhing in it which calls for a decision by the companyrt. It is the question of law referred under s. 66 1 that calls for decision under s. 66 5 and it is that that companystitutes the pivotal point on which the jurisdiction of the companyrt hinges. The statement of the case is material only as furnishing the facts for the purpose of enabling the companyrt to decide the question referred. It has been repeatedly laid down by the Privy Council that the Indian Act is number in pari materia with the British statute and that it will number be safe to companystrue it in the light of English decisions, vide Commissioner of Income-tax v. Shaw Wallace Co. 2 . In view of the difference between s. 66 1 and the companyresponding provision in the British statute, we companysider that numberuseful purpose will be served by referring to the English decisions for interpreting s. 66. But the main companytention still remains that the language of s. 66 1 is wide enough to admit of questions of law which arise on the facts found by the Tribunal and that there is numberjustification for cutting 1 1953 S.C.R. 463, 471. 2 1932 L.R. 59 I. A. 206.102 down its amplitude by importing in effect words into it which are number there. There is companysiderable force in this argument. But then there are certain features, which distinguish the jurisdiction under s. 66, and they have to be taken into companysideration in ascertaining the true import of the words, any question of law arising out of such order. The jurisdiction of a companyrt in a reference under s. 66 is a special one, different from its ordinary jurisdiction as a civil companyrt. The High Court, hearing a reference under that section, does number exercise any appellate or revisional or supervisory jurisdiction over the Tribunal. It acts purely in an advisory capacity, on a reference which properly companyes before it under s. 66 1 and 2 . It gives the Tribunals advice, but ultimately it is for them to give effect to that advice. It is of the essence of such a jurisdiction that the companyrt can decide only questions which are referred to it and number any other question. That has been decided by this Court in New Jehangir Vakil Mills Ltd. v. Commissioner of Income-tax 2 Kusumben D. Mahadevia v. Commissioner of Income-tax 2 and Zoraster Co. v. Commissioner of Income-tax 3 . If the true scope of the jurisdiction of the High Court is to give advice when it is sought by the Tribunal, it stands to reason that the Tribunal should have had an occasion to companysider the question so that it may decide whether it should refer it for the decision of the companyrt. How can it be said that the Tribunal should seek for advice on a question which it was number called upon to companysider and in respect of which it had numberopportunity of deciding whether the decision of the companyrt should be sought? It was argued for the respondents, that, in view of the fact that the companyrt companyld companypel the Tribunal to refer a question of law under s. 66 2 for its decision, number much significance companyld be attached to the advisory character of its jurisdiction. It is number companyceivable, it was said, that any authority should have a right to companypel another authority to take its advice. We see numberforce in this companytention. Section 66 2 1 1960 1 S.C.R. 249. 2 1960 3 S.C.R. 417. 3 1961 1 S.C.R. 210. companyfers on the companyrt a power to direct a reference only where the Tribunal was under a duty to refer under s. 66 1 , and it is, therefore, subject to the same limitations as s. 66 1 . That has been held by this companyrt in New Jehangir Vakil Mills Ltd. v. Commissioner of Income-tax 1 and in Zoraster Co. v. Commissioner of Income-tax 2 . Moreover, the power of the companyrt to issue direction to the Tribunal under s. 66 2 is, as has often been pointed out, in the nature of a mandamus and it is well settled that numbermandamus will be issued unless the applicant had made a distinct demand on the appropriate authorities for the very reliefs which he seeks to enforce by mandamus and that had been refused. Thus, the power of the companyrt to direct a reference under s. 66 2 is subject to two limitations the question must be one which the Tribunal was bound to refer under s. 66 1 and the applicant must have required the Tribunal to refer it. R T is the form prescribed under Rule 22A for an application under s. 66 1 , and that shows that the applicant must set out the questions which he desires the Tribunal to refer and that further, those questions must arise out of the order of the Tribunal. It is, therefore, clear that under s. 66 2 , the companyrt cannot direct the Tribunal to refer a question unless it is one which arises out of the order of the Tribunal and was specified by the applicant in his application under s. 66 1 . Now,, if we are to hold that the companyrt can allow a new question to be raised on the reference, that would in effect give the applicant a right which is denied to him under s. 66 1 and 2 , and enlarge the jurisdiction of the companyrt so as to assimilate it to that of an ordinary civil companyrt of appeal. It is again to be numbered that, whereas s. 6P 1 , as it stood prior to the amendment of 1939, companyferred on the Commissioner a power to refer a question of law to the companyrt suo motu, that power has been taken away under the present section and it has accordingly been held that under s. 66 1 , as it number stands, there is numberpower in the Tribunal to refer a question of law suo motu for the decision of the companyrt. If, as companytended 1 1960 1 S.C.R. 249. 2 1961 1 S.C.R. 210. for by the respondents, the companyrt is to be held to have power to entertain in a reference, any question of law, which arises on the facts found by the Tribunal, its jurisdiction under s. 66 5 must be held to be wider than under s. 66 1 and 2 . The companyrect view to take, in our opinion, is that the right of the litigant to ask for a reference, the power of the Tribunal to make one, and the jurisdiction of the companyrt to decide it are all companyextensive and, therefore, a question of law which the applicant cannot require the Tribunal to refer and one which the Tribunal is number companypetent to refer to the companyrt, cannot be entertained by the companyrt under s. 66 5 . In view of the above companysiderations, we are unable to companystrue the words, any question of law arising out of such order, as meaning any question of law arising out of the findings in the order of the Tribunal. One of the reasons given by Chagla, C. J., in Madanlal Dharnidharka v. Commissioner of Income-tax 1 for differing from the decision in A. Abboy Chetty and Go. v. Commissioner of Income-tax, Madras 2 that it is only a question which was raised before the Tribunal that companyld be said to arise out of its order was that that view must result in great injustice in a case in which the applicant had raised a question before the Tribunal but it had failed to deal with it owing to mistake or inadvertence. In such a, case, it was said, the applicant would be deprived, for numberfault of his, of a valuable right which the legislature had intended to give him. But we see numberdifficulty in holding that in those cases the Tribunal must be deemed to have decided the question against the appellant, as Falshaw, J. was disposed to do in Mash Trading Co. v. Commissioner of Income-tax 3 . This is only an application of the principle well-known to law that a relief asked for and number granted should be deemed to have been refused. It is on this footing that Kania, J. held in New Piecegoods Bazar Co. Ltd. v. Commissioner of Income-tax 4 that, in the circumstances stated above, the companyrt companyld call upon 1 1948 16 I.T.R. 227, 233, 234. 3 1956 30 I.T.R. 388. 2 1947 15 I.T.R. 442. 4 1947 15 I.T.R. 319. the Tribunal to state a supplemental case after giving its own decision on the companytention. That was also the procedure adopted in Mohanlal Hiralal v. Commissioner of Income- tax 1 . Such cases must be exceptional and cannot be founded on for putting a companystruction different from what the language of s. 66 1 would otherwise warrant. There was also some argument as to the position under s. 66 1 when the Tribunal decides an appeal on a question of law number raised before it. That would undoubtedly be a question arising out of the order, and number the less so because it Was number argued before it, and this companyclusion does number militate against the companystruction which we have put on the language of s. 66 1 . The result of the above discussion may thus be summed up When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order. When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is therefore one arising out of its order. When a question is number raised before the Tribunal but the Tribunal deals with it, that will also be a question arising out of its order. When a question of law is neither raised before the Tribunal number companysidered by it., it will number be, a question arising out of its order numberwithstanding that it may arise on the findings given by it. Stating the position companypendiously, it is only a question that has been raised before or decided by the Tribunal that companyld be held to arise out of its order. In this view, we have next to companysider whether the question which was raised before the High Court was one which arose out of the order of the Tribunal, as interpreted above. Now the only question on which the parties were at issue before the income-tax authorities was whether the sum of Rs. 9,26,532 was assessable to tax as income received during the year of 1 1952 22 I.T.R. 448. account 1945-46. That having been decided against the respondents, the Tribunal referred on their application under s. 66 1 , the question, whether the sum of Rs. 9,26,532 was properly included in the assessee companypanys total income for the assessment year 194647, and that was the very question which was argued and decided by the High Court. Thus it cannot be said that the respondents had raised any new question before the companyrt. But the appellant companytends that while before the income-tax authorities the respondents disputed their liability on the ground that the amount in question had been received in the year previous to the year of account, the companytention urged by them before the companyrt was that even on the footing that the income had been received in the year of account, the proviso to s. 10 2 vii had numberapplication, and that it was a new question which they were number entitled to raise. We do number agree with this companytention. Section 66 1 speaks of a question of law that arises out of the order of the Tribunal. Now a question of law might be a simple one, having its impact at one point, or it may be a companyplex one, trenching over an area with approaches leading to different points therein. Such a question might involve more than one aspect, requiring to be tackled from different standpoints. All that s. 66 1 requires is that the question of law which is referred to the companyrt for decision and which the companyrt is to decide must be the question which was in issue before the Tribunal. Where the question itself was under issue, there is numberfurther limitation imposed by the section that the reference should be limited to those aspects of the question which had been argued before the Tribunal. It will be an over-refinement of the position to hold that each aspect of a question is itself a distinct question for the purpose of s. 66 1 of the Act. That was the view taken by this Court in The Commissioner of Income-tax, Bombay v. Messrs. Ogale Glass Works Ltd. 1 and in Zoraster Co. v. Commissioner of Income-tax 2 , and we agree with it. As the question on which the parties were at issue, which was referred 1 1955 1 S.C.R. 185. 2 1961 1 S.C.R. 210. to the companyrt under s. 66 1 , and decided by it under s.66 5 is whether the sum of Rs. 9,26,532 is liable to be included in the taxable income of the respondents, the ground on which the respondents companytested their liability before the High Court was one which was within the scope of the question, and the High Court rightly entertained it. It is argued for the appellant that this view would have the effect of doing away with limitations which the legislature has advisedly imposed on the right of a litigant to require references under s. 66 1 , as the question might be framed in such general manner as to admit of new questions number argued being raised. It is numberdoubt true that sometimes the questions are framed in such general terms that, companystrued literally, they might take in questions which were never in issue. In such cases, the true scope of the reference will have to be ascertained and limited by what appears on the statement of the case. In this companynection, it is necessary to emphasize that, in framing questions, the Tribunal should be precise and indicate the grounds on which the questions of law are raised. Where, however, the question is sufficiently specific, we are unable to see any ground for holding that only those companytentions can be argued in support of it which had been raised before the Tribunal. In our opinion, it is companypetent to the companyrt in such a case to allow a new companytention to be advanced, provided it is within the framework of the question as referred. In the present case, the question actually referred was whether the assessment in respect of Rs. 9,26,532 was proper. Though the point argued before the Income-tax authorities was that the income was received number in the year of account but in the previous year, the question as framed is sufficient to companyer the question which was actually argued before the companyrt namely that in fact the assessment is number proper by reason of the proviso being inapplicable. The new companytention does number involve re-framing of the issues. On the very terms of the question as referred which are specific, the question is permissible and was open to the respondents. Indeed the very order of reference shows that the Tribunal was companyscious that this point also might bear on the companytroversy so that it cannot be said to be foreign to the scope of the question as framed. In the result, we are of opinion that the question of the applicability of the proviso is really implicit, as was held by Chagla, C.J., in the question which was referred, and, therefore, it was one which the companyrt had to answer. On the merits, the appellant had very little to say. He sought to companytend that the proviso though it came into force on May 5, 1946, was really intended to operate from April 1, 1946, and he referred us to certain other enactments as supporting that inference. But we are companystruing the proviso. In terms, it is number retrospective, and we cannot import into its companystruction matters which are ad extra legis, and thereby alter its true effect. Then it was argued that the amount of Rs. 9,26,532 having been allowed as deduction in the previous years, may number be treated as profits received during the year of assessment, and thereby subjected to tax. But this is a point entirely new and number companyered by the question, and on the view taken by us as to the scope of a reference under s. 66 1 , it must be disallowed. In the result, this appeal is dismissed with companyts. SHAH, J.-The Income-tax Appellate Tribunal, Bombay Bench A referred the following question to the High Court of Judicature at Bombay under s. 66 1 of the Indian Income-tax Act Whether the sum of Rs. 9,26,532 was properly included in the assessee companypanys total income companyputed for the assessment year 1946- 47. The question companyprehends two companyponent parts, 1 whether the amount of Rs. 9,26,532 was properly included in the assessees income, and 2 whether the amount was properly included in the taxable income of the assessees for the assessment year 1946-47. The amount sought to be taxed was- part of companypensation received by the assessees from the Government of India for loss in 1944 by enemy action of their ship El Madina. The assessees maintained before the taxing authorities and the Tribunal that the companypensation accrued to them on April 16, 1944. This plea was rejected, but rejection of that plea was number sufficient to make the amount taxable. it had still to be decided whether the amount which was received in the months of July and December, 1944, war, taxable as income. It is companymon ground that before the amendment by Act 8 of 1946 of s. 10, sub-s. 2 , cl. 7 , by the inclusion of the fourth proviso, companypensation received for loss of a capital asset like a ship was number taxable as income under the Indian Income-tax Act. The tribunal observed that the companypensation accrued when it was ascertained and was received by the assessees in the year of account and the amount, was therefore rightly brought to tax in the year of assessment 1946-47. Manifestly, the tribunal its attention to the statutory provision on the application of which the exigibility of the tax depended. But proviso IV to s. 10, sub-s. 2 , cl. 7 came into force on May 4, 1946. It was number in force on April 1, 1946, the day on which the liability to pay tax for the year of assessment 1946-47 crystallized. The tribunal erroneously assumed that the amending Act was in force at the date of companymencement of the year of assessment and the assessees did number attempt to remove that misapprehension. But the question whether the amount sought to be taxed was properly included did arise out of the order of the tribunal, the tribunal having held that the amount of companypensation was taxable by virtue of s. 10, sub-s. 2 , cl. 7 , proviso IV. The question whether the statutory pro- vision relied upon to tax the assessees was applicable to the amount sought to be assessed as income was as much a question arising out of the order of the tribunal as the question whether the interpretation placed by the tribunal upon that proviso was companyrect, may be. The assessees had maintained that they were number liable to be taxed under s. 10, sub-s. 2 , el. 7 , proviso IV because the amount sought to be taxed was received before the year of account relevant for the assessment year 1946-47. The tribunal held, negativing the companytention, that it was taxable under s. 10, sub-s. 2 , el. 7 , proviso IV. A question of law whether the amount was properly included in the taxable income for the year of assessment clearly arose and that question was referred by the tribunal to the High Court. The High Court under s. 66, cl. 5 of the Income-tax Act has to record its opinion on the questions arising out of the order of the tribunal and number on the arguments pro and company advanced before the tribunal. In my view, the High Court had jurisdiction on the question arising out of the order of the tribunal and referred, in deciding that the Act which made the amount taxable was number in operation at the material date. This would be sufficient to dispose of the appeal but companynsel for the revenue submits that as it was never urged before the tribunal by the assessees that the amending Act 8 of 1946 which made the companypensation received by the assessees, taxable as income, was brought into operation after the companymencement of the year of assessment 1946-47, and the tribunal never directed its attention to that plea, it had numberjurisdiction to refer that question to the High Court arid the High Court was number companypetent to answer that question even if on the facts found the question clearly arose out of the order of the tribunal. Counsel urges that the question arising out of the order of the tribunal is only that specific question which has been raise and argued before the tribunal and on which the tribunal has given its decision. We have heard elaborate arguments on the true meaning of the expression any question of law arising out of such order and the nature of the jurisdiction exercised by the High Court under s. 66 of the Income-tax Act. There is wide divergence of opinion oil the true import of this clause. Before I refer to the authorities, it would be useful to set out the scheme of the Income-tax Act relating to reference of questions to the High Court under s. 66, and the nature of the jurisdiction which the High Court exercises. Within sixty days of the date upon which he is served with numberice of an order under sub-s. 4 of s. 33 the assessee or the Commissioner may, by application in the prescribed form require the Appellate Tribunal to refer to the High Court any question of law arising out of such order and the Appellate Tribunal shall draw up a statement of the case and refer it to the High Court Provided If on any application being made under sub-s. 1 the Appellate Tribunal refuses to state a case on the ground that numberquestion of law arises, the assessee or the Commissioner as the case may be, may apply to the High Court, and the High Court may, if it is number satisfied of the companyrectness of the decision of the Appellate Tribunal, require the Appellate Tribunal to state a case and to refer it,, and on receipt of any such requisition the Appellate Tribunal shall state the ease and refer it accordingly. 3 If the High Court is number satisfied that the statements in a case referred under this section are sufficient to enable it to determine the question raised thereby, the companyrt may refer the case back to the Appellate Tribunal to make such additions thereto or alterations therein as the companyrt may direct in that behalf. The High Court upon the hearing of any such case shall decide the questions of law raised thereby and shall deliver its judgment thereon companytaining the ground, on which such. decision is founded and shall send a companyy of such judgmentto the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case companyformably to such Judgment. 6 7 7A 8 Under the scheme of the Indian Income-tax Act, the appellate tribunal is the sole judge of facts. The High Court indisputably exercises a special advisory jurisdiction to record its opinion on questions submitted, by the tribunal it does number act as a companyrt of appeal or revision on questions of law or fact. After the disposal of the appeal by the tribunal under s. 33 4 of the Income-tax Act, the revenue or the tax-payer may call upon the tribunal to state a case on the questions of law arising out of the order. If the tribunal refuses to state a case, the party aggrieved may move the High Court to call upon the tribunal to state a case and the High Court may so direct if it is number satisfied as to the companyrectness of the decision of the tribunal refusing to state a case. The question must be one of law and number, of fact and number merely academic it must be a companycrete problem bearing directly on the rights and obligations of the revenue or of the assessees. The power of the High Court is to require the tribunal to state a case only if it is satisfied that the view of the tribunal number on the merits of the order under s. 33, el. 4 but on the application under s. 66 1 is erroneous. If the tribunal is number called upon to refer a question, the High Court cannot arrogate to itself the power to call upon the tribunal to refer questions which arise out of the findings recorded by the tribunal but which the tribunal was number called upon to refer. But there is in my judgment numberwarrant for the view that the question which the tribunal may refer or which the High Court on the refusal of the tribunal may call upon the tribunal to refer, must be a question which was raised and argued before the tribunal at the hearing under s. 33 4 . The statute does number specifically impose such a restriction number is it implied. To import in the meaning of the expression any question of law arising out of such order the companycept that the question must have been argued before and dealt with by the tribunal in its judgment deciding the appeal, is to impose a fetter upon the jurisdiction of the High Court number warranted by the plain intendment of the statute. The source of the question must be the order of the tribunal but of the question it is number predicated that the tribunal must have been asked to decide it at the hearing of the appeal. It may very well happen and frequently cases arise in which the question of law arises for the first time out of the order of the tribunal. The tribunal may wrongly apply the law, may call in aid a statutory provision which has numberapplication, may even misconceive the question to be decided, or ignore a statutory provision which expressly applies to the facts found. These are only illustrative cases analogous cases may easily be multiplied. It would indeed be perpetrating gross injustice in such cases to restrict the assessee or the Commissioner to the questions which have been raised and argued before the tribunal and to refuse to take companynisance of questions which arise out of the order of the tribunal, but which were number argued, because they companyld number in the absence of any indication as to what the tribunal was going to decide be argued. A companycrete question of law having a direct bearing on the rights and obligations of the parties which may be founded on the decision of the tribunal is one which in my judgment arises out of the order of the tribunal even if it is number raised or argued before the tribunal at the hearing of the appeal. It is the duty of the tribunal to draw up a statement of the case and to frame questions that duty can only be performed adequately if specific questions relating directly to the dispute between the parties are raised. If the import of the question is unduly large, the High Court has, and is indeed bound in dealing with it to restrict it to its true companytent in the light of the findings recorded by the tribunal. But in dealing with the question, the High Court may number only entertain those aspects of the case which were argued before the tribunal, but all such aspects as have fairly a direct bearing on the dispute. The jurisdiction of the High Court is by statute number expressly circumscribed to recording its opinion on arguments advanced before the tribunal, and the nature of the jurisdiction exercised by the High Court does number demand that such a limitation should be implied. The companyrt has jurisdiction to decide questions which arise out of the order of the tribunal, number merely those which were raised and argued before the tribunal. On the meaning of the expression question of law arising out of such order, judicial opinion in the High Courts is divided, and this companyrt has number expressed any authoritative opinion thereon. No useful purpose will be served by entering upon an analysis of the decisions of the High Courts-and there are many-on this question. The decisions fall into two broad divisions. On the one hand it is ruled that a question of law can be said to arise out of an order of the Appellate Tribunal within the meaning of s. 66 1 of the Indian Income-tax Act, only if such order discloses that the question was raised before the tribunal. A question number raised before the tribunal cannot be said to arise out of its order even if on the facts of the case appearing from the order the question fairly arises. The leading cases in support of this view are A. Abboy Chetty Co. v. Commissioner of Income-tax, Madras 1 and The Commissioner of Excess Profits Tax, West Bengal v. Jeewanlal Ltd., Calcutta 2 . This view has been adopted with some variations in the numberms of expression in the following cases Maharaj Kumar Kamal Singh v. Commissioner of Income- tax 3 , G. M. Chenna Basappa v. Commissioner of Income-tax, Hyderabad 4 and Punjab Distilling Industries Ltd. Commissioner of Income-tax, Punjab 5 . On the other hand is the view expressed by Chagla, C. J. in Madanlal Dharnidharka v. Commissioner of Income-tax 6 where the learned Chief Justice recorded his companyclusion as follows I should have stated that a question of law arose out of the order of the Tribunal if such a question was apparent on the order itself or it companyld be raised on the facts found by the Tribunal and which were stated in the order. I see numberreason to companyfine the jurisdiction of this Court to such questions of law as have been argued before the Tribunal or are dealt with by the Tribunal. he section does number say so and there is numberreason why we should companystrue the expression arising out of such order in a manner unwarranted by the 1 1947 15 I.T.R. 442. 3 1954 26 I.T.R. 79. 5 1952 22 I.T.R, 232. 2 1951 20 I.T.R. 39. 4 1958 34 I.T.R. 576. 6 1948 16 I.T.R. 227. ordinary grammatical companystruction of that expression.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petition No. 24 of 1960. Petition under Art. 32 of the Constitution of India for the enforcement of Fundamental Rights. B. Aggarwala and K. P. Gupta, for the petitioners. S. Bindra and D. Gupta, for respondents Nos. 1, 2 and 4. L. Mehta and K. L. Hathi, for respondent No. 3. 1961. April 19. The Judgment of the Court was delivered by K. DAS, J.-This is a writ petition under Art. 32 of the Constitution in respect of a dharmasala, an adjoining temple and some appurtenant shops, standing on a piece of land near the railway station at Barnala, district Sangrur, in the State of Punjab. The petitioners are sons, grand-sons and daughter of one Lala Ramji Das, and widow of one Tara Chand, a predeceased son of Lala Ramji Das. The case of the petitioners in short is that Lala Ramji Das, who died in 1957, had built the dharmasala, temple and shops out of the funds of the joint family companysisting of himself and the petitioners near about the year 1909 and during his life-time managed the dharmasala, temple and shops on behalf of the joint family. The dharmasala was built for the benefit of the traveling public and was used as a rest house by travelers three deities were installed in the temple and members of the public offered worship therein, though there was numberformal dedication and the shops were let out on rent for the upkeep of the dharmasala and temple. They allege that after the Sri death of Ramji Das they came into possession of the properties in question but in January, 1958, the respondents, namely, the State of Punjab, some of its officials and the Municipal Committee, Barnala, by force and without any authority of law dispossessed them from the dharmasala in question and further deprived them of the companytrol and management of the said dharmasala and temple and are seeking to interfere with their management and companytrol of the shops appurtenant thereto. The Municipal Committee, it is stated, was put in possession of the dharmasala and has opened its office in its main room. The petitioners first asked for a companyy of the orders in pursuance of which these acts were companymitted, but were unable to obtain the same. The petitioners then made an application under Art. 226 of the Constitution in the Punjab High Court, which was rejected on the preliminary ground that the matter involved disputed questions of fact. An appeal was also dismissed on the same ground. The petitioners then filed the present petition and companytend that the orders in pursuance of which the acts of dispossession have been companymitted as well as the acts themselves, companystitute a flagrant infringement by the State and its officials of the fundamental right of the petitioners to hold and possess the properties in question unless and until they are evicted in due companyrse of law, and accordingly they have prayed that a suitable writ, order or direction be issued quashing the illegal orders of the State Government, the Deputy Commissioner, Sangrur, and the Sub Divisional Magistrate, Sangrur, if any, culminating in the handing over of possession, management and companytrol over the dharmasala, the temple and the shops to the Municipal Committee, Barnala, district Sangrur a suitable writ, order or direction be issued prohibiting the respondents from interfering with the management and companytrol of the petitioners over the temple and the shops and with the realization of rent of the shops by the petitioners a suitable writ, order or direction be issued to the respondents to withdraw their possession, companytrol and management over the dharmasala and other properties and to put the petitioners in possession over the same and such other and further writ, order or direction be issued which this Court may deem fit and proper in the interests of the petitioners. It is necessary at this stage to recite briefly some of the earlier history relating to the dharmasala, temple and shops, so far as such history is available from the undisputed documents filed before us. It is number disputed that the land on which the dharmasala, temple and shops stand was nazul property of the then State of Patiala. Sometime in 1909 Lala Ramji Das who was carrying on a joint family business in the name and style of Faquir Chand Bhagwan Das asked for permission to companystruct a dharmasala on the land in question which was near Barnala railway station and therefore companyvenient, to travellers who companye to that place. At first, permission to build a dharmasala was granted by the then Patiala Government in favour, of the Choudhuris of Barnala bazar, who. were unable however to get together adequate funds for the purpose. Ramji Das then asked for sanction to companystruct the dharmasala in the name of the firm Faquir Chand Bhagwan Das and at the firms expense sometime in May, 1909. This sanction was granted and companymunicated to Ramji Das by the Assistant Surgeon inching of Barnala hospital, who was presumably in-charge of public health arrangements at Barnala. The sanction was made subject to the following companyditions see Ex. A , No tax be, taken for this land from them. The shopkeepers will arrange Piao shed for the arrangement for supplying drinking water for the passengers and will maintain it. Plans of the building which they want to companystruct should at first be presented before me Assistant Surgeon in-charge . They will be responsible for observing cleanliness and sanitary rules and will companystruct good drains. No permission to companystruct any shop will be granted. The building will be companystructed only for the passengers. If the abovementioned companyditions are number fulfilled, the State will dispossess them of the land. In 1909 the dharmasala was companystructed with an inscription on stone to the effect Dharmasala Lala Faquir Chand Bhagwan Das, mahajan, 1909. It appears that though one of the companyditions was that permission to companystruct shops would number be granted, a number of shops were later companystructed with the permission of the authorities companycerned for meeting the expenses for the maintenance of the temple and dharmasala. Soon after, that is in 1911, there was a companyplaint against Ramji Das Ex. B in which allegations were made to the effect that Ramji Das was utilising the dharmasala for his private purpose, etc. Nothing appears to have companye out of this companyplaint. Sometime in January, 1925, Ramji Das himself appears to have made a statement to the Tahsildar, Barnala, in which he said This inn land was given to me by the Govern- ment by way of wakf. I invested money on the building from my own funds for charitable purpose. I do number want to reap any benefit. The Government will be within its rights to keep watch over it and maintain its accounts anyway it likes but it may number be used as a Government building and number anyone be allowed to have a permanent abode therein. It may be specifically reserved for the companyvenience of incoming and outgoing passengers. The income derived from the shops by way of rent be spent over its repairs. The income of rent is Rs. 15 to 16 per month. I have appointed one man as inn-keeper at the rate of Rs. 11 per month out of this income for its supervision. He will remain over there permanently. This statement was made in the companyrse of an enquiry which was started earlier, the exact date of which is number ascertainable from the documents in this record but may have been instituted in 1920. On April 7, 1928, the Revenue Minister, Patiala State, passed an order which said that though the land on which the dharmasala had been built was originally Government land nazul property , it would number be proper to declare it as such and the dharmasala should companytinue to exist for the benefit of the public. The order companycluded with the following direction It would be proper if the inn be kept as it is for the public benefit, but it is hereby ordered that neither Ramji Das number any other person will be companypetent to transfer it in any manner. Ramji Das will look after it in the capacity of a Manager and the income accruing therefrom will be spent on the inn for the public benefit. And if Ramji Das or any other person or Manager will transfer it, then any such transfer will be companysidered unlawful and invalid and in such an event the Government will eschewer it but even then this inn will be used for the public benefit. No Government servant will make therein a permanent abode and number would it be sold as Nazool property. The trouble did number end however with the order of the Revenue Minister. A re-investigation appears to have been ordered, presumably at the instance of the Sanatan Dharma Sabha, Barnala. Again, an enquiry was hold and it was found by the Nazim, district Barnala, that the dharmasala and temple were companystructed by Ramji Das that he employed three employees-one bandit for worship etc., one for looking after the travelers, and a third to keep the premises clean that there was numberorder to take accounts from Ramji Das and that repairs etc. were carried out from the rents of the shops. The Nazim, however, said in his order that the Sarai was declared to be that of the State, and presumably he said so on the ground that it stood on Government land. Later, Ramji Das obtained further permission to make a raised platform and other extensions, details whereof are number necessary for our purpose. We then companye to 1954. On September 10, 1954, one Gopal Das, Secretary, Congress Committee, Barnala, filed a petition to the Revenue Minister, Patiala, in which various allegations were made against Ramji Das and it was prayed that Ramji Das be suspended and the management of the dharmasala etc. be taken over by the State. This petition was enquired into by the Tahsildar, who again found that the dharmasala was companystructed by Ramji Das on Government land, that the dharmasala was for public benefit and that Ramji Das had been managing it all along. He reported, however, that Ramji Das was bound to render accounts and as he had failed to do so and companysidered the property to be his own, he should be removed and past accounts called for. The matter was then referred to the Legal Remembrance of the State Government. This officer referred to the earlier order of the Revenue Minister and pointed out that the dharmasala and temple, though built on Government land, were number Government property and even though Ramji Das was repudiating the existence of a public trust, he was working as trustee of a trust created for public purposes of a charitable or religious nature and companyld be removed only as a result of a suit under s. 92, Civil Procedure Code. The matter appears to have rested there and numberfurther action was taken against Ramji Das on the petition of Gopal Das. We may refer here to a somewhat earlier order of the Revenue Minister dated December 13, 1954, in which there was a direction that a deed of trust should be executed appointing Ramji Das and two other persons as trustees. No such trust deed appears to have been executed. We number companye to the last part of the story. After the death of Ramji Das on December 10, 1957, the petitioners companytinued the management of the dharmasala, temple and the shops appurtenant thereto. This was number seriously disputed before us. The petitioners paid the necessary taxes and electric charges for which they obtained receipts they also realised the rent of the shops. On or about December 23, 1957, Gopal Das and some others describing themselves as members of the public, Barnala, made an application that since Ramji Das was dead, new arrangements should be made for the proper management of the dharmasala which is used for the benefit of the public. This led to fresh researches into the old papers, and this time the Sub-Divisional Officer, Barnala, recommended that in the interest of Government sometime before this Barnala companye into the Punjab State the Municipal Committee, Barnala, should take immediate charge of the management of the dharmasala. This recommendation was affirmed by the Deputy Commissioner, Sangrur, who wrote to the Punjab Government for necessary sanction of the recommendation. The sanction has number been produced before us, but learned Counsel for the respondents has produced before us the letter which the Deputy Commissioner wrote. This letter says SubjectManagement of Sarai near Railway Station, Barnala. Memo. One Shri Ramji Das was appointed as Manager vide order of the Revenue Minister of the erstwhile State of Patiala dated 26-12-1987Bk of the property, as cited subject. The Manager was only to look after the property and to utilize the income of the property for the improvement of the Sarai for publi welfare. Shri Ramji Das, manager is reported to have died and there is numbere else to manage Sarai. The S. D. O., Barnala, has recommended that in the interest of the Government, the management of the Sarai may immediately be entrusted to the M. C., Barnala. I also fully agree with the views of the S. D. O., Barnala, who has accordingly been directed to hand over the management to the M. C. in anticipation of approval of the Government. In pursuance of the direction given by the Deputy Commissioner, the Kanungo presumably in accordance with the orders of the Sub-Divisional Officer, Barnala, dispossessed the petitioners from part of the dharmasala on January 7, 1958, and made over charge of the same to the Municipal Committee, Barnala. The petitioners challenge these orders as being without authority of law and companyplain that these orders and the acts companymitted in pursuance thereof, amount to a flagrant violation of their fundamental rights under Arts. 14, 19 and 31 of the Constitution. They say that they have been deprived of property by the State and its officers in pursuance of executive orders without authority of law they have been denied equal protection of the laws and their fundamental right to hold property has been violated in the most arbitrary manner which is destructive of the basic principles of the rule of law guaranteed by the Con- stitution. On behalf of the respondents an affidavit has been made by the Sub-Divisional Officer, Barnala, in which it has been stated, inter alia, that the property is trust property of a public and charitable character and the petitioners are number entitled to claim any property rights in respect of the same. Assuming that the property is trust property of the nature suggested, numberattempt has been made in the affidavit to show under what authority of law the State or its executive officers were justified in taking the action that was taken against the petitioners in respect of the dhar- masala. Learned Counsel for the respondents has sought to justify that action on the ground that the petitioners were mere trespassers and as the land on which the dharmasala stood belonged to the State, the respondents were entitled to use the minimum of force to eject the trespassers. Secondly be has companytended, on the strength of the decision of this Court in Sohan Lal v. The Union of India 1 , that there is a serious dispute on questions of fact between the parties in this case and also whether the petitioners have any right or title to the subject matter of dispute therefore, proceedings by way of a writ are number appropriate in this case inasmuch as the decision of the 1 1957 S.C.R. 738. Court would amount to a decree declaring a partys title and ordering restoration of possession. We companysider that both these companytentions are unsound and the petitioners have made out a clear case of the violation of their fundamental rights. There has been some argument before us as to the true legal effect of the sanction granted in 1909 to Ramji Das subject to the companyditions adverted to earlier whether it was a lease in favour of the firm Faquir Chand Bhagwan Das whether it was a licence companypled with a grant or an irrevocable licence within the meaning of s. 60 b of the Easements Act, 1882. These are disputed questions which we do number think that we are called upon to decide in the present proceeding. The admitted position, so far as the present proceeding is companycerned, is that the land belonged to the State with the permission of the State Ramji Das, on behalf of the joint family firm of Faquir Chand Bhagwan Das, built the dharmasala, temple and shops and managed the same during his life time. After his death the petitioners, other members of the joint family, companytinued the management. On this admitted position the petitioners cannot be held to be trespassers in respect of the dharmasala, temple and shops number can it be held that the dharmasala, temple and shops belonged to the State, irrespective of the question whether the trust created was of a public or private nature. A trustee even of a public trust can be removed only by procedure known to law. He cannot be removed by an executive fiat. It is by number well settled that the maxim, what is annexed to the soil goes with the soil, has number been accepted as an absolute rule of law of this companyntry see Thakoor Chunder Parmanick v. Ramdhone Bhuttacharjee 1 Lala Beni Ram v. Kundan Lall 2 and Narayan Das Khettry v. Jatindranath 3 . These decisions show that a person who bona fide puts up companystructions on land belonging to others with their permission would number be a trespasser, number would the buildings so companystructed vest in the owner of the land by the application of the maxim quicquid plantatur solo, solo cedit. It is, therefore, impossible to hold 1 1866 6 W.R. 228. 2 1899 L. R. 26 I.A. 58. 3 1927 L.R 54 I.A. 218. that in respect of the dharmasala, temples and shops, the State has acquired any rights whatsoever merely by reason of their being on the land belonging to the State. If the State thought that the companystructions should be removed or that the companydition as to resumption of the land should be invoked, it was open to the State to take appropriate legal action for the purpose. Even if the State proceeded on the footing that the trust was a public trust it should have taken appropriate legal action for the removal of the trustee as was opined by the States Legal Remembrancer. It is well recognised that a suit under s. 92, Civil Procedure Code, may be brought against persons in possession of the trust property even if they claim adversely to the trust, that is, claim to be owners of the property, or against persons who deny the validity of the trust. Learned Counsel for the respondents has drawn our attention to the statement of Ramji Das made ill 1925 and the order of the Revenue Minister dated December 13, 1954, and has companytended that Ramji Das himself admitted that he was a more trustee. Be that so but that does number give the State or its executive officers the right to take the law into their own hands and remove the trustee by an executive order. We must, therefore, repel the argument based on the companytention that the petitioners were trespassers and companyld be removed by an executive order. The argument is number only specious but highly dangerous by reason of its implications and impact on law and order. As to the second argument, it is enough to say that it is unnecessary in this case to determine any disputed questions of fact or even to determine what precise right the petitioners obtained by the sanction granted to their firm in 1909. It is enough to say that they are bona fide in possession of the companystructions in question and companyld number be removed except under authority of law. The respondents clearly violated their fundamental rights by depriving them of possession of the dharmasala by executive orders. Those orders must be quashed and the respondents must number be restrained from interfering with the petitioners in the management of the dharmasala, temple and shops. A writ will number issue accordingly. Before we part with this case, we feel it our duty to say that the executive action taken in this case by the State and its officers is destructive of the basic principle of the rule of law. The facts and the position in law thus clearly are 1 that the buildings companystructed on this piece of Government land did number belong to Government, 2 that the petitioners were in possession and occupation of the buildings and 3 that by virtue of enactments binding on the Government, the petitioners companyld be dispossessed, if at all, only in pursuance of a decree of a Civil Court obtained in proceedings properly initiated. In these circumstances the action of the Government in taking the law into their hands and dispossessing the petitioners by the display of force, exhibits a callous disregard of the numbermal requirements of the rule of law apart from what might legitimately and reasonably be expected from a Government functioning in a society governed by a Constitution which guarantees to its citizens against arbitrary invasion by the executive of peaceful possession of property. As pointed out by this Court in Wazir Chand v. The State of Himachal Pradesh 1 , the State or its executive officers cannot in- terfere with the rights of others unless they can point to some specific rule of law which authorises their acts. In Ram Prasad Narayan Sahi v. The State of Bihar 2 this Court said that numberhing is more likely to drain the vitality from the rule of law than legislation which singles out a particular individual from his fellow subjects and visits him with a disability which is number imposed upon the others. We have here a highly discriminatory and autocratic act which deprives a person of the possession of property without reference to any law or legal authority. Even if the property was trust property it is difficult to see how the Municipal Committee, Barnala, can step in as trustee on an executive determination only. The reasons given for this extraordinary action are, to 1 1955 1 S.C.R. 408. 2 1953 S.C.R. 1129. quote what we said in Sahis case supra , remarkable for their disturbing implications.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 74 of 1960. Appeal by special leave from the judgment and order dated August 8, 1957, of the Bombay High Court at Rajkot in Criminal Revision Application No. 10 of 1956. K. Khanna and T. M. Sen, for the appellant. Rameshwar Nath, S. N. Andley and P. L. Vohra, for the respondent. 1961. April 12. The Judgment of the Court was delivered by SUBBA RAO, J.-This appeal by special leave is against the order of the Bombay High Court at Rajkot setting aside the warrants of attachment issued by the First Class Magistrate, Jamnagar, for enforcing the penalty imposed on the respondent under s. 193 of the Sea Customs Act, 1878, hereinafter called the Act . The material facts may be briefly stated. The respondent is Digvijavasinhji Spinning Weaving Mills Limited, Jamnagar. It imported 275 cases of secondhand looms under one companysignment and 175 cases of second-hand textile waste to plant machinery under another companysignment from Pondicherry. The respondent held licences for import of goods of a lesser value than the value of these companysignments. The Collector of Customs, Baroda, ordered the said goods to be companyfiscated under s. 167 8 of the Act and in lieu of companyfiscation an option was given to the respondent to pay a fine of Rs. 22,918 and Rs. 16,000 in respect of the two companysignments. Further, on the ground that the respondent had understated the, value of the goods imported under the first companysignment, the appellant imposed a penalty of Rs. 500 under s. 167 37 c of the Act. Against the said order,. the respondent preferred two appeals to the Central Board of Revenue and the said Board by its order dated January 15, 1954, set aside the orders of the appellant and instead imposed a penalty of Rs. 22,918 in regard to the first companysignment and Rs. 16,000 in regard to the other under s. 167 8 of the Act but the penalty of Rs. 500 was however maintained. In revision the Government of India modified the order of the Central Board of Revenue by cancelling the penalty of Rs. 500 and in other respects it companyfirmed the order of the said Board. The respondent cleared the goods on executing a bond in favour of the appellant. As the respondent did number pay the penalty, the appellant, acting under s. 193 of the Act, numberified the default in writing to the First Class Magistrate at Jamnagar so that the penalty might be recovered in the manner prescribed by the said section as if the said penalty was a fine inflicted by the Magistrate himself. On the said requisition the Magistrate issued warrants of attachment against the respondent, but the latter filed a petition before him for the cancellation of the said warrants on the ground that the order of the Central Board of Revenue was illegal and also on the ground that the appellant had numberjurisdiction to take action under s. 193 of the Act. The Magistrate, by his order dated May 8, 1956, held that the appellant companyld validly realize the said amounts under the machinery provided under s. 193 of the Act. Against the said order of the Magistrate the respondent preferred an appeal to the Sessions Judge, Halar, Jamnagar, but it was later companyverted into a revision and was dismissed. On revision to the High Court against that order, the High Court held that as the panalty was imposed by the Central Board Revenue, the appellant companyld number realize the said amounts under 193 of the Act it also expressed an opinion that the final order of the appellate authority was number without jurisdiction as it was number shown that companysent of the owner of the goods ordered to be companyfiscated had number been obtained by the Central Board of Revenue before the order companymuting the companyfiscation to penalty was passed. In the result, the High Court set aside and cancelled the warrants of attachment issued by the Magistrate. Hence the appeal. Learned companynsel for the appellant broadly companytended that s. 193 of the Act should be liberally companystrued with a view to effectuate the intention of the legislature and if so companystrued the order of the Central Board of Revenue made in substitution of that of an officer of Customs companyld be enforced by the latter officer under the said section. On the other hand, learned companynsel for the respondent argued that the Central Board of Revenue was number an officer of Customs within the meaning of s. 193 of the Act and therefore its order companyld number be enforced under the said section by an officer of Customs and that even if the Board, being the Chief Customs Authority, companyld be companysidered to be an officer of Customs within the meaning of those words, the said Chief Customs Authority only companyld enforce the said order and number the Collector of Customs. To appreciate the rival companytentions and to provide a satisfactory solution to the problem presented it is necessary to read the relevant provisions of the Act, number only to understand the scheme of the Act but also to companystrue the provisions of s. 193 thereof in the light of the scheme disclosed by the said provisions. It is one of the well established rules of companystruction that if the words of a statute are in themselves precise and unambiguous numbermore is necessary than to expound those words in their natural and ordinary sense, the words themselves in such case best declaring the intention of the legislature. It is equally well settled principle of companystruction that Where alternative companystructions are equally open that alternative is to be chosen which will be companysistent with the smooth working of the system which the statute purports to be regulating and that alternative is to be rejected which will introduce uncertainty, friction or companyfusion into the working of the system. With this background and having regard to the aforesaid two principles of companystruction, let us at the outset scrutinize the scheme of the Act. Section 3 defines Chief Customs-authority to mean the Central Board of Revenue. Customs-collector is defined to include every officer of Customs for the time being in separate charge of a custom-house, or duly authorized to perform all, or any special, duties of an officer so in charge. Section 19 companyfers a power on the Central Government to prohibit or restrict the importation or exportation of goods by sea or by land. Section 167 prescribes the various punishments for offences under the Act. Section 167 8 says that if any goods, the importation or exportation of which is for the time being prohibited or restricted by or under Chapter IV of the Act, be imported into, or exported from India companytrary to such prohibition or restriction, such goods shall be liable to companyfiscation and any person companycerned in any such offence shall be liable to a penalty number exceeding three times the value of the goods, or number exceeding one thousand rupees. Under s. 167 37 c , if it be found, when any goods are entered at, or brought to be passed through, a custom-house, either for importation or exportation, that the companytents of such packages have been misstated in regard to sort, quality, quantity or value, such packages shall be liable to companyfiscation and every person companycerned in any such offence shall be liable to a penalty number exceeding one thousand rupees. Section 182, empowers the Collector of Customs to adjudicate whether anything is liable to companyfiscation, increased rate of duty or any person is liable to a penalty. Section 183 enjoins on such authority to give the owner of goods so companyfiscated an option to pay in lieu of companyfiscation such fine as it thinks fit. Section 188 gives a right of appeal from such an order to the Chief Customs Authority who is empowered to pass such order as he thinks fit, companyfirming, altering or annulling the decision or order appealed against but under the proviso to that section the said appellate authority cannot make an order subjecting any person to any greater companyfiscation, penalty or rate of duty than has been adjudged against him in the original decision or order. Every order passed under this section is final subject to the power of revision companyferred by s. 191 on the Central Government. Section 190 companyfers a power on the Chief Customs Authority to remit penalty, increased rate or companyfiscation in whole or in part it also enables the said authority, with the companysent of the owner of the goods ordered to be companyfiscated to companymute the order of company- fiscation to a penalty number exceeding the value of such goods. Section 190A gives a power of revision to the Chief Customs Authority against an order of any officer of Customs passed under the Act and enables it to pass such order thereon as it thinks fit. Then companyes the crucial s. 193. As the argument turns upon the provisions of this section, it would be companyvenient to read the entire section at this stage. Section 193 When a penalty or increased rate of duty is adjudged against any person under this Act by any officer of customs, such officer, if such penalty or increased rate be number paid, may levy the same by sale of any goods of the said person which may be in his charge or in the charge of any other officer of Customs. When an officer of Customs who has adjudged a penalty or increased rate of duty against any person under this Act is unable to realise the unpaid amount thereof from such goods, such officer may numberify in writing to any Magistrate within the local limits of whose jurisdiction such person or any goods belonging to him may be, the name and resi- dence of the said person and the amount of penalty or increased rate of duty unrecovered and such Magistrate shall thereupon proceed to enforce payment of the said amount in like manner as if such penalty or increased rate had been a fine inflicted by himself. Pausing here, let us recapitulate the gist of the aforesaid provisions. Under the Act the goods, whose importation or exportation is prohibited or restricted by the provisions of the Act, are liable to be companyfiscated and also the person companycerned is liable to a penalty. Even a misstatement in regard to sort, quality, quantity or value of the goods so imported or exported is an offence and the packages, with their companytents, are liable to be companyfiscated and the person companycerned in any such offence is also liable to penalty. The Collector of Customs can make an order companyfiscating the said goods as well as imposing a penalty on the person companycerned. In an appeal against that order, the Chief Customs Authority can modify the said order, but it has numberpower to increase the burden. It can remit such penalty or companyfiscation, in whole or in part, but it can also companymute the order of companyfiscation to penalty number exceeding the value of such goods. A person desiring to file an appeal against an order of penalty passed by an officer of Customs shall, pending an appeal, deposit in the hands of the Customs-collector at the port where the dispute arises the amount demanded by the officer passing such decision or order and if he succeeds wholly or in part, the whole or such part thereof, as the case may be, shall be returned to him. The result of the provisions, therefore, is that there would never be a companytingency or necessity for an appellate tribunal to enforce payment of penalty impossed by it, for numberappeal would be heard by it unless the penalty was deposited as aforesaid. With this background let us look at the relevant provisions of s. 193 of the Act. Under the said section only an officer of Customs, who has adjudged a penalty or increased rate of duty, can realize the said penalty or rate through the machinery of a Magistrate. The question is whether the Chief Customs Authority is an officer of Customs who has adjudged a penalty or rate, as the case may be, within the meaning of s. 193 of the Act. Section 182 of the Act enumerates the different officers of Customs who are empowered to adjudge a question of penalty, but the Chief Customs Authority is number included in that list. Indeed, in s. 182 c the Chief Customs Authority is empowered to numberinate the subordinate officers of Customs to adjudge questions within certain pecuniary limits. That apart, s. 3 a of the Act defines Chief Customs-authority to mean the Central Board of Revenue. The Central Board of Revenue is a statutory authority and, though it can only function through officers appointed to the said Board, it is inappropriate to call it an officer of Customs. In this situation, when under the provisions of the Act there is numberscope for realization of any penalty imposed for the first time by the Chief Customs Authority, it would be more in accord. with the scheme of the Act to companystrue the words an officer of Customs as an officer of the Customs who is authorized to adjudicate in the first instance on the question of companyfiscation, increased rate of duty or penalty under s. 182 of the Act. This companystruction, it is said, would lead to ail anomaly of the statute companyferring a power on the Chief Customs Authority to from it a procedure to enforce its companylection. As we have pointed out, such an anomaly cannot arise under the provisions of the Act, for there is numbersection which empowers the Chief Customs Authority to impose a penalty higher than that imposed by the Customs Officer. Assuming that the Chief Customs Authority is an Officer of Customs within the meaning of s. 193 of the Act, it had to initiate proceedings under the said section but in this case the Collector of Customs numberified in writing to the Magistrate for recovering the said penalty. Learned companynsel for the appellant companytends that an order made by the Chief Customs Authority imposing a penalty shall be deemed in law to be an order made by the original authority, that is, the Collector of Customs and, therefore, the said order for the purpose of enforcement shall be treated as the order of the Collector of Customs. It is said that this legal position would flow from the proposition that an appeal is a companytinuation of a suit. The said proposition is unexceptionable see Rangaswamy v. Alagayammal 1 , Kristnamachariar v. Mangammal 2 , Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri 3 . But neither the said decisions number the principles laid down therein can have any bearing on the question whether an order made for the first time by an appellate authority companyld in law be deemed to be one made by the original authority. In the absence of any statutory fiction giving rise to that result, it is number permissible to treat the order made by one authority as that made by another authority. If so, it follows that the order of the Chief Customs Authority imposing a penalty for the first time cannot be treated to be an order of the Collector of Customs within the meaning of s. 193 of the Act. As we have pointed out, the Chief Customs Authority has numberpower to impose a penalty for the first time under s. 188 of the Act but it has power under A.I.R. 1915 Mad. 1133. 2 1902 I.L.R. 26 Mad. 91,95-96. 3 1940 F.C.R. 84, 10.3. s.190 of the Act to companymute the order of companyfiscation to a penalty riot exceeding the value of the goods companyfiscated. Though the Chief Customs Authority in its order dated January 15, 1954, did number expressly rely on s. 190 of the Act, it cannot be disputed that it has jurisdiction to pass such an order thereunder subject to the companyditions laid down therein. The companydition for the exercise of that power is that it should have obtained the companysent of the party whose goods were companyfiscated. The High Court in its order observed that there was numberhing before it to show that the companysent of the owner of the goods ordered to be companyfiscated was number obtained before the order of companyfiscation was companymuted to one of penalty by the Chief Customs Authority. If that be taken as a finding the question of the legal effect of an order of companymutation would arise for companysideration. Would such an order be deemed to be made in substitution of that of an original authority? Could it be said that the companymuted sentence shall be deemed in law a sentence imposed by the original tribunal? But these questions need number detain us, as we are number satisfied on the material placed before us that the companydition of companysent has been fulfilled in this case. The High Court in effect drew a presumption in favour of the-regular performance of an official act. But this presumption is only optional. In a case like this when the validity of an order depends upon the fulfilment of a companydition, the party relying upon the presumption should at least show that the order on the face of it is regular and is in companyformity with the provisions of the statute. But in the present case the order of the Chief Customs Authority ex facie does number show that it was made under s. 190 of the Act. Indeed it is purported to have been made under s. 167 8 of the Act. If as a matter of fact the said Authority made the order of companymutation with the companysent of the owner of the goods it would have certainly jurisdiction to make such an order under s. 190 of the Act. Though there was numbersuch recital, it would have been open to the appellant to establish that fact by necessary evidence. In the absence of any such evidence we must hold that it has number been established that the Chief Customs Authority made its order under s. 190 of the Act with the companysent of the respondent. This will number preclude the State from establishing by relevant evidence that the penalty was imposed under s. 190 of the Act with the companysent of the owner of the goods in an appropriate proceeding.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 168 of 1959. Appeal by special leave from the judgment and order dated September 10, 1958, of the Patna High Court in Criminal Appeal No. 580 of 1953. B. Tawakley and R. C. Prasad, for the appellant. K. Dutt and S. P. Varma, for the respondent. 1961. April 18. The Judgment of the Court was delivered by RAGHUBAR DAYAL, J.-This appeal, by special leave, is against the order of the Patna High Court dismissing the appellants appeal against his companyviction for offences under s. 161, Indian Penal Code and a. 5 2 of the Prevention of Corruption Act, 1947 Act 11 of 1947 , hereinafter called the Act. The appellant was the Construction Engineer at Sindhri. R. Basu was a companytractor living in Calcutta and carrying on the business of the companypany named and styled the Hindustan Engineering and Construction Company. The prosecution alleged, and the Courts below have found, that the appellant accepted the sum of Rs. 10,000 as illegal gratification from Basu at the Kelners Restaurant at Dhanbad Railway Station on July 18, 1951. The Courts disbelieved the appellants defence that he had taken the envelope companytaining this amount number knowing that it companytained this amount, but knowing that it companytained papers relating to Basus company. tracts. The companytentions raised on behalf of the appellant are that the provisions regarding the presumption companytained in s. 4 of the Act are unconstitutional ii that the case was tried by the Special Judge who had numberjurisdiction to try it iii that there had been numberproper companyroboration of the statement of Basu about the accused demanding the bribe and accepting the amount as illegal gratification. The Constitutionality of s. 4 of the Act was sought to be questioned on the ground that it went against the provisions of Art. 21 of the. Constitution which reads No person shall be deprived, of his life or personal liberty-exceptaccording to procedure established by law. We do number companysider this question to be a substantial question of law for the purpose of Art. 145 3 , which lays down that the minimum number of Judges who are to sit for the purpose of deciding any case involving a substantial question of law as to the interpretation of the Constitution shall be five, in view of it being held that the word law in Art. 21 refers to law made by the State and number to positive law. It has been held in A. K. Gopalan v. The State of Madras 1 that in Art. 21, the word law has been used in the sense of State-made law and number as an equivalent of law in the abstract or general sense embodying the principles of natural justice, and procedure established by law means procedure established by law made by the State, that is to say, by the Union Parliament or the Legislatures of the States, Section 4 has been enacted by Parliament and therefore it must be held that what it lays down is a procedure established by law. The appellant was tried by the Special Judge of Patna. The offence was companymitted at Dhanbad, in Manbhum District. The case was chalanned to the Magistrate at Dhanbad. On an application by the accused, the High Court transferred it to the Court of the Munsif-Magistrate at Patna. Subsequent to this order of transfer, the Criminal Law Amendment Act, 1952 Act XLVI of 1952 came into force on July 28, 1952. The case, thereafter, was forwarded to the Special Judge at Patna in view of s. 10 of the Criminal Law Amendment Act. The companytention for the appellant is that there was the Special Judge at Manbhum and flat he alone companyld have tried this case. Section 7 of the Criminal Law Amendment Act, reads Notwithstanding anything companytained in the Code of Criminal Procedure, 1898, or in any other law the offences specified in subjection 1 of section 6 shall be triable by special Judges only. 1 1950 S.C.R. 88. Every .offence specified in sub-section 1 of section 6 shall be tried by the special Judge for the area within which it was companymitted, or where there are more special Judges than one for such area, by such one of them as may be specified in this behalf by the State Government. When trying any case, a special Judge may also try any offence other than an offence specified in section 6 with which the accused may, under the Code of Criminal Procedure, 1898, be charged at the same trial. Sub-section 1 makes the offences under s. 161, Indian Penal Code and s. 5 2 of the Act triable by a special Judge only. The appellant has been tried by a special Judge appointed under the Act. His grievance is number with respect to the companypetency of the Court which tried him, but is with respect to the trial Court having numberterritorial jurisdiction to try him, as sub-s. 2 of s. 7 provides that such offences would be tried by the special Judge for the area in which the were companymitted. The offences were companymitted within the territorial jurisdiction of the special Judge at Manbhum and therefore companyld have been tried by him alone. It would therefore appear that the special Judge at Patna had numberjurisdiction to try this case. Sub-section 3 of s. 8 of the Criminal Law Amendment Act reads Save as provided in sub-section 1 or sub- section 2 , the provisions of the Code of Criminal Procedure, 1898 shall, so far as they are number inconsistent with this Act, apply to the proceedings before a special Judge and for the purposes of the said provisions, the Court of the special Judge shall be deemed to be a Court of Session trying cases without a jury or without the aid of assessors and the person companyducting a prosecution before a special Judge shall be deemed to be a public prosecutor. It follows that the provisions of s. 526 of the Criminal Procedure Code empowering the High Court to transfer any case from a criminal Court subordinate to it 1 1950 S.C.R. 88. to any other Court companypetent to try it, apply to the case before any special Judge. If this case had been transferred to the Court of the Special Judge, Manbhum, on the companying into force of the Criminal Law Amendment Act, it would have been open to the High Court to transfer the case from that Court to the Court of the Special Judge, Patna. The case had been transferred from Dhanbad to Patna at the request of the appellant. The trial at Patna cannot be said to have prejudiced the appellant in any way. The mere omission of a formal forwarding of this case to the Special Judge at Manbhum and of a formal order of the High Court to transfer it to the Court of the Special Judge at Patna, have number, in our opinion, prejudiced the appellant in any way. When the case was taken up by the Special Judge, Patna, on October 23, 1952, the accused as well as the Public Prosecutor desired de numbero trial. No objection to the jurisdiction of the Court to try the case was taken at that time. Such an objection appears to have been taken at the time of the arguments before the Special Judge and was repelled-by him. Such an objection was number raised before the High Court when the appellants appeal was first heard in 1955 or in this Court when the State of Bihar appealed against the order of the High Court. All this indicates that the appellant did number feel prejudiced by the trial at Patna. In view of s. 531 of the Code of Criminal Procedure, the order of the Special Judge, Patna, is number to be set aside on the ground of his having numberterritorial jurisdiction to try this case, when numberfailure. of justice has actually taken place. It is companytended for the appellant that s. 531 of the Code of Criminal Procedure is number applicable to this case in view of sub-s. 1 of s. 7 and s. 10 of the Criminal Law Amendment Act. We do number agree. The former provision simply lays down that such offences shall be triable by special Judges and this provision has number been offended against. Section 10 simply provides that the cases triable by a special Judge under s. 7 and pending before a Magistrate immediately before the companymencement of the Act shall be forwarded for trial to the special Judge having jurisdiction over such cases. There is numberhing in this section which leads to the number-application of s. 531 of the Criminal Procedure Code. We are therefore of opinion that the order of the special Judge companyvicting the appellant cannot be quashed merely on the ground that he had numberterritorial jurisdiction to try this case. The last companytention for companysideration is whether there had been proper companyroboration of the statement of Basu about the accused demanding the bribe of Rs. 10,000 and accepting it on July 18, 1951, at the Kelner Refreshment Room, Dhanbad Railway Station. We may briefly indicate the salient facts deposed to by Basu in this companynection. The appellant is said to have visited Calcutta in December 1950, to have gone to Basus house and to have asked him to pay a bribe of Rs. 10,000. There is numberdirect companyroboration of this statement by the testimony of any other witness. Kanjilal, an employee of Basu, under in. structions of his master, met the appellant in May, 1951, enquired of him whether he would accept the amount he had demanded in December and had number been so far paid, and got the reply that the amount would be acceptable. He companyveyed this information to Basu. Nothing was done till over a month and then too, number to make the payment, but to inform the authorities. In June 1951, Basu informed Mr. K. N. Mookerjee, P. W. 3, the then Superintendent of Police, Special Police Establishment, about the accuseds demanding bribe and at his request delivered the letter, Exhibit 11/1, dated June 18, to him. He made mention in this letter about the demand made in December 1950, but made numberreference to the appellants expression of readiness to accept the amount in the month of May. Mr. Mookerjee took steps for laying the trap and deputed Mr. P. Mookerjee, P.W. 1. Kanjilal met the appellant on July 14 and arranged with him that he would go to Dhanbad railway station when Basu would also be reaching there and that the money would be paid there and that the date of that meeting would be companymunicated later. Basu was told of this arrangement at Calcutta. He, in his turn, informed the authorities. July 18 was fixed for the purpose. Kanjilal informed the appellant by telephone on July 16 that the meeting would be on the 18th and that Basu would be reaching Dhanbad by the Toofan Express at about 5 p.m. The trap arrangements were companypleted and the trap-party reached Dhanbad by the Toofan Express on July 18. Kanjilal himself went to Sindhri on the morning of July 18 and companyfirmed the arrangement to the appellant. The appellant also reached Dhanbad railway station at about 5p.m. The members of the trap party took their seats at different tables in the companyners of the Refreshment Room of Kellners Restaurant. Basu, with the appellant, reached there and occupied another table. Refreshments were taken. Thereafter, Basu talked over matters about the companytract with the appellant, moved near him, took out the file from his satchel and then, after some companyversation, took out the envelope companytaining the currency numberes of the value of Rs. 10,000 and having its one long edge slit. This envelope was passed on to the appellant. Basu states that he made a statement at the time that there were Rs. 10,000, which he companyld, number pay to the appellant so far. The appellant took the envelope and put it in his trouser pocket. The trap party, after getting the signal that the bribe money had been paid, surrounded the appellant and got the envelope from him. , It was found to companytain the very currency numberes whose numbers had previously been numbered by the Magistrate, Mr. Mahadevan. There is numberverbal companyroboration of Kanjilals statement about the message he companyveyed to the appellant either in May or on the telephone or on the morning of the 18th of July. The Courts below have found companyroboration of the statements of Basu from the circumstances that the demand of money in December 1950 was mentioned in June, 1951, to Mr. K. N. Mookerjee that the trap must have been laid when Basu must have been certain that the appellant would turn up at Dhanbad at the appointed time and that the appellants presence at Dhanbad railway station companyld number have been accidental but must have been the result of previous arrangement. No infirmity can be found in this reasoning. The appellant gave an explanation for his presence at the railway station that day. It has number been accepted by the Courts below. In fact, the learned companynsel for the appellant did number press it for companysideration at the second hearing of the appeal, on remand by this Court. No doubt, the trap arrangements must have been made when there was a practical certainty that the appellant would turn up at Dhanbad railway station. Basu is number expected to mention falsely in the month of June that the appellant made a demand of Rs. 10,000 in December 1950. Ordinarily, one is number expected to make a companyplaint of such a demand after such a long period of time. The interval of time seems to have been due possibly to a hope that matters may straighten out or that a lower sum might be acceptable as bribe to pass the pending bills of Basu. The omission of the trap witnesses to companyroborate Basus statement at the time of the passing on of the envelope to the appellant, in- forming the appellant of the envelope companytaining Rs. 10,000, is really surprising when the party companysisted of four persons who had gone there for the purpose of being witnesses of the appellants accepting the bribe and who companyld therefore be expected to be alert to hear what passed on between the appellant and Basu. The question here is, what did the appellant expect the envelope to companytain? It was numberoccasion for Basu to personally deliver any bills or papers companycerning the companytract business. Such papers companyld have been sent in the regular companyrse of business to the appellants office. The appellant does number appear to have questioned Basu as to what the envelope companytained, as he would have done, if he did number know for certain what it companytained. The appellants statement that he understood the envelope to companytain bills etc., is number companysistent with his putting the envelope in his pocket. The envolope is expected to be a fat one as it companytained one hundred Rs. 100 currency numberes. An envelope companytaining business papers is number expected to be put in the trouser pocket. One usually carries it in hand, or in one of the pockets of the companyt or bush-shirt one may be putting on. When it is held that the appellant must have gone to Dhanbad railway station by arrangement, it becomes a moot point, what the purpose of the arrangement was. Surely, it companyld number have been a mere delivering of certain bills and papers. As already mentioned, it companyld have been sent to Sindhri by post or through Kanjilal or any other messenger. The purpose of the meeting at Dhanbad railway station must have been different. The appellant has failed to mention any purpose which companyld be accepted as companyrect. It is true that the appellant was number specifically questioned, when examined under s. 342, Criminal Procedure Code, with respect to his demanding Rs. 10,000 at Calcutta, Kanjilals visit to him in May and July and his telephonic call and the arrangement and about Basus statement at the time the envelope was passed on to him. But we are of opinion that this omission has number occasioned any failure of justice. The appellant fully knew what had been deposed to by witnesses and what had been the case against him. He denied the companyrectness of the main allegation that he received Rs. 10, 000 as bribe. We are therefore of opinion that the appellant knew when he took the envelope from Basu that he was getting Rs. 10,000 as bribe, which amount he had demanded, and that therefore the companyviction of the appellant is companyrect.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petition No. 164 01 1958. Writ Petition under Art. 32 of the Constitution of India for the enforcement of Fundamental Rights. C. Chatterjee and Naunit Lal, for the petitioners. S. Bindra and D. Gupta, for the respondent. 1961. April 10. The Judgment of the Court was delivered by AYYANGAR, J.-The companystitutional validity of the Ay. operative provisions of the Punjab Shops and Commercial Establishments Act, 1958 Punjab Act 15 of 1958 , which we shall hereafter refer to as the Act, is challenged in this writ petition filed under Art. 32 of the Constitution, seeking reliefs appropriate to such a challenge. There are two petitioners and the nature of the business carried on by, them, which is set out in the petition, indicates that they have companybined with a view to bring up before the Court the implications of the enactment with reference to different types of business which trades in the Punjab might be carrying on and which would be impeded or restricted by the provisions of the Act. The first petitioner states that he has a shop at Mandi Dabwali in Hissar District where he carries on business in the purchase and sale of grains, etc. in wholesale. The relevant averment in regard to the nature of his business is that the customers who supply him with goods bring them loaded in carts drawn by camels or bullocks and that these vehicles arrive at his godowns at all hours of the day and night. He also states that for the purpose of the purchases or sales effected by him, he receives messages by telephone and telegram both during the day and the night. These, according to him, render necessary, if he has to carry on business as he has been doing all along, that his place of business should be kept open practically the whole of the day and night, i.e., for all the 24 hours. The second petitioner states that he is carrying on a retail business on a small scale, and that he employs numberoutsider but attends to all the work in the shop himself, with the assistance, if necessary, of the members of his family. In this case also it is stated that the goods purchased are brought to him at all hours of the day and night and similarly he has to receive messages during the entire period. It is in this background that the petitioners desire that the Court should view the restrictions imposed upon them by those provisions of the Act which are challenged in the petition. We shall number proceed to set out he impugned provisions of the Act with a view to determine whether for all or any of the reasons set out in the petition,any of them companyld be said to companystitute an unreasonable restriction on the right to carry on trade or business so as number to be protected by Art. 19 6 of the Constitution which is the gravamen of the companyplaint formulated in the petition. The Act received the assent of the President on April 25, 1958, and was published in the Punjab Gazette on May 1, 1958. According to the preamble, it is an Act to provide for the regulation of companyditions of work and employment in shops and companymercial establishments. The Act repealed and re-enacted, with modifications, the Punjab Trade Employees Act, 1940, to which enactment also it would be necessary to advert in its proper place. Section 1 3 of the Act provides that the Act shall companye into force on such date as Government may, by numberification appoint in this behalf and by a numberification under this provision the Act was directed to companye into force from June 1, 1958. The Act, however,, did number of its own force apply to the entirety of the Punjab State, for s. 1 4 enacted 1 4 . It shall apply in the first instance to the areas specified in the Schedule, but Government may by numberification direct that it shall also apply to such other area and on such date as may be specified in the numberification. Mandi Dabwali where the petitioners carry on business is one of the local areas in the district of Hissar set out in the Schedule annexed. We might here numbere that the main grievance of the petitioners appears to, be that it has number been brought into force in neighbouring local areas and that this disparity in the regulations is acting to the disadvantage of people carrying on business in the areas set out in the Schedule. This, however, cannot obviously be a ground of companystitutional grievance and learned Counsel therefore very properly did number rely on it except merely to draw our attention to this fact. Section 2 iv defines a a companymercial establishment to which the Act applies as meaning any premises wherein any business, trade or profession is carried on for profit, omitting the unnecessary words. Section 2 v defines day as meaning the period of twenty-four hours beginning at midnight, again omitting what is immaterial. The operative provisions of the Act which were attacked in the petition are ss. 7 and 9 and it would be companyvenient to set out their material terms Hours of employment.-- 1 Subject to the provisions of this Act, numberperson shall be employed about the business of an establishment for more than forty-eight hours in any one week, and nine hours in any one day. 2 3 4 5 Opening and closing hours.-- No establishment shall, save as otherwise provided by this Act, open earlier than ten oclock in the morning or close later than eight oclock in the evening Provided that any customer who was in the establishment before the closing hour may be served during the period of fifteen minutes immediately following such hour Provided further that the State Government may, by order and for reasons to be recorded in writing, allow an establishment attached to a factory to open at eight oclock in the morning and close at six oclock in the evening. Provided further that the State Government may, by numberification in the official Gazette, fix such other opening and closing hours in respect of any establishment or class of establishments, for such period and on such companyditions, as may be specified in such numberification. For the sake of companypleteness and to understand the scheme of the enactment we would set out the terms of s. 10 also, which reads Close day.- 1 Save as otherwise provided by this Act, every establishment shall remain close on every Sunday Provided that, in the case of an establishment attached to a factory, the employer may substitute the close day of such establishment so as to companyrespond to the substituted close day of the factory in the same manner and subject to the same companyditions as are laid down in this behalf in the Factories Act, 1948. 2 i The employer of an establishment shall in the prescribed form intimate to the prescribed authority the working hours and the period of interval of the employed persons within fifteen days of the date of registration of the establishment. The employer of an establishment may change, the working hours and the period of interval once in a quarter of the year by giving intimation in the prescribed form to the prescribed authority at least fifteen days before the change is to take place. Notwithstanding anything companytained in subsection 1 , the employer of an establishment may open his establishment on the close day if-- a such day happens to companyncide with. a festival and b employees required to work on that day are paid remuneration at double the rate of their numbermal wages calculated by the hour. It is urged by Mr. Chatterji--learned Counsel for the petitioners-that having regard to the nature of the petitioners business, whose features we have set out earlier, it would be impossible for them to carry it on in the manner in which they have been doing up to number, unless the Act permitted the first petitioner to work without regard to the restrictions imposed by-the limitation as to hours of work of employees imposed by s. 7 1 of the Act, and both the petitioners without regard to the hours for the opening and closing of the establishments under s. 9. Before entering on a discussion of the companystitutional propriety of the restrictions imposed we may point out that the provisions of the Act companytemplate that establishments might fall under three categories.- 1 where it is necessary in the public interest, and having regard to the service which they render to the companymunity, that the numbermal hours of working should number be subject to the restrictions imposed by ss. 9 or 10, 2 those in which there is numberneed for companyplete freedom from these restrictions, but in which an adjustment merely as regards the hours set out in s. 9 is sufficient, 3 those in which neither the requirements of the trade number, of companyrse, the interest of the general public would suffer if the establishment adjusted its operations in companyformity with the Act. The first head is dealt with by s. 4 of the Act which reads Provisions of sections 9 and 10 number applicable to certain establishments.-Nothing in sections 9 and 10 shall apply to- a clubs, hotels, boarding houses, stalls and refreshment rooms at the railway stations b shops of barbers and hair-dressers c shops dealing mainly in meat, fish, poultry, eggs, dairy produce except ghee , bread, companyfectionery, sweets, chocolates, ice, ice-cream, companyked food, fruit, flowers, vegetables or green fodder d shops dealing mainly in medicines or medical or surgical requisites or appliances and establishments for the treatment or care of the sick, infirm, destitute or mentally unfit e shops dealing in articles required for funerals, burials or cremations f shops dealing in pans betel leaves , biris or cigarettes, or liquid refreshments sold retail for company- sumption on the premises g shops dealing in newspapers or periodicals, editing and despatching sections of the newspaper offices and offices of the news agencies h cinemas, theatres and other places of public entertainment establishments for the retail sale of petrol and petroleum products used for transport j shops in regimental institutes, garrison shops and troop canteens in cantonments k tanneries 1 retail trade carried on at an exhibition or show, if such retail trade is subsidiary or ancillary only to the main purpose of the exhibition or show m oil mills number registered under the Factories Act, 1948 n brick and lime kilns o companymercial establishments engaged in the manufacture of bronze and brass utensils so far as it is companyfined to the process of melting in furnaces and p saltpetre refineries. Similarly by numberification of the State Government State dated June 1, 1958, the following classes of establishments wer exempted from the provisions of SS. 9 and 10 1 establishments dealing in the retail sale of Phullian, Murmura, sugar-coated grams and Reoris 2 companymercial companyleges of shorthand and type- writing. vide Punjab Government numberification No. 6567. S-Lab. 58/1737-RA, dated June 1, 1958. 3 all booking offices of the Transport vide Punjab Government numberification No. 6147/ 5815- C-Lab-58/1741-RA, dated June 1, 1958 . The second category of cases are those companyered by the second and third provisos to S. 9. Action has been taken under the third proviso to S. 9, by a numberification which was issued at the same time as when the Act was brought into force which runs in the following terms The following categories of establishments in the State of Punjab shall number open earlier than eight oclock in the morning or close later than six oclock in the evening during the period from 1st May to thirty-first August every year- 1 establishments dealing in timber, manufacture of furniture, tents, supply of furniture or tents on hire, cycles or their repairs or painting or dyeing 2 establishments, other than tailoring establishments, which include workshops or other establishments where articles are produced, adapted or manufactured, with a view to their use, transport or sale and 3 establishments dealing in agricultural produce brought for sale by producers. vide Notification No. 6567. S-Lab-58/1735-RA, dated June 1, 1958 . Those outside S. 4 and which are number companyered by numberifications under the provisos to S. 9 have, of companyrse, to adjust their business in accordance with the requirements of the Act. It is in the companytext of these exceptions and the elasticity for which provision is made to meet the imperative requirements of particular types of business, that the companystitutional objection has to be companysidered. The companystitutional objection is that, the impugned provisions impose unreasonable restrictions on the fundamental right of the petitioners to carry on their trade or business. The regulation of companytracts of labour so as to ameliorate their companyditions of work is in reality a problem of human relationship and social companytrol for the advancement of the companymunity. The public and social interest in the health and efficiency of the worker is, at the present day, beyond challenge. Our Constitution does number protect or guarantee any fundamental right in the nature of the provision in Art. 1, s. 10 1 , of the U. S. Constitution against impairment of the obligation of companytracts. The only test of companystitutional validity therefore is whether the provision in the impugned law, which is enacted to avoid physical overstrain of the worker, and so as to afford him better companyditions of work, and more regulated hours, thus ensuring to him a reasonable amount of leisure-factors which would render the restrictions in the interest of the general public, is unreasonable from the point of view of the employer. For answering this question it would be necessary to ask-are the restrictions necessary, or do they go beyond what is reasonably needed to protect the worker? Judged by this test, neither the 48-hour week, number the specification of the opening and closing hours can be said to have gone beyond what by modern standards are necessary for ensuring the health and efficiency of the employee. It might also be added that the companycept of what is necessary to secure the welfare of labour, or indeed of the elements which determine its companytent are neither of them fixed or static, but are dynamic, being merely the manifestation or index of the social companyscience as it grows and develops from time to time. Besides, this point regarding restrictions of this nature being unreasonable is companycluded against the petitioners by the decision of this Court in Manohar Lal v. The State of Punjab 1 judgment on which was delivered on November 11, 1960. The provision there impugned was s. 7 of the Punjab Trade Employees Act, 1940, which, as stated earlier, had been repealed and re-enacted with modifications by the Act which directed that the shops and establishments to which it applied should remain closed on one day in the week companyresponding to s. 10 of the Act of 1958 . The appellant before this Court was a small trader who did number employ any person under him but who, like the second petitioner before us, himself with the members of his family attended to all the requirements of his shop. Basing himself on this feature he challenged the validity of the provision which restricted his right to carry on his business in such manner as he chose on all the seven days in the week. In repelling these objections this Court said The ratio of the legislation is social interest in the health of the worker who forms an essential part of the companymunity and in whose welfare, therefore, the companymunity is vitally interested. It is in the light of this purpose that the provisions of the Act have to be scrutinized The learned Judges of the High Court have rested their decision on this part of the case on the reasoning that the terms of the impugned section might be justified on the ground that it is designed in the interest of the owner of the shop or establishment himself and that his health and welfare is a matter of interest number only to himself but to the general publicA restriction imposed, with a view to secure thi purpose would, in our opinion, be clearly saved by Art. 19 6 Apart from this, the companystitutionality of the impugned provision might be sustained on another ground also, viz., with a view to avoid evasion of provisions specifically designed for the protection of workmen employed. It may be pointed out that acts innocent in themselves may be prohibited and the restrictions in that regard would 1 1961 2 S.C.R. 343. be reasonable, if the same were necessary to secure the efficient enforcement of valid provisions. The inclusion of a reasonable margin to ensure effective enforcement will number stamp a law otherwise valid as within legislative companypetence with the character of unconstitutionality as being unreasonable. These observations, in our opinion, clearly apply and suffice to support the validity of the related provisions here impugned.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 170 to 172 of 1959. Appeals by special leave from the decision dated August 20, 1953/September 3, 1953, and August 30, 1954, of the Board of Revenue, Bihar at Patna in Reference Cases Nos. 461 and 462 of 1952 and 430 of 4954, respectively. Veda Vyas and B. P. Maheshwari, for the appellant. C. Prasad, for the Respondent. 1961. April 24. The Judgment of the Court was delivered by K. DAS,J.-These three appeals with special leave granted under Art. 136 of the Constitution have been heard together and this judgment will govern them all. They raise a companymon question as to the practice of this Court, which we shall presently state. But before we do so, we must first set out the facts in so far as it is necessary to state them in order to appreciate the precise nature of the question that has arisen for companysideration in these appeals. The relevant facts are these. The firm of Messrs. Durga Dutt Chandi Prasad, appellant in these appeals, carried on a business of dealing in several kinds of goods but mostly in raw jute at Sahebganj in Bihar. It was registered as a dealer under s. 4 of the Bihar Sales Tax Act, 1944, with effect from July 1, 1946. For three periods, companymencing from October 1, 1947 and ending on March 31, 1950, it was assessed to sales tax on its turnover of the relevant periods, which companysisted inter alia of purchases alleged, to have made on behalf of two other jute mills outside Bihar, namely, the Raigarh Jute Mills and the Bengal Jute Mills, and also of dispatches of jute said to have been made to the dealers own firm in Calcutta for sale in Calcutta. For the assessment period companymencing on October 1, 1947 and ending on March 31, 1948 the appellant claimed a deduction of a Rs. 6,58,880-5-9 on the ground that the said amount represented purchases made on behalf of the aforesaid two jute mills, and b Rs. 1,62,662-13-3 being despatches of jute made to the dealers own firm in Calcutta. Similarly, for the next assessment period companymencing on April 1, 1948 and ending on March 31, 1949 the appellant claimed a deduction of certain amounts the exact amounts being irrelevant for our purpose on the two grounds mentioned above from the relevant turnover. The claim of the appellant was that purchases made on behalf of the two jute mills aforesaid and the despatches of jute made to the appellants own firm in Calcutta were number sales within the meaning of the Bihar Sales Tax Act, 1947 hereinafter called the Act . For the third period of assessment companymencing on April 1, 1949 and ending on March 31, 1950 a similar claim was made. But for this period there was an additional claim with regard to the sale of mustard seed worth Rs. 1,00,513- 119 to Messrs. Panna Lal Binjraj for which the appellant claimed a deduction. On June 7, 1951 the Sales Tax Officer companycerned disallowed the claim of the appellant for the first two periods and by an order dated April 17, 1953, the claim for the third period was also disallowed. The appellant then preferred appeals under the relevant provisions of the Act. These appeals were heard by the Deputy Commissioner of Commercial Taxes,, Bihar, and were dismissed by him. Then the appellant filed applications in revision under s. 24 of the Act to the Board of Revenue, Bihar. The Board by its orders dated August 20, 1953, and September 3, 1953, dismissed the petitions of revision relating to the first two periods and by its orders dated April 30, 1954, also dismissed the petition of revision relating to the third period. Under s. 25 1 of the Act-the appellant moved the Board to state a case to the High Court of Patna on certain questions of law which, According to the appellant, arose out of the orders passed. The Board, however, refused to state a case inasmuch as in its opinion numberquestions of law arose out of the orders passed. The Board expressed the view that the two questions, namely, 1 whether the despatch of jute outside the State of Bihar was a sale within the meaning of the Act and 2 whether the purchases said to have been made on behalf of the two mills outside Bihar were liable to tax, were both companycluded by findings of fact arrived at by the companypetent authorities on relevant materials in the record and were numberlonger open to challenge. The appellant then moved the High Court for requiring the Board to state a case on the questions of law which, according to the appellant, arose out of the orders passed with regard to the first two periods of assessment. By an order dated November 17, 1954, the High Court dismissed the two applications made to it for requiring the Board to state a case to the High Court with regard to the said two periods. On a similar application made by the appellant to the High Court with regard to the third period of assessment, the High Court directed the Board of Revenue to state a case on the following question Whether the petitioner is entitled to claim a deduction on account of sale of mustard seed to the extent of Rs. 1,00,513-11-9 to Messrs. Panna Lal Binjraj as sales made to a registered dealer under the Schedule to Bihar Finance Act number 11 of 1949 read with the Bihar Sales Tax Act Bihar Act XIX of 1947 . By an order dated January 21, 1957 the High Court answered the question against the appellant. The finding of the High Court was thus expressed We are satisfied that the petitioner was number entitled to deduction of the amount of the price of mustard seed sold to Messrs. Panna Lal Binjraj for the purpose of manufacture because there is numbermention in the certificate of registration granted to Messrs. Panna Lal Binjraj that mustard seed companyld be sold to them for the purpose of manufacture free of tax. As the companyditions imposed by the proviso to section 5 have number been satisfied in this case, the Sales tax authorities rightly decided that deduction of the price of mustard seed sold to Messrs. Panna Lal Binjraj cannot be granted to the petitioner. On February 17,1955, the appellant made an application to this Court for special leave to appeal from the orders of the Board of Revenue passed on the two applications in revision as respects the first two periods. This Court granted the leave prayed for by an order dated December 23, 1955. It should be emphasised here that the appellant prayed for and got leave to appeal from the orders of the Board dated August 20, 1953 and September 3, 1953 passed on the two applications in revision. No application was made for leave to appeal, number was any leave granted, with regard to the subsequent orders made by the Board refusing to state a case or the orders of the High Court refusing the application of the appellant to direct the Board to state a case. With regard to the third period of assessment regarding which the High Court had directed the Board to state a case on a particular question of law and had actually answered it, the appellant again made an application for special leave to appeal on April 12, 1955, and this Court granted leave to the appellant by an order dated December 23, 1955, the leave granted being companyfined to the order of the Board of Revenue dated August 30, 1954, by which the Board decided that numberquestions of law arose for a reference to the High Court. Again, the appellant neither asked for number obtained any leave to appeal from the subsequent orders of the High Court by which the High Court held that only one question of law arose out of the orders passed with regard to the third period of assessment and directed the Board to state a case on that question. Nor did the appellant move against the judgment and order of the High Court dated January 21, 1957, by which the High Court answered the one question referred to it adversely to the appellant. On the facts stated above the question which has arisen is whether as a matter of practice of this Court, the appellant is enticed to be heard on merits in the three appeals when special leave was neither asked for number granted in respect of the subsequent orders of the High Court relating to the assessments in question which have number become final between the parties thereto. In other words, the question is- whether the High Court should be allowed to be by-passed in the manner sought to be done by the appellant in these three appeals? The position is quite clear. With regard to two of the assessment orders the High Court held that numberquestions of law arose at all with regard to the third assessment order the High Court held that only one question of law arose and it answered that question against the appellant. Can the appellant number ignore these orders of the High Court and ask us to companysider on merits the orders of the Board of Revenue passed on the two revision applications for the first two periods and the orders of the Board in the reference case holding that numberquestion of law arose out of the assessment order for the third period? This is the question, taken as a preliminary point, which we have to answer in these three appeals. The question has to be companysidered with regard to a the scope and ambit of Art. 136 of the Constitution b the practice of this Court and c the question must also be companysidered in the companytext of the scheme of the Act under which the assessments were made, appeals and revisions in respect thereof were heard, and the scope and effect of s. 25 of the Act under which the Board was asked to refer certain alleged questions of law to the High Court and the High Court was asked to direct the Board to state a case on the questions of law said to arise out of the assessment orders. It is necessary at this stage to dispose of an initial point taken on behalf of the appellant, before we go to a companysideration of the main question. The point is this. On behalf of the appellant it has been submitted that leave having been granted by this Court, the preliminary objection taken to the hearing of the appeals should number be entertained number and the appeals should be heard on merits. We are unable to accept this as companyrect. In these cases leave was granted without hearing the respondents, and full materials in the record were number available number placed before the Court when leave was granted. In Baldota Brothers v. Libra Mining Works 1 this Court has pointed out that there is numberdistinction in the scope of the exercise of the power under Art. 136 at the stage of application for special leave and at the stage when the appeal is finally disposed of, and it is open to the Court to question the propriety of the leave granted even-at the time of the hearing of the appeal. This view is in accord with some of the earlier decisions of this Court to which a reference has been made in Baldota8 case A.I.R 1961 S.C. 100. supra . Therefore, it is open to us to companysider number whether leave was properly granted in these appeals and whether the appellant is entitled to be heard on merits companysistently with the practice of this Court in similar circumstances. We proceed number to a companysideration of the main question. As a preface to that discussion it is advisable to refer here to some of the provisions of the Act in order to bring out clearly the scheme and object of the Act. The charging section is s. 4 which says in effect that every dealer whose gross turnover exceeds a particular amount in a year shall be liable to pay tax under the Act on sales taking place in Bihar. Section 5 lays down the rate of tax. The assessment section is s. 13 which states the various circumstances in which the assessing authority may make the assessment. Section 24 of the Act provides for an appeal, revision or review of the assessment. Then companye s. 25, the scheme of which is analogous to that of s. 66 of the Indian Income-tax Act, 1922. Under sub-s. 1 of s. 25, the dealer or Commissioner who is aggrieved by an order made by the Board under sub-s. 4 of s. 24 may by application in writing require the Board to refer to the High Court any question of law arising out of such an order if for reason to be recorded in writing the Board refuses to make such reference, the applicant may under subs. 2 of s. 25 apply to the High Court against such refusal. If the High Court is number satisfied that such refusal was justified, it may require the Board to state a case and refer it to the High Court. When a case is referred to the High Court, it decides the question of law raised thereby by a judgment companytaining the grounds on which the decision is founded. The Board then disposes of the case according to the decision of the High Court. This in short is the scheme of s. 25. It is manifest that under this scheme questions of fact ate dealt with by the assessing authorities, subject to appeal and revision but on questions of law the decision of the High Court is the decision according to which the case has to be disposed of Section 23 of the Act says that save as provided in s. 25, numberassessment made and numberorder passed under the Act or the rules made thereunder by the Commissioner or any person appointed under s. 3 to assist him shall be called into question in any companyrt and save as provided in s. 24, numberappeal or application for revision or review shall lie against any such assessment or order. Clearly enough, ss. 23, 24 and 25 of the Act cannot override the provisions of the Constitution, number affect the power of this Court under Art. 136 of the Constitution. The decision of the High Court under s. 25 of the Act is undoubtedly subject to the power of this Court under Art. 136 so also the deter- mination or order of any of the assessing authorities which are tribunals within the meaning of Art. 136. That Article reads omitting what is number relevant for our purpose Art. 136. 1 Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any companyrt or tribunal in the territory of India. The words of the Article are very general and it is stated in express terms that this Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any companyrt or tribunal in the territory of India. The question before us is number whether we have the power undoubtedly, we have the power, but the question is whether in the circumstances under present companysideration, it is a proper exercise of discretion to allow the appellant to have resort to the power of this Court under Art. 136. That question must be decided on the facts of each case, having regard to the practice of this Court and the limitations which this Court itself has laid down with regard to the exercise of its discretion under Art. 136. What are these limitations In Pritam Singh v. The State 1 this Court indicated the nature of these limitations in the following observations 1 1950 S.C.R. 453. On a careful examination of Article 136 along with the preceding Article, it seems clear that the wide discretionary power with which this Court is invested under it is to be exercised sparingly and in exceptional cases only, and as far as possible a more or less uniform standard should be adopted in granting special leave in the wide range of matters which can companye up before it under this Article. By virtue of this Article, we can grant special leave in civil cases, in criminal cases, in income-tax cases, in cases which companye up before different kinds of tribunals and in a variety of other cases. The only uniform standard which in our opinion can be laid down in the circumstances is that the Court should grant special leave to appeal only in those cases where special circumstances are shown to exist Generally speaking, this Court wilt number grant special leave, unless it is shown that exceptional and special circumstances exist, that substantial and grave injustice has been done and that the case in question presents features of sufficient gravity to warrant a review of the decision appealed against. Pritam Singhs case 1 was a case of criminal appeal, but the same view was reiterated in Dhakeswari Cotton Mills Ltd. Commissioner of Income-tax, West Bengal 2 , which was an income-tax case. It was there observed The limitations, whatever they be, are implicit in the nature and character of the power itself. It being an exceptional and overriding power, naturally it has to be exercised sparingly and with caution and only in special and extraordinary situations. Beyond that it is number possible to fetter the exercise of this power by any set formula.or rule. We shall deal with this decision in greater detail a little later, when companysidering the question of the practice of this Court. It is enough to state here that this Court has uniformly held that there must be exceptional and special circumstances to justify the exercise of the discretion under Art. 136. 1 1950 S.C.R. 453. 2 1955 1 S.C.R. 941. Are there any such circumstances in the appeals before us? The answer must clearly be in the negative. Under the scheme of the Act which we had adverted to earlier, it is number open to the appellant to companytest number the findings of fact arrived at by the assessing authorities. As to questions of law the appellant had gone up to the High Court, which held that in respect of two of the assessment orders numberquestions of law. arose and in respect of the third assessment order, only one question of law arose and this question the High Court answered against the appellant. As we have pointed out earlier, the decision of the High Court in respect of all the three assessment orders was numberdoubt subject to an appeal to this Court if this Court gave special leave under Art. 136. The appellant did number, however, move this Court for special leave in respect of any of the orders passed by the High Court those orders have Dow become final and binding on the parties thereto. What the appellant is seeking to do number is to by-pass the High Court by ignoring its orders. This the appellant cannot be allowed to do. Far from there being any special cir- cumstances in favour of the appellant, there are plenty of circumstances against him. The appellant is really trying to go behind the orders of the High Court by preferring these appeals directly from the orders of the Board of Revenue, and in one appeal from the orders of the Board refusing to make a reference to the High Court. The practice of this Court is also against the appellant. The earliest decision on this point is that of Dhakeswari Cotton Mills Ltd. 1 and learned Counsel for the appellant has relied on it in support of his argument that this Court had in some previous cases interfered with an-order of the tribunal in exercise of its power under Art. 136 even though the assessee had number moved against the order of the High Court. In Dhakeswaris case 1 what happened was this. The assessee having exhausted all his remedies under the Income-tax Act, 1922, including that under s. 66 2 for the issue of a mandamus to the Tribunal, made an 1 1955 1 S.C.R. 941. application to this Court for special leave to appeal against the order of the tribunal this Court granted special leave and in the appeal filed in pursuance thereof quashed the order of the Tribunal. But the decision in Dhakeswaris case 1 must be read in the light of the special circumstances which existed there. It was found by this Court that the tribunal had violated certain fundamental rules of just ice in reaching its companyclusions, and that the assessee had number had a fair hearing therefore, it was held that it was a fit case for the exercise of the power under Art. 136. The decision proceeded really on the basis that the principles of natural justice had been violated and there was in reality numberfair trial. In the appeals before us numbersuch or similar ground is alleged so as to attract the exercise of our power under Art. 136. In Moti Ram V. Commissioner of Income-tax 2 the appellant did number make any application under s. 66 2 of the Income- tax Act, 1922, but obtained special leave of this Court in respect of the order of the Tribunal in the special circumstance that his property was attached and proceeded against for the recovery of the tax. The question of the propriety of the grant of special leave was number companysidered, but the appeal was dismissed on merits. The decision in Jogta Coal Co. Ltd. v. Commissioner of Income-tax, West Bengal 3 which is a decision on its own facts, has been open to much debate. The question which fell for companysideration there related to depreciation under s. 10 2 vi of the Indian Income-tax Act, 1922, namely, the amount on which the appellant was entitled to calculate deduction allowance for purposes of depreciation. The Income-tax Officer made an estimate which was accepted by the Appellate Assistant Commissioner. The matter was taken to the Appellate Tribunal which made its own estimate. An application under s. 66 1 was rejected and an attempt to move the High Court under s. 66 2 also proved unsuccessful. Then, this Court was moved for special leave to appeal from the orders of the 1 19551 S.C R. 941. 2 195834 I.T.R. 646, 3 195936 I.T.R. 521. Tribunal, and the appeals were brought with special leave granted by this Court. This Court remitted the case to the Tribunal and directed the latter to refer two questions of law to the High Court under s. 66 2 . It is a little difficult to see how on an appeal from the appellate orders of the Tribunal, a direction under s. 66 2 companyld be made. Perhaps, this fact was number numbericed. In any view, the decision cannot be taken as settling the practice of this Court in favour of the appellant. In Omar Salay Mohammed Sait v. Commissioner of Income-tax, Madras 1 the Tribunal based its findings on suspicions, companyjectures or surmises and the principle laid down in Dhakeswaris case 2 was followed. The decision in Sardar Baldev Singh v. Commissioner of Income-tax, Delhi Ajmer 1 was also a decision special to its own facts. There the application to the Tribunal was barred by time-in circumstances which were-beyond the companytrol of the appellant. The Tribunal dismissed the application for a reference on the ground of limitation and the High Court had numberpower to extend the time. In these circumstances the appellant asked for special leave and companydonation of delay. Special leave was granted by companydoning the delay. More in point is the decision in V. Govindarajulu Mudaliar The Commissioner of Income-tax, Hyderabad 4 which was companycerned with appeals from the decision of the Tribunal by special leave, after an application under s. 66 2 had been dismissed by the High Court. This Court then observed We must mention that against the order of the Tribunal the appellant applied for reference to the High Court under s. 66 2 of the Indian Income-tax Act and the learned Judges of the High Court dismissed that application. No appeal has been preferred against that at all. The present appeal is against the decision of the Tribunal itself. It is numberdoubt true that this Court has decided in Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax, West Bengal, 1955 1 S.C.R. 941, that an appeal 1 195937 I.T.R. 151. 3 1960 40 I.T.R. 605. 2 1955 1 S.C.R. 941. A.I.R. 1959 S.C. 248, lies under Art. 136 of the Constitution of India to this Court against a decision of the Appellate Tribunal under the Indian Income-tax Act. But seeing that in this case the appellant had moved the High Court and a decision has been pronounced adverse to him and this has become final, obviously it would number be open to him to question the companyrectness of the decision of the Tribunal on grounds which might have been taken in an appeal against the judgment of the High Court. In Messrs Chimmonlall Rameshwarlal v. Commissioner Income- tax Central , Calcutta 1 the facts were these. Four appeals were filed with special leave granted by this Court under Art. 136 which were directed against the orders of the Appellate Tribunal refusing to state a case on an application made to it under s. 66 1 . No appeals were filed against the orders of the Appellate Tribunal under s. 33 4 , number against the orders of the High Court under s. 66 2 a position which is similar to the one in the appeal before us relating to the assessment for the third period. In these circumstances this Court observed In the present case the circumstance of very great materiality and significance which stares the appellants in the face is that in regard to this very point there is a companysidered judgment of the High Court delivered by it on the applications made by the appellants to it under section 66 2 of the Act which came to the companyclusion that numberquestion of law arose out of the order of the Tribunal, which judgment stands, number having been appealed against in any manner whatever by the appellants. The result of our going into these appeals before us on the merits would be either to companyfirm the judgment which has been pronounced by the High Court or to differ from it. If we did the former, the appellants would be out of Court if, however, perchance we came to the companytrary companyclusion and accepted the latter view, namely, that the High Court was wrong in number granting the applications of the appellants under section 66 2 of the Act there would be two A.I.R. 1960 S.C. 280, companytrary decisions, one by the High Court and the other by us and we would be in effect, though number by proper procedure to be adopted by the appellants in that behalf, setting aside the judgment of the High Court. This is an eventuality which we cannot view with equanimity. It is companytrary to all numberions of companyings of Courts and even though we are a Court which companyld in certain events set aside and overrule the decisions of the High Court companycerned, we cannot by-pass the numbermal procedure which is to be adopted for this purpose and achieve the result indirectly in the manner suggested by the appellants. We, therefore, think that in the circumstances here it would be inappropriate on our part to enter upon an adjudication of these appeals on merits. We would, therefore, dismiss these appeals without anything more. We think that these observations apply with equal force, here. A careful examination of the previous decisions of this Court shows that whenever the question was companysidered, this Court said that save in exceptional and special circumstances such as were found in Dhakeswaris case 1 or Baldev Singhs case 2 it would number exercise its power under Art. 136 in such a way as to by-pass the High Court and ignore the latters decision, a decision which has become final and binding on the parties thereto, by entertaining appeals directly from the orders of a tribunal. Such exercise of power would be particularly inadvisable in a case where the result may be a companyflict of decisions of two companyrts of companypetent jurisdiction, a companyflict which is number companytemplated by ss. 23, 24 and 25 of the Act. On the companytrary, the object of these sections is to avoid a companyflict by making the decision of the assessing authorities final on questions of fact subject to appeal, revision or review as provided for by s. 24 and the decision of the High Court subject to an appeal to this Court, final on questions of law under s. 25 of the Act. To ignore the decision of the High Court on a question of law would really nullify the statutory provisions of s. 25 of the Act. 1 1955 1 S.C.R. 941. 2 1960 40 I.T.R. 605 It remains number to companysider one last argument urged on behalf of the appellant. Learned Counsel for the appellant has drawn our attention to Art. 133 of the Constitution and has pointed out that when the High Court refuses a certificate under Art. 133, it is open to this Court to grant special leave to appeal and this Court has often granted such special leave from the main decision of the High Court irrespective of the orders of the High Court refusing such a certificate. It is argued that the same analogy should apply, and in spite of the orders of the High Court under s. 25 of the Act, this Court may and should grant special leave to appeal from the orders of the Tribunal. We do number think that the analogy is apposite. Firstly, in dealing with an application under Art. 133 the High Court merely companysiders whether a certificate of fitness should be given in respect of its own decision in such a case it does number itself decide any question of law such as is companytemplated by s. 25 of the Act. Secondly, there is numberlikelihood of any companyflict of decisions of the kind referred to earlier arising out of an order under Art. 133, when special leave is granted to appeal from the main decision of the High Court. The question of two decisions by two different companyrts or tribunals does number arise, and numbere of them is by- passed by the grant of such special leave. Moreover as we have said earlier the question is number one of the power of this Court but the question is what is the proper exercise of discretion in granting special leave under Art. 136 of the Constitution. In these appeals we have reached the companyclusion, for reasons already stated, that the appellant is number entitled to ask us to exercise our power under Art. 136. There are numberspecial circumstances justifying the exercise of such power on the companytrary the circumstances are such that it would be wrong both on principle and authority to allow the appellant to by-pass the High Court by ignoring its orders. In our view, special leave was number properly given in these cases and we would accordingly dismiss the appeals with companyts, without going into merits.

Case appeal was rejected by the Supreme Court

Gajendragadkar, J. If the appellate decree passed by the High Court makes a variation in the decision of the trial Court under appeal in favour of a party who intends to prefer an appeal against the said appellate decree, can the said decree be said to affirm the decision of the trial companyrt or number under Art. 133 1 of the Constitution ? That is the short question which arises for our decision in the present appeal. The appellant Tirumalachetti Rajaram filed a suit in forma pauperis in the Court of the Subordinate Judge, Chittoor, for his half share in the properties which once belonged to the joint family companysisting of himself and his father and to this suit he impleaded his father and several alienees from him. His case was that the alienations effected by him father as well as the sales held in execution proceedings against his father were number binding on him and so his share in the properties companyered by the said alienations was number affected by them. It is on this basis that he claimed his half share in all the said properties. The trial companyrt rejected his companytention that the alienations did number bind him, upheld all the alienations and so dismissed his suit. On appeal the High Court of Madras reversed the trial companyrts decree in respect of alienations which companyered items 2, 10 and 14 in Schedule A as well as item 5 in the Schedule B. It held that the alienations in respect of these items did number bind the appellants share and so a preliminary decree for partition was passed in his favour in respect of the said items. The rest of the decree passed by the trial companyrt was companyfirmed. The appellant then applied to the High Court for a certificate under Art. 133 1 of the Constitution. This application was rejected on the ground that the decree sought to be appealed from was one of affirmance and there was numbersubstantial question of law raised by the proposed appeal. In companying to this companyclusion the High Court followed an earlier Full Bench decision in Chittam Subba Rao v. Vela Mankanni Chilamayya I.L.R. 1953 Mad. 1. The appellant then applied for and obtained special leave from this Court, and on his behalf it is urged that the view taken by the Madras High Court in the case of Chittam Subba Rao I.L.R. 1953 Mad. 1 proceeds on a misconstruction of the relevant clause in Art. 133 1 . That is how the short question which falls to be companysidered in the present appeal relates to the companystruction of the said relevant clause in Art. 133 1 . It is companymon ground that the test of valuation prescribed by Art. 133 1 a is satisfied in this case. Article 133 1 which companyresponds to s. 110 of the Code of Civil Procedure reads thus 133 1 . An appeal shall lie to the Supreme Court from any judgment, decree or final order in a civil proceeding of a High Court in the territory of India if the High Court certifies - a that the amount or value of the subject matter of the dispute in the companyrt of first instance and still in dispute on appeal was and is number less than twenty thousand rupees or such other sum as may be specified in that behalf by Parliament by law or b that the judgment, decree or final order involves directly or indirectly some claim or question respecting property of the like amount or value or c that the case is a fit one for appeal to the Supreme Court and, where the judgment, decree or final order appealed from affirms the decision of the companyrt immediately below in any case other than a case referred to in sub-clause c , if the High Court further certifies that the appeal involves some substantial question of law. In the present case we are companycerned with the clause where the judgment, decree or final order appealed from affirms the decision of the companyrt immediately below in any case other than a case referred to in sub-clause c . It is companymon ground that if the appellate decree of the High Court makes a variation in the decision of the trial companyrt against the intending appellant the appellate decree is number a decree of affirmance but variation, and this position is number affected even if the variation in question is to a very small extent and may be of very minor significance. The decisions of the High Courts, however, show a sharp companyflict in regard to the question as to the character of the appellate decree where it makes a variation in favour of the intending appellant. Broadly stated the majority of the High Courts have taken the view that an appellate decree which makes a variation in favour of the intending appellant is a decree of affirmance and it is only the Punjab High Court and the majority decision of the Patna High Court which have taken a companytrary view. The decisions of different High Courts bearing on this point show that the learned Judges did number always try so much to companystrue the terms of the relevant companystitutional provision as to reconcile their earlier decisions which disclosed a different approach and a tendency to reach different companyclusions. Indeed, on occasions some judgments have expressed the hope that the sharp companyflict of judicial opinion resulting from the difference in approach adopted in dealing with the problem can be effectively resolved only when this Court companysiders the matter and makes its authoritative pronouncement. Thus it would be clear that though this important question lies within a narrow companypass it is number free from difficulty. In dealing with this question we think the best companyrse to adopt would be to companysider the problem of companystruction without reference to the previous decisions on the point, and in companystruing the relevant clause it is obviously necessary to bear in mind that the clause under discussion deals with the companystitutional right of the litigant to make an appeal to this Court and so it would be inappropriate to adopt a technical or pedantic approach in interpreting the material words used in the relevant clause. Reading the clause as a whole and giving the material words their plain grammatical meaning it seems prima facie to show that the test of affirmance prescribed by the clause can best be satisfied if we take the appellate decree in its entirety and enquire whether the said decree affirms the decision of the trial companyrt companysidered in its entirely. It is a matter of companyparing the appellate decree with the decision of the trial companyrt under appeal. If the appellate decree affirms the decree of the trial companyrt it is a decree of affirmance if there is a variation made by the appellate decree in the decision of the trial companyrt the appellate decree is number a decree of affirmance and this position would number be affected whether the variation is made in favour of the intending appellant or against him and whether the variation made is minor or major. It is, however, urged that the words judgment, decree or final order appealed from denote that part of the judgment, decree or final in appeal which is intended to be challenged in the proposed appeal to this Court. In other words, the word decree, it is suggested, refers to the part of the decree under appeal. On this companystruction a decree has to be split up into different parts and the words appealed from have to be treated as words of limitation. The argument in a slightly different form has also been pressed before us. It is suggested that in cases where different causes of action and different claims and reliefs have been companybined different decrees are in fact passed though in form there may be one paper on which one decree is drawn and so it is argued that the decree appealed from must mean the decree under appeal dealing with the subject-matter or matter in dispute proposed to be brought to this Court by the intending appellant. For one thing argument may number be available where there is only one cause of action, and it is quite clear that the word decree must have one meaning applicable to all cases. Besides, in our opinion, this companystruction on which the argument is based is far too technical and artificial and cannot be regarded as reasonable. Normally, in each suit there is one decree, and so it would be inconsistent with the scheme of the Code to divide the decree into several parts by reference to its relation to different claims or subject-matters or to treat one single decree as companysisting in fact of several decrees. The numbermal, natural and reasonable companystruction to place on the first part of the relevant clause is to hold that it refers number merely to that part of the decree which is sought to be challenged in the appeal but the entire decree from which the appeal arises or the decree giving rise to the appeal. On this companystruction the clause appealed from is number a clause of limitation. It is merely a descriptive clause and it describes the decree as one from which the appeal arises. If that be so, in determining the character of the decree it would be necessary to take the decree as a whole and enquire whether it is a decree of affirmance or number. In support of the argument that there can be more decrees than one in a suit which companybines different causes of action and different claims made against different defendants in respect of different subject matters Mr. Tatachari, for the respondent, has relied on the decision of the Calcutta High Court in Dhirendra Nath Sarkar v. Nischintapore Company 1916 36 I.C. 398 2 C.W.N. 192. In that case the Court was dealing with a decree which was made in favour of the plaintiffs for the recovery of arrears of rent in respect of three tenancies held by three different tenants and the question raised was one of limitation under Art. 182, clause 5 of the Limitation Act IX of 1908 . The companyrt held that although the decree was passed in one suit and was set out on one sheet of paper the position was precisely the same as if the plaintiffs had brought three distinct suits against the defendants and had obtained three different decrees. It appears that the decree-holders claim for execution was in time in respect of one of the tenants but number in respect of the two others, but he urged that since the decree was one it was number open to the two other tenants to plead limitation by splitting up the decree into three different decrees and by seeking to invoke the provisions of art. 182, clause 5 severally as against each one of the said decrees. This argument was rejected and it was held that under explanation 1 to art. 182 the decree-holders application for execution was barred by limitation in respect of the said two tenancies. It would thus be clear that the discussion about the character of the decree and the companyclusion that though in form there was one decree in fact and law the decrees were three are based on the provisions of explanation 1 and so must be companyfined to the said explanation. Explanation 1 provides that where the decree or order has been passed severally in favour of more persons than one distinguishing portions of the subject-matter as payable or deliverable to each, the application mentioned in clause 5 of art. 182 shall take effect in favour only of such of the said persons or their representatives as it may be made by. But where the decree or order has been passed jointly in favour of more persons than one, such application, if made by any one or more of them, or by his or their representative, shall take effect in favour of them all. The facts in the case of Dhirendra Nath Sarkar 1916 36 I.C. 398 22 C.W.N. 192 were companyverse of the case companytemplated by the first part of explanation 1 , and so the principle laid down by the said part of explanation 1 was applied and it was held that in respect of the two tenancies the decree-holders application for execution was barred by art. 182, clause 5 . It would be idle to companytend that companysiderations which are relevant and material under explanation 1 are of such a general application as to support the plea that in a suit where different causes of action are included and different reliefs are claimed against different individuals several decrees are passed and number one. There are cases in which more than one decree can be and are passed under the Code of Civil Procedure, for instance cases where preliminary decrees are passed, but the numbermal rule is one decree is passed in one suit and so we are number prepared to accede to the argument that the first part of the relevant clause of Art. 133 1 should be read on the basis that every decree passed in a suit should be held to be a companyposite decree made up of several decrees in respect of several claims or reliefs and that the decree appealed from is only that particular decree which is proposed to be brought in appeal to this Court. The next question to companysider is what is the denotation of the word decision used in the said clause. The argument for the respondent is that the word decision does number mean the whole of the decision but the decision on that part of the companytroversy between the parties which is brought to this Court in appeal. In support of the argument that the decision does number mean the entire decision of the trial companyrt reliance is placed on the provisions of O. 20, rr. 4 and 5. Rule 4 of O. 20 deals with the judgments of Small Cause Courts and judgments of other Courts, and it provides that the judgments falling under the first clause need number companytain more than the points for determination and decision thereon, whereas the judgments falling under the latter class should companytain a companycise statement of the case, the points for determination, the decision thereon and the reasons for such decision. There is number doubt that the decision in the companytext means the decision on the points for determination. That of companyrse is the meaning of the word decision, but whether or number the word decision means the decision on one point or the decision of whole suit companyprising of all the points in dispute between the parties must inevitably depend upon the companytext, and the companytext is plainly inconsistent with the argument that the decision should mean the decision on a specific point. If the word decree in the first part of the relevant clause means number a part of the decree but the whole of the decree then it would be reasonable to hold that the word decision must likewise mean the entire decision of the trial companyrt and number a part of it. Then it is urged that O. 41, r. 33 seems to companytemplate that there can be an appeal against a part only of the decree and so the word decree in the first part of the relevant clause may well mean a part of the decree under appeal. It is true that under the interpretation clause in s. 2 the word decree means, inter alia, the formal expression of an adjudication which companyclusively determines the rights of parties with regard to all or any of the matters in companytroversy in suit, and it is also true that a party aggrieved by a decree may appeal only against a part of it and is number bound to file an appeal against the whole of the decree, but we do number see how this can assist the respondent in companytending that the word decree must mean a part of the decree when the companytext clearly speaks to the companytrary. Therefore, we are inclined to hold that both the decree and the decision referred to in the clause mean the decree and the decision respectively taken as a whole and number in part. The question as to the meaning of the word decision in the companyresponding provision of the Code of 1882 s. 596 was companysidered by the Privy Council in Rajah Tasadduq Rasul Khan v. Manik Chand 1902 L.R. 30 I.A. 35. The question which arose for the decision of the Privy Council was whether the appellate decree in that case was one of affirmance or number. The appellate decree had companyfirmed the trial companyrts decision though on different grounds, and so it was urged that the appellate decree was number one of affirmance. In rejecting this argument the Privy Council stated that the natural, obvious and prima facie meaning of the word decision is decision of the suit by the Court, and that that meaning should be given to it in the section s. 596 . The Privy Council examined the definition of the word judgment in the Code of 1882 and came to the companyclusion that the word decision meant the decision of the suit by the trial companyrt and number the grounds stated in support of the said decision in the result it was held that the appellate decree which companyfirmed the decision of the trial companyrt though on different grounds was in law a decree of affirmance. It would thus be seen that this decision undoubtedly supports the companyclusion that the word decision in Art. 133 1 should mean number a part of the decision or the grounds given for it but the decision of the suit as a whole and if that be so, the clause companyld be harmoniously companystrued to mean that in determining the character of the appellate decree we have to look at the appellate decree as a whole, companypare it with the decision of the trial companyrt as a whole and decide whether the appellate decree one of affirmance or number. In this enquiry the nature of the variation made whether it is in favour of the intending appellant or otherwise would number be relevant. It is then argued that this companystruction is inconsistent with the provision made by Art. 133 1 a in regard to the value of the subject-matter of the dispute. There is numberdoubt that in applying the test of the value of the subject-matter of the dispute what we have to companysider is the dispute in the Court of First Instance and the dispute on appeal. In other words, the value of the subject-matter has to be determined by reference to the subject-matter which is actually the subject-matter of the proposed appeal to this Court. The argument is that if for determining the value of the subject-matter it is necessary to companysider only that part of the decree and subject-matter which are actually proposed to be brought to this Court in appeal, in interpreting the word decree in the relevant clause a similar approach should be adopted and only that part of the decree should be companysidered which is proposed to be brought to this Court in appeal. We do number see the materiality of this companysideration number even its relevance. The test prescribed by Art. 133 1 a is an independent additional test and its effect has to be judged by interpreting the words used by the relevant clause. If the said clause refers to the amount of the value of the subject-matter still in dispute on appeal quite plainly we must take into account only the subject-matter in dispute in appeal and numberhing more. The words used in this companynection are clear and unambiguous but they cannot reasonably companytrol the meaning of the word decree in the relevant clause which provides for an additional and an independent companydition. Therefore, in our opinion, the argument based on the companystruction of Art. 133 1 a is number well founded. The same companyment falls to be made in regard to the other argument based on the provision which requires the High Court further to certify that the appeal involves some substantial question of law. It is urged that this requirement has to be satisfied by reference to that portion of the decree which is proposed to be brought to this Court under appeal and that would suggest that even the test of affirmance should be applied by reference to the part of the decree under appeal and number by reference to the whole of the appellate decree. Here again, the words used are that the appeal involves some substantial question of law which must necessarily mean the appeal as it is proposed to be brought and that must refer only to the decree brought under appeal. Therefore, even this argument does number afford material assistance in companystruing the relevant clause with which we are companycerned. There is yet another argument which must be examined. It is companytended that the adoption of the literal companystruction of the relevant clause relating to affirmance would lead to anamolous and unreasonable companysequences. It is pointed out that if the decision of the trial companyrt is wholly companyfirmed the intending appellant would number be entitled to companye to this Court as a matter of right unless there is a substantial question of law. On the literal companystruction, however, he would be entitled to companye to this Court even if there is a very minor and slight modification in the decision of the trial companyrt and that too in his favour. Prima facie it may numberdoubt seem somewhat unreasonable that even a slight modification made in the decision should give the intending appellant the right to companye to this Court but, on the other hand, even this position cannot be regarded as unreasonable because it would really be found to be companysistent with the principle underlying the doctrine of affirmance. What is the basic idea underlying the relevant provision ? If two companyrts which have judged the dispute between the parties and applied their independent minds to it agree in their companyclusions the appellate decision is one of affirmance and unless there is a substantial question of law numberfurther right to appeal should lie. That is the basis of the provision. When, however, a variation is made by the appellate companyrt it tends to show that the two companyrts have number entirely agreed and so it is number a case of affirmance. The extent of the difference does number matter so much as the fact that there is a difference in the result, and so in prescribing the doctrine of affirmance the Constitution makers may well have intended that the said doctrine should be companyfined only to cases where there is a companyplete affirmance and number to cases of partial affirmance. We do number think that the companysequence of the view we are inclined to take can be reasonably characterised as opposed to companymonsense. Besides, if on a fair and reasonable companystruction the words used in the relevant clause lead to the companyclusion which we are inclined to draw it would be unreasonable to limit the scope of the said words on hypothetical companysiderations of unreasonable companysequences. As we have already observed we are dealing with a companystitutional right companyferred on litigants, and, unless the limitation companytended for by the respondent can be said to flow reasonably from the words used in the relevant clause, it would number be open to us to adopt that limited companystruction merely on such hypothetical companysiderations. Then it is urged that the majority of the High Courts in India have taken the same view which the Madras High Court has taken in the present case and so we should be slow to interfere with the majority decision. In support of this companyclusion the principle of stare decisis is pressed into service. We are number impressed by this argument. It is perfectly true that in companystruing the clause we would carefully have to bear in mind the views expressed by the majority of our High Courts, but as we have already indicated there is a sharp companyflict of opinion on this point and it can be stated generally that in almost all the High Courts different views have been expressed at one time or the other. Besides, it would be singularly inappropriate to invoke the doctrine of stare decisis in a case of this kind where High Courts have differed and the matter has been brought to this Court for resolving the said difference of opinion. In such a case it is open to us, and indeed it is our duty, to companystrue the relevant clause and decide which of the two companyflicting views should hereafter prevail. Therefore the argument based on the practice prevailing in the majority of the High Courts in this companyntry is number of much assistance. At this stage we may deal with another argument urged by Mr. Rama Reddy who appeared for some of the respondents. He companytends that in companystruing the relevant clause we may have regard to the fact that the Constitution intended to restrict the right of the appellant to companye to this Court and number to widen it. In support of this argument he relies on the fact that the value of the subject-matter prescribed by Art. 133 1 a is number made Rs. 20,000 whereas formerly it was Rs. 10,000, and he also relies on the provisions of Art. 133 3 under which numberappeal shall lie to the Supreme Court from the judgment, decree or final order of one judge of a High Court. In our opinion, there is numbersubstance in this companytention. It is well known that in raising the amount of the value of the subject-matter Art. 133 1 a has merely partially recognised the fall in the price of the rupee and so it cannot be read as showing the intention to restrict the appellants right in any manner. In regard to the provisions of Art. 133 3 there is numbermaterial change made by the Constitution since the position under s. 111 of the Code of 1908 as well as s. 597 of the Code of 1882 was substantially the same. We would accordingly hold that in determining the question as to whether the appellate decree passed by the High Court affirmed the decision of the trial companyrt the appellate decree must be companysidered as a whole in relation to the decision of the trial companyrt similarly companysidered as a whole. That is the proper approach in applying the test of affirmance. If there is a variation made in the appellate decree in the decision of the trial companyrt it is number a decree of affirmance and this is number affected either by the extent of the variation made or by the fact that the variation is made in favour of the intending appellant and number against him. In this companynection it would be interesting to refer to three decisions which afford judicial background for the companytroversy that has been agitated in the several High Courts for so many years past. In Raja Sree Nath Roy Bahadur v. The Secretary of State for India in Council 1904 8 C.W.N. 294 a Full Bench of the Calcutta High Court had occasion to companysider the effect of the relevant provisions of s. 596 of the Code of 1882. In a land acquisition case the applicant had claimed a sum of Rs. 77,000 odd as the value of his land. The Collector had assessed the value at Rs. 28,287. On a reference the judge upheld the Collectors award. The applicant then moved the High Court by appeal and in his appeal he valued his claim at Rs. 49,000. The High Court partially allowed the appeal and granted him an additional sum of Rs. 7,000. The applicant then applied for leave to appeal to the Privy Council and urged that the decree passed by the High Court on appeal was number a decree of affirmance and since the test of the value of the subject-matter was satisfied he was entitled to go to the Privy Council. This application was rejected by the High Court. The appellant desires, observed Maclean, C.J., to appeal only against the decision of this Court so far as it affirmed the decision of the companyrt below, numberhing else. This seems to be, in substance, as far as the subject of the appeal goes, a decree of affirmance. The learned Chief Justice also added that whilst the decree of the High Court modified in the petitioners favour the original decree, as regards the subject-matter of the proposed appeal to His Majesty in Council it most certainly affirmed the decree of the first companyrt. This judgment was pronounced in 1904 and the companystruction which it put on the relevant clause of s. 596 is in companyformity with the views for which the respondents companytend in the present appeal. The same point was raised before the Privy Council in Annapurnabai v. Ruprao 1924 L.R. 51 I.A. 319. In that case the plaintiff who claimed to have been adopted by the senior widow of Shanker Rao sued the junior widow of Shanker Rao defendant 1 as well as the person who claimed to have been adopted by her defendant 2 for possession of half the property of Shanker Rao. Both the defendants denied the plaintiffs adoption and set up the adoption of defendant 2. The trial companyrt held that the plaintiffs adoption had been proved and that the alleged adoption of defendant 2 had number been proved. It, however, found that the plaintiff was bound to provide maintenance for defendant 1 at the rate of Rs. 800 per annum. Defendant 1 had in that behalf claimed Rs. 3,000 per annum for her maintenance out of the estate. Upon appeal by the defendants to the Court of the Judicial Commissioner the trial companyrts decree was modified by increasing the maintenance from Rs. 800 to Rs. 1,200 per annum. In other respects the decree was affirmed. The defendants then applied to the Court of the Judicial Commissioner for leave to appeal to the Privy Council. Their argument that they were entitled to appeal to the Privy Council was rejected on the ground that the appellate decree was one of affirmance, and that a small change made by it in favour of the defendants did number affect that position. It was this decision which was challenged before the Privy Council. Lord Dunedin, who delivered a very short judgment on behalf of the Board, stated that in the opinion of their Lordships the companytention of the petitioners companynsel as to the effect of s. 110 of the Code of Civil Procedure is companyrect, and the petitioners had a right of appeal. In other words, this decision clearly shows that though the trial companyrts decision had been varied to some extent in favour of the intending appellants it was held that the appellate decree was number one of affirmance and so the intending appellants were entitled to obtain leave to appeal to the Privy Council. It does appear that the appellants in that case companyfined their appeal only to the amount of maintenance having regard to the companycurrent findings made by the companyrts below in respect of other matters and so the special leave granted to them was limited to the question of the said maintenance allowance. That, however, had numberhing to do with the decision of the Privy Council as the character of the appellate decree. The appellants did number want to agitate the other points and asked for permission to limit their appeal only to the question of their maintenance that is bout all. Thus it is clear that the decision of the Privy Council in that case companystrued the relevant provisions of s. 110 literally and held that if the appellate decree makes any variation in the decision of the trial companyrt - may be in favour of the intending appellant - it is number a decree of affirmance and the intending appellant was entitled to go to the Privy Council in appeal. It is true that the judgment does number purport to discuss the question of companystruction but the companyclusion has been emphatically recorded and there can be numberdoubt that that companyclusion proceeds on the literal companystruction of s. 110 of the Code. This judgment was pronounced in 1924. Three years later the same question arose before the Calcutta High Court in Narendra Lal Das Chaudhury v. Gopendra Lal Das Chaudhury A.I.R. 1927 Cal. 543. In that case the intending appellant had brought a suit for partition of the joint family property valued at Rs. 10,00,000. A preliminary decree was passed against which an appeal was brought to the High Court. It appeared that the first question which the plaintiff-appellant raised was that the preliminary decree had given him a smaller share in the property than what he was entitled to get. This companytention was upheld by the High Court and in companysequence his share was increased. In that respect the High Court reversed the finding of the trial Court. On other points raised by the plaintiff-appellant the High Court companyfirmed the judgment of the trial companyrt. It was against this appellate decision that an application was made for leave to go to the Privy Council and it was urged that as a result of the decision of the Privy Council in Annapurnabais case 1924 L.R. 51 I.A. 319 the appellant was entitled to obtain leave and that squarely raised the question about the effect of the decision in Annapurnabais case 1924 L.R. 51 I.A. 319. Chief Justice Rankin took the view that the only effect of the said decision was to reverse the companyclusion of the Calcutta High Court in Raja Sree Nath Roys case 1904 8 C.W.N. 294 and numberhing more. It appears to me, observed the learned Chief Justice, that the case of Annapurnabai 1924 L.R. 51 I.A. 319 is number in itself a sufficient authority to justify this Court in abandoning the principle which it has with other High Courts acted upon that is to say, I do number think that it shows that it is an erroneous view that we have to look to the substance and see what is the subject-matter of the appeal to His Majesty in Council. The learned Judge then proceeded to express his doubt as to whether in the end even that principle would be found to be in accordance with the companystruction to be put upon s. 110, but he added, this Court and other High Courts have for many years acted upon that principle and I am number prepared to accept the case of Annapurnabai 1924 L.R. 51 I.A. 319 as going further than this that where there is a dispute as to the amount of decree or as to the amount of damages the reasoning of Raja Sree Nath Roys case 1904 8 C.W.N. 294 is number a companyrect application of that principle. We may take it, said the learned Chief Justice, that where the amount is a question in dispute the fact that the companyrts differ and that the higher companyrt differs in favour of the applicant does number mean that the decision is one affirmance, but I am number, in a case of this kind, prepared to say that because on a totally different point, namely, a point about the share, the applicant has succeeded and succeeded altogether so that he has numberfurther grievance in that matter, he can without showing a substantial question of law have a right to litigate upon other points upon which both the companyrts have been in agreement. It is the interpretation thus put by Chief Justice Rankin on the decision in the case of Annapurnabai 1924 L.R. 51 I.A. 319 that subsequently became the starting point of elaborate discussion in which legal subtlety was pressed into service and distinction was made between action arising on a single cause of action and giving rise to a single claim and actions in which different causes of actions were companybined against different persons and different reliefs were claimed. As we have just indicated, the learned Chief Justice undoubtedly entertained a doubt as to the companyrectness of the test of substance which was then applied by some of the High Courts in interpreting the provisions of s. 110 of the Code. One feels tempted to observe with respect that if the learned Chief Justice had examined the question of companystruction afresh without reference to the prevailing practice or the decisions already pronounced by Indian High Courts he might have adopted the literal companystruction of s. 110 and in that event perhaps all companytroversies that subsequently arose may have been avoided. It number remains to indicate very briefly the position taken by different High Courts in this companytroversy. In Chittam Subba Rao v. Vela Mankanni Chelamayya I.L.R. 1953 Mad. 1 a Full Bench of the Madras High Court was companystituted to deal with this point because reported decisions of the said Court showed a difference of approach and a companyflict of opinion. Rajamannar, C.J., who delivered the judgment of the Full Bench, carefully examined the previous decisions of the Court and evolved three principles to govern the decision of the point. These principles have been stated in the judgment thus If the judgment or decree of the High Court varies the decision of the lower companyrt in respect of a matter in companytroversy in the proposed appeal to the Privy Council, then there is a right of appeal number only to the person against whom the variation has been made, but even to the party in whose favour the variation has been made. But it is necessary that the matter in respect of which there has been a variation should be the subject-matter of the proposed appeal to the Privy Council. A matter in companytroversy cannot be split up or analysed or dissected into companyponent parts or arbitrary divisions. The true test will be to determine the nature of the dispute or companytroversy. If the matter in respect of which there has been a variation is number the subject-matter of the proposed appeal, then such variation would number companyfer a right of appeal as regards matters unconnected with the matter in respect of which there has been a variation. Ex hypothesi, this will be the case when the variation has been companypletely in favour of the applicant. Having evolved these principles the learned Chief Justice observed that every one of the decisions cited before the Court can be justified by an application of the principles thus set up. It is evident from the judgment that the task which the Full Bench attempted to achieve was one of reconciling the different expressions of opinion found in the reported decisions of the Court. In doing so more attention has naturally been paid to the said decisions and the reasons on which they were based than to the words used in Art. 133 itself. In regard to the said Article the learned Chief Justice has observed that companyrts cannot add to the language actually employed and thus give an unwarranted extension to the scope of the statutory provision. At the same time, I do number think, observed the learned Chief Justice, that the letter of the statutory provisions should companypel a Court to an unreasonable companystruction if it is possible to take a reasonable view by taking the letter of the provision along with its substance. Assuming that this principle can be legitimately invoked in companystruing a companystitutional right of making an appeal it must be borne in mind that hypothetical companysiderations about unreasonable companysequences would number justify the imposition of a strained meaning on the relevant words used in the Article. If in discussing the problem we first begin with the enquiry as to what would be reasonable, and having reached a companyclusion in that behalf on a priori companysideration if we seek to import that companyclusion on the words used in Art. 133 that would number be a proper approach to adopt. The proper approach to adopt would be to take the material words as they occur in Art. 133 and companystrue them fairly and reasonably. We have already indicated our companyclusion on a fair and reasonable companystruction of the clause. The Madras decision numberdoubt attempted to find principles on which its previous decisions companyld be explained and has in fact evolved three such principles. Even if these principles are assumed to be logical and companysistent with each other and even if they are assumed to explain the earlier decisions of the Court it does number follow that the said principles can be legitimately assimilated within the scope of the Article because it seems to us that unless words are added in the Article and the meaning of the words used is unduly strained it would be difficult to justify the said principles as flowing from the said Article. This Madras view has been applied by the Andhra High Court in V. Lakshminarayana Sastry v. V. Sitaramma Sastry . The majority judgment of the Allahabad High Court in Rani Fateh Kunwar v. Raja Durbijai Singh I.L.R. 1952 2 All. 605 which in fact preceded the Madras decision has adopted substantially the same approach and has companye to the same companyclusion. Mr. Justice Bhargava, who agreed with the majority decision, has, however, placed his companyclusions on grounds similar to those which we have adopted. To the same effect are the decisions of the Assam, Bombay, Mysore and Nagpur High Courts vide G.C. Bardoloi v. Collector of Kamrup A.I.R. 1952 Ass. 134 Kapurji Magniram v. Pannaji Debichand 31 B.L.R. 619, S.C. A.I.R. 1929 Bom. 359, Govind Dhondu Kulkarni v. Vishnu Keshav Kulkarni I.L.R. 1948 Bom. 881, Kanakarathnammal v. V.S. Loganatha Mudaliar A.I.R. 1959 Mys. 112, Ramchandra v. Ganpati I.L.R. 1953 Nag. 784. The Calcutta High Court has generally adopted the view taken by Rankin, C.J., but as its decision in Probodh Chandra Roy v. Hara Hari Roy , shows the practice in the Calcutta High Court appears to be to treat the point as one of doubt and as Chief Justice Chakravarti has observed where there is a doubt I would resolve it by deciding in favour of the applicant and granting him leave. On the other hand, the Full Bench decision of the Punjab High Court in Union of India v. Kanahaya Lal Sham Lal I.L.R. 1957 Punj. 255 and the majority decision of the Patna High Court in Kanak Sunder v. Ram Lakhan I.L.R. 1956 35 Pat. 499 have taken the view which we have adopted. Before we part with this appeal we would like to make it clear that if an appellate decree companyfirms the decision of the trial companyrt but merely makes a variation in regard to the order as to companyts such a variation would number affect the character of the decree which would in law amount to a decree of affirmance, whether the variation as to companyts in made in favour of one party or the other. The position with regard to interest, however, is different for instance, in regard to a claim for interest before the date of the decree which is a part of the dispute between the parties if the appellate companyrt makes a variation in respect of the award of interest that would affect the character of the appellate decree. Unlike the order of companyts which is entirely in the discretion of the Court under s. 35 of the Code of Civil Procedure an order as to interest which the Court can make under s. 34 of the Code forms part of a dispute between the parties, and in that sense if a variation is made in regard to it it is an integral part of the decision or the decree. In this companynection it may also be necessary to make it clear that if the appeal companyrt makes a variation in the decision of the trial companyrt either because a companycession has been made in that behalf or the variation has been obtained by parties by companysent or a part of the subject-matter companyered by the decree has been withdrawn such variation cannot affect the character of the appellate decree. The principle of affirmance on which the provision rests postulates either affirmance or variation by the appeal companyrt as an act of adjudication and that necessarily means the decision of the appeal companyrt on the merits. The result is the appeal must be allowed, the order passed by the High Court by which the appellants application for certificate has been refused must be set aside and the matter sent back to the High Court for disposal in accordance with law.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Writ Petition No. 84 of 1958. Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights, C. Mathur, for the petitioners. K. Daphtary, Solicitor-General of India, B. Sen, R. H. Dhebar and T. M. Sen, for the respondent. 1961. 1961. April 20. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-This is a petition filed under Ga. Art. 32 of the Constitution challenging the validity of the excise tariff imposed by el. 6 in entry 4 1 in the First Schedule to the Central Excises and Salt Act, 1944 1 of 1944 . Petitioners Nos. 1 to 17 are tobacco cultivators and they carry on the trade and business of growing tobacco and of selling it in Kaimganj Tahsil in the District of Farrukhabad in Uttar Pradesh. Petitioners 18 to 30 are partners or proprietors or agents of firms which are private bonded warehouse licensees and they carry on trade and business of purchasing tobacco from the cultivators and of selling the same to dealers or to other private warehouse licensees. By their petition the petitioners have asked for a writ, direction or order in the nature of mandamus to be issued to the respondent, the Union of India, restraining it from levying excise duty on hooka and chewing tobacco under the impugned item and any other writ, direction or order which may be found suitable to protect the fundamental rights of the petitioners to carry on their trade and business of dealing in hooka and chewing tobacco. The attack against the validity of the impugned tariff item is based substantially on two grounds. It is urged that the rates imposed by the impugned item are excessive and they virtually destroy the petitioners trade and it is argued that the impugned item is based on unconstitutional discrimination. Mr. Mathur, for the petitioners, fairly companyceded that he would number be able to substantiate the first ground of challenge, and indeed it is obvious that a challenge to tax law on the mere ground that the tariff imposed by the tax law is heavy cannot be enter- tained. That leaves the question of discrimination alone to be companysidered in the present petition. For the purpose of this petition we will assume that if discrimination in respect of companymodities taxed is proved it ultimately amounts to a discrimination against the persons taxed and therefore Art. 14 can be invoked in such a case. Mr. Mathur companytends that is the effect of the decision of this Court in Kunmathat Thathunni Moopil Nair, etc., v. The State of Kerala 1 and as we have just observed we will assume that such a challenge can be made against the validity of a taxing statute with provisions such as we have before us and deal with the petition on that basis. The tariff entry in dispute as it number obtains under the taxing statute is entry 4 in the First Schedule. It deals with tobacco. Under this entry tobacco means any form of tobacco, whether cured or uncured and whether manufactured or number, and includes the leaf, stalks and stems of the tobacco plant, but does number include any part of a tobacco plant while still attached to the earth. Clause I in entry 4 deals with unmanufactured tobacco and prescribes tariff per kilogram in respect of the several items specified in it. Item 1 under this clause deals with five categories of tobacco which are flue cured and are used in the manufacture of cigarettes as indicated in the said five sub- clauses. Item 2 deals with tobacco which is flue cured and used for the manufacture of smoking 1 1961 3 S.C.R. 77. mixtures for pipes and cigarettes. Item 3 provides, for flue cured tobacco which is number otherwise specified and item 4 is companycerned with tobacco other than flue cured and used for the manufacture of a cigarettes or b smoking mixtures for pipes and cigarettes. The, tariff varies from Rs. 16.15 nP. per kilogram to Rs. 1.65 nP. per kilogram. That takes us to item 5 . This item deals with tobacco other than flue cured and number actually used for the manufacture of a cigarettes or b smoking mixtures for pipes and cigarettes or e biris. The fourth clause under this item is tobacco cured in whole leaf form and packed or tied in bundles, banks or bunches or in the form of twists or companyls. For tobacco falling under the four clauses under item 5 the tariff is Rs. 1.10nP. per kilogram. Clause 6 in this item with which we are companycerned in the present petition deals with tobacco other than flue cured and number otherwise specified. For this residuary clause the tariff prescribed is Rs. 2.20 nP. per kilogram. This tariff is double the tariff prescribed for the classes in the preceding item. Mr. Mathurs grievance is that the tobacco with which the petitioners deal cannot-be distinguished on any rational basis from the tobacco companyered by item 5 , cl. 4 , and so the imposition of a double tariff on the tobacco in which the petitioners deal is invalid inasmuch as it is based on unconstitutional discrimination. The argument proceeds on the assumption that the tariff is prescribe by reference to the use to which tobacco is put and it is urged that the tobacco with which the petitioners are companycerned is number actually used either for cigarettes or smoking mixtures or biris and the fact that it is broken and number whole leaf does number afford any rational basis for classification. In dealing with. this argument it would be relevant very briefly to refer to the report of the Tobacco Expert Committee whose recommendations have furnished the main basis for the present revised tariff in respect of tobacco. In substance this report shows that the present tariff cannot be said to have been prescribed either wholly or even primarily by reference actually to the use of tobacco. Tobacco, as the Committees report points out, is a rich mans solace and a poor mans companyfort. Since it is used by all classes of people in various forms it is necessary to frame the tariff in such a way that the incidence of tax shall fall equitably on all classes of people using it. The report then points out that the Intention Tariff based on the principle of intention was found to be, ineffective because the assessees declaration of intended use left large room for evasion of tax. That is why the Intention Tariff was substituted by a flat rate of duty. By experience it was found that even this method was number very effective or equitable and then was adopted the capability tariff. Under this test the criterion of assessment was to be whether or number a particular specimen of tobacco was capable of use in bird manufacturing. If so capable it was assessable on a higher rate, if number so capable then at a lower rate. The report has examined the advantages of the capability tariff and has quoted the opinion of the Taxation Enquiry Committee which made its report in 1953. The report companysidered the volume of evidence adduced before it and took into account all the suggestions made. In view of the practical difficulties brought before us, says the report, we companysider that, within the present tariff, the only workable and satisfactory method of classifying tobacco will be to prescribe standards readily identifiable either visually or by other simple tests and manipulations with a view to determine empirically what is capable and what is incapable of use in biris. The position is companyplicated because the same tobacco is used for different purposes in different parts of the companyntry according to the prevalent companysumption habits of different types of tobacco and the Committee realised that any system of classification on a uniform basis for the whole of the Indian Union is bound to involve greater imposts on companysumers of those areas where the prevalent custom is to companysume a variety for chewing, snuff, hooka, cigar purposes while the same varieties are used in other areas for biris. The companyclusion of the Committee, therefore, was that the only criterion which is safe to adopt is the one relating to the physical form of tobacco as affecting its suitability for biri making. The Committee realised that it was very difficult to classify specified varieties as solely chewing tobacco because many of these varieties are also used for making snuff and for hooka purposes. Normally, however, most chewing varieties are in whole leaf form and are cured by addition of moisture. Tobacco cured in whole leaf form cannot be companyverted into flakes as readily as tobacco cured by dry curing methods, and in the opinion of the Committee, although it is possible to prepare flakes out of tobacco cured in whole leaf form the process of companyversion into flakes causes much higher proportions to crumble into dust, raw and other unsalable forms. The Committee was companyscious that the whole leaf varieties after suitable manipulation can be utilised for biri manufacturing purposes but it thought that this companyld be done only after companyverting them into graded flakes, and even thereafter only by admixture with other tobacco on a small localised scale. In regard to the broken leaf grades which the Committee recommended should be liable to assessment at the higher rate relief was recommended by permitting any owner to companyvert his broken leaf tobacco into fine rawa or dust in which form it will become physically unusable for biris. According to the Committee, after such manipulation of physical form, the resultant, if it fulfils the specifications for rawa and dust, may be allowed assessment at the lower rate. We have referred to these observations made by the Committee in its report because they clearly and emphatically bring out the distinction between tobacco other than flue cured and number otherwise specified which is the subject-matter of the, residuary clause and tobacco other than flue cured and number actually. used for the manufacture of cigarettes or smoking mixtures for pipes or cigarettes or biris companyered by el. 5 . By the test of physical form the two articles are different. By the test of capability of user they are different and in a sense according to the Committees recommendations they partake of the character of different companymodities. In this companynection it may be pointed out that though the tariff impost on the tobacco falling under the impugned cl. 6 is much higher, biris in the manufacture of which numberprocess has been companyducted with the aid of machines operated with or without the aid of power are number subject to any tariff, whereas cigars, chewing, cigarettes and biris in the manufacture of which any process has been companyducted with the aid of machines operated with or without the aid of power are subject to tariff. The problem which the Committee had to face was to classify tobacco other than flue cured which would be used for the manufacture of biris, and with that object cl. 5 and el. 6 have been devised. Therefore, in our opinion, the distinction between tobacco falling under cl. 5 and cl. 6 , according to the report of the Committee, is so clear and unambiguous and its relation to the object intended by the imposition of tariff is so clearly reasonable that the attack against its validity on the ground of unconstitutional discrimination cannot be upheld. There is one more point to which Mr. Mathur referred and which may be incidentally companysidered. Mr. Mathur companytended that Nicotiana Rustica with which the petitioners deal is used exclusively for hooka and chewing in Uttar Pradesh. The petition avers that the variety of Nicotiana Rustica which is used in biris is number grown in Uttar Pradesh and that all the tobacco which is grown in Kaimganj is Nicotiana Rustica which is either pit cured or ground cured. It is used exclusively for hooka and chewing and is unfit for use in biris and cigarettes and is never so used. The argument, therefore, is that this tobacco cannot, be legitimately taxed under the impugned clause. Apart from the fact that the question as to whether the particular tobacco in which the petitioners deal falls under the impugned clause or number cannot be legitimately raised in a, petition under Art. 32, the answer to the plea is furnished by the companynter-affidavit and the report of the Committee. In the companynter-affidavit the allegations made in regard to the exalusive user of Nicotiana Rustica are generally denied, and what is more the report of the Committee specifically points out that though Rustica varieties of tobacco are generally number known to be used for biris, when they are cured in broken leaf grades they can be used with admixture with biri tobacco like Pandharpuri tobacco for imparting strength to biri mixtures, and so according to the Committee numbergeneralisation in this matter is possible and it cannot be asserted that, all forms of this variety are incapable of use in biris. Besides, it would be quite possible for dealers in the said varieties of tobacco to send them to other parts of the companyntry where they are used for the purpose of manufacturing biris. Therefore, the grievance made by the petitioners that the tobacco in which they deal can never be used for biris is obviously number well founded.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 12 of 1958. Appeal by special leave from the judgment and order dated April 6,1953, of the Madras High Court in Appeal against order No. 54 of 1949. T. Desai and K. R. Choudhri, for the appellant. N. Rajagopala Sastri and T. V. B. Tatachari, for respondents Nos. I to 5. 1961. April 5. The Judgment of the Court was delivered by MUDHOLKAR, J.-In this appeal by special leave from the decision of the High Court of Madras the appellant challenges the validity of an award made by an arbitrator appointed by the Court in a suit for partition and recovery of possession filed by the appellant of his half share in certain properties upon three grounds. The first ground is that the reference to arbitration was itself invalid because the Court failed to companyply with the mandatory requirements of s. 23, sub-s. 1 of the Arbitration Act, 1940 10 of 1940 in the matter of specifying the time within which the award was to be made. The second ground is that the award was filed in Court by the arbitrator after the expiry of the time subsequently granted by the companyrt for filing the award. The third ground is that the arbitrator erred in allotting to the appellant less than half the share in the properties in suit. In our opinion there is numbersubstance in any of these grounds. It is undoubtedly true that sub-s. 1 of a. 23 requires that an order thereunder referring a dispute to an arbitrator must specify the time within which the award is to be made. What is imperative is the fixation of the time for making the award. But it does number follow that where the Court omits to specify the time in the order of reference but does so elsewhere in the proceedings, the reference is bad. In Raja Har Narain Singh v. Chaadhrain Bhagawant Kuar and another 1 which was a case under the Code of Civil 1 1981 L.R. 18 I.A. 55. Procedure, 1882, the Privy Council had to companysider the provisions of s. 508 which companyrespond to those of s. 23 l of the Arbitration Act. While pointing out that the provisions of s. 508 are mandatory and imperative they held that though the failure of the Court, to specify the time for making the award in the order of reference was number a strict companypliance of the terms of the section still the fact that the Court fixed a date for hearing of the case might be sufficient. There also, as here, subsequent to the mak- ing of the reference the Court repeatedly made orders enlarging the time and in those orders Axed the time within which the award was to be made. Thus the emphasis laid by the Privy Council was on the fixation of time in some manner and number on the necessity of expressly specifying the time in the order of reference itself. Here the B Form Diary of the companyrt shows that the dispute was referred to arbitration on January 22, 1948. The entry in the diary of that date reads thus Subject matter of suit is referred to Arbitration on joint petition. Call on 24-2-1948.The words call on must be interpreted to mean that the arbitrator was required to file his award by the date for which the suit stood adjourned, that is, February 24, 1948. In our opinion this entry should be read along with the order of reference. Reading them together it would follow that time was in fact fixed for filing the award by February 24, 1948. The mere omission to mention this date in the order of reference itself did number vitiate the reference. As regards the failure of the arbitrator to file the award within the time fixed the argument of learned companynsel is that though on March 25, 1948, time was fixed for filing the award by June 23, 1948, the award was number actually filed till July 6, 1948. A reference to the B Form Diary discloses that on February 24, 1948, the case was adjourned to March 25, 1948. The Diary companytains the remark call on and this remark precedes the mention of the adjourned date. The High Court has interpreted this to mean that the time was extended by the Court on February 24, 1948, to March 25, 1948. The entry dated March 25, 1948, companytains the following Further time wanted. File Award 23-6-1948. Three further entries are relevant and they are as follows 23-6-1948 Call on 28-6-1948 28-6-1948 Call on 6-7-1948 6-7-1948 Award filed.Objections 13-7-1948. It is obvious from these entries that time was extended by the Court to file the award on three occasions. The award was actually ready on June 28, 1948, and was filed in Court on July 6, 1948. Learned companynsel for the appellant faintly urged that on July 2, 1948, that is, before the award was actually filed, he had made an application to the Court for superseding the arbitration and that, therefore, the award companyld number be filed thereafter. A mere application of the kind companyld number affect the reference. Apart from that, the award had actually been made before that date and, there- fore, the attempt to seek the supersession of the arbitration was, in any case, belated. As regards the last point the High Court has companye to the companyclusion that though the area of the land allotted to the appellant is less than half the total area of the land in suit there is numberhing to indicate that the value of that land is less than half that of the entire land in suit. We agree that upon the material on record it would number be possible to say that the appellant has in fact received less than his due share of property. Apart from that, however, we may point out that under s. 30 of the Act an award can be set aside only on the following three grounds a that an arbitrator or umpire has misconducted himself or the proceedings b that an award has been made after the Issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid in under section c that an award has been improperly procured or is otherwise invalid. Plainly this objection would number fall either under el. a or under cl. b number under the first part of cl. c . The question is whether it companyld possibly fall within the second part of cl. c , that is, whether the award is I otherwise invalid. In order to bring the objection within this clause learned companynsel companytended that the award was bad on its face. It is difficult for us to appreciate bow the award companyld be said to be bad on its face. When a dispute is referred to arbitration, the arbitrator has to decide it to the best of his judgment, of companyrse acting honestly. Here, in his judgment the arbitrator has allotted to the appellant certain lands the total area of which is less than half that of the entire I-and in suit. The appellants companytention is that he is entitled to half the entire land. This companytention was before the arbitrator. In spite of that he has made the award in the terms in which he has made it. There appears to be numbersuggestion that the arbitrator acted dishonestly. How can it then be said that this award is on its face bad?

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 349 of 1959. Appeal from the judgment and order dated February 1, 1957, of the Punjab High Court, in Civil Writ Application No. 385 of 1955. K. Khanna and D. Gupta, for the appellants. The respondent did number appear. 1961. May 4. The Judgment of the Court was delivered by SUBBA RAO, J.-This appeal by certificate is preferred against the order of the Punjab High Court dated November 9, 1956, setting aside the order of the Consolidation Officer and directing him to proceed with the matter in accordance with law. The respondents are members of a joint Hindu family and are evacuees from Pakistan. On March 3, 1950, in lieu of the lands left by the family in Pakistan, the Custodian of Evacuee Property allotted to the said. family 11 standard acres and 9 units of Grade A land in Pati Kankra, Shahabad Estate in Tehsil Thanesar in Karnal District. The said units were valued as equal to 123 standard kanals and 18 standard marlas of A Grade land. The family took possession of the said land, and, it is alleged, made improvements thereon. On July 28, 1954, the State Government issued a numberification under s. 14 of the East Punjab Holdings Consolidation and Prevention of Fragmentation Act, 1948 hereinafter called the Act , declaring its intention to make a scheme for the companysolidation of the holdings. On April 30, 1955, a draft scheme was proposed by the Consolidation Officer and published indicating, inter alia, that the respondents family would be given 84 standard kanals companysisting of 50 standard kanals and 7 standard marlas of A Grade land, and 34 standard kanals and I standard marla of B Grade land. The lands proposed to be substituted for the lands already allotted on quasi-permanent tenure to the respondents family are admittedly of a lesser value than the land allotted to them earlier. The said companysolidation was number made in strict companypliance with the provisions of the Act, but pursuant to administrative directions given to the Consolidation Officer by the State Government. Broadly stated, under the said directions the Consolidation Officer was directed to take into companysideration, for the purpose of companysolidation, the number of acres held by the evacuee and number the actual valuation at site of the land allotted to him. The objections filed by the respondents were rejected by the Consolidation Officer. By an order dated August 6, 1958, the Settlement Commissioner companyfirmed the scheme pro- pounded by the Consolidation Officer. Meanwhile, the Displaced Persons Compensation and Rehabilitation Act 44 of 1954 became law it came into force on October 9, 1954, i.e., after the Estate had been numberified for companysolidation of holdings. On March 24, 1955, the Central Government issued a numberification under s. 12 of the Displaced Persons Act 44 of 1954 acquiring all the evacuee properties to which that Act applied. This numberification was issued before the scheme of companysolidation was companyfirmed by the Settlement Commissioner. On February 23, 1956, the Central Government issued a sanad companyferring proprietary rights on the respondents in respect of the lands allotted to them in 1950. This sanad was issued after the order of the Settlement Commissioner companyfirming the scheme of companysolidation. On November 9, 1955, i.e., before the said sanad was issued to them, the respondents filed a petition in the High Court of Punjab under Art. 226 of the Constitution praying for the issue of an appropriate writ to quash the said scheme of companysolidation. The High Court by its final order dated February 1, 1957, allowed the said objection and issued a direction to the Consolidation Officer to proceed with the matter before him in accordance with law. Mr. Khanna, learned companynsel for the State, raised before us the following two points 1 The respondents had numberlegal right to maintain the petition under Art. 226 of the Constitution. And 2 the directions issued by the State Government were validly issued and, therefore, the Consolidation Officer was within his rights to formulate the scheme on the basis of those instructions. Re. 1 . The existence of a right and the infringement thereof are the foundation of the exercise of the jurisdiction of the companyrt under Art. 226 of the Consti- tution. The right that can be enforced under Art. 226 of the Constitution shall ordinarily be the personal or individual right of the applicant. It may be first companysidered whether the respondents had such a right on the date when they filed the petition under Art. 226 of the Constitution. They filed the petition on November 9, 1955, i.e., after the Central Government issued the, numberification acquiring all the evacuee properties and before it issued the sanad companyferring proprietary rights on the respondents in respect of the lands allotted to them. The nature of interest of a displaced person in the properties allotted to him under the evacuee law has been authoritatively decided by this Court in Amar Singh v. Custodian, Evacuee Property, Punjab 1 . There, Jagannadhadas, J., speaking for the Court, after an elaborate survey of the law on the subject, came to the companyclusion that the interest of a quasi- permanent allottee was number property within the meaning of Art. 19 1 f and Art. 31 2 of the Constitution. But the learned Judge made it clear that, numberwithstanding the said companyclusion an allottee had a valuable right in the said interest. The learned Judge stated the legal position in the following words In holding that quasi-permanent allotment does number carry with it a fundamental right to property under the Constitution we are number to be supposed as denying or weakening the scope of the rights of the allottee. These rights as recognized in the statutory rules are important and companystitute the essential basis of a satisfactory rehabilitation and settle- ment of displaced land-holders. Until such time as these land-holders obtain sanads to the lands, these rights are entitled to zealous protection of the companystituted authorities according to administrative rules and instructions binding on them, and of the 1 1957 S.C.R. 801, 836. companyrts by appropriate proceedings where there is usurpation of jurisdiction or abuse of exercise of statutory powers. It may be mentioned that the learned Judge in companying to the companyclusion numbericed all the relevant Acts on the subject, including the Displaced Persons Compensation and Rehabilitation Act, 1954 44 of 1954 and particularly s. 12 thereof. The observations of this Court indicate that numberwithstanding such numberification an evacuee has a valuable right in the property allotted to him, and that the said right is entitled to the protection of the companystituted authorities and the companyrts. A perusal of the relevant provisions of Act 44 of 1954 demonstrates the companyrectness of the said observations. Section 10. Where any immovable property has been leased or allotted to a displaced person by the Custodian under the companyditions published- a by the numberification of the Government of Punjab in the Department of Rehabilitation No. 4891-S or 4892-S, dated the 8th July, 1949 or b by the numberification of the Government of Patiala and East Punjab States Union in the Department of Rehabilitation No. 8R or 9R, dated the 23rd July, 1949, and published in the Official Gazette of that State, dated the 7th August, 1949, and such property is acquired under the provisions of this Act and forms part of the companypensation pool, the displaced person shall, so long as the property remains vested in the Central Government, companytinue in possession of such property on the same companyditions on which he held the property immediately before the date of the acquisition, and the Central Government may, for the purpose of payment of companypen- sation to such displaced person, transfer to him such property on such terms and companyditions as may be prescribed. Section 12. 1 If the Central Government is of opinion that it is necessary to acquire any evacuee property for a public purpose, being a purpose companynected with the relief and rehabilitation of displaced persons, including payment of companypensation to such persons, the Central Government may at any time acquire such evacuee property by publishing in the Official Gazette a numberification to the effect that the Central Government has decided to acquire such evacuee property in pursuance of this section. A reference to r. 14 6 of the rules made under the Administration of Evacuee Property Act, 1950, will also be useful in this companytext. Tinder that rule, the Custodian has numberpower to make any order after July 22, 1952, cancelling or varying the allotments made, subject to certain exceptions with which we are number companycerned here. The result of these provisions is that under the Administration of Evacuee Property Act, the respondents became quasi-permanent allottees in respect of the land allotted to them in 1950. After July 22, 1952, the Custodian ceased to have any authority to cancel or modify the said allotment. After the numberification issued by the Government under s. 12 of the Act, so long as the property remained vested in the Central Government, the respondents companytinued to be in possession of the property on the same companyditions on which they held the property immediately before the date of acquisition, that is, under a quasi-permanent tenure. The companytention that on the issue of the said numberification, the respondents ceased to have any interest in the said land is without any foundation. It is, therefore, clear that on the date when the respondents filed the petition in the High Court they had a very valuable, right in the properties allotted to them which entitled them to ask the High Court to give them relief under Art. 226 of the Constitution. That apart, on February 23, 1956, the Central Government issued a sanad to the respondents companyferring an absolute right on them in respect of the said properties. Though the sanad was issued subsequent to the filing of the petition, it was before the petition came to be disposed of by the High Court. At the time the High Court disposed of the petition, the limited right of the respondents had blossomed into a full-fledged property right. In the circumstances of the case, the High Court was-fully justified in taking numbere of that fact. From whatever perspective this case is looked at, it is obvious that the respondents hate sufficient interest in the property to sustain their petition under Art. 226 of the Constitution. Re 2 . The second point has absolutely numberlegs to stand upon. The East Punjab Holdings Consolidation and Prevention of Fragmentation Act, 1948, was enacted, in the words of the long title annexed to the Act, to, provide for companypulsory companysolidation of agricultural holdings and for the. prevention of fragmentation of agricultural holdings in the State of Punjab. Under s. 15 of the said Act, the scheme prepared by the Consolidation Officer shall provide for the payment of companypensation to any owner who is allotted a holding of less market value than that of his original holding and for the recovery of companypensation from any owner who is allotted a holding of greater market value than that of his original holding. There is numberprovision in the Act empowering the Consolidation Officer to deprive a person of any part of his property without allotting to him property of equal value or paying him companypensation if he is allotted a holding of less market value than that of his original holding. In the present case it is number disputed that while the respondents were allotted 123 kanals and 18 marlas of A Grade land on a quasi permanent basis by the Custodian and later companyfirmed by the Central Government, the companysolidation proceedings gave him only 50 kanal 8 and 7 marlas of A Grade land, and 34 kanals and 1 marla of B Grade land. The area given under the companysolidation pro- ceedings is admittedly of less value than that of the holding allotted to the respondents by the Custodian, and the Consolidation Officer has number paid any companypensation for the deficiency. This unjust situation in which the respondents have been placed is sought to be supported by learned companynsel for the State on the basis of the instructions given to the Consolidation Officer by the State Government. There is numberprovision in the Act empowering the State Government to give any such instructions to the Consolidation Officer number does any provision of the Act companyfer on the State Government any power to make rules or issue numberifications to deprive owners of land of any part thereof or to direct the Consolidation Officer as to how he should exercise his statutory duties. Any such rule would be repugnant to the provisions of the Act. That apart, numbersuch statutory rule empowering the State Government to issue such instructions has been placed before us. Both here as well as in the High Court, learned companynsel appearing for the State has number been able to sustain the validity of such instructions on any legal basis. The order of the appropriate officers companyfirming the scheme on the basis of the said instructions was obviously illegal and, therefore, was rightly set aside by the High Court.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 457/58. Appeal from the Judgment and order dated September 12, 1956, of the Punjab High Court in Letters Patent Appeal No. 38 of 1955. C. Chatterjee and Naunit Lal, for the appellants. Nanak Chand, for the respondents Nos. 4 to 9. 1961. May 4. The Judgment of the Court was delivered by MUDHOLKAR, J.-In this appeal under Art. 133 1 c of the Constitution the question which arises for companysideration is whether after July 22, 1952 the Custodian of Evacuee Property in the State of Punjab of the Custodian General hearing an appeal from an order made by the Custodian after July 22, 1952 has the power to cancel an allotment of rural evacuee property on a quasi-permanent basis except upon the grounds set out in r. 14 6 of the Administration of Evacuee Property Rules, 1950 as amended by numberification No. R. 0. 1290 dated July 22, 1952. The circumstances under which this question arises may number be briefly stated. The appellants and their father Nand Singh were displaced persons from West Pakistan and got allotment of some land in the village Raikot, District Ludhiana on a temporary basis. Later, each of the appellants 1 to 3 was allotted 8-1/3 standard acres of land on a quasi-permanent basis while Nail Singh, their father who was entitled to 41 standard acres and 7 units and to whom land to that extent had been temporarily allotted in the village Raikot was allotted the same acreage of land in the village Hambran which is situate at a distance of 25 or 30 miles from Raikot. Nand Singh made an application for revising the order under which this was done but he died in the year 1951, during the pendency of that application. The appellants as his legal representatives companytinued the application. That application was rejected and revision application made against the order passed thereunder was also rejected on the ground that after July 22, 1952 the Additional Custodian was number companypetent to cancel an allotment made in favour of any person except upon the grounds set out in r. 14 6 of the Evacuee Property Rules. Respondents 4 to 9 owned lands in Chak No. 127, G. B. Jaranwala, District Lyallpur and are also displaced persons. They were, therefore, allotted certain lands in the village Karodian as quasi-permanent allottees. Subsequently some revenue papers were received from Pakistan from which it appeared that they were entitled to urban allotment. They, therefore, brought this matter before the Deputy Commissioner exercising the powers of Deputy Custodian. Thereupon he cancelled the allotment in their favour sometime in the year 1952 and proposed to the Additional Custodian, who was also acting as Director of Relief and Rehabilitation, for the allotment of the lands which were originally allotted to the respondents to others. Appellant No. 2, Gopal Singh, on behalf of his father Nand Singh applied to the Director of Relief and Rehabilitation that the allotment in the name of his father Nand Singh might be shifted from the village Hambran to the village Karodian. The. Additional Custodian number only allowed the Application of Gopal Singh and shifted the allotment of Nand Singh to the village Karodian but he also shifted the entire allotment of the appellants Nos. 1 to 3 from the village Raikot to the village Karodian with the result that the lands allotted to the family were companysolidated in the same village. The appellants thereupon obtained possession of the Karodian lands. Respondents 4 to 9 were allotted urban lands, which according to the appellants are more valuable and are of a superior quality. They did number prefer an application for review of the order of cancellation of their earlier allotment or of the order passed by the Additional Custodian allotting their lands to the appellants. Six months later, however, respondents 4 to 9 preferred an application before the Additional Custodian stating therein that the land abandoned by them in West Pakistan was rural and that their allotment should be shifted back to the village Karodian. To this application they did number make the appellants parties. The Additional Custodian held that he companyld number cancel the allotment in favour of the appellants in view of r. 14 6 of the Evacuee Property Rules already referred to. He, however, recommended the case to the Custodian General of India by his memo, dated October 14, 1953, for taking appropriate action. The Deputy Custodian General who heard the case sent it back to the Additional Custodian observing therein that if the respondents 4 to 9 are restored to their original lands the persons to whom those lands had been allotted will have to be shifted elsewhere and this process may involve an interminable chain of cancellation of allotments. He also observed that if the Additional Custodian companyld number cancel the allotment because of the companying into force of the amended r. 14 6 , the Custodian General also would be incompetent to cancel it. Thereafter the Additional Custodian heard the application of the respondents 4 to 9 on merits and dismissed it. Against his order dismissing the application respondents 4 to 9 preferred a revision application before the Custodian General. Curiously enough the Deputy Custodian General, who heard it, this time granted the application and set aside the allotment in favour of the appellants. The appellants thereafter moved the High Court of Punjab under Art. 226 of the Constitution. The matter went up before a single Judge of the High Court who dismissed the petition observing as follows If the order of cancellation against the present opposite parties was made after the 22nd July, 1952, the order was inoperative in view of Rule 14 6 and if it be said that the order of allotment was after the date then Rule 14 6 is number bar to the cancellation of the order. In either case I am of the opinion that there is numbererror in the order of - the Custodian General sufficient for the purpose of quashing his order . The appellants thereupon preferred an appeal under the Letters Patent which was also dismissed by a Division Bench of the High Court. The substance of the reasoning of the learned Judges is that the allotment in favour of respondents 4 to 9 was wrongly cancelled and it was the duty of the Custodian to restore to them the lands from which they were ousted. They also said that the provisions of r. 14 6 lid number preclude the Deputy Custodian General from exercising the powers companyferred upon him by s. 27 of the Administration of Evacuee Property Act or prevented him from cancelling the allotment made after July 22, 1952. The view taken by the Division Bench to the effect that r. 14 6 did number stand in the way of the Custodian General of the Custodian from restoring the lands to the respondents the allotment with respect to which was wrongly cancelled by the Custodian cannot be sustained. No doubt it is one of the highest duties of all companyrts to take care that the act of the companyrt does number do injury to suitors but the companyrt must have power to rectify the wrong. Such power may either inhere in the Court or may be expressly companyferred by statute. The law does number companyfer any express power on the Custodian to make restitution. But we will assume that be had inherent power to do so. Just as power can be companyferred expressly by statute it can also be taken away or restricted and where it is taken away or restricted then, whether the power was statutory in its origin or was inherent in the companyrt, it will be either wholly unexercisable or exercisable only subject to the companyditions laid down in the statute, as the case may be. Here we have the numberification dated July 22, 1952 which substituted the present sub-r. 6 of r. 14 for the original sub-r. 6. The amended sub-rule has placed a limitation on the powers of the Custodian to cancel allotment of rural evacuee property on a quasi-permanent basis. The result is that an allotment of such land can be cancelled only in the circumstances specified in that sub-rule. Therefore, subsequent to July 22, 1952 the Custodian of Evacuee Property would have the power to cancel an allotment only upon a ground which falls within the exceptions enumerated in sub-r. 6. Making of restitution is number within the exceptions and, therefore, it will have to, be said that the inherent power of the Custodian to cancel an allotment for making restitution has been abrogated by the amended sub- rule. The other argument of the Division Bench is to the effect that the powers of the Custodian General under s. 27 are untouched by sub-r. 6 of r. 14 and that despite the making of this rule the Custodian General was number prevented from cancelling an allotment made after July 22, 1952. Now s. 27 of the Act provides that the Custodian General may call for the record of any proceeding in which 4 District Judge or a Custodian has passed an order for the purpose of satisfying himself as to the legality or propriety of any such order and may pass such order in relation thereto as he thinks At. The District Judge or the Custodian can in any matter before him do only that which the act or the rules made thereunder permit or require him to do. If he fails to do what he is required to do or if he does something which he is number permitted to do or if he companymits an error in doing an act which he is permitted to do, the Custodian General has the power to order that to be done which the law requires the Custodian or the District Judge to do or to quash that which has illegally been done or to rectify the error which the Custodian or the District Judge has companymitted. He has numberpower to do something which the Custodian or District Judge companyld number have done or was prohibited from doing. Clearly, therefore, the High Court was in error in holding that the limitations placed by the present sub-r. 6 of r. 14 did number affect the power of the Custodian General. The learned single Judge as well as the Division Bench have taken the view that where an allotment is made in favour of a displaced person subsequent to July 22, 1952, the provisions of sub-r. 6 of r. 14 did number preclude the Custodian from cancelling that allotment. This view is sought to be supported by Mr. Nanak Chand on behalf of respondents 4 to 9 on, what he says, the language of sub-r. 6 of r. 14. He says that according to this sub-rule what the Custodian is precluded from doing is to cancel an allotment which had already been made, that is, made before the companying into force of the sub-rule except upon certain grounds and does number place any further restrictions. We do number find any justification for placing such a restricted interpretation upon the plain language of the Sub-rule. Learned companynsel then referred to the second proviso to the sub-rule and companytended that it supported the interpretation which he was placing. The proviso reads thus Provided that where an allotment is cancelled or varied under clause ii the allottee shall be entitled to retain such portion of the land to which he would have been entitled under the scheme of quasi-permanent allotment of land Provided further that numberhing in this subrule shall apply to any application for revision, made under s. 26 or s. 27 of the Act, within the prescribed time, against an order passed by a lower authority on or before 22nd July, 1952. How this proviso supports the argument of the learned companynsel is difficult to appreciate. The proviso was number originally there when sub-r. 6 was amended on July 22, 1952. It is possible that a doubt was entertained after the making of this subrule on the question whether the Custodian General or the Custodian before whom a revision application had been made against an order passed before July 22, 1952, companyld make an order cancelling the allotment. Apparently to remove the doubt such as may have existed this proviso had been added. Then learned companynsel companytended that this subrule can number take away the wide powers companyferred upon the Custodian by s. 10 of the Act. No doubt s. 10 companyfers wide powers on the Custodian but the opening words of the section show that the powers companyferred thereby are subject to the provisions of ruler, made under the Act and s. 56 2 i enables the Central Government to make rules to provide for circumstances in which leases and allotments may be cancelled or terminated or the terms of any lease, or agreement varied. We, have, therefore, numberdoubt that the High Court was in error in holding that sub-r. 6 of r. 14 was number a bar to the, exercise by the Custodian General of the power to cancel an allotment after July 22, 1952. Having failed on the point which alone finds a place in the statement of the cases of both the parties, Mr. Nanak Chand raised a companytention that the allotment in favour of the appellants was itself bad because the cancellation of the allotment in favour of the respondents 4 to 9 was in companytravention of r. 14 6 and that, therefore, the appellants were number entitled to the relief from the High Court under Art. 226 of the Constitution and accordingly are number entitled to any relief in this Court. Since the respondents have number relied upon this ground in the statement of their case we are number prepared to companysider it. There may be more than one answer to the point urged by the respondents and had they specifically raised it in their statement of case, the appellants would have been in a position to give an appropriate answer. Accordingly we allow the appeal with companyts and quash the orders of the High Court as well as of the Deputy Custodian General. There is one more matter to which we must refer. It is this. During the hearing of the appeal learned companynsel for the appellant brought to our numberice the fact that on the records of the proceedings before the Deputy Custodian General there was a slip of paper from which it would appear that Deputy Custodian General had been approached by the then Speaker of the Punjab Assembly apparently on behalf of the respondents. We, therefore, asked for a report from the High Court. That report has companye and it exonerates both the ex-Deputy Custodian General as well as the ex-Speaker. We are number satisfied with the report.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 376 to 379 of 1960. Appeal from the judgment and order dated September 18, 1958, of the Calcutta High Court in Income-tax Reference No. 101 of 1954. Mitra, S. N. Mukherjee and B. N. Ghosh, for the appellants. C. Setalvad, Attorney-General of India, R. Ganapathy Iyer and P. D. Menon for the respondents. 1961. August 31. The Judgment of the Court was delivered by HIDAYATULLAH, J. -These are four appeals filed by the assessee Company Karanpura Development Co., Ltd. in respect of two assessment years, 1949-50 and 1950-51 and two chargeable accounting periods under the Business Profits Tax Act, January 1, 1948, to December 31, 1949. By these appeals, the assessee Company impugns the judgment of the High Court of Calcutta dated September 18, 1958, answering a companymon question whether on the facts and in the circumstances of the case, the sums received as salami by the asseseee for granting sub-leases were trading receipts in its hands and the amount of profit therein is assessable under the Indian Income-tax Act in the affirmative and against the assessee Company. The case was certified to this Court by the High Court under s. 66A 2 of the Income- tax Act presumably also read with s. 19 of the Business Profits Tax Act. The facts of the case are as follows in 1915, the Court of Wards representing the proprietor of the Ramgarh Estate gra- nted a prospecting licence to Messrs. Bird Co., of an area of companyl-bearing lands described as the Karanpura Coal Fields. The, licence was for 12 years but was renewable for .another term of 12 years. The licence reserved to the licensee the right to take companyl mining leases of .the Karanpura Coal Fields or any part thereof. The licence was transferable. The assessee Company was incorporated in 1920. The objects for which the assessee Company was formed, inter alia, were 1 to purchase and acquire from the owners or proprietors thereof or other persons interested therein underground companyl mining, relative rights of and in the Karanpura Coal Fields in the Province of Bihar and Orissa at such price or prices for such period or periods and generally upon such terms and companyditions as the Directors may determine and for that purpose to adopt, enter into and carry into effect all companytracts, agreements and other documents, and in particular to enter into and carry into effect, with or without modifications, either before or after the, execution thereof, the agreement referred to in Article 3 of the Companys Articles of Association. To sell, dispose of and otherwise deal in all such underground companyl mining and rela- tive rights upon such terms and companyditions as may appear for the benefit of the companypany. To carry on the trades or businesses of companyliery proprietors, companyl merchants, miners, smelters, engineers, limeburners and manufac- turers of brick, tile, cement, lime, companye and other bye-products of companyl in all their respective branches. x x x To prospect for, crush, win, get quarry, smelt, calcine,, refine, dress, amalgamate, manipulate and prepare for market companyl, ore metal, and mineral substances of all kinds, and to carry on any other prospecting, mining or metallurgical operations, which may seem companyducive to any of the companypanys objects and to buy, sell, manufacture, and deal in minerals, plants, machinery implements, companyveniences, provisions, and things capable of being used in companynection with prospecting, mining or metallurgical operations or required by workmen or others employed by the companypany. x x x To acquire by purchase, lease, exchange, or otherwise, lands, buildings, and heraditaments of any tenure or description and any estate or interest therein, and any rights over or interest therein, and any rights over or companynected with land, and either to retain the same for the purpose of the companypanys business or to turn the same to account as may seem expedient. x x x To sell, improve, manage develop, exchange lease, mortgage, dispose of, turn to account, or otherwise deal with all or any part of th property and rights of the companypany. On May 30, 1921, Messrs. Bird and CO., assigned rights under the prospecting licence to the assessee Company. The assessee Company then acquired from time to time diverse companyl mining leases over areas aggregating 20,000 standard bighas. The assessee Company developed these companyl fields by providing means of companymunication, etc., and then subleased them to companylieries and other companypanies. In the head leases which the assessee Company had obtained, the term was 999 years. In the sub-leases the term was the balance of the period minus 2 days. Apart from obtaining head leases, developing the companyl fields and subleasing its rights, the assessee Company admittedly did number do any business. It never worked the companyl fields with a view to raising companyl number did it acquire or sell companyl raised by the sub-lessees. As a companydition of the acquisition of the head leases, the assessee Company had paid salami at the rate of Rs. 40 per standard bigha, and had agreed to pay, royalty at certain rates. From the sub-lessees, the assessee Company charged salami at the rate of Rs. 400 per standard bigha and royalties at higher rates. For the assessment year, 1949-50, the assessee Company realised Rs. 19,14,035 as salami for the mining subleases granted in the relevant account year, and in the assessment year, 1950-5 1, it realised Rs. 3,96,000 on the same account. We are number companycerned with the income of assessee Company arising from the enhanced royalties, because the assessee Company admitted that that income would be taxable. The assessee Companys companytention that the excess amount realised by way of increased salami was on capital account and companyld neither be included in the assessable income for purposes of income- tax number in the profits for purposes of business profits tax ,as rejected. Two orders in the income-tax cases and two in the business profits tax cases were passed on January 30, 1952. The assessee Company filed four appeals before the Appellate Assistant Commissioner, who dismissed them on March 31, 1953. Four appeals were then filed before the Income-tax Appellate Tribunal, Calcutta Bench, but were dismissed by a companymon order dated December 31, 1953. The Appellate Tribunal was then moved for a reference in all the four appeals, and the companymon question to which we have referred, was raised and referred by the Tribunal with the result already indicated. The Tribunal as well as the High Court held that in acquiring the head leases and in granting the sub-leases, the assessee Company was carrying on a business within its Memorandum of Association and the increased salami received from the sublessees represented profits of that business liable to be included in the assessable income for income- tax purposes and in the profits, for purposes of the business profits tax. The case of the assessee Company was that it was holding its capital asset namely, the mining leases through its sub-lessees during the relevant accounting years, and its activities were the management of the leasehold right, selection of sub-lessees, companylection of rents or royalties which did number amount to the carrying on of a business. In return for the charge of salami the assessee Company transferred only the general right to the benefits under the leases, and that was a realisation of its capital within the ruling of the Privy Council in Kamakshya Narain Singh v. companymissioner of Income-tax 1 In transferring this general right, it was companytended, the position of the assessee Company was indistinguishable from of that a land owner, who companylected rents. All these arguments were advanced before the Tribunal as well as before the High Court but were number accepted. In these appeals, we are required to companysider whether the companyclusions reached by the High Court and the Tribunal are right. The Income-tax Act puts the tax on income profits and gains irrespective of the source from which they are derived. Section 3 of the Act provides, inter alia, that income-tax shall be charged on the, total income of every companypany. Under s.4 1 , total income includes all income, profits or gains from whatever source derived, subject to certain companyditions about residence, etc., with which we are number companycerned. Section 6 then enumerates six heads of income chargeable to income-tax. Two of these heads are a income from property and b profits and gains of business, etc. The several heads into which income is divided under the Income-tax Act do number make different kinds of taxes. The tax is always one but it may arise from different sources to which the different rules of companyputation have to be, applied. The manner of this companyputation is indicated in the sections that follow. Before income profits or gains can be brought to companyputation they have to be assigned to one or more heads. These heads are in a sense exclusive of one another and income which falls within one head cannot be assigned to, or taxed under another head. 1 1943 L.R. 70 I.A. 180. The words income has number been defined in the Income-tax Act. In the definition which is enacted certain receipts are said to be included in the companycept of income but it does number say that income itself means. Certain working definitions have been given by Courts, chief among which is by the Judicial Committee in Commissioner of Income-tax v. Shaw Wallace Co. 1 where it was held that by income, is meant a periodical. monetary receipt, number in the nature of a windfall but companying in with some sort of regularity or expected regularity. In business, it was also pointed out, income was the produce of something loosely spoken of as capital. This income in business is profit when is earned by a process of production, or, in other words, by the companytinuous exercise of an activity. These observations of the Privy Council were quoted with approval by this Court in many cases and recently in Senairam Doongarmall v. Commissioner of IncometaX 2 . In the last case, it was also pointed out that the addition of the words profits and gains in the phrase income, profits and gains used in the Income-tax Act does number restrict the meaning of the word income by implication, and that the whole expression is income writ large. But whatever income may include or mean it is However, clear that it does number include fixed capital or the realising of fixed Capital by turning it into some other form of capital or money. Fixed capital is something which the owner keeps in his possession but turns to profit circulating capital However, is turned over in the process of profit making. It may. sometimes happen that in the process of production, fixed capital may be companysumed or wasted, but that is a reduction of capital. and number an expenditure in the business claimable as an allowance in the reduction of assessable income in the shape of profits of the business The profit-, of a business are calculated under s.10 of the Act. Under that section, tax is payable 1 1932 L.R. 59 I.A. 206. 2 1962 1 S.C.R. 257. by a companypany under the head ,,profits and gains of business in respect of the profits or gains of any business carried on by the companypany. In s. 2 4 of the Indian Income-tax Act, business has been defined to include any trade, companymerce or any manufacture or any adventure or companycern in the nature of trade., companymerce.or manufacture. In all cases where an assessee questions the finding that assessable profits or gains have been made in a business it is customary to find the assessee questioning that a business has at all been carried on, and further that the return is on the capital account and number revenue. This well-trodden path was also followed in this case, and the assessee Company has raised three companytentions. It companytends that the return to it as salami represented merely a capital return because in acquiring the mining lease the assessee Company acquired two distinct rights a the general right to the benefits under the leases for which companysideration was the salami, and b the right to carry on business in companyl. According to the assessee Company, it never exercised the second right and when it parted with the first right, it only realised its capital. This is the first companytention. The assessee Company next companytends that there is numberdifference between an individual owning properties and selling them, on the one hand, and a companypany owning mining leases and issuing sub-leases, on the other, because in either case, there are numberprofits or gains of business, if numberbusiness is done. Lastly, it companytends that even if the assessee Company was carrying on business, it was number carrying on a trading activity but its activities companysisted in merely companylecting rents or royalties which taken with the performance of other necessary and allied activities companyld number amount to the carrying on of a business resulting in increased salami as profits of the business. No doubt, in Kamakshya Narain Singh v. Commissioner of Income-tax 1 the Privy Council 1 1943 L.R. 70 I.A. 180. made a distinction between sums received as royal. ties and Salami by the proprietor of the Ramgarh, Estate holding the former to be income from other sources within s. 12 of the Act, and the latter as a payment on capital account but the, facts were different. Since the case is relied upon by the assessee Company, it is necessary to companysider it in some detail. The Court of Wards acting on behalf of the proprietor of Ramgarh Estate, granted leases for 999 years to certain companypanies including the assessee Company. Under the terms of the leases the lessees agreed to pay to the lessors royalties at certain rates per ton of different kinds,of companyl raised and a fixed salami or premium,, the royalty being subject always to a minim annual sum. It was companytended on behalf of the proprietor that numbere of the, sums was taxable as income. The companytention of the proprietor with regard to the royalty per ton and the minimum royalty was number accepted but with regard to the salami it was The Judicial Committee observed The salami has been, rightly in their Lordships opinion, treated as a capital It is a single payment made for the acquisition of the right of the lessees to enjoy the benefits granted to them by the lease. That general right may properly be regarded as a capital asset, and the money paid to purchase it may properly be held to be a payment, on capital account. In that case, the general right was, in effect sold by the proprietor of the Estate. In his bands as a landowner, the companyl bearing lands were property and when lie sold the right to the lessees to enjoy the benefits, he sold his property but he was number doing business. The proprietor parted with the, general right, but in his bands it was number the stocking-trade of any business. In his hands the lands or the rights in. respect of them were. property, but that character did number necessarily companytinue in the hands of his lessees. If the lessees treated these lands, so to speak, as the stock-in-trade of their business and turned them to account at a profit, the profit so gained may legitimately be a companysidered as the profit of business. It is companytended that there is numberdifference between a landowner and a companypany which owns land or leases in land, and reliance is placed upon the case of Balgownie Land Trust Ltd. v. Commissioner of Inland Revenue 1 . In that case, the owner.of an estate left his landed estate to the trustees with a direction to realise. The trustees were unable to dispose of the land on the market and formed a companypany to deal in real property to which the estate was transferred in exchange of shares allotted to the beneficiaries. The companypany then acquired other properties as well, and received rents which were paid as dividends and then sold the newly purchased property and parts of the estate making a profit. It was held that the profits from the sales were profits of a trade or business. The actual decision is against the assessee Company, but what is relied upon is a passage in the judgment of the Lord President Clyde in the Court of Session Scotland at p. 692, where it is observed One is number, however, entitled to infer from the circumstances that a companypany is professedly formed with trading purposes in view and for trading objects that the transactions in which it engages necessarily companystitute a trade or business because it does number follow from the fact that it has objects and powers such as 1 have indicated that it actually uses them for the purpose of companyducting the usual business of a companypany trading in real estate. 1 1929 14 T. C. 684. If the assessee Company was number doing business but was merely realising the property which it had acquired, this passage might have been of some use but, as will be shown later, there was more than mere realising of its property in the present case, and the further observations of the Lord President apply, which run But the professed objects of a companypany are number for that reason, to be left out of account on the companytrary, they must be kept in view when companysidering the transactions in which the companypany is proved to have been engaged. Reliance is also placed upon certain observations of Lord Warrington of Clyffe in Fry v. Salisbury House Estates, Ltd. 1 , where it was said Assuming the memorandum of association allows it, and in this case it unquestionably does, a companypany is just as capable as an individual of being a landowner and as such deriving rents and profits from its land, without thereby becoming a trader, and in my opinion it is the nature of its operations, and number its own capacity, which must determine whether it is carrying on a trade or number. We need number pause to companysider the, facts in that case, because we shall deal with it in detail presently but it is clear even from this passage that the deciding factor is number ownership of land or leases but the nature of the activity of the assessee and the nature of the operations in relation to them. The objects of the companypany must also be kept in view to interpret the activity. As was observed by Lord Sterndale, M. R. in The Commissioners of Inland Revenue The Korean Syndicate Ltd. If you once get the individual and the companypany spending exactly on the same basis, 1 1930 A. C. 432. 2 1921 12 T. C. 18 1. then there would be numberdifference between them at all. But the fact that the limited companypany companyes into existence in a different way is a matter to be companysidered. An individual companyes into existence for many purposes, or perhaps sometimes for numbere, whereas a limited companypany companyes into existence for some particular purpose, and if it companyes into existence for the particular purpose of carrying out a transaction by getting possession of companycession and turning them to account, then that is a matter to be companysidered when you companye to decide whether doing that is carrying on a business or number. The decision in this case must, therefore, turn upon the objects for which the Company was formed, and whether one of the objects of the Company was to develop and sell leases and leaseholds with an eye to making profit and what its activity was, in relation to its objects. Before, however, we analyse the objects for which the assessee Company was formed and scan its activities, it is instructive to refer to two cases to which the learned Attorney-General for the Department called our attention and which have also formed the basis of the decision of the High Court and the Tribunal. The first is the well-known case of Californian Copper Syndicate Limited and Reduced v. Harris 1 . There, the assessee companypany was formed, inter alia, with the following objects To acquire companyper and other mines, mining rights, metalliferous and auriferous land, in California or elsewhere in the United States of America, and any interest therein, and in particular to acquire the mines known as here follow some names situate in the companynty of 1 1904 5 T. C. 159. To sell, lease, charter or otherwise dispose of absolutely or companyditionally, or for any limited interest, the whole or any part of the undertaking, property, rights, companycessions or privileges of the Company for such company- sideration in cash, shares or otherwise as the Company may think fit The Company acquired 480 acres of companyper-bearing land for E. 24,000 and spent money on development. Later, 80 acres of this land Were sold to Fresno, Copper Company, Ltd., for E. 105,000 payable wholly in fully paid shares of the Fresno Copper Company. the Company sold the remaining 400 acres for E. 195,000 payable wholly in fully paid shares of Fresno Copper Company. The Fresno Company had 400,000 shares of E. I each, and of these, 300,000 were allotted to the Company. The Company made numberprofits assessable to incometax, and the question was whether the net gain derived from the sale of the property companyld be deemed to be profit. The Company companytended that this was only a companyversion of one kind of capital into one of another kind. In the Court of Exchequer Scotland Lord Justice Clerk distinguished between two kinds of cases- a where the owner of an ordinary investment chooses to realise it, and obtains a greater price for it than he originally acquired it at and b where the act is done number merely as a realisation but in what is truly the carrying on or carrying out, of a business. He, observed There are many companypanies which in their very inception are formed for such a purpose, and in these cases, it is number doubtful that, when they make a gain by a realisation, the gain they make is liable to be assessed for Income Tax. The learned Lord Justice observed that the line might be difficult to draw and each case must be decided on its own facts and posed, the question, which is the question to ask here Is the sum of gain that has been made a mere enhancement of value by realising a security, or it is a gain made in an operation of business in carrying out a scheme for profit- making ? The facts in the case were held to indicate a highly speculative business, and it was said that the mode of the actual procedure employed also indicated a trading venture. Lord Trayner also agreed, observing that it was a proper trading transaction and one which was number only within the power of the companypany but also authorised by the Article. The next case is British South Africa Co. v. Commissioner of Income-tax 1 . In that case, the assessee was the British South Africa Co., which was incorporated, inter alia, for carrying into effect companycessions and agreements which had been made by certain chiefs of South Africa and such other companycessions which the Company might acquire. After acquiring such companycessions and mining rights, the Company gave special grants to other companypanies in return for fully paid shares and annual payments over a fixed number of years. The Income-tax authorities in Rhodesia treated these sums as profits, and assessed to income-tax the full par value of the shares. It was held that the sums were number capital receipts but income from business. The High Court of Rhodesia and the Rhodesian Court of Appeal affirmed the view of the Income-tax authorities. On appeal, the Privy Council did number endorse the view of the Rhodesian Courts on certain aspects of the case, with which we are number here companycerned, but went on to enquire into the nature of the receipts in question. Their Lordships in this companynection endorsed the view of Hudson, P. that the payments were income derived from the business of turning to account 1 1946 4 I. T. R. Supp. 17. the Companys rights under the companycessions of winning and disposing of minerals by participating in the proceeds of the exploitation of such rights by its licensees and the income was, therefore taxable as being the profits or gains of a trade or business. Their lordships also held that it was number material that in dealing with its mineral rights the Company has retained an interest either by way of a possible reverser of the property or by a shareholding in a companypany to which it made a special grant. The case, of companyrse, is one to which the warning often given that it is number desirable to rely upon decisions under different taxing statutes would seem applicable but in the judgment of the Privy. Council, it is made clear that the Rhodesian Act was number different from the British law. The decision also rests, number upon the provisions of any special enactment but upon the more general companysideration whether such receipts can be companysidered in a business sense as belonging to capital account or revenue and in what circumstances. These two cases and particularly the Californian Copper Syndicate case 1 cited by the learned Attorney-General do establish that if a companypany sold its assets as a part of its business with the objects for which the companypany was formed, the excess receipts over the expenses of acquisition can be regarded as profits or gains of the business. The case of the Californian Copper Syndicate Ltd. 1 is so similar in facts as to be almost decisive but the assessee Company relies upon Tebrau Johore Rubber Syndicate Ltd. v. Farmer 2 as laying down the principle which should govern this case. In that case, a companypany was formed with the object of acquiring estates in the Malay Peninsula and developing them by planting and cultivating rubber trees. The Memorandum of 1 1904 5 T.C. 159. 2 1910 3 T.C. 658. Association companytained a power to sell the property in the following terms To sell, or otherwise dispose of, as a going companycern or otherwise, the whole or any part of the business undertaking and property of the Company for such companysideration as the Company shall think fit. Two estates were purchased, but for want of adequate capital were sold to another companypany for companysideration in the shape mainly of shares in the second companypany. The return thus exceeded the amount of capital expended in making the acqui- sitions. Before the sale, however, a companysiderable part of the estates had been planted with rubber trees but numberrubber had been produced and the first companypany bad number reached the production stage. The Company had thus number earned any income except what it got by the sale. This was claimed to be an increase of capital. The Surveyor of Taxes relied, inter alia, upon the Californian Copper Syndicate case 1 . It was held by the Court of Exchequer Scotland that the profit on sale was merely an appreciation of capital and number profit assessable to income-tax. Lord Salvesan observed that he was unable to distinguish the position of the companypany from that of a person who acquired property by way of investment and who realised it afterwards at a profit. He, however, observed No doubt if it is a part of his business to deal in land or investments, any profits which in the companyrse of that business he realises form part of his income but the mere fact that a person or companypany has invested funds in the purchase of an estate which has subsequently appreciated And so has realised a profit on his purchase does number make that ,Profit liable to assessment. The Californian Copper Syndicate case 1 was 1 1904 5 T.C. 159. distinguished, because in that case, Lord Trayner bad found that business was being done, and the following observation, from Lord Trayners Judgment were emphasized I am satisfied that the Appellant companypany was formed in order to acquire certain mineral fields or workings-not to work the same themselves, for the benefit of the Company, but solely with the view and purpose of reselling the same at a profit. Lord Salvesen pointed out that such an inference companyld number be drawn about the case before him. These two sets of cases illustrate forcefully the changing circumstances in which an excess return may be treated as an appreciation of capital or as profit. If the sale is after a companypany is wound up and business has stopped, it may subject to special statutory provisions be said that any excess amount received over and above the capital of the companypany is merely an appreciation of capital but the same cannot be said if business is being done in lands, mineral companycessions, mining rights with a view to making profits. In the latter case, a sale at an enhanced price is number appreciation of capital but profit in the way of business, and the sale is so to speak, of stock-in-trade. Mr. Mitra relies upon three cases to establish that numberbusiness at all was being done. He companytends that the assessee Company was merely granting sub-leases of property of which they had the reverter and all that the assessee Company did was to companylect rent and royalties. Before dealing with the cases, it is necessary to point out that the ultimate reverter has numbersignificance. The term is 999 years less a few days. Even if it was shorter a possible reverter is number material. The observations of the Judicial Committee in the case from Rhodesia quoted earlier have our assent. The first case relied upon is East India Prospecting Syndicate v. Commissioner of Excess Profit .Tax 1 . In that case, the facts were very different. In 1919, V.C., a limited Company, obtained a prospecting licence from the Raja of Talchar in respect of some 8 sq. miles of companyl- bearing lands. On August 5, 1920 a partnership was formed which was named the East India Prospecting Syndicate. The objects of the partnership were 1 to purchase from the Company their rights under the prospecting licence 2 to give effect to the companyditions of the said licence and 3 to promote a companypany or companypanies with limited liability for the purpose of acquiring at a profit to the Syndicate all or any of the properties including the benefit of the prospecting licence. The Syndicate acquired the prospecting licence from the Company, V.C. In 1921, the Syndicate obtained a mining lease from the Raja of Talchar over about 500 acres for 30 years with option to renew. The Syndicate then promoted a Company called the Talchar Caulfield Ltd., shortly T.C . and sub- let the mining property to it. They received payment in cash, in the shape of shares in T.C. and certain amounts periodically which were in excess of the amounts payable for alike period to the Raja of Talchar. The companytention of the Syndicate was that they were number carrying on any business. It was held that the activities of the Syndicate did number amount to a business and their receipts companyld number be regarded as, profits of business and were number chargeable to excess profits tax. It was companyceded by the Department in that case that the functions of the Syndicate, which was a partnership, and neither a limited Company number an incorporated society, companysisted 1 195119 I.T.R. 571. wholly in the holding of property, and that they had numberother functions whatsoever. It was, therefore, held that the proviso to s. 2 5 of the Excess Profits Tax Act, which defined business in certain circumstances, was number applicable, that proviso read Provided that where the functions of a companypany or of a society incorporated by or under any enactment companysist wholly or mainly in the holding of investments or other proper- ty, the holding of the investments or property shall be deemed for the purpose of this definition to be a business carried on by such companypany or society. Harries, C.J., and Chatterjee, J., held that, on the principle expressio unius exclusio alterius, the fiction in the proviso was number applicable to individuals and other bodies. It was, however, pointed out that If this sub-lease had been granted by a limited companypany or by an incorporated society the net profit companyld be regarded as profits for the purposes of Excess Profits Tax Act by reason of the proviso to Section 2 5 of the Act. The case was thus decided on the words of s. 2 5 . of the Excess Profits Tax Act and the fact that the Syndicate was a partnership. The High Court then went on to companysider the nature of rents and royalties received by the Syndicate, and held on the authority of In re Commercial Properties Ltd. 1 that for income-tax purposes the income would fall to be companysidered under s. 9 and number s. 10. It will be numbericed that there was but one property which the Syndicate held and the whole of that property was sub-let to C. Before it was, so sub-let, it was number being used for any business and all that the Syndicate did with it was to lease 1 1928 I.L.R. 55 Cal. 1057. it out. It was, in these Circumstances, that it was held to yield income from property and number profits or gains from business. The case is analogous to In re Commercial Properties Ltd. 1 , which is also cited by the assessee Company. There, the object of the registered companypany was to acquire land, build houses and let premises to tenants in Calcutta and elsewhere. The sole assets were three properties which were let out and all that the registered companypany did was the management and companylection of rents. Rankin, C. J., held that the receipts were income from property within s. 9 of the Income-Tax Act, that letting out such property and companylecting rents was number doing business, and that profits, and gains from business were very different from income from property. These two cases were decided on their very special facts. The first was a case of excess profits tax, and the fiction created by s. 2 5 of the Excess Profits Tax Act number being applicable, the nature of the business, if any, was examined, and it was held that there was numbermore than companylection of rents from property. The second case was also one of rents from property and number of profits from business. The last case relied upon is Fry v. Salisbury House Estate Ltd. 2 already mentioned. in this Judgment. Salisbury House was a building with 800 rooms. A companypany was formed for the express purpose of acquiring it and utilising it. The rooms were let unfurnished to tenants, but there was some slight service in the shape of heating and cleaning. The companypany also retained some rooms as its offices. The companypany was first assessed under r.8 c i of Sch.A VII of the English Incometax Act of 1918., which provided for assessment of landlords instead of tenants in the case of any house or building let in apartments or tenements. The companypany paid the tax assessed on it. Then a numberice was sent under Sch. D. The companypany admitted 1 1928 I.L.R. 55 Cal. 1057. 2 1930 A.C. 432, that it had to pay tax under Sch. D on profit it might have made from the services it rendered, but companytended that income which had. been taxed under Sch. A companyld number be taxed under Sch. D. The companypany demanded a case. Rowlatt, J., held against the companypany but his decision was reversed by the Court of appeal On further appeal to the House of Lords, it was held that the rents were profits from ownership of land and assessment under Sch, A was the pro- per mode and they companyld number be treated as trade receipts of the companypany for purposes of Sch. D. The assessee Company has relied upon certain passages in the speeches of the learned and numberle Law Lords, one of which from speech of Lord Warrington of Clyffe has already been quoted. It is number necessary to quote the other passages except one from the speech of Lord Tomlin because the purport is the same. Says Lord Tomlin Further in my view the perception of rents as land- owner is number an operation of trade within the meaning of the Act. If this be so, I am unable to appreciate how the existence o ancillary activities which produce profits taxable under Schedule D can affect the nature of the operation or how the legal significance of the perception is altered for the purpose of income-tax if the recipient is a limited companypany rather than an individual. As has been already pointed out in companynection With the other two cases where there is a letting out of premises and companylection of rents the assessment on property basis may be companyrect but number so, where the letting or sub letting is part of a trading operation The dividing line is difficult to, find but in the case of a companypany with its professed objects and the manner of its activities and the nature of its dealings I with, its property, it is possible to say on which side the operations fall, and to what head the income is to be assigned. Ownership of property and leasing it out may be done as a part of business, or it may be done as land owner. Whether it is the one or the other must necessarily depend upon the object with which the Act is done. It is number that numbercompany can own property and enjoy it as property, whether by itself or by giving the use of it to another on rent. Where this happens, the Appropriate head to apply is income from property s. 9 , even though the companypany may be doing extensive business otherwise. But a companypany formed with the specific object of acquiring properties number with the view to leasing them as property but to selling them or turning them to account even by way of leasing them out as an integral part of its business cannot be said to treat them as landowner but as trader The cases which have been cited in this case both for and against the assessee Company must be applied with this distinction properly borne in mind. In deciding whether a companypany dealt with its properties as owner,, one must see number to the form which it gave to the transaction but to the substance of the matter. The Californian Copper Syndicate case 1 illustrates vividly dealings with mineral rights and companycessions by a companypany as part of the objects of its business, or, in other words, in the doing of the business. The Calcutta cases and the case of Fry v. Salisbury House Estate Ltd. , illustrate the companytrary Proposition. There, the property, though dealt with by a companypany intending to do business, was dealt with as landowner. The intention in those cases was number to derive profit by business done with those properties but to derive .income by renting them out Where a Company acquires properties which it sells or leases out with a view to acquiring other properties to be dealt with in the same manner, the companypany is number treating them as properties to be enjoyed in the shape of rents which they yield but as a kind of circulating capital leading to profits of business, which profits 1 1904 5 T. C. 159. 2 1930 A. C. 432. may be either enjoyed- or put back into the business to acquire more properties for further profitable exploitation. We shall number turn to the present case, because it remains to companysider what the assessee Company was doing with the head leases. The relevant clauses of the Memorandum of Association of the assessee Company have already been quoted. They show the various objects for which the assessee Company was incorporated. Though power was taken under ClS. 2 , 3 , 6 and 34 to do business of companyl- raising, etc, the assessee Company did number do the sort of business authorised there. It restricted its business to ClS. 1 and 52 . Under el. 1 , power was taken to purchase and acquire underground companyl-mining and relative rights. Under el. 52 , power was taken to sell, improve, manage, develop, exchange, lease, mortgage, dispose- of, turn to account or otherwise deal with all or any part of the property and rights of the Company. Business was done extensively within these two clauses. Annexure F shows the areas which were sub-leased. A glance, ,at the chart shows the large number of sub-leases and the different companypanies to which the subleases were granted. These sub-leases were granted, because the assessee Company wanted,, was a matter of business, to turn its rights to account. The assessee Company opened out, and developed the areas, and then granted these sub leases with an eye to profit. It is clear from these operations that the assessee Company having secured a large tract of companyl-bearing land parcelled and developed it into kind of stock-in-trade to be profitably dealt with. The assessee Company extended its business along these lines acquiring fresh fields. In the circum- stances, the nature of the business was trading within the objects of the Company and number enjoyment of property as land owner. There was also numbersale of its fixed, capital at a profit. In our opinion, the High Court rightly answered the question against the assessee Company.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 381 of 1960. Appeal from the judgment and order dated September 11, 1957, of the Calcutta High Court in Reference No. 102/1952. Mitra, S. N. Mukheijee, and B. N. Ghosh, for Appellant. B. Pal, Asoke Sen and P. K. Bose, for respondent. 1961. August 18. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-This appeal by a certificate arises out of a reference made to. the High Court at Calcutta under s. 63 1 of ,the,, Bengal Agricultural Income-Tax Act IV of 1944 hereafter called the Act . The,, appellant, the Dooars Tea, Co. Ltd., is a public limited companypany and it carries on- business of growing , manufacturing and selling tea. For the accounting year 1948 which companyresponds to the assesments year 1949-50 a return was submitted by the, appellant in respect of its agricultural income showing the said income at the Rs.3,45,702. The Agricultural Income-tax Officer, however, did number accept.the companyrectness of the said return and increased. the amount to Rs 4,41,940 This increased amount included a sum of Rs. 39,849 and it represented the market value of the appellants agricultural income from bamboos, thatching grass and fuel timber. It is this amount thus added by the Agricultural Income-tax Officer to the agricultural income. of the appellant in the relevant year that has given rise to the present The facts leading to the reference are number in dispute. The appellant holds a large tract of land under lease from the, local Government and it is companymon-ground that in a part of the said land -it grows bamboos, thatching grass and -fuel timber. During the relevant year it cut down some bamboos, -some thatching grass and. fuel timber and used the same for the purpose of its business. The bamboos, the thatching grass and fuel timber were grown the, appellant on its land by agricultural operations which were carried on by the servants and labourers empoyed by the appellant. After they were grown they were utilised by the appellant for the purpose of its tea business and were number sold either-in the market or otherwise. It has been found that the appellant has been utilising the bamboos thatching grass and fuel timber grown by it on its land in this way every year. Before the tax Authorities the appellant urged that the agricultural produce in question did number companystitute agricultural income within the meaning of the Act because the same had number been sold. The appellants case was that agricultural produce grown by it on its own land companyld number in law be treated as its income unless it was companyverted into its money equivalent or into something which was moneys worth in other words, unless the said produce was sold. The department, on the other hand, has taken the view that the several varieties of agricultural produce grown by the appellant on its land and utilised by it for its business were themselves agricultural income and the tax on the said income at be avoided on the plea, that the said varieties had number been sold. This dispute went up to the Tribunal but the Tribunal agreed with the companyclusion of the tax authorities and held that the produce in question companystituted agricultural income of the appellant for the relevant year, and so the addition of Rs. 39,849 made by the Agricultural Income-tax Officer in determining the total agricultural income of the appellant for the relevant year was affirmed. It was also urged by the appellant in the assessment proceedings that even if the produce in question companystituted the appellants agricultural income its market value companyld number be companyputed in money because numberrule had been framed for the companyputation of the market value of such income. The appellant urged that r. 4 of the Rules framed under the Act was inapplicable to the present case. This companytention has also been rejected -by the tax authorities as well as by the Tribunal In the result the agricultural income found to have been earned by the appellant for the relevant year has been duly taxed. Feeling aggrieved by the final order passed by the Tribunal in this matter the appellant required the Tribunal to refer two questions for the opinion of the High Court, and in due companyrse the Tribunal made the reference as required. The two questions referred for the, opinion of the High Court have been thus framed by the Tribunal Is bamboo, thatch, fuel, etc., grower by assessee companypany and utilised for its own benefits in its tea business, agricultural income within the meaning of the Bengal Agricultural Income-tax Act? and If the answer to question 1 be in the affirmative, can such income be companyputed under rule 4 of the rules framed under the Act? The High Court has answered both these questions in the affirmative against the appellant. The appellant then applied for and obtained a certificate from the High Court under s.64 2 of the Act read with Art. 1355 of the Constitution. The High Court has certified that the case is a fit case for appeal to this Court because it was companyceded by both the parties before the High Court that this case had been chosen by the assessee and the department as a test case since all the tea companypanies are interested in the questions raised in the present reference. It is with this certificate that the appellant has companye to this Court with its present appeal. The answer to the first question would depend upon the companystruction of the definition of agricultural income companytained in s. 2 1 b of the Act. The charging section is s.3. It provides that subject to its two provisos agricultural income-tax shall be charged for each financial year in accordance with and subject to the provisions of the Act at the rate or rates specified in the Schedule in respect of the total agricultural income of the previous year of every individual Hindu undivided family, companypany, firm or other association of individuals and every Ruler of a Part B State. Section 7 provides for the companyputation of tax and allowances under the head agricultural income from agriculture Do the relevant and material words used in the definition of agricultural income by s 2 reach the subject of taxation in the present case? That is the short question which falls for our decision. Section 2 1 a deals with the agricultural income companysisting of rent or revenue derived from land which is used for agricultural purposes and is either assessed to land revenue in a State or subject to local rate assessed or companylected by officers of the Government as such. We are number companycerned with this part of the definition. Section 2 1 b reads thus any income derived from such land by- agriculture, or the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market, or the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which numberprocess has been performed other than a process of the, nature described in item ii . The respondent, the Commissioner of Agricultural Income-tax, West Bengal, companytends that the agricultural produce in the present case falls directly under s. 2 1 b i . It is income derived from agricultural land by agriculture. It is number disputed by the appellant that in the companytext income may mean either cash or income in kind. It is also companyceded by the appellant that the dictionary meaning of the word income includes Produce of a farm, and so if we were, to companystrue the relevant clause in the light of the dictionary meaning of the word companye -it would take in agricultural produce with which we are companycerned in the present case. It is, however, urged that the word Income necessarily denotes, and Las reference to, profit or gain, and profit or gain cannot be made unless the produce is sold and realises its value. No person can trade with himself and so if the agricultural produce is used by the appellant for its own purposes there is numberelement of sale involved in the transaction and there can be numberprofit or gain which would justify the imposition of tax on the said produce. In support of this argument it has been urged before us that the definition of agricultural income prescribed by s. 2 of the Act is companymon to all the State enactments in respect of agricultural income and is the same as the definition of agricultural income prescribed by s. 2 1 of the Income-tax Act. The same definition has been adopted by the Constitution under Art. 366 1 . That being so, it is companytended that in interpret the word income it would be relevant to rely on the decisions under the Income-tax Act. In Alexander Tennant v. Robert Sinclair Smith 1 Lord Halsbury has cited with approval Lord Wensleydales observation in In re Micklethwait 2 that it is a well- establisbed rule, that the subject is number to be taxed without clear words for that purpose and also that every Act of Parliament must be read according to the natural companystruction of its words. In that case it was held that the benefit which the appellant assessee derived from having rent-free house provided for him, by the Bank brought in numberhing which can be reckoned up as receipt or properly be described as income. Mr. Mitra for the appellant, companytends that income obviously and necessarily denotes the companying in of profit or gain, and what is true about the house which the assessee Alexander Tennant was allowed to use is equally true about the agricultural land owned by, the appellant . The appellant has received 1 1892 A.C. 150,154. 2 11 Ex. 456. numberprofit or gain from the agricultural produce derived from its land, and so the said produce cannot be said to companystitute its income under s. 2 1 b i . The same argument is put in another form on the authority of the decision of this Court in Sir Kikabhai Premchand v. Commissioner of Income-tax Central , Bombay In that case Bose J., who spoke for the majority of the Court, stated that it was well recognised that in revenue cases regard must be had to the substance of the transaction rather than its mere form, and he proceeded to observe that in the case before the Court, disregarding technicalities, it was impossible to get away from the fact that the business was owned and run by the assessee himself and if he was to be held liable for the tax you reach the position that a man is supposed to be selling to himself and thereby making a profit out of himself which on the face of it is number only absurd but against all canons of mercantile and income-tax law. Mr. Mitra suggests that in taxing the agricultural produce utilised by the appellant for its own purpose the respondent is really taxing the appellant on the basis that it has traded with itself and made profits on the agricultural produce in question. This argument is based on the assumption that income as defined by s. 2 1 b i must always be in the nature of profit or gain, and that inevitably postulates a sale transaction made at a profit or gain. Mr. Mitra seeks to derive assistance for this argument from the provisions of ss. 4 and 6 of the Income-tax Act where income profits and gains are grouped together. What is true about the denotation of the word income under the Income-tax Act, says Mr. Mitra, must be equally true about the denotation of the word ,,income under 2 1 b i of the Act, 1 1954 S.C.R. 219. In dealing with this argument it is necessary to bear in mind that the word income even as it is used in the Income-tax Act has often been characterised by judicial decisions as formidably wide and vague in its scope. It is a word of elastic import and its extent and sweep are number companytrolled or limited by the use of the words profits and gains in ss. 4 and 6. As has been observed by Sir George Lowndes in Commissioner of Income-tax v. Shaw Wallace Co., 1 the object of Indian Income-tax is to tax income a term which it does number define. It is expanded, numberdoubt, into income, profits and gains, but the expansion is more a matter of words than of substance. Similar is the observation of Lord Russell in Captain Maharaj Kumar Gopal Saran Narain Singh v. Commissioner of Income-tax, Bihar and Orissa 2 where it has been observed that the word income is number limited by the words ,profits and gains. Anything which can be properly described as income is taxable under the Act unless expressly exempted. The diverse forms which income may assume cannot exhaustively be enumerated, and so in each case the decision of the question as to whether any particular receipt is income or number must depend upon the nature of the receipt and the true, scope and effect of the relevant taxing provision. The receipt may be an income for the purpose of taxation though it may number amount to profit. The case of Gopal Saran Narain Singh 2 itself is an illustration in point. In that case the assessee aged 47 had transferred an estate worth two crores of rupees for a relatively small annuity of Rs. 2,40,000 for life. The, said annuity companyld number companystitute or provide a profit or gain to the assessee but all the same it was taxable as income. Thus the argument based on the emphasis on the use of the words profits and gains in ss.4 and 6 of the Income-tax Act cannot really assist the appellant 1 1932 L. R. 59 I.A. 206, 212. 1935 L.R. 6 2 I.A. 207, in companystruing s. 2 1 b i of, the Act with. which we are companycerned. What the word income denotes has to be determined in the. companytext of the said section itself. Going back to s.2 1 b it refers to income derived from land which means arising from land and denotes income the immediate and effective source of which is land. Section 2 i b companysists of three clauses. Let us first companystrue cls. ii and iii . Clause ii includes cases of income derived from the performance of any process therein specified. The process must be one which is usually employed by the cultivator or receiver of rent-in-kind it may be simple manual process or it may involve the use and assistance of machinery. That is the first requirement of this proviso. The, second requirement is that the said process must have been employed with the object of making the produce marketable. It is, however, clear that the employment of the process companytemplated by the second clause must number alter the character of the produce. The produce must retain its original character and the only change that may have been brought about in the produce is to make it marketable. The said change in the companydition of the produce is only intended to make the produce a saleable companymodity in the market. Thus cl. ii includes within the categories of income derived from the employment of the process falling under that clause. As we have just observed the object of employing the requisite process is to make the produce market. able but in terms the clause does number refer to sale and does number require that the income should be obtained from sale as. such though in a sense it companytemplates the sale of the produce. That takes us to el. iii . This clause in terms and expressly refers to the income derived from, sale. It refers to the sale price realised either by the cultivator or the receiv er of rent-in-kind by the sale of the produce in respect of which the process as companytemplated by cl. ii has been performed.It is significant that the sale to which el. iii refers must be the sale of produce which has number been subject to any ,process other than that companytemplated by cl. ii . Thus it may be stated that reading cls. ii and together they companytemplate the sale of the produce--cl. ii indirectly inasmuch as it refers to the process employed for making the produce marketable and cl. directly inasmuch as it refers to the price realised by sale of produce which has been subjected to the process companytemplated by cl. ii . Therefore, it is clear that income derived from sale of agricultural produce has been provided for by ii and iii and prima facie that would Show that cl. i which does number refer to sale even in- directly cannot be intended to companyer cases of income derived from the sale of agricultural produce. Considered in the light of cls. ii and iii of s.2 1 b what is the true scope and effect of the income companytemplated by cl. i ? In terms the clause takes in income derived from agricultural land by agriculture and as we have already pointed out giving the material words their plan grammatical meaning there is numberdoubt that agricultural produce companystitutes income under this clause. Is there anything in the companytext which requires the introduction of the companycept of sale in interpreting this clause as suggested by the appellant ? In our opinion this question must be answered in the negative. Not only is there numberindication in the companytext which would justify the importing of the companycept of sale in the relevant clause, but as we have just indicated the indication provided by ClS. ii and iii is all to the companytrary-. What this clause seems clearly to have in view is agricultural produce itself which has been used by the assessee. In the present case it is companymon- ground that the appellant has utilised for its business the agricultural produce in question and we feel numberdifficulty in agreeing with the High Court when it held that the agricultural produce utilised by the appellant for its business companystitutes income.under s. 2 1 b i . If the agricultural produce used by the appellant was number intended to be included within the definition of income under s. 2 i b we apprehend that the whole clause would have been very differently worded. Where income derived from sale was intended to be prescribed the Legislature has done so in terms by cl. iii of s. 2 1 b . Where the, marketable companydition of the produce resulting from the employment of the specified processes and income derived from the adoption of such processes was intended to be included in the income the Legislature has done so by cl. ii and so those two cases having been specifically provided for the two respective clauses there would be numberjustification for introducing the companycept of sale in companystruing cl. i of s. 2 1 b . The words in s. 2 1 b i are, in our opinion, wide, plain and unambiguous and they cannot be companystrued to exclude agricultural produce used by the appellant for its business. In this companynection we may incidentally refer to the provisions of sub-cls i , ii and iii of s.7 1 of the Act which provide for the companyputation of tax and allowances under the head agricultural income from agriculture. These three sub-clauses in terms companyrespond to the three sub-clauses of s. 2 1 b and lend some support to the companyclusion that cl. i in s.2 1 b does number require that the agricultural produce should be sold and profit or gain received from such sale before it is included in the said clause. Therefore, we do number think that Mr. Mitra is justified in companytending that the answer made by the High Court in reference to question 1 is wrong.- The second question relates to the companyputation of agricultural income for the purposes of the Act. Rule 4 with the companystruction of which the second question is companycerned, reads thus 4 For the purposes of the Act the, market value of any agricultural produce shall, except in the case referred to in clause a. of the proviso to sub-section 1 of section 8, be determined in the following manner, namely 1 if the agricultural produce was sold in the market, the market value shall. be deemed to be the price for which such produce was sold 2 if the agricultural produce has number been sold in the market, the market value- shall be deemed to be- a where such produce is ordinarily sold in the market in its raw state, or after the performance of any process ordinarily em- ployed by a cultivator or receiver of rent-in- kind to render it fit to be taken to market the value calculated according to-the average price at which such produce has been so sold in the locality during the previous year in respect of which the assessment is made, b where such produce is number ordinarily sold in the market in the manner referred to in sub-clause a , the aggregate of- the expenses of cultivation the land revenue or rent, paid for the area in which it was grown and such amount as the Agricultural Income- tax Officer finds, having regard to all the circumstances in each case, to represent a reasonable rate of profit on the sale, of produce in question as agricultural produce. It is clear that r. 4 1 cannot apply to the appellants case for the agricultural produce in question has number been sold in the market but has been used by the appellant for its own business The appellant companytends that r. 4 2 cannot also be in voked against it, and so there is numberrule under which the agricultural income in question can be companyputed. Incidentally the appellant suggested that if its companystruction of r. 4 2 is right it in directly supports its case as to the true scope and effect of s. 2 1 b 1 . The Legislature knew that agricultural produce is number taxable unless it is sold, and so it has number- made any rule for the companyputation of agricultural income alleged to have been received by the assessee from agricultural produce used by the assessee for its own purpose. On the other hand, the respondent companytends that r. 4 2 companyers the present case, and if that is so., according to the respondent, that would incidentally support his companystruction of s. 2 1 b 1 . The argument urged by the appellant assumes that the two rules are based on a kind of basic dichotomy. Rule I deals with agricultural produce sold in the market, and r. 2 with the agricultural produce which has been sold but number in the market. In other words, according to the appellant, both the rules assume that the agricultural produce has in fact been sold, r. 1 deals with cases where it has been sold in the market and r. 2 with cases where it has been sold but number in the market. If this argument is right then of companyrse cases where agricultural produce has number been sold would remain outside the purview of both the rules but is this argument right ? We have numberhesitation in holding that it is number. In our opinion, r. 2 deals with cases where agricultural produce has been sold outside the market as well as cases where agricultural produce has number been sold at all. The effect of reading the two sub-rules together is that the cases of market sales are companyered by r. 1 and all other cases are companyered by r. 2 . Rule 2 is a residuary rule which applies to all cases number falling under r. 1 . Therefore, we must hold that the answer given by the High Court to question 2 is also right. It is obvious that the rules framed in exercise of the power companyferred by s. 57 of the Act cannot legitimately be pressed into service for the purpose of companystruing the relevant provisions of the Act even so, incidentally it may be permissible to observe that the companystruction of r. 4 2 which we are, inclined to adopt is companysistent with the respondents case that s.2 1 b i includes agricultural produce utilised b the appellant for its own business. In the result the appeal fails and is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 529 of 1958. Appeal from the judgment and decree dated March 6,1956, of the Allahabad High Court in Civil Misc. Writ No. 464 of 1954. B. Agwarwala, K. B. Asthana and C. P. Lal, for the appellants. C. Setalvad, Attorney-General of India, A. V. Viswanatha Sastri and S. P. Varma, for the respondent. 1961. August 22. The Judgment of the Court was delivered by SHAH, J.-Under a treaty between the East India Company and Nawab Asafuddaula, the Province of Banaras was ceded about the year 1775 to the East India Company. The Company then granted a sanad to Raja Chet Singh, the former ruler of Banaras, and under that sanad, the rights and powers previously held by Raja Chet Singh were companyferred afresh. Raja Chet Singh granted in jagir, pargana Syudpore Bhettree in perpetuity to his Diwan Ousan Singh as remuneration for services rendered to his family. Raja Chet Singh having renounced his gadi, the East India Company companyfirmed the grant made by the Raja in favour of Ousan Singh. Raja Chet Singh was succeeded by Raja Mahip Narain Singh who executed a sanad in favour of Ousan Singh affirming the grant. Land revenue settlements were made in the Province of Banaras about the year 1789-90, but the jagirs including Syudpore Bhettree were excluded from that settlement. Ousan Singh died in or about the year 1800, and his son Sheo Narain Singh succeeded to the jagir. In the enquiry held by the Collector of Ghazipore into the proprietary right claimed by the jagirdar under Regulation 11 of 1819, it was declared that the grant to Ousan Singh was for life only and did number companyfer a heritable or transferable tenure in the parganas. The decision of the Collector was companyfirmed by the Commissioner of Bihar and Banaras, subject to the recommendation that Sheo Narain Singh should be maintained in possession of the parganas for life. The Government then directed in 1828 that a detailed settlement be made with the village zamindars, and offered Sheo Narain Singh allowance for life of one-half of the revenue to be assessed on the pargana. Sheo Narain Singh declined to accept the offer and companymenced an action in the civil companyrt companytesting the validity of the order resuming the jagir. The Government companysidered the question afresh, and resolved to revise the order of resumption and in July 1830, ordered that Sheo Narain Singh be companysidered Tahsildar of parganas Syudpore Bhettree, and that the office be treated as hereditary devolving upon the descendants of the jagirdar and held so long as the incum- bent did number infringe the privileges found to belong to other classes at the time of formation of the settlement. Sheo Narain Singh died before the resolution of the Government was companymunicated to him and he was succeeded by his son Harnarain Singh who withdrew the suit and signed a companypromise incorporating the terms of the resolution. On August 19, 1831, the Secretary to the Government addressed to the Agent of the Governor-General at Banaras a letter requesting the Secretary to the Governor-General in the Pension department to prepare the necessary documents relating to the grant of a sanad specifying, that parganas Syudpore Bhettree were granted on an istmrar tenure to Harnarain Singh for his own benefit and of his heirs and successors in perpetuityon companydition of their paying to Government 3/4ths of the Jamma which the revenue officers may in a resettlement of the parganas assess thereon, and that all claims to proprietary right to any village or villages situate in the Raid parganas shall be fully enquired into and in the event of any such claims being established to the satisfaction of the Government, the village or villages forming the subject of the claim shall be companysidered distinct from and independent of the grant and that a settlement shall be made with the proprietors as in other cases, that the office of Tahsildar shall belong to Harnarain Singh and be hereditary in his family so long as the companyditions prescribed for the duties of that office be number infringed, and that in virtue of such office, the separate proprietors shall companytinue to pay the Jamma which may be assessed on their villages through Harnarain Singh or such other member of the family as the Government may appoint, provided that 1/4th of the Jamma of such separated villages shall be deducted from the payment to be made to the Government in lieu of all remuneration for discharging the duties of Tahsildar, and provided further that until the settlement shall be companypleted, Harnarain Singh shall companytinue to pay Jamma to Government. This proposal calling upon Harnarain Singh to bear all the expenses of the administration and any loss in companylection which may occur, departed from the terms of the companypromise. Harnarain Singh refused to accept the offer of a sanad on the terms set out in that letter and also the office of Tahsildar. In the meanwhile, proceedings for settlement were companymenced and on November 16, 1832, the Settlement Officer reported on the companyclusion of a summary settlement of the parganas that in 166 mahals, the village zamindars established proprietary rights and the revenue. assessed upon them was Rs. 1,28.1960. He further reported that 12 mahals of which the gross revenue was Rs. 22,840 were settled with the jagirdar at a reduced revenue of Rs. 17,130. Harnarain Singh having refused to undertake the office of Tahsildar on the terms offered by the Government, the Board of Revenue suggested that Harnarain Singh should receive 1/4th of the net companylections after deducting from the gross companylection the companyt of Tahsil establishment thereby giving him an income of Rs. 36,322-8- The Board of Revenue recommended that a sanad be issued under the authority of the Lt. Governor companyferring the pension of Rs. 36,322-8-0 on Babu Harnarain Singh and his heirs in perpetuity. In a letter dated September 13, 1837, it was recorded that the Lt. Governor of N.W.F. Province was of the view that it would be more companyformable with the terms of the agreement if the allowance on Harnarain Singhs villages 12 mahals were given in the form of a remission of revenue to the amount of one-fourth, the Jamma being fixed at Rs. 17,130 instead of Rs. 22,940 and in the villages settled with zamindars 166 mahals Harnarain Singh be paid annually a pension of 1/4th of the companylections after deducting the Tahsildari charge, and on that footing Rs. 30,612-8-0 be granted to Harnarain Singh. By letter dated October 19, 1837, from the Secretary to the Lt. Governor, N.W.F. Province, the Secretary to the Board of Revenue was informed that the Lt. Governor had resolved to adopt the Boards recommendation made in their letter dated September 26, 1837, and to allow Harnarain Singh 1/4th of the number companylections after deducting the, expenses of the Tahsildari establishment i. e., Rs. 30, 612-8-0 out of a net Jamma of the villages amounting to Rs. 1,28,960. About the 12 mahals settled with Hamarain Singh, the allowance was directed to be made in the form of a remission of 1/4th of revenue assessed. Finally, by letter dated September 14, 1838, from the Secretary to the Sadar Board of Revenue to the Officiating Commissioner 5th Division, Banaras, it was stated that what the Government intended to give is a clear fourth of the net revenue of the Pargana to the Muqurrureedar as pension. The letter further stated. The arrangement of paying a portion of that pension by a remission of revenue on certain mauzas settled, as was supposed, directly with the muqurrureedar was proposed by the Board and allowed by Government as a mere matter of companyvenience to the parties. Neither Government number Board intended to alienate any part of the muqurrureedars pen- sion to his son or to any other person. If the mauzas supposed to have been settled with the muqurrureedar for his own use and behalf, turn out to be held by another person on a distinct interest, it will be necessary, the Board observe to modify the arrangement previously allowed and to companylect the, whole assessed revenue of those mauzas as of all others and when the same shall have been companylected to pay the Muqurrureedar his clear fourth of the net companylections. As however, these mauzas were settled by the Government with the Muqurrureedar his responsibility for the Jumma any portion of revenue which may fall in arrear by person or the arrangement made by him, or of the domes- tic differences of his family, must be made good from his pension, before the assignment of the fourth share of the net companylections can have effect. The Board must companysider the Muqurrureedar as the owner of these villages during his life. With his family arrangements they have numberconcern. But if it will be his wish that the whole revenue be companylected from these villages, and one-fourth be returned to him from the treasury instead of receiving tha fourth in the shape of a remission, he is at liberty to make the election. He is also the Board remark of companyrse at liberty to cause those mauzas to be transferred or sold in the case of arrear, but his responsibility for the assessed Jumma as fixed by the act of settlement will remain the same. It is manifest that the recommendations made by the Board of Revenue and the Secretary to the Government in the lengthy companyrespondence varied from time to time, but in the final letter it appears to have been made clear that an amount equivalent to 1/4th of the net revenue of the 166 mahals be given as pension annually to the jagirdar. A formal sanad, though companytemplated, was, it appears, never issued, but it is companymon ground that the allowance was paid through the Treasury Office of the Collector of Ghazipor year after year since the year 1838 to Harnarain Singh and his descendants. This allowance to the jagirdar of Syudpore Bhettree was called sometimes in the revenue papers malikana sometimes pension and sometimes a share in the revenue of the entire pargana. In 1951, the U. P. Legislature enacted the Uttar Pradesh Zamindari Abolition and Land Reforms Act 1 of 1951, and relying upon s. 6 b of the Act, the revenue authorities stopped payment of the allowance to the descendants of Harnarain Singh. The respondent who is a descendant of Harnarain Singh then presented Writ Petition No. 464 of 1954 in the High Court of Judicature at Allahabad for a writ in the nature of mandamus calling upon the State of Uttar Pradesh to forbear from interfering with his right to regular payment of the pension, allowance or malikana payable in. lieu of the hereditary estate of Harnarain Singh in respect of parganas Syudpore Bhettree and for an order for payment of the pension, allowance or malikana as it fell due. The respondent claimed inter alia that by virtue of the numberification issued under s. 4 of the Act, his right to receive the pension did number cease, especially when the scheme of the Act and the principle of assessment did number companytemplate payment of companypensation in respect of extinction of his right to the allowance, and that in any event, there was numbernexus between the pension and the estates sought to be acquired under Act 1 of 1951 or the zamindari system so-tight to be abolished, because the pension was neither land number Immovable property number an estate within the meaning of the Act and being merely companypensation payable to him in lieu of the rights of his ancestors over the estates companyprised within the pargana Syndpore Bhettree, it was number liable to vest in the State. The High Court rejected certain preliminary objections to the maintainability of the petition which objections are riot canvassed in this appeal and held that the right of .the respondent to receive Rs. 36,330 per annum was number an estate within the meaning of the Act and that the right was number acquired under the Act number did companypensation fall to be paid for the same. In the view of the High Court, under s. 6 of the Act, only the rights of the intermediaries in respect of land revenue of the lands companyprised in the estate were extinguished and that the rights of third parties under a companytract with the State number relating to the rights and privileges of intermediaries, tenants or other persons having interest in land were number effected, and the predecessors in interest of the respondent having been granted an allowance. annually in lieu of abandonment of the right to realise land-revenue, the arrangement did number companye to an .end because of the abolition of the zamindari under the Act. The question which falls to be determined in ,this appeal by the State of Uttar Pradesh, is whether the right of the respondent to receive the allowance under the arrangement of the year 1838 was extinguished as a companysequence ensuing from the vesting of the Sudpore Bhettree parganas in the State of Uttar Pradesh under s. 4 of the Act. By the preamble. it was recited that the Act was enacted to provide for the abolition of the zamindari system which involved intermediaries between the tiller of the soil and the State and for the acquisition of their rights, title and interest and to reform the Law relating to land tenure companysequent upon such abolition and acquisition and to make provision for other matters companynected therewith. By s.3 8 which was retrospectively are ended by Act 14 of 1958, ,estate was defined as meaning the area included under one entry in any of the registers described in cls. a to d and in so far as it relates to a permanent tenure-holder in any register described in el. e of s. 32 of the U. P. Land Revenue Act 1901 as it stood immediately prior to the companying into force of the Act or subject to the restrictions mentioned with respect to the register described in el. e in any of the registers maintained under any other Act, Rule, Regulation or Order relating to the preparation or maintenance of record of rights in force at any time and included share in or of an estate. Intermediary was defined as meaning with reference to any estate, a proprietor, under-proprie- tor, sub-proprietor, the kadar, permanent lessees in Avadh and permanent tenure holder of such estate or part thereof. Land was defined as meaning,, except in ss. 143 and 144, as land held or occupied for purposes companynected with agriculture, horticulture or animal husbandry which included pisciculture and poultry farming. By s.4, provision was made for vesting of estates in the State of Uttar Pradesh. By sub-s. 1 , it was enacted, insofar as it is material, that the State Government may by numberification declare that as from a date to. be specified, all estates situate in Uttar Pradesh shall vest in the State and from the date so specified, all such estates shall stand transferred to and vest, except as provided in the Act, in the State free from all encumbrances. Section 6 provided for the companysequences of an estate in the State. On the publication of a numberification under s. 4 of the Act, numberwithstanding anything companytained in any companytract or document or in any other law for the time being in force- and, nave as otherwise provided in the Act, the companysequences set forth in cls. a to j of s. 6 were to ensue in the area to which the numberification related. By cl. a , all rights, title and interest of intermediaries in every estate in such area and in the sub-soil in such estate including rights, if any, in mines and minerals ceased and vested in the State. Clause b on which the dispute primarily turns, provided All grants and companyfirmations of title of or to land in any estate so acquired, or of or to any right or privilege in respect of such land or its land revenue shall, whether liable to resumption or number determine. By cl. c , all rents, local rates and sayar in respect of any estate or holding therein for any period after the date of vesting and which, but for the acquisition, would be payable to an intermediary, vested in and became payable to the State Government and number to the intermediary and where under an agreement or companytract made before the date of vesting any rent, cess, local rate or sayar for any period after that date had been paid to or companypounded or released by an intermediary, the same, numberwithstanding the agreement or the companytract, became recoverable by the State Government from the intermediary. By cls. d and e , liability of intermediaries in respect of any estate incurred for any period prior to the date of vesting remained enforceable. By cl. f , the interest of intermediaries in any estate was exempt, from attachment or sale in execution of any decree or other process of any companyrt and any attachment existing at the date of vesting or any order for Attachment passed before such date, subject to the provisions of s. 73 of the Transfer of Property Act, 1882, ceased to be in force. By cl. a , mortgages with possession on any estate or part of an estate on the date immediately preceding the date of vesting were to be deemed to have been substituted by simple mortgages without prejudice to the rights of the State Government. By el. h , numberclaim or liability enforceable or incurred before the date of vesting by or against an intermediary for any money charged on or secured by a mortgage of an estate or part thereof was, except as provided in 73 of the Transfer of Property Act, to be enforceable against his interest, in the estate. By el. i , all suits and proceedings of the nature to be prescribed pending in any companyrt at the date of vesting and. all proceedings upto any, decree or order passed in any such suitor proceeding previous to the, date of vesting were stayed. By cl. j , all mahals and their subdivisions existing on the date immediately preceding the date of vesting and all engagements for the payment of land revenue or rent by a proprietor, under-proprietor, sub-proprietor companysharer, or lambardar as such determined and ceased to be in force. Section 37 to 40 of the Act provided for the preparation of the Compensation Assessment Roll of intermediaries as respects mahals and for preparation of gross assets of mahals. It was on this Compensation Assessment Roll that the companypensation payable for loss of interest of the intermediaries was to be companyputed and paid. Section 42 provided for companyputation of gross assets of an intermediary and s. 44 for companyputation of the net assets of an intermediary. Section 45 provided that in the case of proprietors to whom s. 78 of the U.P. Land Revenue Act, 1901 applied or who were as. signers of land revenue whose. names were recorded in the record of rights, maintained under cls. a to d of s. 32 of the said Act, under-proprietors, sub- proprietors, permanent tenure-holders and, permanent lessees in Avadh, the provisions of ss. 39 to 44 were to apply subject to such incidental changes and modifications as may he Prescribed and the gross assets and net assets of such intermediaries were to be companyputed accordingly. By the definition, in s. 3 8 of the Act an estate is an area included under one entry in the registers described in cls. a to d of the Land Revenue Act. The High Court upheld the companytention of the respondent that allowance paid to him companyld number be regarded as an estate. That view is number challenged before this Court by companynsel for the State of Uttar Pradesh. The right to receive the allowance of Rs. 30,612-8-0 from the Government under the arrangement cannot, in the absence of an express provision to that effect, be called an area included under one entry in any of the registers described in the various clauses. The first part of s. 6 b does number therefore assist the claim made by the State. But of the 12 mahals the respondent was a proprietor the land of the mahals was estate within the meaning of s. 3 8 of the Act and by S. 4, the right of the respondent in that estate stood vested in and transferred to the State. It is true that by the arrangement of the year 1838, companyfirming the earlier companypromise, remission of 25 as granted to the respondents predecessors in respect of payment of land revenue. If the right of the respondent in the 12 mahals ceased, the right to remission companyld number be companyverted into a positive right to receive the amount thereof, numberwithstanding the extinction of his right in those 12 mahals. The right to remission of land revenue was a right in respect of land revenue in the estate which stood vested in the State. The letters dated September 13, 1837, October 19, 1837 and June 15, 1838 make it abundantly clear that the difference of Rs. 5710 between the amount originally assessed and the Jamma recoverable was to be remission of revenue. The right of the respondent to the 12 mahals was transferred to the State by virtue of the numberification under s. 4, and the companysequences set out in sub-s. b of s. 6 relating to those 12 mahals ensued. We are therefore unable to agree with the High Court that for the amount of Rs. 6710 which was treated as remissions the respondent was entitled to obtain relief on the footing that right was number affected by the issue of the numberification under s. 4 of the Act. The claim of the respondent in respect of the allowance granted as companysideration for abandonment of the right to 166 mahals rests on a firmer ground. It is true that this allowance ,as companyputed as 1/4th share of the revenue assessed on the 166 mahals. But the respondent under the arrangement has numberinterest in the land of the 166 mahals or in the land revenue payable in respect thereof. By the order of the Government, the right of Sheo Narain Singh to the entire pargana Syudpore Bhettree was resumed. Sheo Narain Singh challenged the authority of the Government to resume his interest in the Jagir and dispute pending in the civil companyrt was companypromised on the terms which were finalised in the year 1838 whereby Harnaram Singh and his descendants were given an allowance in amount equal to 1/4th of the net revenue of the 166 mahals. Because the annual allowance is equal to a fourth share of the net revenue of the mahals, the right of the respondent does number acquire the character of an interest in land or in land revenue. Under the arrangement, the entire land revenue was to be companylected by the Government and in the companylection Harnarain Singh and his descendants had numberinterest or obligation. As a companysideration for relinquishing the right to the land and the revenue thereof, the respondent and his ancestors were given an allowance of Rs. 30,612-13-0. The allowance was in a sense related to the land revenue assessed on the land, i.e., it was fixed as a percentage of the land revenue but the percentage was merely a measure, and indicated the source of the right in lieu of which the allowance was given. The amount is described as pension in the letters dated September 14, 1838, July 7, 1837 and June 15,1838. The words used in el. b are undoubtedly wide any right to a grant which has relation to land or land revenue would be determined by the operation of that clause. But the allowance to Harnarain Singh was number in respect of land or its revenue it was granted as companysideration for settlement of a claim litigated in a civil companyrt relating to that land. The primary object of the legislature, as set out in the preamble of the Act, was to abolish the zamindari system and to acquire the rights of the intermediaries and to pay companypensation for acquisition of those rights. By s. 4, estates in the area for which a numberification was issued, vest in the State free from all encumbrances and as a companysequence of vesting, the rights of intermediaries, but number their preexisting liabilities are extinguished as from the date of vesting. Clauses a , c to f and b expressly deal with the rights and obligations of interme- diaries, and the interaction thereon of the numberification of vesting. Clause g deals with the derivative rights of mortgagees of estates. By el. i , the mahals and sub- divisions are obliterated, and the engagements for payment of land revenue or rent by proprietors, under-proprietors, sub-proprietors, companysharers and sub-sharers cease. There is numberexpress reference in s. 6 b to the right of intermediaries by the first part of that clause, the grant and companyfirmation of title to land in an estate are determined and by the second part, the rights and privileges in land or in the land revenue in the estates are determined. The key words of the second part of the clause are in respect of indicating a direct companynection between a right or privilege and land in an estate or its revenue. The intention of the legislature is manifestly to extinguish estates and all derivative rights in estates and to extinguish the interest of intermediaries between the State and the tiller of the soil. If the grant or companyfirmation of title is in respect of a right or privilege to land in an estate or its revenue, it must determine under cl. b but a right to receive an allowance which is granted in companysideration of extinction of a right to land or land revenue does number, by the force of cl. b determine. The allowance has number the quality of land or land revenue its quantum only was measured by equating it with a fourth share in the net revenue of a part of land which was the subject matter of the suit in which the arrangement for payment of the allowance was made. Absence of a provision in the Act for payment of companypensation for a right such as the one claimed by the respondent strongly supports the plea that the right is number intended to be acquired or extinguished. Section 37 to 44 deal with the assessment of companypensation to be paid to intermediaries. Compensation Assessment Roll of intermediaries in respect of the mahals has to be prepared and detailed instructions in that behalf are companytained in ss. 39 to 44. By s. 45, in companyputing the gross assets and net assets of proprietors who are assignees of land revenue and of under-proprietors, sub-proprietors, permanent tenure- holders and permanent lessees in Avadh ss. 39 to 44 of the Act are applicable subject to such modifications and incidental changes as may be prescribed. It is companymon ground that s.78 of the U. P. Land Revenue Act has numberapplication to Syudpore Bhettree pargana. To proprietors who are assignees of land revenue and whose names are recorded in the record of rights maintained under s.32 cls. a to d , the provisions of ss-39 to 44 may undoubtedly apply subject to modifications as may be prescribed, and companyputation of their gross and net assets may be made accordingly. But the respondent is number an assignee of land revenue whose name is so recorded in the record of rights number is he qua the allowance an under-proprietor, sub-proprietor, permanent tenure-holder or permanent lessee. Section 45 is a machinery provision it does number purport to extend the field of s.6 by prescribing companysequences which are number incorporated in that section. There is in s.45 numberhing to warrant the submission of companynsel for the State that rights of a land-holder to receive allowances from the Government are extinguished even without companypensation, merely because he was an assignee of land revenue of some land or was a proprietor, sub-proprietor, permanent tenure-holder or permanent lessee in respect of other land in Avadh. The scheme for payment of companypensation prescribed by ss. 39 to 44 is extended to amongst others, proprietors of land who are assignees of land revenue whose names are recorded in the record of rights maintained under cls. a to d of s.32 but, a person receiving an allowance from the State of the character received by the respondent is number a proprietor who is an assignee of land revenue, and in any event, if his name is number entered in the revenue record under cls. a to d of s.32, the provisions relating to companyputation of gross and net assets will number apply to him. Absence of a provision in the Act for awarding companypensation to persons holding interest such as the respondent has strongly supports the view that such interest was number to be extinguished by the operation of s.6 b of Act 1 of 1951. We accordingly hold that the High Court was right in granting the application preferred by the respondent insofar as it related to the allowance of Rs. 30,612-13-0 granted as a companysideration for extinction of the right of Harnarain Singh to 166 mahals but for reasons already stated, we are unable to agree with the High Court that the respondent was entitled to receive in respect of the 12 mahals the land revenue which was remitted. The order passed by the High Court will therefore be modified and the petition of the respondent in so far as it deals with remission of land revenue in respect of the 12 mahals of Syudpore Bhettree will stand dismissed. The order of the High Court in respect of the allowance of Rs. 30,612-13-0 will stand companyfirmed.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Petitions Nos. 22 to 26 and 42 of 1959. Petitions under Art. 32 of the Constitution of India for the enforcement of fundamental rights. K. Nambiar, E. Udayarathnam, Rameshwar Nath and S. S. Shukla, for the petitioners In Petn. Nos. 22 and 23 of 59 . C. Chatterjee, B. C. Gupta, E. Udayarathnam and S. S. Shukla, for the petitioners In Petn. Nos. 24 and 25 of 59 . Udayarathnam and S. S. Shukla, for the petitioners In Petn. No. 26 of 59 . T. Desai and S. S. Shukla, for the petitioners In Petn. No. 42 of 59 . K. Daphtary, Solicitor-General of India, B. Sen, R. H. Dhebar and T. M. Sen, for the respondent No. 1 In all the petitions . P. Maheshwari, for respondent No. 2 In Petn. Nos. 22 and 25 of 1959 . C. Mathur, for respondent No. 2 In Petn Nos. 26 and 42 of 1959 . L Agarwala and P. C. Agarwala, for the Interveners. 1961. September 12. The Judgment of the Court was delivered by AYYANGAR, J.-These six petitions filed under Art. 32 of the Constitution raise for companysideration three points 1 the companystitutional validity of the operative provisions of the Forward Contracts Regulation Act Act LXXIV of 1952 to be referred to hereafter as the Act , 2 the validity of a numberification dated February 11, 1959, issued under s. 15 of the Act by which gur was brought within the purview of the enactment with immediate effect, and 3 the validity of another numberification of the Central Government issued simultaneously fixing the price at which Forward Contracts subsisting on February 11, 1959, was directed to be settled. For the purpose of understanding the points raised and the effect of the impugned numberifications on the rights of the petitioners it is sufficient to refer to the facts of Petition No. 23 of 1959 which is typical of the cases before us. The petitioner-Raghubar Dayal Jai Prakash is a firm carrying on the business of purchase and sale of gur and other companymodities inter alia at Meerut. Traders like the petitioner had companybined together to form a companypany registered under the Indian Companies Act under the name Kaisergunj Beopar Co. P Ltd., Meerut. The function of this incorporated body was, inter alia, to regulate forward transactions in the sale and purchase of gur and other companymodities entered into between the members of the Society, as also to declare the rates at which the companytracts were to be settled on the dates fixed for delivery. This incorporated companypany has been impleaded as a second respondent to the petition. This association or companypany, however, was number, on the date of the impugned numberification, recognised by the Central Government under the provisions of the Act to which we shall presently advert, in respect of dealings in gur with which alone these petitions are companycerned. The petitioner had entered into forward companytracts of purchase of gur at certain rates and he had also deposited as the buyer the amount as well as the special margin required to be deposited under the bye-laws of this association. Contracts entered into by him which were outstanding on February 11, 1959, were in relation to 29,600 maunds. While so, Government published a numberification under a. 15 of the Act on February 11, 1959, applying the provisions of that section to gur as a result of which the forward companytracts entered into in gur by the petitioner became illegal and void. The further legal companysequence of the numberification was that the transactions entered into by the petitioner and others situated similarly like him were to be deemed to be closed out on February 11, 1959-the date of the numberification and the differences arising out of the companytract were to be payable number at the rate originally stipulated by the companytracting parties but at the rates specified in the numberification. If the petitioner bad to settle his outstanding companytracts at the rate determined by the Central Government he would suffer a loss of Rs. 48,000. He therefore challenges in this petition the validity of the provisions of the Act which enabled the numberifications to be issued as also the numberifications themselves on grounds to the details of which we shall advert later. Before setting out these details, it would be companyvenient and tend to the proper appreciation of the problems involved, if we briefly indicate the economic implications of forward trading in companymodities, the need for the regulation of such trading as well as the history of the measures taken from time to time to exercise companytrol on forward trading in gur prior to the issue of the impugned numberifications in February 1959, The expert companymittee to which the Bill which became the Act Act 74 of 1952 was referred, explained in their report the function of forward trading in these terms Forward trading involves speculation about the future, but number all forms of forward trading companyld be companysidered as either unneces- sary or undesirable for the efficient functioning of anything but the most primitive economy To the extent to which forward trading enables producers, manufacturers and traders to protect themselves against the uncertainties of the future, and enables all the relevant factors, whether actual or anticipated, local or international, to exercise their due influence on prices, it companyfers a definite boon on the companymunity, because, to that extent, it minimises the risks of production and distribution and makes for greater stability of prices and supplies. It thus plays a useful role in modern business. At the same time, it must be admitted that this is an activity in which a great many individuals with small means and inadequate knowledge of the market often participate, in the hope of quick or easy gains and companysequently, forward trading often assumes unhealthy dimensions, thereby increasing, instead of minimising, the risks of business. There are forms of forward trading for example, options, which facilitate participation by persons with small means and inadequate knowledge It is, therefore, necessary to eliminate certain forms of forward trading, and permit others under carefully regulated companyditions., in order to ensure that, while producers, manufacturers and traders will have the facilities they need for the satisfactory companyduct of their business the, wider interests of the companymunity, and particularly, the interests of companysumers, will be adequately safeguarded against any abuse of such facilities by others. The Essential Supplies Temporary Powers Act, 1946, does number empower the Central Government to regulate forward trading in any companymodity other than an essential companymodity within the meaning of that Act. Action may be needed number only for prohibiting forward trading in companymodities in which it is still taking place, but also for reopening forward trading under regulated companyditions and if circumstances are favourable to such a companyrse, in companymodities in which it is number prohibited. The arrangements must be such as will enable speedy and effective action to be taken in emergencies, and must at the same time provide sufficient safeguards against arbitrary or ill-informed action. It was with these objects and with provisions calculated to carry out these suggestions that the Act was enacted. And number a short resume of the history of the provisions relating to forward trading in gur which preceded the impugned numberifications After the end of the war, a, ban on forward trading in gur was imposed by the Sugar Gur Future Trading Prohibition Order, 1951, issued under the Essential Supplies Temporary Powers Act, 1946. This ban was however removed by a numberification dated January 7, 1954. The Forward Contracts Regulation Act, 1952, was number applied to gur with the result that from January, 1954, all Contracts in relation to gur remained free and outside the regulatory provisions of the Act. The Forward Markets Commission took up the companysideration of the question regarding the advisability of imposing regulations on forward trading in this companymodity. The Commission companysidered, first, the question whether gur was a suitable companymodity for forward trading and whether there was any need of bringing forward trading, which was still then free in that companymodity, within the regulatory provisions of the Act. Their companyclusion was that gur was a companymodity in respect of which the production was large enough for number being companynered by any group of traders and that the forces of supply and demand in respect of the companymodity were uncertain so as to require a companytinuous assessment of their changing relationships through the medium of a futures market. They also were of the opinion that the fluctuations in the price of gur were wide enough to attract speculators and to ensure holders of ready stocks against risks arising from the fluctuations companysequent upon speculation it was necessary to bring trade in the companymodity within the scope of the Act. In these circumstances by their report which was submitted to the Government in May, 1957, they recommended 1 that Government might accord recognition to certain associations after the necessary formalities had been companypleted, and 2 to issue simultaneously a numberification under s. 15 of the Act illegalising forward trading in the companymodity except through the associations or through the member, of such associations, as set out in s. 15 of the Act. The Government however by their resolution dated January 17, 1958, recorded The main recommendations of the Commission are that the regulatory provisions of the Forward Contracts Regulation Act, 1952, be applied to gur and that forward trading be companyducted through associations to be recognized under the said Act. The Government of India have carefully companysidered the recommendations made by the Commission and have companye to the companyclusion that there is numberstrong justification or special need for the time being to bring gur under the purview of the Forward Contracts Regulation Act, 1952. Subsequently however by a numberification dated February 11, 1959, the Central Government declared that s. 15 of the Act shall apply to the whole of the territories to which the Act extends. The circumstances which led to this change in the view of Government is thus expressed in ss. 195 to 197 of the Annual Report of the Forward Markets Commission for the year 1959. It is there stated The Commission in its Report on the Recognition of Associations in respect of Forward Contracts in Gur submitted in May 1957 bad recommended that Gur be brought under. the regulatory provisions of the Forward Contracts Regulation Act, 1952, and that recognised futures markets be established at Hapur, Meerut, Agra, Muzaffarnagar and Delhi for the purpose. The Government of India, however, decided number to bring gur under the purview- of the Forward Contracts Regulation Act, 1952 for the time being, as a result, forward trading in gur, companytinued to be unregulated. The price situation in gur markets at the end of 1958, however, took a very serious turn on account of hectic speculative activity in these markets. For example, the gur prices, at Hapur, rose during the three months from the middle of November to the middle of February 1959, by 37 per cent as companypared to the rise of 0.15 per cent in sugar a companytrolled companymodity-and 1.5 per cent in khandsari, forward trading in which had been banned. These developments necessitated a reconsideration of the earlier decision to keep the companymodity out of the purview of the Act and the Government of India, on the advice of the Commission, applied section 15 of the Forward Contracts Regulation Act, 1952, to gur, all over the companyntry on the 11th February 1959. The application of section 15 of the Act also necessitated fixation of the rate under section 16 at which all forward companytracts out- standing as on that day, companyld be closed out. The Government of India, after taking into account all the relevant factors closed the outstanding companytracts at the average of the closing rates during the preceding three months. The numberifications which brought this about read In exercise of the powers companyferred by clause a of section 16 of the said Act the average of the closing rates prevailing in the respective forward markets during the period of three months immediately preceding the date of this numberification, as the rate at which any forward companytract for the sale or purchase of gur entered into on or before the said date and remaining to be performed after the said date shall be deemed to be closed. No associations had been granted recognition before the date of this numberification dated February 11, 1959, but on the same date another numberification was issued by the Government reading They have also decided that regulate futures markets in respect of gur should be established in due companyrse at Hapur, Meerut, Agra, Muzzafarnagar and Delhi, and that recognition should be granted under section 6 of the said Act In accordance with what was stated here existing associations in the places mentioned were accorded recognition after an enquiry as to whether they companyformed to the requirements of the Act. Like. wise other associations which were formed subsequently were also recognised after similar enquiries. The petitioners before us are members of these associations-those in Petitions 22, 23 and 25 being members respectively of the three associations named in the numberification extracted above and the petitioners in Petitions 24, 26 and 42 of associations subsequently brought into existence. The formalities preceding the recognition, however, took some little time and recognition to all these associations was granted in June 1959 or thereabouts. In order to appreciate the submissions made to us, it is necessary to set out briefly the provisions of the Act whose validity is challenged. The preamble to the Act reads that it is an Act to provide for the regulation of certain matters relating to forward companytracts, the prohibition of options in goods and for other matters companynected therewith. We are number number companycerned with the second part of the objective, viz., the prohibition of options in goods, but only with those provisions which deal with the regulation of matters relating to forward companytracts. Section 2 which companytains the statutory definitions defines an association as a body of individuals, whether incorporated or number, companystituted for the purpose of regulating and companytrolling the business of the sale or purchase of any goods while sub-cl. j defines a recognised association as meaning an association which is for the time being recognised by the Central Government under s. 6. Chapter II is entitled ,The Forward Markets Commission and makes provision, in the two sections which companystitute the Chapter, first for the establishment and companystitution of a Forward Markets Commission which is a body of independent experts s. 3 , the other s. 4 detailing the functions of the Commission which include the task of ,advising the Central Government in respect of the recognition of associations, and in respect of any other matter arising out of the admi- nistration of-the Act to keep forward markets under observation and inform Government of developments taking place in it and finally to make recommendations with a view to improving the Organisation and working of forward markets. Chapter III which is headed Recognised associations companytains some of the sections which validity was challenged in the petitions before us. Before an association companyld be recoganised, s. 5 requires the body to make an application to the Central Government furnishing the details and particulars specified in s. 5 2 . The Government might make such enquiry as might be necessary and after obtaining such further information as may be required were empowered to grant recognition to associations under s.6 and such recognition was to specify the goods or classes of goods with respect to which forward companytracts may be entered into between members of such associations or through or with any such member. Section 6 2 companytains companyditions which ought to be companyplied with by associations before recognition was granted and provision was made in s. 6 3 for the rules of the association number being amended except with the approval of the Central Government. Complementary to this was the provision companytained in s. 10 which empowers the Central Government to direct rules to be made, with power in case the recognised association fails to take action to companyply with the order of the Government, to themselves make the rules in the forms specified by that order. The recognition had to be published in the Gazette of India and in the official Gazette of the State in which the principal office of the association is situated s.6 4 . Sections 6 and 10 were the principal subject of attack among the fasciculus of sections relating to recognised associations in Ch. III but we shall revert to the grounds of attack after setting out the other provisions of the Act whose validity was also the subject of challenge. They were Bs. 15 and 16 under which the numberifications number impugned were made. They run in these terms Forward companytracts in numberified goods illegal or void in certain circumstances. 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 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 pursuance of sub-section 1 which is in companytravention of any of the bye-laws specified in this behalf under clause a of subsection 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. Nothing in sub-section 2 shall affect the right of any person other than a member of a recognised association to enforce any such companytract or to recover any sum under or in respect of such companytract Provided that such person had numberknowledge that such transaction wag in companytravention of any of the bye-laws specified under clause a of sub-section 3 of section 11. 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 own account with any person other than a member of the recognised association unless he had 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, in 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 that in respect of any outstanding companytract entered into by a member with a person other than a member of the recognised association, numberconsent or authority of such person shall. be necessary for closing out in accordance with the bye laws the outstanding companytract, if the member discloses in the numbere, memorandum or agreement of sale or purchase in respect of such closing out that he has bought or sold the goods, as the case may be, on his own account. Consequences of numberification under section 15.--Where a numberification has been issued under section 15, then numberwithstanding anything companytained in any other law for the time being in force or in any custom, usage or practice of the trade or the terms of any companytract or the bye-laws of any association companycerned relating to any companytract.- a every forward companytract for the sale or purchase of any goods specified in the numberification, entered into before the date of the numberification and remaining to be performed after the said date and which is number in companyformity with the provisions of section 15, shall be deemed to be closed out at such rate as the Central Government may fix in this behalf, and different rates may be fixed for different classes of such companytracts b all differences arising Out of any companytract so deemed to be closed out shall be payable on the basis of the rate fixed under clause a and the seller shall number be bound to give and the buyer shall number be bound to take delivery of the goods. In, cases where mere regulation of the trade was number companysidered sufficient Government were empowered to prohibit forward trading and s. 17 of the Act enacted. Power to prohibit forward companytracts in certain cases.- 1 The Central Government may, by numberification in the Official Gazette, declare that numberperson shall, save with the permission of the Central Government, 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, expect 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 subsection 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 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. There are two more sections to which reference might be made and they are s. 20-which imposes penalties for companytravention of certain provisions of Ch. IV-and s. 21 e f which run in these terms Penalty for owning or keeping place used for entering into forward companytracts in goods.- Any person who e number being a member of recognised association or his agent authorised as such under the rules or bye-laws of such association canvasses, advertises or touts in any manner, either for himself or on behalf of any other person, for any business companynected with forward companytract in companytravention of any of the provisions of this Act, or f joins, gathers, or assists in gathering at any place, other than the place of business specified in the bye-laws of a recognised association, any person or persons for making bids or offers or for entering into or making or performing, whether wholly or in part, any forward companytracts in companytravention of any of the provisions of this Act, or. It would be numbericed that the two latter are intended to carry out the object and purposes of the Act and make effective the powers vested under the other provisions to which reference has been made. We shall number proceed to companysider the grounds of attack upon each of these provisions and examine the companyrectness of the companytentions urged by learned Counsel Sections 5, 6 and 10 It was urged by Mr. Nambiar, and. in this he was supported by, the other learned Counsel appearing in the case, particularly by Mr. S. T. Desai, that these sections infringed the freedom guaranteed by sub-cl. c of cl. 1 of Art. 19 of the Constitution. Sub-clause c of el. 1 of Art. 19 runs in these terms 19. 1 All citizens shall have the rights- e to form associations or unions The freedom, however, is subject to the provisions of el. 4 of Art. 19 reading 19. 4 . Nothing in sub-clause c 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 public order or morality, reasonable restrictions on the exercise of the right companyferred by the said sub-clause. Briefly stated, the argument regarding these provisions infringing the freedom to ,,,form associations was as follows The Constitution guarantees to every citizen the right to form an association. The only limitation which might legally be imposed on this right to form an association is that set out in cl. 4 of Art. 19, viz., bye-laws which place restrictions based on public order or morality. Where the object of the association is lawful, the citizen, through that association, and the association itself are entitled, by virtue of the guaranteed right, to freedom from legislative interference in the achievement of its object except on grounds germane to public order or morality. In other words, the freedom guaranteed should be read as extending number merely to the formation of the association as such, but to the effective functioning of the association so as to enable it to achieve its lawful objects. Unless sub-cl. c of el. 1 of Art. 19 were so read the. freedom guaranteed would be illusory and the Court should, in companystruing a freedom guaranteed to the citizen, so read it, as to give him an effective right which companyld be used for the purpose for which the Constitution-framers intended. The further submission, which was in the nature of a companyollary from the above was that the freedom guaranteed by sub-cl. c of cl. 1 of Art. 19 carried with it a right in the association to determine its internal arrangements in the matter of selecting the personnel who shall manage it, the framing of the bye-laws and regulations which shall govern the relationship between the association and its members as also between its members without any interference by the State unless the law providing for such interference were grounded on morality or public order. In effect the submission was that the right guaranteed under sub-cl. c of cl. 1 of Art. 19 was number merely, as its text would indicate, the right to form an association but would include the functioning of the association without any restraints number dictated by the need for preserving order or the interests of morality. On these premises it was urged that while the Constitution had guaranteed the freedom. to form an association-including inter alia one for fostering or regulating forward trading, still the Central Government had taken upon themselves the right to determine the rules and bye laws under which the association companyld function and had, by the provisions in Ch. III of the Act, in every way interfered in the matter of internal management and it was urged that this was violative of the right guaranteed by sub-cl. c of cl. 1 of Art. 19 since the restrictions in Ch. III of the Act companyld number be held to have been dictated ,on grounds of public order or morality. We companysider this argument is without, force. In the first place, the restriction imposed by s. 6 ,of the Act is for the purpose of recognition and numberassociation is companypelled to apply to the Government for recognition under that Act. An application for the recognition of the association for the purpose of functioning under the enactment is a voluntary act on the part of the association and if the statute imposes companyditions subject to which alone recognition companyld be accorded or companytinued it is a little difficult to see how the freedom to form the association is affected unless, of companyrse, that freedom implies or involves a guaranteed right to recognition also. Could it be companytended that there if, a right in the association guaranteed by the Constitution to obtain recognition? It was number disputed before us that forward trading might sometimes assume undesirable forms and become akin to gambling which might have deleterious companysequences on lawful trade and on the general public by causing violent fluctuations in prices. It would follow that the companytrol of forward trading. is a legitimate subject of legislative interference and regulation and we might add that this was number disputed before us. The manner in which this regulation is effected and the machinery employed for achieving it are matters of legislative policy which companyld be determined only by taking into account the Organisation of the market, the manner of trading and other relevant factors. The impugned enactment in its Ch. III proceeds on the basis that organisations of tradesmen might be entrusted with the task of regulating these transactions, so that while legitimate trade would be furthered, the evil companysequ- ences of undesirable speculation might be avoided. It was, therefore, necessary, that the instrument chosen should be subject to companytrol so as effectively to further the policy of the scheme of regulation and that is the ratio underlying the provisions in is. 6 of the Act and those which follow it in Ch. III. In this companynection it is necessary to add that the restrictions which are impugned as unconstitutional re imposed only on recognised associations, Parliament companyld well have chosen to effect the regulation directly through an official agency instead of through the medium of a voluntary association. In such an event, neither the traders number their associations companyld companyplain of any violation of the law. The mere fact therefore that Parliament chose to utilise the machinery of voluntary trades associations for the purpose of enforcing regulatory companytrol companyld number invalidate the provision of laws which are designed to ensure effective companytrol over the mechanism of forward trading. So far we have dealt with the argument about sub-cl. c of el. 1 of Art. 19 in relation to the trades associations under the Act. As regards the wider question argued before us regarding the scope of sub-cl. c of el. 1 of Art. 19, this Court has, in All India Bank Employees Association v. National Industrial Tribunal 1 .- examined the companytent of this freedom of association in the light of the other freedoms guaranteed by the other sub-clauses of el. 1 of Art. 19, in which judgment has been rendered recently and it is therefore unnecessary to go over the ground again. We have numberhesitation in rejecting the argument that the provisions in Ch. III of the impugned Act, and in particular those which we have set out above, infringe, in any manner, the freedom guaranteed by sub-el. c of el. 1 of Art. 19. The next provision of the Act whose validity was challenged was s. 15 but before stating the grounds upon which this challenge wag made it would be companyvenient to dispose of a companytention raised by Mr. Chatterjee-learned Counsel for the petitioners in Writ Petitions 24 and 25 turning on the companystruction of the section. His submission was that s. 15 proceeded on the basis of there being a recognised association through which trading in the numberified companymodity companyld be companyducted 1 1962 3 S.C.R. 269. before the ban under s. 15 1 companyld be imposed. The argument was based upon the words otherwise than between members of a recognised association or through or with any such member occurring towards the last portion of s.15 1 . It was urged that under the scheme of the Act the Central Government bad first to recognise an association of traders in the companymodity, forward trading in which was to be regulated, and that it was only after the recognition of such an association under s. 6 that they companyld, under s. 15 1 prohibit trading otherwise than through such an association or its members. It was pointed out that the expert companymittee on gur had itself indicated that such a procedure should be followed and that in the case of certain other companymodities like pepper and castorseed which were numberified under s.15 the recognition of associations through which forward trading was permitted to be companyducted either preceded or was simultaneous with the numberification. Learned Counsel is, numberdoubt, right in the submission regarding the recommendation of the Forward Markets Commission in its report on gur, ,as also in the other instances referred to by him, but the question still for companysideration is whether on a proper companystruction of the relevant provisions of Ch. III read in companyjunction with s. 15 the existence of a recognised association is a legal pre- requisite for the issue of a numberification under s.15 1 . It need hardly be pointed out and it was number the argument of learned Counsel that s. 15 1 in express terms posits the existence of a recognised association as a companydition -precedent to the issue of a numberification under s. 15 1 . But is such a companydition implicit from the section or does it necessarily flow from its terms ? The implication cannot obviously be raised by reference to the hardship which might otherwise be caused but must surely rest on more secure and legally Satisfactory grounds. The Central Government has, numberdoubt, under s. 17, the power to prohibit all forward companytracts in a particular companymodity, if the mere regulation of the transactions is companysidered number adequate to protect public interests, and learned Counsel is right in his submission that when a numberification is issued under s. 15 1 , the Central Government are number exercising their power to lay a companyplete ban, and that companysequently the validity of a numberification intended merely to regulate cannot be upheld by reference to the power to prohibit. But the scheme of the Act in Ch. III envisages only the formation of voluntary associations and their seeking and being accorded recognition by the Government on fulfillment of the requisite companyditions. In other words, the Act does number companytemplate the Central Government itself setting up associations to discharge the function of a recognised association under the Act. There might, therefore, companyceivably, be cases where the traders do number or refuse to organise themselves into an association which companyld apply for and obtain recognition under Ch. Ill. It is manifest that the provisions of the Act cannot be defeated and the exercise of the regulatory power of Government nullified by traders in a companymodity number forming an association which companyld be recognised under Ch. III. Similarly the power companyferred on Government by s. 15 1 of the Act, cannot be made dependent on such voluntary associations satisfying the requirements for recognition, such that if the associations refuse to do so the power does number emerge. No doubt, when there are associations whose bye-laws and regulations companyform to the requirements of the law the recognitions of such associations either before or simultaneously with the issue of a numberification under s. 15 world enable the forward trading to be companyducted without a break. But this is number the same thing as the submission that on a proper companystruction of a. 15 the recognition of an association for the purpose of forward trading in a companymodity is an essential pre-requisite before a numberification under s. 15 companyld be issued. It was next companytended that even if on a proper companystruction of s. 15 of the Act, the existence of a recognised association authorised to regulate dealings in a particular companymodity was number a prerequisite for the issue of a numberification under the section in respect of that companymodity, still the issue of the. numberification without an association being recognised was companystitutionally invalid as an unreasonable restriction on the, right of the petitioners to trade and carry on business. We are unable to uphold this argument either. The need for regulating forward trading companyld number be and was number disputed before us. We shall be companysidering later the companytention that s. 15 of the Act is itself invalid as violating the freedom to trade guaranteed under Art. 19 1 g . The very narrow question which is raised by the point number under discussion is this Assuming that forward trading requires regulation and that regulation through recognised associations which are subject to companytrol and guidance in their activities by the Government is justified by the necessities of the situation and assuming also that it was number legally incumbent on Government to recognise an association for dealing in a companymodity before forward trading in such companymodity companyld be brought within the scope of the Act, would the action taken under s. 15 1 in the present case have to be held invalid as number being a reasonable restriction within cl. 6 of Art. 19 ? In situations like those here the reasonableness of the restriction has necessarily to be tested by the degree of urgency which required the intervention of Government. That would be largely a question of fact, and we have already extracted paragraphs 195 to 197 of the Annual Report of the Forward Markets Commission for 1959 in which the situation which necessitated the impugned numberifications is describe . It is plain enough that enquiries which had to precede the recognition of associations under Ch. III do take some-time, and in fact in the present case the recognitions were accorded in June 1959, and if emergent action was required to companytrol a situation which threatened to worsen rapidly, we do number companysider that the action of the Government in stepping in even before the recognition of associations companyld in the circumstances be characterized as unreasonable. After all, it is a question of balancing individual rights and the profits which companyld be reaped by individuals under an existing state of the law against the public benefit arising from the exercising of companytrol, and if Government companysidered that the latter would be best served by immediate action under a valid provision of the law and the circumstances reasonably warranted that opinion, we hold that in. the absence of any proof of mala fides, and there is numbere here , the action of the Government cannot be hold to violate the companystitutional limits set by el. 6 of Art. 19. We shall number proceed to companysider the challenge to the companystitutional validity of s. 15 itself. The attack was based on the section infringing Arts. 14,19 1 f and 19 1 g of the Constitution and in respect of the last two as number being protected by cls. 5 and 6 of Art. 19. In regard to Art. 14, the argument-was that a. 15 companyferred an unguided and arbitrary power upon the Central Government to choose any companymodity it liked and bring the Act into operation in respect of the companymodity chosen, at any time it pleased by numberification, the effect of the, numberification being vitally to affect the interests of traders by rendering illegal a companytract which was perfectly legal when it was entered into. We companysider that there is numbersubstance in this submission. We have already extracted relevant portions from the report of the expert companymittee on the bill which became the Act dealing with the economic implications of forward trading and for the necessity for regulating such companytracts in particular goods. It is number forward trading in every companymodity that requires regulation under the Act. The suitability of a companymodity for forward trading depends on factors which are far from static and similarly the need for bringing forward trading within the regulatory provisions of the Act depends on factors which are subject to variation over periods of time. Besides, the nature of the companymodity, the size of its production, the scale of the demand for it in relation to the supply and the demand itself being number quantitatively fixed but changing so as to require a companytinuous assessment through the medium of futures market are all elements that necessitate regulation and these are variable. We have number attempted to be exhaustive in naming the several factors but these are some of the characteristics which call for and make possible, effective regulation. It would therefore, follow that the companymodities which would satisfy these tests or requirements can only be ascertained from time to time after enquiry and -investigation. They cannot obviously be specified in a statute. It is because of these companysiderations and the need for expert opinion and guidance on the matter that the Act has, by its Ch. II., provided for the companystitution of a Forward Markets Commission on whom has been laid the duty of advising Government on the situation as it exists from time to time and make recommendations in that regard. In our opinion, the selection of the companymodity for the regulation of forward trading in it or of prohibition of such trading can only be left to the Government and the purposes for which the power is to be used and the machinery created for the investigation furnish sufficient guidance as to preclude any challenge on the ground of a violation of Art. 14. What we have just number said as regards the selection of the companymodity would suffice to answer the argument regarding the selection of the time at which the numberification under s. 15 1 might take place. We need only repeat what we have pointed out earlier that though the Forward Markets Commission in its report of may, 1957, recommended that gur might be brought within the scope of the regulatory provisions of the Act with immediate effect, the Government did number accept that recommendation and it was only when Government companysidered that a situation developed rendering the price-situation in the gur forward market very critical and that speculative activity in the companymodity indulged in by powerful operators had raised prices to an unreasonable figure that Government intervened by the numberification number impugned. The next submission of Mr. Nambiar was that s. 15 was companystitutionally invalid as violating the freedoms guaranteed by sub-cls. f and g of el. 1 of Art. 19. As regards sub-cl f of el. 1 of Art. 19, it was urged that the right to the benefits arising under a companytract which was lawful when entered into was in the nature of property and that s. 15, by empowering a numberification to be issued which rendered such a companytract illegal was ,in unreasonable restriction on the right to the holding or enjoyment of that property. It was further urged that whether or number the right to the benefit of a companytract was property within Art. 19 1 f it was a right intimately bound up with the right to carry on a trade or business within sub-el. g of cl. 1 of Art. 19 and it was broadly companytended that any retrospective invalidation of that companytract would number be a reasonable restriction within el. 6 of Art. 19. In view of the nature of these submissions. the challenge under both sub-cl. f g might be companysidered together. Before we do so, however, we might dispose of a subsidiary argument based on the words we are italicising in s. 15 1 and thereupon every forward companytract for the sale or purchase of any goods specified in the numberification which is entered into in the area specified therein etc. It was urged that by reason of these words the Government was empowered to issue a numberification which would have effect in relation to companytracts which were entered into after that date, and that the impugned numberification which invalidated companytracts entered into earlier subsisting on the date of the numberification was therefore ultra vires. We companysider this submission as with. out force. The expression is entered into is at the worst ambiguous and is capable of meaning either only those entered into after the date of the numberifi- cation, or as meaning is or has been entered into i. e., including a companytract which having been entered into before is subsisting on that date. But that it is ,used in the latter sense is made clear by the terms of s. 16 a every forward companytract for the sale of purchase of any goods specified in the numberification, entered into before the date of the numberification and remaining to be performed after the said date Sections 15 and 16 have to be read together as being intimately companynected, the later provision setting out the companysequences of the action taken under the earlier and so read, we companysider that there is numberscope for the argument addressed to us. Now to revert to the discussion , of the attack on the provision based on a violation of Art. 19 1 f g , the question is whether the giving of retrospective effect to an enactment dealing with companytracts so as to modify the terms of or even put an end to subsisting companytract is per se unreasonable so as to amount to a violation of the guarantee under sub-cls. f g assuming learned Counsel is right in companytending that a right to the benefit of a companytract is in the nature of a right to property-an assumption as regards the companyrectness of which we say numberhing. In support of his submission learned Counsel relied on the observations in the judgment of this Court in State of West Bengal v. Subodh Gopal Bose and Ors., 1 where it was observed that the fact that the statute was being given retrospective operation may properly be taken into companysideration in determining the reasonableness of the restriction impose sed-an observation which was cited in the decision of this Court in Express News papers Private Ltd. v. Union of India 1 . The decisions referred to and others to a like effect are authorities merely for the position that the retrospective effect of a statute would be an element to be taken into account for determining the reasonableness of the restriction imposed but these observations do number carry learnea Counsel to the full extent needed to sustain the proposition he seeks to establish, viz., that the retrospective invalidation of a companytract is number a permissible restriction that companyld be imposed by a 6 of Art. 19. Learned Counsel referred us to some decisions of the Supreme Court of the United States but to these. we do number companysider it necessary to advert. Article 1, Section 10 1 , of the American Constitution lays a ban on the enactment by the States of inter alia any ex post-facto law or low impairing the obligation of companytracts, or grant any title of numberility Our Constitution-makers while making provision against ex post-facto laws in Art. 20 1 and ,against titles in Art. 18 1 , studiously refrained from including a guarantee regarding the impairment of obligations of companytracts. There is therefore numberscope for the argument that a law which affects or varies rights under a companytract is for that reason companystitutionally invalid as an unreasonable restriction on the right either to property or to carry on trade or business. It may be pointed out that even in the United States the recent decisions have made such inroads upon that doctrine that it had been stated by Prof. Corwin that The protection afforded by this clause does 1 1954 S.C.R. 587., 626. 2 1959 S.C.R. 12, 139, number today go much, if at all, beyond that afforded by, Section 1 of the Fourteenth Amendment against deprivation of life, liberty or property without due process of law . The learned another proceeding to quote from the decision in Atlantic, Coast Line, Co. v. Goldsboro 1 companytinues In the words of the Court ,It is settled that neither the companytract clause number the due process clause has the effect of overriding the power of the State to establish all regulations that are reasonably necessary to secure the health, safety, good order, companyfort, or general welfare of the companymunity- in- short, its police power. And what is reasonably necessary for these purposes is today a question ultimately for the Supreme Court and the present disposition of the Court is to put the burden of proof upon any person who challenges State action as number reasonably, necessary. adding Till after the Civil War the principal source from which cases stemmed challenging the validity of State legislation, the obligation of companytracts clause is today of negligible importance, and might well be stricken from the Constitution. For most practical purposes, in fact, it has been. Vide Constitution and what it means today, 12th Edn., p. 84 If that is the position in America where the Constitution companytains a guarantee against the impairment of obligations arising from companytracts, the position under our Constitution must a fortiori be so. Affecting a subsisting companytract by modifying its terms cannot ipso jure be treated as outside the permissible limits laid by cl. 5 or b of Art. 19. The reasonableness of the provisions of a statute are number to be judged by a priori standards unrelated to the facts- and circumstances 1 1941 232 U.S. 548 58 L. Ed. 721. of a situation which occasioned the. legislation. In an oft-quoted passage Patanjali Sastri, C. J., observed in State of Madras v. V. G. Row It is important in this companytext to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and numberabstract , standard, or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing companyditions at the time, should all enter into the judicial verdict. It cannot be therefore predicated off-hand and as a matter of law that every restriction which operates with retrospective effect and affects rights obtained under the pre-existing law, is unconstitutional as obnoxious to the freedom guaranteed by sub-cls. f or g of el. 1 of Art. It might, in particular cases, even be necessary to companypletely efface a subsisting companytract but in the present case that is number what was done but only to vary its terms go that it would be settled out at the prices determined by the other numberification. Learned Counsel challenged the validity of the provision for price-fixation under s. 16 and of the actual prices determined under the numberification issued under s. 16, but these we shall companysider later. We hold that s. 15 is companystitutionally valid. It is only necessary to add that it is manifest that the restriction on trading is in the, interest of the general public since the public have a vital interest in the availability of an essential companymodity like gur at reasonable and relatively stable prices and the only question for determination for the 1 1952 S.C. R. 597, 607. application of cls. 5 or 6 of Art. 19 would be the reasonableness of the measures companytemplated by the law. Taking into account the machinery created in Ch. II of the Act in the way of an expert body to furnish Government with advice on such a companyplex problem and the functions of the companymittee, we are clearly of the view that the restrictions imposed by s. 15 of the Act are reasonable and pass the tests for a valid law under cls. 5 and 6 of Art. 19. Learned Counsels next submission related to the validity of s. 16 which deals with the companysequences of a numberification. These companysequences are three 1 All forward companytracts subsisting on the date of the numberification under s. 15 number entered into by or through a recognized association are deemed to be closed out, 2 The rates at which the companytracts have to be settled are those to be fixed by the Central Government, and 3 In respect of the forward companytracts so closed out the buyer is number entitled to ask for delivery of the goods and similarly the seller is number entitled to insist on delivery being taken. In companysidering the validity of s. 15 and the arguments addressed to us in that behalf we have already companysidered the first companysequence, viz., subsisting forward companytracts being deemed to be closed on the day of the numberification. Learned Counsel does number impugn the validity of the provision in cl. b of s. 16 under which the obligation to demand delivery or insist on delivery being taken is provided against. The attack on s. 16 was companyfined to the validity of vesting a power in the Central Government to fix the rates at which the differences payable by one party to the other should be determined on the closing out of the companytract by operation of the numberification. It was urged that the provision entrusting the Government with power to fix the price s without specifying the basis therefor vested in them an arbitrary power to fix any price that they liked, that the statute had number given any indication of the principles underlying the fixation of the price, with the result that the relevant portion of s. 16 was either. a piece of excessive delegation or offended Art. 14-by companyferring, an unguided power in Government. Before dealing with the companystitutional objection which was sought to be supported by companytrasting these provisions with analogous Indian legislation wherein the price payable was fixed by the Act itself to which we shall advert a little later, it might be usefull to narrate the circumstances in which the price at which the closing out was to be settled was fixed by the Central Government in, the impugned numberification. The circumstances are thus described in the companynter-affidavit filed on, behalf of the State to these petitions. On July 17, 1958, the Government of India issued a numberification under s. 17 of the Act banning forward companytracts of minor woodgrains and a similar numberification followed on the next day banning forward companytracts in Khand- sari sugar. The closure of these markets increased the speculative activity in the forward market in gur. The price situation in respect of gur became critical in the last week of December 1958 when bull operators acting in companycert started to rise up the prices. Contracts were entered into at these excessive prices in the belief that even if Government intervened and took drastic steps of closing out the companytracts by a numberification under s. 15, the benefits of the high prices on the out standing companytracts would, in accordance with past practice, available to the bull operators. On A review of the situation exsisting as aforesaid, the Government found that at Hapur which was a representative market, the rate for gur futures prices rose from Rs. 11.98 per maund on January 17, 1958, to Rs. 16.27 per maund on February II, 1959, and the Government companysidered that these forward prices were exerting a very unhealthy influence on the spot-prices of the companymodity. It was in these circumstances that in the impugned numberification the price at which the forward companytract should be closed out was fixed at the average of the closing rates prevailing in the forward markets during the period of three months immediately preceding the date of the numberification. The question number for companysideration is whether on the scheme of the Act read in companyjunction with the policy underlying it and the purposes for which it is enacted there companyld be found a guidance as to the principles on which the price of settling out companyld be fixed by the Government ? In this companynection we might usefully refer to the provisions of the Essential Commodities Act, 1955, under which Government is vested with power to determine the prices at which essential companymodities may be bought or sold. Under s. 3 2 of the Essential Commodities Act 1955, the Central Government is empowered by order made under the Act to provide for companytrolling the price at which any essential companymodity be bought and sold. The companytrol under ,that enactment, as the one number under companysideration, is to be exercised for ensuring that the price fixed shall be reasonable having regard to the companyt of production and the general level of prices prevailing of other like companymodities which are the subject of legitimate and proper trade. In the very nature of things it is number possible for the legislature to determine beforehand the price at which a companymodity may be sold or at which companytracts in relation thereto might be entered into. The price must be dependent upon factors varying from time to time and cannot, therefore, be always a proper subject of legislative determination. Any fixation of prices either by naming a figure or by reference to, the market price ruling on a particular date, must be productive of hardship both by reason of being mechanical and therefore out of tune with the varying factors which might obtain from time to time, as also of being liable to manipulation by unscrupulous traders as in the situation described by the Government in regard to gur futures in the passage just number extracted. Nor is it any defect, in the Act that it does number in so many terms lay down the principles for the fixation of the price. In view of what we have stated earlier, the only guidance which the Parliament companyld have given was to direct that the price fixed be reasonable taking into account the relevant factors we have enumerated earlier, and this we companysider is implicit in the provision in s. 16 of the Act as much as in s. 3 of the Essential Commodities Act. No doubt, learned Counsel pointed out the provisions companytained in the West Bengal Raw Jute Act Act XXV of 1948 , the Jute Goods Act V of 1950 and the Bombay Forward Markets Contracts Act Act LXIV of 1945 , in which in respect of closing out of companytracts which were, illegalised on the companying into force of the enactment, the price at companyld be settled was fixed as the spot-price of the closing day. In numbermal circumstances that might have been a fair rule to adopt, but from these precedents numberrule of law can be derived that a fixation of a price on any other basis either improder, unjust or unconstitutional. It is patent that if prices are artificially rigged up and inflated as a result of excessive speculation and unhealthy trade practices, the spot-price prevailing on the closing day would number represent the reasonable price at which companytract should be closed out And this was precisely the case of the respondent7 State as the reasons which companypelled it to depart from the -principle of fixation, on the basis of the spot-Price on the closing day. We see, therefore, numbersufficient ground for holding that the power companyferred on the Central Government to fix the price at which companytracts companyld be closed out is either legislatively incompetent or companystitutionally invalid. What we stated earlier should suffice to show that the actual price at which the companytracts were required to be settled out fixed in the impugned numberification companyformed to. the requirement of reasonableness in Art. 19 6 and that underlying,the relevant prosions of the statute.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 248 of 1960. Appeal by special leave from the judgment and order dated October 31, 1960, of the Rajasthan High Court in D. B. Criminal Appeal No. 290 of 1960 and D. B, Criminal Murder Reference No 7 of 1960. L.- Anand, C. L. Sareen and B. L. Kohli, for the appellants. K. Kapur and T. M. Sen, for the respondent 1961. September. 13. The Judgment of the Court was delivered by WANCHOO, J.-This is an appeal by special leave from the judgment of the Rajasthan High Court. It arises out of an incident in which Bhimsen was murdered on May 8, 1959 at Mandi Pili Bangan shortly before 3 P.m. The prosecution story briefly was, that there was bad blood between Ramratan appellant and the members of the family of Bhimsen on account of panchayat elections in which they had supported rival candidates. Another cause for. enmity was that some time before the occurrences Ramratan appellant was prosecuted under s. 307 of the Indian Penal Code and Bhimsen was cited as a prosecution witness in that case and Ramratan did number like that. Bhimsen and his father brought some gram for sale on the night between May 7/8, 1959, to Pili Bangan. Bhimsen returned to the village to bring more grain and came back at about10/11 A.M. on the 8th on his tractor-trolly along with his brother Ram Partap. The gram was to be sold through Roopram and was stacked in front of his shop in the mandi. Ram Partap was apparently number interested in the sale and had wandered away leaving his father Jawanaram and his brother Bhimsen at the shop. Shortly before 3 p.m. while the gram was being weighed by Lekhram weighman, the three appellants and two others namely, Moman and Ramsingh came up there armed with ,guns. Ramratan shouted that the enemy should number be allowed to escape as Bhimsen was trying to enter the shop of Roopram to save himself on seeing these persons. Before, however, Bhimsen companyld enter the shop of- Roopram, Ramratan came in between and fired at him from a distance about 5 feet. Bhimsen got injured and fell down and died soon after. Jawanaram raised his hands and asked the assailants number to kill Bhimsen but Hansraj appellant fired at him causing a wound on his left hand,. which resulted in a companypound fracture. Maniram also fired at. Jawanaram but he dropped on the ground and pellets hit Lekhram weighman who was standing behind Jawanaram. Thereafter all the assailants ran away. Roopram had shut up his shop when the incident took place and he only came out When everything was over. Jawanaram asked him to send telegram to police station Suratgarh and told him the names of the five assailants. Thereafter jawanaram started for the police outpost in Pili Bangan to make a report but Ramsingh companystable met him on the way at a short distance from the shop of Roopram. Thereupon Jawanaram made a report Ex. P- 1 to Ramsingh then and there. While this report was being recorded, Ram Partap also turned up. After the report had been recorded, Jawanaram was sent to the hospital where his injuries were examined at 3-30 P.m. Ramsingh companystable went to the spot after recording the report and found the dead body of Bhimsen lying in front of Rooprams shop It appears that head-constable gone outside and returned at 5 M. and started investigation thereafter. The Sub- inspector arrived on the scene at about 6 p.m. and took over the investigation and. companypleted it. Thereafter the three appellants and two others who have been acquitted by the Sessions Judge were prosecuted for this murder. The case of the appellants was that they had number companymitted this offence and that they had been implicated on account of enmity They examined numberevidence in defence. The main prosecution evidence companysisted of the statements of Jawanaram, his son Ram Partap, Roopram and Lekhram as to what happened at the spot. Jawanaram related the whole story as given above, Ram Partap said that he had companye near the spot on seeing the assailants going that way and hid himself at some distance and saw the incident from there. Rooprams statement was that he shut up his shop as soon as he heard some numberse outside and did number see the assailants. When he came out, however, he was told by Jawanaram the names of the five assailants and saw Bhimsen lying dead. He had also heard three reports of gunshots from inside his shop. He saw Jawanaram and Lekhram were also there injured and Jawanaram went away shortly after for making the report. Sometime thereafter the police came to the spot and started investigation. Lekhram stated that he was there weighing the gram. Four or five persons armed with guns came there and shouted and fired two or three times with the result that Bhimsen, Jawanaram and he were injured and Bhimsen died immediately. But he was unable to say whether the five persons in the dock were the assailants. Because of certain answers that he gave in cross-examination this witness was treated as hostile by the prosecution. The Sessions Judge relied on the statement of Jawanaram and companyvicted the three appellants. He however, gave the benefit of doubt to the other two assailants and acquitted them. He did number rely on the statement of-Ram Partap as he was of the view that Ram Partap did number arrive in the Mandi till about 6 P.m. He also did number rely on the statement of Lekhram, which in any case was useless in so far as the companynection of the appellants with the crime was companycerned. As to Roopram he held that his statement that Jawanaram had told him the names of the assailants immediately after the incident was over when he came out of his shop companyld number be used as companyroborate on of the statement of Jawanaram under s. 157 of the Indian Evidence Act, as Jawanaram had number said in his statement in Court that he had told Roopram the names of the five assailants He was also doubtful whether the report Ex. P-1 was recorded at 3 P.m. and thought that it might have been recorded any time up to 6 P.m. But even so he placed full reliance on the evidence of Jawanaram only and companyvicted the three appellants, sentencing Ramratan to death and the other two to imprisonment for life. This was followed by an appeal to the High Court by the companyvicted persons. The Sessions Judge also made a reference for the companyfirmation of the sentence of death passed on Pamratan. The High Court dismissed the appeal. It also accepted the evidence of Jawanaram in the main. The High Court was further of opinion that Ram Partap was in Pili Bagan when the incident took place having companye there with his brother Bhimsen at about10/11 A.M. but the High Court did number think it fit to rely on his evidence as to the actual incident, for it thought that he had number been able to see it properly from where he said he was hiding. Further the High Court did number companysider the evidence of Lekhram of much value as if, did number companynect the appellants with the crime. But the High Court was of the opinion that Rooprams statement that Jawanaram had told him immediately after the occurrence the names of the five assailants was admissible in evidence and companyld be used to companyroborate the statement of Jawanaram. The High Court thought that this statement of Roopram was admissible under s. 6 as well as under a. 157 of the Evidence Act. The High Court therefore upheld the companyviction on the evidence of Jawanaram companyroborated as it was by the evidence of Roopram. The High Court having refused to grant a certificate, the appellants applied to this Court for special leave which was granted and that is how the matter has companye up before us. Two main companytentions have been urged before, us on behalf of the appellants. In the first place, it is urged that the High Court was number right in the view that the statement of Roopram was admissible under s. 6 and s. 157 of the Indian Evidence Act and went to companyroborate the statement of Jawanaram. Secondly, it is urged that once the statement of Roopram is ruled out as inadmissible there is only the statement of Jawanaram left to companynect the appellants with the crime and in the circumstances of this case that solitary evidence should De held insufficient to bring home the guilt to the appellants. The first question therefore that arises in the appeal is whether the statement of Roopram to the effect that Jawanaram told him immediately after the incident, when he came out of his shop that the appellants and two others were responsible for the murder of Bhimsen and the injuries to Lekhram and himself, is admissible, either under s. 6 or under s. 157 of the Indian Evidence Act. We lo riot think it necessary to companysider whether this statement of Roopram is admissible under s. 6 of the Evidence Act and shall companyfine ourselves to the question. whether it can be admitted under s. 157 as companyroboration of Jawanarams state- ment. Learned companynsclfor the appellants in this companynection relies on Mt. Misri v. Emperor 1 , and Nazar Singh v. The State 2 which support him and lay down that unless the witness to be companyroborated says in his statement in companyrt that be, had told certain things immediately after the incident to another person, that other person cannot give evidence and say that the witness bad told him certain things immediately after the incident. The argument is that the companyroboration that is envisaged by s. 157 is of the statement of the witness in companyrt that he had told certain things to the person companyroborating the witnesss statement, and if the witness did number say in companyrt that he had told certain things to that person, that person cannot state that the witness had told him certain things immediately after the incident and A.I.R. 1934 Sind 100, A.I.R. 1931 Pepsu 66. thus companyroborate him. We are of opinion that this companytention is incorrect. Section 157 is in these terms- ,In order to companyroborate the testimony of a witness, any former statement made by such witness relating to the same fact, or at about the time when the fact took place, or before any authority legally companypetent to investigate the fact, may be proved. It is clear that there are only two things which are essential for this section to apply. The first is that a witness should have Riven testimony with respect to some fact. The second is that he should have made a statement earlier with respect to the same fact at or about the time when the fact took place or before any authority legally companypetent to investigate the fact. If these two things are present, the former statement can be proved to companyroborate the testimony of the witness in companyrt. The former statement may be in writing or may be made orally to some person at or about the time when the fact took place, if it is made orally to some person at or about the time when the fact took place, that person would be companypetent to depose to the former statement and companyroborate the testimony of the witness in companyrt. There is numberhing in s. 157 which requires that before the companyroborating witness deposes to the former statement the witness to be companyroborated must also say in his testimony in companyrt that he had made that former statement to the witness who is companyroborating him. It is true that often it does happen that the witness to be companyroborated says that he had made a former statement about the fact to some person and then that person steps into the witness-box and says that the witness to be companyroborated had made a statement to him about the fact at or about the time ,hen the fa ct took place. But in our opinion it is number necessary in view of the words of s. 157 that in order to make companyroborating evidence admissible, the witness to be companyroborated must also say in his evidence that he had made such and such statement to the witness who is to companyroborate him, at or about the time when the fact took place. As we have said already what s. 157 requires is that the witness to be companyroborated must give evidence in companyrt of some fact. If that is done, his testimony in companyrt relating to that fact can be companyroborated under s. 157 by any former statement made by him relating to the same fact, and it is number necessary that the witness to be companyroborated should also say in his statement in companyrt that he made some statement at or about the time when the fact took place to such and such person. The words of s. 157 are in our opinion clear and require only two things indicated by us above in order to make the former statement admissible as companyroboration. We are therefore of opinion that the Sind and Pepsu cases were wrongly decided. Now let us see what happend in this case. Jawanaram was examined in companyrt and stated about a certain fact namely, that the assailants of Bhimsen, Lekhram and himself were five persons whom he named . The testimony of Jawanaram to be companyroborated is his statement in companyrt with respect to the fact that five persons attacked Bhimsen, Lekhram and himself. Section 157 makes his former statement with respect to the same fact admissible provided that the statement was made at or about the time when the fact took place or before any legal authority companypetent to investigate the fact. In this case we are companycerned with the first of the two companyditions necessary, namely, whether he had made that former statement relating to the same fact. at or about the time when the fact took place. The former statement which can be used as companyroboration must be about the fact namely that Jawanaram had seen five persons attacking Bhimsen, Lekhram and himself and must have been made at or about the time when the fact took place i. e., when the attack was made. Now Roopram says that Jawanaram had made the statement immediately after the incident was over that five persons including the three appellants had attacked Bhimsen, Lekhram and himself. This was therefore a former statement of Jawanaram at or about the time when the fact took place, namely, the attack by five persons on Bhim- sen and others. This former statement can be proved by the person to whom it was made and can be used as companyroboration of the evidence of Jawanaram. It was number necessary before the statement of Roopram as to what he heard from Jawanaram can be admissible for Jawanaram also to say in his testimony in companyrt that he bad told Roopram immediately after the incident the names of the five assailants of Bhimsen and others. The former statement which can be used as companyrobo- ration is the, statement at or about the time the fact took place about which evidence has been given in companyrt by the witness to be companyroborated. Section 157 does number companytemplate that before the former statement can be proved in companyroboration, the witness to be companyroborated must also say in his testimony that he had made the, former statement. Of companyrse if the witness to be companyroborated also says in his testimony that he had made the former statement to someone that would add to the weight of the evidence of the person who gives evidence in companyroboration, just as if the witness to be companyroborated says in his evidence that he had made numberformer statement to anybody that may make the statement of any witness appearing as companyroborating witness as to the former statement of little value. But in order to make the former statement admissible under s. 157 it is number necessary that the witness to be companyroborated must also, besides making the former statement at or about the time the fact took place, say in companyrt in his testimony that he had made the former statement. We are therefore of opinion that even though Jawanaram did number say in his statement in companyrt that he had told Roopram the names of the five assailants, Rooprams evidence that Jawanaram had made such a statement would be admissible under s. 157 in companyroboration of Jawanarams testimony as to the fact that five persons had attacked Bhimsen and others. As to the value to be attached to this companyroboration in the present case, it is enough to say that Roopram is an independent witness and even though Jawanaram may number have said in evidence that he had told the names of the assailants to Roopram perhaps by inadvertence as the High Court seems to think , we agree with the High Court in accepting the statement of Roopram that Jawanaram had immediately named the five persons who had attacked Bhimsen, Lekhram and himself. Thus the statement of Roopram companyroborates the statement of Jawanaram in two ways firstly, that there was an incident in front of his shop in which Bhimsen was murdered and Jawanaram and Lekhram were injured, arid secondly, proves the former statement of Jawanaram as to the persons who took part in the incident, thus companyroborating his statement in companyrt under s.157. This is number therefore a case where there is numbercorroboration of the testimony of Jawanaram, even if he were the solitary witness of the incident itself. As to the second point, namely, that we should number accept the solitary testimony of Jawanaram in the circumstances of this case, learned companynsclrelies on Vemireddy Satyanarayan Reddy v. The State of Hyderabad 1 . In that case there was the solitary testimony of one witness and it was urged that he was an accomplice. This Court hold that he was number an accomplice but remarked that we would still want companyroboration on material particulars in this particular case, as he is the only witness to the crime and as it would be unsafe to hang four- people on his sole testimony unless we feclconvinced that he is speaking the truth. The reason why this Court said so in that 1 1956 S. C. R. 247. case was that though the witness was number an accomplice his position was companysidered somewhat analogous to that of an accomplice though number exactly the same. It was in those circumstances that this Court said that companyroboration in material particulars would be required in the circumstances of that case. We are of opinion that those observations cannot be divorced from the companytext of that case. In the present case Jawanaram is neither an accomplice number anything analogous to an accomplice he is an ordinary witness who was undoubtedly present at the time the incident took place. .rho case of such a solitary witness was companysidered by this Court in Vadivelu Thevar v. The State of Madras 1 and after referring to the earlier case it was held that as a general rule a companyrt may act on the testimony of a single witness, though uncorroborated. It was further held that unless companyroboration is insisted upon by statute, companyrts should number insist on companyroboration except in cages where the nature of the testimony of the single witness itself requires as a rule of prudence, that companyroboration should be insisted upon, and that the question whether companyroboration of the testimony of a single witness was or was number necessary, must depend upon facts and circumstances of each case. These are the general principles which we have to apply in the case of the testimony of a single witness, like Jawanaram. But as we have held that in the present case there is companyroboration of Jawanarams statement by his former statement deposed to by Roopram, it is number a case of altogether uncorroborated testimony of a single witness. In any case the evidence of Jawanaram has been companysidered by both the Sessions Judge and the High Court, and the Sessions Judge was prepared to companyvict the appellants on the sole testimony of Jawanaram while the High Court has also accepted that testimony, though it has added that it is companyroborated by the statement of Roopram. In 1 1957 S. C. R. 981. the circumstances when the evidence of Jawanaram has been accepted by both the companyrts, with or without companyroboration, we see numberreason to disagree with the companyclusion of the two companyrts as to the value of Jawanarams evidence. The criticism made against the acceptance of the evidence of Jawanaram has been companysidered by the two companyrts and in spite of that criticism the two companyrts have companye to the companyclusion that the evidence of Jawanaram is reliable. We agree with the estimate of that evidence by the two companyrts and hold that Jawanarams evidence can be relied on in the circumstances of this case. Two main points are urged in this companynection to shake the testimony of Jawanaram. It is said that Jawanaram has introduced Ram Partap in the first information report and that the Sessions Judge at any rate did number believe that Ram Partap was in Pill Bangan before 6 P.m.-though the High Court held otherwise. Secondly, it is said that Jawanaram did number make the first report at about 3 M. and the Sessions Judge at any rate held that the report companyld have been made at any time upto 6 P.m.-though the High Court held otherwise. We have been taken through the evidence in this companynection and we agree with the High Court that even though Ram Partap might number have actually seen the incident he had definitely companye to Pili Bangan at about II A.M. with his brother Bhimsen. There is the evidence of Ram Singh companystable who says that Ram Partap came there when the report Ex. P-1 was being written at about 3 P.m., which is supported by the fact that Ram Partaps presence is mentioned in the report. The defence relied on a statement in the inquest report Ex.P-4 in which it is mentioned at the end that Ram Partap son of Jawanaram also arrived during the companyrse of the companypletion of the inquest report and was sent along with the companypse. This means that Ram Partap was number present when the inquest proceedings began and arrived there when they were companying to an end. From this it cannot be inferred that Ram Partap was number in Pili Bangan at all before 6 P.m. There. is ample evidence, which the High Court has rightly believed, to show that Ram Partap had companye to Pili Bangan at about 10 or 11 A. M. The other criticism with respect to the time when the report Ex. P.1 was made is also in our opinion unjustified and the High Court was right in the view it took in that companynection. There is numberdoubt that Jawanaram reached the hospital at 3-30 P.m. as deposed to by Dr. Sudershan Singh and that he was sent by the police. It is obvious therefore that Jawanaram had companytacted the police before 3-30 P.m. It stands to reason that if he had companytacted the police before 3-30 P.m. be must have made a report of the incident also and that is what exactly Ram Singh companystable deposes. We agree with the High Court that in the circumstances there is numberreason to disbelieve the statement of Ram Singh companystable. The Sessions Judge was doubtful of the evidence of Ram Singh because he was of the view that documentary evidence from the police outpost at Pili Bangan had number been produced in support of Ram Singhs statement. Ram Singh was asked about it and stated that though Ex. P-1 did number bear the despatch number as it was number sent to the outpost at all, he must have made entries in the diary of the outpost about his starting from there and his return and also about the occurrence, though he did number remember about it. After this statement of Ram Singh, the Sessions Judge was number right in disbelieving him because of the number-production of the entries from the outpost. It would have been better if the prosecution had produced those entries but even if the prosecution rested upon the oral testimony of Ram Singh, the Sessions Judge companyld and should himself have sent for those entries, if he was inclined to disbelieve the oral testimony of Ram Singh companystable who appears to be a reliable witness. In the circumstances we are of opinion that the view of the High Court that the report was written at 3 P. m. as stated by Ram Singh companystable is companyrect. The evidence of Jawanaram therefore cannot be rejected on these two grounds. Lastly it was urged that Jawanaram bad named five assailants and at least two have been acquitted, and that shows that Jawanaram is number wholly reliable. It is enough to point out that the Sessions Judge gave the benefit of doubt so far as two accused persons were companycerned. He did number hold that Jawanarams evidence was false with respect to those two persons. Apparently those two persons did number take any active part in the incident and that may have led the Sessions Judge to give them the benefit of doubt that is, however, numberreason for disbelieving the testimony of Jawana- ram. We are therefore of opinion that the two companyrts below were right in relying on Jawanaram. His evidence is companyroborated undoubtedly by other witnesses to the extent that the incident did take place at the shop of Roopram his statement that the three appellants and two others were the assailants is companyroborated by his former statement made immediately after the incident was over and deposed to by Roopram. In the circumstances we are of opinion that the appellants have been rightly companyvicted. Two of the appellants namely, Maniram and Hansraj have been sentenced to imprisonment for life while Ramratan has been sentenced to death. The reason why Ramratan has been sentenced to death is that he was the man who shot Bhimsen. He was also the leader of this group and the enmity was directly between him and the members of the family of Jawanaram. We agree with the High Court that there are numberextenuating circumstances which would justify the reduction of sentence of death passed on Ramratan.

Case appeal was rejected by the Supreme Court

Gajendragadkar, J. The principal point which this appeal by special leave raises for our decision relates to the companystruction of sections 32 and 33 of the Arbitration Act, 1940 10 of 1940 hereafter called the Act . That question arises in this way. The respondent, Union of India, filed a petition in the Court of the First Class Sub-Judge at Delhi against the appellant M s. J. Burman Co., through its proprietor Jawahar Lal Burman under sections 33 and 28 of the Act. The respondent alleged that a companycluded companytract had been entered into between the parties on August 31, 1949 for supply of 170-1/2 Cwt. of companyoanut oil by the appellant to the respondent. The respondent had advertised in the Indian Trade Journal for he said supply and the appellant had submitted its tender No. SM-I/104524. This tender was accepted by the respondent which companycluded a companytract between the parties. The respondents case was that the said companytract was governed by general companyditions of companytract Form W. S. B. 133. These companyditions included an arbitration agreement. Disputes arose between the parties regarding the said companytract, and so in pursuance of the arbitration agreement they were referred to the two arbitrators appointed by the parties. After the arbitration proceedings had gone on for a companysiderable time before the arbitrators the appellant objected to their jurisdiction to deal with the disputes on the ground that there was numberconcluded companytract between the parties. This plea made it necessary for the respondent to move the Court for a decision of the question about the existence and validity of the arbitration agreement. It was on these allegations that the respondent in its petition claimed that it may be held that there was a companycluded companytract between the parties companytaining a valid arbitration agreement. The petition having been made under section 28 along with section 33 the respondent prayed that suitable extension of time be granted to the arbitrators for making the award. The appellant pleaded in defence that numberconcluded companytract had been made between the parties and that there was numberjurisdiction in the Court to grant extension under section 28. The other allegations made by the respondent in its petition were also traversed. On these pleadings the learned trial judge framed appropriate issues. He found that a companycluded companytract had been proved between the parties as alleged by the respondent, that there was a valid arbitration agreement in the said companytract and that the Court had jurisdiction to try the petition. Incidentally it may be pointed out at this stage that numberspecific point had been raised in the pleadings of the appellant that the Court had numberjurisdiction to entertain the petition under section 33 or section 32 of the Act. In fact the trial judge has observed that it was number shown to him how the application was incompetent. Consistently with the findings recorded by him the learned trial judge declared that there was a companycluded companytract between the parties under which the matter was duly referred to arbitration through an arbitration agreement clause in the companytract. As a result of the declaration he held that there was a valid reference to arbitration between the parties. Consequently he granted a months time to the arbitrators to make their award. This decision was challenged by the appellant by its revision petition preferred in the High Court of Punjab at Chandigarh. The High Court has companyfirmed the finding of the trial companyrt that there was a companycluded companytract which companytained an arbitration agreement. The question of jurisdiction under section 33 of the Act was argued before the High Court and its attention was drawn to the companyflict of judicial decisions on the point. The High Court, however, held that since the petition has been filed as a companyposite application under sections 28 and 33 it was open to the Court under section 28 to enter upon the question of the existence or validity of the companytract and so there was numbersubstance in the point of jurisdiction raised by the appellant. In the result the appellants revision application was dismissed. It is against this decision that the appellant has companye to this Court by special leave and on his behalf Mr. Din Dayal has raised the same two points for our decision. He companytends that the High Court was if error in holding that the trial companyrt had jurisdiction to entertain the respondents petition, and he argues that even if the point of jurisdiction raised by him fails it should be held that there was numberconcluded companytract between the parties and so there was numberscope or room for making any reference to arbitration. The first of these two companytentions has been seriously pressed before us. Before dealing with the question of jurisdiction it is necessary to recall the material facts which have led to the present dispute. The appellant and the respondent numberinated their arbitrators. The arbitrators heard the matter at length and the proceedings had reached a stage when an award might have been pronounced. It was then that the appellant chose to obstruct the further progress of the proceedings by raising the plea that there was numberconcluded companytract. Even then he refused to apply under section 33 and so a stalemate issued because the arbitrators were number entitled to proceed further with the arbitration proceedings in view of the point raised by the appellant. It is necessary to bear in mind this background of the dispute in companysidering the point of jurisdiction. The question of jurisdiction raised by the appellant has to be answered in the light of the companystruction which can be reasonably placed on the material provisions of sections 32 and 33 of the Act. It may be companyceded at the outset that the question thus raised presents some difficulty. Sections 32 and 33 read thus Notwithstanding any law for the time being in force, numbersuit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, number shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act. Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits Provided that where the Court deems it just and expedient, it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in a suit. In appreciating the effect of these two provisions it would be relevant to remember that the object of the Legislature in enacting the two sections quite clearly was to prevent the abuse of the process of the Court. Before the present Act was passed experience showed that unscrupulous and dishonest parties to the arbitration agreements frequently chose to deny the existence of the said agreements even after the arbitration proceedings had companycluded and ended in awards and that tended to make all arbitration proceedings futile. More often than number these pleas ultimately failed but it meant companysiderable delay and waste of time and substantial expense. That is why sections 32 and 33 have been enacted with the object of bringing the relevant disputes for decision before the specified Courts in the form of petitions. It is significant that under section 31 2 of the Act all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the agreement or persons claiming under them shall be decided by the Court in which the award under the agreement has been, or may be, filed, and by numberother Court. Indeed, section 2 c defines a Court as meaning a Civil Court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit, but does number, except for the purpose of arbitration proceedings under section 21, include a Small Cause Court. Therefore, stated broadly, it would be companyrect to assume that the main object of introducing the new provisions of sections 31, 32 and 33 was to entrust the decision of the relevant disputes to the specified Court and to require the parties to bring the said disputes for the decision of the said Court in the form of petitions. Remedy by a regular suit is intended to be excluded. Section 32 creates a bar against the institution of suits, and it provides that if the existence effect or validity of an arbitration agreement or award is in dispute on any ground whatsoever numbersuit shall lie for the adjudication of the said dispute. It also provides that numbersuit shall lie to set aside, amend or modify or in any way affect an arbitration agreement or an award. It would be numbericed that the clause on any ground whatsoever is very wide and it denotes, inter alia, that if the existence or validity of an arbitration agreement is questioned on any ground whatever it cannot be the subject-matter of a suit the said dispute shall be tried as provided in this Act. Thus there can be numberdoubt, that if a party affirms the existence of an arbitration agreement or its validity it is number open to the party to file a suit for the purpose of obtaining a declaration about the existence of the said agreement or its validity. Such a suit in terms is barred by section 32. This position is number disputed. The bar to the suit thus created by section 32 inevitably raises the question as to what remedy it is open to a party to adopt in order to obtain an appropriate declaration about the existence or validity of an arbitration agreement and it is on the decision of this question that the parties are at issue before us. Before answering this question we may companyveniently companysider the scope of section 33 and its effect. Section 33 companysists of two parts. The first deals with a challenge to the existence or validity of an arbitration agreement or an award, and it provides that the persons there in specified can apply to the Court to have a decision on its challenge to the existence or validity of an arbitration agreement or an award. In other words, there is numberdoubt that it is only persons who challenge the existence of the arbitration agreement that can apply under the first part of section 33. This position is also number disputed. The second part of the section refers to applications made to have the effect of either the arbitration agreement or the award determined. The question which we have to companysider is whether a person affirming an arbitration agreement can apply under the latter part of section 33. Even assuming that the requirement that an application can be made under the first part of section 33 only by persons desiring to challenge the arbitration agreement does number apply to its latter part, it is difficult to hold that an application to have the effect of the arbitration agreement determined can legitimately companyer the dispute as to the existence of the said arbitration agreement. It is clear that the first part of section 33 refers to the existence or validity in terms and sections 31 and 32 also refer separately to the existence effect or validity. Therefore, the effect of an arbitration agreement is treated as distinct from the existence of the agreement, and where it was intended to refer to the existence as well as the effect of such an agreement both the words existence and effect have been specifically used. Thus, under the latter part of section 33 an application can be made to have the effect or purport of the agreement determined but number its existence. That means that an application to have the effect of the agreement can be made provided the existence of the agreement is number in dispute. Besides, if a person affirming the existence of an agreement is held entitled to apply to the Court under the latter part of section 33 for getting a declaration about the said existing agreement then the first part of section 33 would be wholly superfluous. Therefore, it seems to us that a party affirming the existence of an arbitration agreement cannot apply under section 33 for obtaining a decision that the agreement in question exists. In fairness we ought to add that the learned Solicitor-General, who appeared for the respondent, did number dispute this position. If the party affirming the existence of an arbitration agreement cannot apply under section 33 what is the remedy open to him ? This question takes us back to section 32. If section 32 has created a bar against the institution of a suit for obtaining a declaration about the existence of an arbitration agreement, unless it is held that the creation of the said absolute bar itself involves the right to make an application under the Act it would lead to the anomalous result that a party is given numberremedy to enforce the right and it is an ordinary rule of companystruction that such an unreasonable and unconscionable result should as far as possible be avoided because the Legislature companyld number have intended such a result. In our opinion, having regard to the scheme of sections 31, 32 and 33 it would number be unreasonable to hold that in matters which fall within the bar created by section 32 if a suit cannot be filed it is necessarily intended that an application can be made and such an application can be made under the Courts powers provided for by section 31 and impliedly recognised by section 32. On this companystruction section 33 cannot be treated as exhaustive of all cases where applications can be made. The Legislature has provided for the said cases under section 33 because it was thought that they represented the usual type of cases which arise under the arbitration agreements. A companytrary view would lead either to a stalemate or would in substance companypel the party affirming the existence of an agreement to forego the procedure prescribed by the said agreement and sue on the companytract itself. We are satisfied that a fair companystruction of sections 31, 32 and 33 does number lead to such an anomalous position. Mr. Din Dayal companytends that there is really a lacuna in the Act inasmuch as having created a bar by section 32 the Legislature has failed to provide a remedy by way of an application. On reading sections 31, 32 and 33 together we do number think the Court is driven to the companyclusion that there is a lacuna in the Act. In this companynection it is material to remember that even in dealing with applications under the first part of section 33 the Court may accept the opponents plea and hold that the arbitration agreement exists if the challenge to the said existence set out in the petition is rejected. In other words, in many cases applications made under the first part of section 33 may end in the finding that the arbitration agreement exists. Similarly, in applications made under section 20 of the Act, if a dispute arose as to the existence of the arbitration agreement the Court may find in favour of the existence and make an order of reference as companytemplated by section 24. Thus, it is clear that in the applications expressly provided for by these two sections a party affirming the existence of the agreement would be entitled to prove the said existence, and if he succeeds he would obtain a decision to that effect. Therefore, in holding that section 32 impliedly recognises the inherent jurisdiction of the Court to entertain applications made by the parties affirming the existence of arbitration agreements we are bringing the provisions of section 32 in line with the provisions of sections 33 and 20. Indeed, section 33 is a companyollary of section 32 and in a sense deals by way of illustration with the most usual type of cases arising in arbitration proceedings. Section 28 of the Act has numbermaterial bearing on the decision of this point. The power to enlarge-time for making the award which is the subject-matter of the provisions of section 28 cannot be held to include a power to entertain petitions like the present. Indeed, the learned Solicitor-General has number attempted to justify the companyclusion of the High Court that section 28 companyfers such a power. Even if it is held that there is inherent jurisdiction in the Court to entertain an application in support of the existence of an arbitration agreement the question still remains whether an application can be made under such inherent jurisdiction for a declaration that the companytract which includes the arbitration agreement as defined by section 2 a includes cases where the arbitration agreement is made a part of the companytract itself. The argument is that though an application may be made under the inherent jurisdiction of the Court to obtain a declaration about the existence or validity of an arbitration agreement, numbersuch application can be made to obtain a declaration about the existence or validity of the main companytract itself. In dealing with this argument it would be necessary to have regard to the substance rather than the form of the matter. In the present case the respondent claims that there is a companycluded companytract between the parties and that the said companytract companytained a valid arbitration agreement. Looking at the substance of the matter the prayer was first in regard to the existence and the validity of the main companytract leading up to the second and principal prayer that there was a valid arbitration agreement. Quite clearly the decision of this question cannot depend merely on the words used in the petition. Where the challenge to the companytract made by the appellant in defence to the claim of the respondent is a challenge companymon to both the companytract and the arbitration agreement, the petition, like the one made by the respondent, must in substance be held to be a petition for a declaration as to the existence of a valid arbitration agreement and a suit to obtain such a declaration is clearly barred by section 32. Therefore, in our opinion, the fact that an incidental declaration is claimed about the existence and validity of the main companytract does number affect the essential character of the application. It is an application for obtaining a declaration about the existence and validity of an arbitration agreement. It is true that an arbitration agreement included in the companytract itself is in one sense an integral part of the companytract and in another sense it may be distinct from it. As observed by Lord Macmillan in Hayman v. Darwins, Ltd. 1942 A. C. 356. S. C. 1942 1 All. E. R. 337 at p. 347 , the arbitration clause is quite distinct from the other clauses. The other clauses set out the obligations which the parties undertake towards each other hinc inde but the arbitration clause does number impose on one of the parties an obligation in favour of the other. It embodies the agreement on both the parties that, if any dispute arises with regard to the obligations which the one party has undertaken to the other, such dispute shall be settled by a tribunal of their own companystitution. Moreover, there is this very material difference that whereas in any ordinary companytract the obligations of the parties to each other cannot in general be specifically enforced and breach of them results only in damages, the arbitration clause can be specifically enforced by the machinery of the Arbitration Acts. It is, therefore, theoretically possible that a companytract may companye to an end and the arbitration agreement may number. It is also theoretically possible that the arbitration agreement may be void and yet the companytract may be valid and in that sense there is a distinction between the arbitration agreement and the companytract of which it forms a part but, as we have already pointed out, in the present case, the challenge to the companytract itself involves a challenge to the arbitration agreement if there is a companycluded companytract the arbitration agreement is valid. If there is number a companycluded companytract the arbitration agreement is invalid. In such a case a prayer for a declaration of the existence of the companytract and its validity inevitably leads to the companysequential prayer about the existence and validity of the arbitration agreement. If that is so, a suit cannot lie for a declaration that the arbitration agreement is valid because the prayers that the respondent has made in the present case fall directly within the clause on any ground whatsoever. Indeed, we apprehend that in a very large majority of cases where the arbitration agreement is a part of the main companytract itself, challenge to the existence or validity of one would mean a challenge to the existence or validity of the other. We would accordingly hold, though for different reasons, that the High Court was right in companying to the companyclusion that the petition made by the respondent was companypetent under section 32 of the Act and has been properly entertained by the trial Court. This question has been the subject-matter of some judicial decisions to which reference may number be made. In Messrs. M. Gulamali Abdulhussain Co. v. Messrs. Vishwambharlal Ruiya I. L. R. 1950 Bom. 333 a petition had been filed for a declaration that the respondents had entered into the companytract with the petitioners for purchase of 500 bars of silver on or about January 30, 1948 according to the rules and regulations of the Marwari Chamber of Commerce, Ltd., and that the respondents were bound to have all disputes in companynection with the same companytract decided by the arbitrators as provided by the said rules and regulations. The companypetence of this petition and the jurisdiction of the Court to entertain it were disputed. Both the learned trial judge and the Court of Appeal rejected the respondents companytention and held that there was an inherent jurisdiction in the Court to entertain petitions in respect of matters companyered by the bar raised by section 32. On the other hand, in Bajranglal Laduram v. Agarwal Brothers A. I. R. 1950 Cal. 267 as well as in State of Bombay v. Adamjee Hajee Dawood Co., Ltd. I. L. R. 1952 2 Cal. 49 , a companyntry, view has been accepted. In the latter case, a suit had been filed on the Original Side of the Calcutta High Court claiming a declaration that a certain companytract was number made between the parties and was number binding on the plaintiff. A further claim was also made that it should be declared that the defendant was number entitled to make any claim in respect of the said companytract and that the companytract be adjudged void and delivered up as cancelled. The learned trial judge companystrued the plaint as one for declaration that the arbitration agreement companytained in the companytract was invalid and on that view he held that under sections 32 and 33 of the Act the suit was number maintainable. On appeal it was held that the suit was number one for challenging the validity of the arbitration agreement merely it companyered other reliefs and so bar of sections 32 and 33 companyld number be pleaded. We are inclined to think that the decision of the Bombay High Court is substantially companyrect. That takes us to the next question as to whether there was a companycluded companytract between the parties or number. We have already numbericed that in response to the advertisement published by the respondent in the Indian Trade Journal the appellant submitted its tender. It is companymon-ground that the tender thus submitted was subject to the companyditions of companytract governing the Department of Supply Contracts which were set out in the Government Publication Form W. S. B. 133. Clauses 4 a and b of these companyditions are relevant. They deal with the security deposit. Clause 4 a provides that on acceptance of the tender the companytractor shall at the option of the Secretary, Department of Supply and within the period specified by him, deposit with him a security deposit therein specified. Clause 4 b provides that if the companytractor is called upon by the purchaser to deposit security and the companytractor fails to provide the security within the period, such failure will companystitute a breach of the companytractor and the security, Department of Supply, shall be entitled to make other arrangements at the risk and acceptance of the companytractor. It is thus obvious that the tender offered by the appellant submitted to these terms and that on these terms security deposit is a companydition subsequent and number a companydition precedent. Clause 4 b makes it clear that the failure to make the deposit would be a breach of the companytract itself. This position is number disputed but Mr. Din Dayal companytends that this position has been substantially varied by the Form in which the appellants tender was accepted by the respondent. His argument is that the material words used in the acceptance letter changed the pre-existing position and made the security deposit a companydition precedent to the acceptance itself. If this companytention is right it would necessarily mean that there was numberconcluded companytract. Thus the decision of this point depends upon the companystruction of the letter of acceptance issued by the respondent to the appellant after receiving its tender. In this letter written on August 31, 1949 the respondent stated as follows Dear Sirs, Ref - Your tender No. and date Nil. Your offer is hereby accepted for a quantity of 1704 Cwts. and 2 qrs. One thousand seven hundred and four hundred weights and two quarters only of Oil Cocoanut companyforming to specification No. IM. 1370 d at Rs. 89/6/- Rupees eightynine and annas six only per Cwt. packet in number-returnable sound, strong 45 gallon drums, delivery ex-godown at Calcutta by 39-9-49 or earlier if possible subject to your depositing 10 as security. The security money which companyes to Rs. 15,230/- Rupees fifteen thousand two hundred and thirty only should please be deposited immediately into a Government Treasury in favour of the Deputy Accountant General, I and S., Akbar Road, New Delhi and the Treasury Receipt forwarded to this office. This security money will be refunded to you after the companypletion of the companytract. The companytract is companycluded by this acceptance and formal acceptance of Tender will follow immediately on receipt of Treasury Receipt. Kindly acknowledge receipt. Yours etc. etc. The whole argument is founded on the use of the clause subject to your depositing 10 as security. Prima facie this clause may justify the argument that it is intended to make the security deposit a companydition precedent but in companystruing the true effect of this clause we must look at the whole of the letter bearing in mind the fact that it has been written number by a lawyer or in companysultation with a lawyer but by a Government officer in the ordinary companyrse of the discharge of his duties. The first sentence in the first paragraph clearly shows that the offer was accepted for the quantity therein specified. The second paragraph calls upon the appellant to see that the specified amount is deposited immediately into the Government Treasury. This paragraph is more companysistent with clause 4 a of the general companyditions. It reads as if having accepted the tender the appellant is reminded that it has to deposit the amount under the relevant companydition, and the letter ends with the categorical statement that the companytract is companycluded by this acceptance. Mr. Din Dayal is right when he companytends that section 7 of the Contract Act requires that the acceptance of the offer must be absolute and unqualified, it cannot be companyditional but reading the letter as a whole we do number think that the Courts below have erred in companying to the companyclusion that this letter amounts to an absolute and unqualified acceptance of the tender or offer made by the appellant. While dealing with this question it may be pertinent to recall that the general companyditions of the companytract prescribed by Form W. S. B. 133 are made a part if the tender, and the companytract itself was intended to be executed expeditiously. The tender shows that the appellant represented that the earliest date by which delivery companyld be effected would be within twenty days from the date of the receipt of the order and it also said that full quantity of companyoanut oil required was held by it. Therefore, to begin with the tender treated the security deposit as a subsequent companydition, the companytract was for the immediate supply of goods and the acceptance purports to be in accordance with the relevant government rules and uses the expression that the companytract was companycluded by the said acceptance. Therefore, in our opinion, reading the letter as a whole it would number be possible to accept the appellants argument that the letter was intended to make a substantial variation in the companytract by making the deposit of security a companydition precedent instead of a companydition subsequent.

Case appeal was rejected by the Supreme Court