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CIVIL APPELLATE JURISDICTION Civil Appeal No. 322 of 1960. Appeal by special leave from the judgment and order dated November 21, 1957, of the Punjab High Court Circuit Bench at Delhi in L.P.A. No. 4 of 1955. C. Setalvad, Attorney-General of India, Sen, R. H. Dhebar and T. M. Sen, for the appellant. V. Viswanatha Sastri and Sardar Bahadur, for the respondents Nos. 1 to 6. N. Andley, Rameshwar Nath and P.L. Vohra, for the respondent No. 7. 1961. August 29. The Judgment of the Court was delivered by SUBBA RAO, J.-This appeal by special leave is preferred against the judgment of a division bench of the Circuit Bench of the Punjab High Court at Delhi companyfirming that of a single Judge of that High Court issuing a writ of mandamus against the Union of India directing it to restore possession of the flat requisitioned by the said Government to the respondents. One Babu Ram was the owner of Flat No. 5, Aggarwal Building, Connaught Circus, New Delhi respondents 1 to 6 are his sons-and widow. By an order dated April 14, 1943, the Government of India requisitioned the said flat under r.75- A 1 of the Defence of India Rules for a period of one year from April 15, 1943. to April 14, 1944. The said flat was put in the occupation of one Hardie of the Indian National Airways. The period of requisition was extended from time to time, and finally by an order dated April 2, 1946, the flat was requisitioned from April 15, 1946, until further orders of the Central Government. After Mr. Hardie vacated the flat, it was allotted to other officers. Babu Ram requested the Government from time to time to de-requisition the said flat for his personal use. He represented that he was suffering from heart trouble and was companytinuously keeping indifferent health, that two of his sons had got married, and that in those circumstances it had become impossible for him to companytinue to live in their small house in a narrow lane but the Government of India rejected his request on the ground that on surrender by the officers of the Indian National Airways it would be required for allotment to Central Government officers. Babu Ram died on October, 24, 1951. It appears that four or five months in 1947 the flat was vacant and thereafter it was occupied by refugees from West Pakistan. It was afterwards given to the present respondent No. 7, Triveni Kala Sangam. On November 4,1952, respondent No. 1 again requested the Government to de- requisition the flat mainly on the ground that the said flat was number in use of the officers of the Central Government but was put in possession of Triveni Kala Sangam, which was a private dance and music school. As numberreply was given to that request, the said respondent sent a reminder on June 26, 1953, and to that he received a reply to the effect that the matter is receiving attention and further companymunication will follow in due companyrse. On September 16, 1953, the Government informed the first respondent that he companyld execute a lease deed in favour of the Government in respect of the said flat. As the appellants did number put the respondents in possession of the said flat, they had numberalternative but to file a petition for a writ of mandamus in the High Court of Punjab. The petition was heard by Falshaw, J., and the learned Judge issued a writ of mandamus on October 19, 1954, directing the appellants to put the respondents in possession of the flat. Against the said order, on November 26, 1954, the appellants filed a Letters Patent appeal in the Circuit Bench of the Punjab High Court at Delhi. The appeal was filed within 30 days from the date of the said order after excluding the time taken for obtaining certified companyies of the necessary documents but more than 20 days thereafter. The appeal was heard by a division bench of the said. High Court companysisting of the Chief Justice and Mehar Singh, J. The learned Judges held that the appeal was filed out of time and that there was number sufficient reason for excusing the delay. They also went into the merits of the case and agreed with Falshaw, J., that a case had been made out for issuing a writ. With the result that the appeal was dismissed. Hence the present appeal. Learned Attorney-General, appearing for the appellants, companytends, that the Letters Patent appeal, it having been filed within 30 days from the date of the judgment of Falshaw, J., was within time, and that, in any view, having regard to the fluid state of the law on the question whether the and prescribed by the Limitation Act or the rule by the High Court would govern that appeal, there Was sufficient cause for excusing the delay. On the merits he argues that the requisition made under r.75-A of the Defence of India Rules hereinafter called the Rules was companytinued unders.3 of the Requisitioned Land Continuance of Powers Act, 1947 Act No. 17 of 1947 hereinafter called the 1947 Act , whereunder the appropriate Government was given the power to use or deal with a requisitioned land in such manner as may appear to it to be expedient, that in exercise of the said power the said Government put Triveni Kala Sangam in possession of the same, and that under s.24 2 of the Requisitioning and Acquisitioning of Immovable Property Act, 1952 hereinafter called the 1952 Act , the said requisition shall be deemed to be property requisitioned under s.3 of the said Act and that under the said section the said purpose must be deemed to be a public purpose, being the purpose of the Union and, as that purpose did number cease to exist, the respondents are number entitled to ask for de-requisition of the said flat. Mr. A. V. Viswanatha Sastri, learned companynsel for the respondents, seeks to sustain the order of the High Court both on the question of limitation as well as on merits. Three questions fall to be companysidered in this appear, namely 1 what is the period of limitation prescribed for an appeal against an order of a Single Judge of the Punjab High Court to a division bench of the same High Court ? 2 if the appeal was preferred out of time, was there a sufficient cause for excusing the delay in preferring the appeal ? 3 are the respondents number legally entitled to ask the Central Government to de-requisition the said premises under the 1952 Act ? To appreciate the first companytention it is necessary to read the relevant provisions of the Limitation Act, the clauses of the Letters Patent and the rules made by the High Court. The Indian Limitation Act, 1908. Section 29. 2 Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed therefor by the First Schedule, the provisions of section 3 shall apply, as if such period were prescribed therefor in that Schedule The First Schedule Description of appeal Period of Time from of which limitation period begains to run From a decree or order of any of the High Courts of Judicature at Fort William, Madras and Bombay, Twenty The date of or of the High Court days the decree or order of Punjab in the exercise of its original jurisdiction. LETTERS PATENT FOR THE HIGH COURT OF LAHORE. Clause 27. And WE do further ordain that it shall be lawful for the High Court of Judicature at Lahore from time to time to make, rules and orders for regulating the practice of the Court and for the purpose of adopting as far as possible the provisions of the Code of Civil Procedure, being an Act, No. V of 1908, passed by the Governor-General in Council and the provisions of any law which has been or may be made, amending or altering the same, by companypetent legislative authority for India, to all proceedings in its testamentary, intestate and matrimonial jurisdiction respectively. Clause 37. And We do further ordain and declare that all the provisions of these Our Letters Patent are subject to the legislative powers of the Governor-General in Legislative Council, and also of the Governor-General in Council under section seventy-one of the Government of India Act, 1915 and also of the Governor-General in cases of emergency under section seventy-two of that Act, and may be in all respects amended and altered thereby. Rules and Orders of the High Court of Punjab. Rule 4 No memorandum of appeal preferred under clause 10 of the Letters Patent shall be entertained if presented after the expiration of 30 days from the date of the judgment appealed from, unless the admitting Bench in its discretion, for good cause shown, grants further time for the presentation. It is clear from the aforesaid provisions that while under Art. 151 of the Limitation Act a period of 20 days is prescribed for preferring an appeal from an order of the High Court of Punjab in the exercise of its Original Jurisdiction, under r. 4 of High Court Rules for an appeal under cl. 10 of the Letters Patent a period of limitation of 30 days is provided. If Art. 151 applies, the Letters Patent appeal in the present case was clearly barred. But if r. 4 companyld be invoked, then the appeal was well within time. The companybined effect of the provisions may be stated thus Under cl. 27 of the Letters Patent, the High Court of Judicature of Lahore has the power to make a rule prescribing the period of limitation in respect of appeals from orders made by that Court in exercise of its Original Jurisdiction to a division bench of that High Court. Under el. 37 thereof, the provisions of the Letters Patent are subject to the legislative powers of the Governor-General in Legislative Council and, therefore, any rule made in exercise of a power companyferred under the Letters Patent must necessarily be subject to the provisions of the Limitation Act which is a law made by the Legislative Council. Article 151 of the Limitation Act prescribes the period of limitation of 20 days for preferring an appeal against an order made by the High Court in exercise of its original jurisdiction, and if there is numberother limitation on that section, r. 4 of the High Court Rules must give way to the said Article. But s. 29 2 of the Limitation Act limits the scope of that section, for it says that where a special or local law prescribes for an appeal a period prescribed therefore in the said Schedule, the provisions of s. 3 shall apply as if such period were prescribed therefor in that Schedule, that is, if there is a special or local law prescribing a period of limition, it will be deemed to be the period of limitation prescribed by the First Schedule to the Limitation Act in respect of an appeal companyered by that rule. To state it differently, if r. 4 is a special law, the Limitation Act itself must be deemed to prescribe the period of limitation mentioned under that rule for the class of cases companyered by the said rule, and to that extent the rule derogates from Art. 151 of the First Schedule to the Limitation Act. Article 151 must be read subject to the special law. In this view, the argument that cl. 37 of the Letters Patent makes the rule made by the High Court subject to the Limitation Act and, therefore, that Art. 151 shall prevail over r. 4 has numberforce. Briefly stated, the legal position is this Under el. 27 of the Letters Patent, the High Court has power to make a rule prescribing the period of limitation for a Letters Patent appeal against an order of a single Judge made in exercise of the original jurisdiction of the High Court, and by reason of cl.37 thereof, the said rule is subject to the provisions of the Limitation Act but the Limitation Act itself saves the operation of the said rule. With the result that r. 4 applies to such an appeal, whereas Art. 151 of the Limitation Act will govern appeals number companyered by r. 4 or appeals, from orders made by other High Courts in exercise of their original jurisdiction, if numberrule similar to r. 4 is made by the said High Court or High Courts. In the premises the only question to be decided is whether r. 4 is a special law within the meaning of s. 29 2 of the Limitation Act. Rule 4 is made by the High Court in exercise of the legislative power companyferred upon the said High Court under cl. 27 of the Letters Patent. As the said rule is a law made in respect of special cases companyered by it, it would certainly be a special law within the meaning of s. 29 2 of the Limitation Act. This view was accepted by the Punjab High Court in Punjab Co-operative Bank Ltd. v. Official Liguidators, punjab Cotton Press Company, Ltd. in liquidation 1 . There, a full bench of that High Court held that the statutory rules framed by the A.I.R. 1941 Lahore 57 F. B. . High Court under cl. 27 of the Letters Patent under the authority delegated to it by His Majesty who, in turn, was acting under the powers companyferred on him by Act of Parliament, are a special law. We agree with this view. It is number necessary to deal with other decisions cited at the Bar, for in numbere, of them the scope of s. 29 of the Limitation Act was companysidered. Indeed, Mr. A.V. Viswanatha Sastri has number companytended that r. 4 is number a special law within the meaning of s. 29 of the Limitation Act. If so, it follows that under r. 4 an appeal companyld be filed within 30 days from the date of the order of Falshaw, J., and the appeal having been filed on the twenty-third day, it was well within time. In this view, the second question does number fall to be companysidered in this appeal. On merits, the question turns upon the companystruction of the relevant provisions of the Defence of India Rules, the 1947 Act and the 1952 Act. For easy reference and companyparison, the relevant provisions may be read at one place. The Defence of India Rules Rule 75-A. 1 If in the opinion of the Central Government or the Provincial Govern- ment it is necessary or expedient so to do for securing the defence of British India, public safety, the maintenance of public order or efficient prosecution of the war, or for main- taining supplies and services essential to the life of the companymunity, that Government may by order in writing requisition any property movable or immovable, and may make such further orders as appear to that Government to be necessary or expedient in companynection wit the requisitioning. x x x x x x Where the Central Government or the Provincial Government has requisitioned. any property under sub-rule 1 that Government may use or deal with the property in such manner as may appear to it to be expedient, and may acquire it by serving on the owner thereof, or ,here the owner is number readily traceable or the ownership is in dispute, by publishing in the official Gazette, a numberice stating that the Central or Provincial Government, as the case may be, has decided to acquire it in pursuance of this rule. , The Requisitioning and Acquisitioning of Immovable Property Act, 1952 XXX of 1952 Section 24. 1 The Requisitioned Land Continuance of Powers Act, 1947 XVII of 1947 , the Delhi Premises Requisition and Eviction Act, 1947 XLIX of 1947 and the Requisitioning and Acquisitioning of Immovable Property Ordinance, 1952 III of 1952 are hereby repealed. For the removal of doubts, it is hereby declared that any property which immediately before such repeal was subject to requisition under the provisions of either of the said Acts or the said Ordinance shall, on the companymencement of this Act, be deemed to be property requisitioned under section 3 of this Act, and all the provisions of this Act shall apply accordingly. Section 3. 1 Where the companypetent authority is of opinion that any property is needed or likely to be needed for any public purpose, being a purpose of the Union, and that the property should be requisitioned, the companypetent authority- a shall call upon the owner or any other person who may be in possession of the property by numberice in writing specifying therein the purpose of the requisition to show cause, within fifteen days of the date of the service of such numberice on him, why the property shall number be requisitioned x x x x Section 6. 1 The Central Government may at any time release from requisition any property requisitioned under this Act and shall, as far as possible, restore the property in as good a companydition as it was when possession thereof was taken subject only to the change caused by reasonable wear and tear and irresistible force Provided that where the purpose for which any requisitioned property was being used ceased to exist, the Central Government shall, unless the property is acquire under section 7 release that property, as soon as may be, from requisition. The Defence of India Rules were issued under the Defence of India Ordinance, 1939, which was repealed by the Defence of India Act, 1939, but the said rules were kept alive by virtue of the provisions of s. 21 of the said Act. Under r.75-A of the said Rules, the power to requisition a property was companyditioned by the purposes for which it companyld be so requisitioned, though it was left to the subjective satisfaction of the Government to decide whether it was necessary or expedient to do so. After requisition, the Central Government was authorized to deal with the property in such manner as might appear to it to be expedient. The expediency in the companytext can only mean expediency in relation to the purposes for which the property was requisi- tioned. The wide import of the word expedient in Sub-s. 2 must necessarily be limited to the purposes under sub-s. 1 as otherwise we would be attributing to the Legislature an intention to companyfer a power on the Government to requisition a property on false pretenses. Act 17 of 1947 was enacted to provide for the companytinuance of certain emergency powers in relation to land which, when the Defence of India Act expired, was subject to requisition effected under the rules made under that Act. Requisitioned land was defined to mean an immovable property which at the companymencement of the said Act was subject to any requisition effected under the said rules. Under s. 3 thereof numberwithstanding the expiration of the said Act and the rules made thereunder, the requisitioned land was companytinued to be subject to requisition until the expiry of the said Act, and it authorized the appropriate Government to use or deal with any requisitioned land in such manner as may appear to it to be expedient. The object of the Act was only to companytinue the. requisition after the expiry of the life of the Defence of India Act and number to enlarge the powers of the Government in respect of the requisitioned land. The land requisitioned under the Ordinance companytinued to be subject to the requisition. The expression companytinue clearly brings out the idea that the scope of the section was only to give a further lease of life to the order which otherwise would have expired. The words may use or deal with any requisitioned land in such manner as may appear to it to be expedient were only a repetition of the words in r. 75-A 2 of the Rules companyferring authority on the Government to do certain things in respect of requisition and the scope of the authority under s.3 of the 1947 Act must be similar to that under r.75-A 2 of the Rules. Under s.24 1 of the 1952 Act, the 1947 Act was repealed. Under sub-s. 2 thereof, it was provided that on the companymencement of the Act the properties which were subject to requisition under the provisions of the earlier Act shall be deemed to be property requisitioned under s.3 of the Act and that all the provi- sions of the Act shall apply accordingly. Relying upon the deeming clause, it is companytended that the requisition of the land and the user of the same by the Government under the 1947 Act should be deemed to be a requisition made, under S. 3 of the 1952 Act, for a public purpose, being the purpose of the Union, and as that purpose, namely user by the Triveni Kala Sangam, had number ceased, the appellants were number bound to de-requisition under s. 6 of the Act. But the fiction created by s. 24 2 of the Act would operate only upon the requisition already made. The fiction companyld number validate any illegal act of the Government. Therefore, the question is what was the effect of the earlier requisition under the Rules as well as under the 1947 Act. If the requisition originally made was for purposes mentioned in r.75 of the Rules and companytinued under s.3 of the 1947 Act only for the said purposes, under s. 3 of the 1952 Act the requisition of the property made for the said purposes would be deemed to be a requisition for a public purpose being a purpose of the Union. But the validity of the requisition companyld be judged on the basis of the pre-existing statutes and number on the basis of the provisions of the sections of the 1952 Act. The result is that the requisition of a property made for public purposes under r.75-A of the Rules would be deemed to be a requisition under s. 3 of the Act and all the provisions of the Act would apply accordingly. It is said that under the Rules a requisition need number have been made for a public purpose but the express provisions of r, 75-A of the Rules negative this Contention. Though numbernotice stating the purpose is companytemplated under r. 75-A of the Rules, the requisition companyld have been made only for the four public purposes mentioned in r. 75-A of the Rules. We have pointed out that the requisition for the said purposes only companytinued under the 1947 Act. The purposes for which it was requisitioned must, therefore, be deemed to be the purposes mentioned in r. 75-A of the Rules. Even if s. 5 of the Act was excluded on the ground that numbernotice was issued under r. 75-A of the Rules the proviso to s. 6 of the Act would be attracted. Under that proviso, where the purposes for which any requisitioned property was being used ceased to exist, the Central Government shall release the property, as soon as may be, from requisition. In the present case, on the facts it is manifest that the flat was number used for any of the purposes for which it was requisitioned for a number of years and indeed, when the Act came into force, it was used only for locating the Triveni Kala Sangam, which is clearly, number one of the purposes for which the flat was requisitioned. If so, it must be held that the purpose for which the property was requisitioned ceased to exist and the respondents have acquired a right to be put in possession thereof under the said proviso. Even so, the learned Attorney-General companytends that the purpose for which the building is number utilised, namely for the Triveni Kala Sangam, is a public purpose being the purpose of the Union, within the meaning of s. 3 of the Act, and, therefore, the respondents are number entitled for de- requisition under the proviso to s. 6 of the Act. It is argued that every Union purpose is a public purpose. The argument proceeds that under the Constitution the Parliament may make laws with respect to any of the matters enumerated in List I of the Seventh Schedule to the Constitution, and also in respect of any matters enumerated in List III thereof, that under Art. 73 the executive power of the Union extends to the said matters and that, therefore, the requisition of property made for any of the purposes companynected with such matters, whether in regard thereof laws were made or number, would be a requisition for a public purpose, being a purpose of the Union, within the meaning of B. 3 1 of the 1952 Act. In support of this company- tention reliance is placed upon the decision of this companyrt in The State of Bombay v. Ali Gulshan 1 . There is a fallacy underlying this argument. The 1 1955 2 S. C. R. 867. effect of the fiction is that the requisition made under r. 75-A of the Rules is a requisition under s. 3 of the 1952 Act, that is, if the requisition was made for purposes mentioned in r. 75-A of the Rules, it would be deemed to be one for a public purpose, being the purpose of the Union, within the meaning of s. 3 of the 1952 Act. The criterion is number, therefore, whether a particular purpose for which a building was used when the Act came into force was a public purpose, being the purpose of the Union, within the meaning of s3 of the 1952 Act, but whether it was requisitioned for one of the purposes mentioned in r. 74-A of the Rules. If those purposes ceased to exist, the proviso to s. 6 of the 1952 Act made it obligatory for the Government to release the property. As the flat was being used for a purpose other than that for which it was requisitioned, the respondents were entitled to be put in possession thereof. In this view, we do number propose to express our opinion on the validity of the companytention raised by the learned Attorney-General based upon the decision of this Court. In the result the appeal fails and is dismissed.

Case appeal was rejected by the Supreme Court

CRIMINAL JURISDICTION Writ Petition No. 1 of 1960. Under article 32 of the Constitution of India for the enforcement of Fundamental Rights. V. Viswanatha Sastri, K.K. Jain and Ganpat Raj, for the Petitioners. K.Daphtary, Solicitor-General of India, V.A. Saiyed Mohamad and T. M. Sen, for the Respondents. 1961. August 8. The Judgment of the Court was delivered by SHAH, J.-Controls on exports and imports imposed as an emergency measure during the last war in respect of certain companymodities were kept alive after the lapse of the Defence of India Rules by the Emergency Provisions Continuance Ordinance, 1946 which was later replaced by the Imports and Exports Control Act,. 1947 18 of 1947 , by s. 3 of the Act, the Central Government was authorised by order published in the Official Gazette, to provide for prohibiting, restricting or otherwise companytrolling, in all cases or in specified classes of cases, and subject to such exceptions if any, as may be made by or under the order, inter alia the import, export, carriage xxx xxx of goods of any specified description. By sub-sec 2 of s.3., it was provided that all goods to which an order under sub-s. 1 applied shall be deemed to be goods of which the import or export has been prohibited or restricted under s.19 of the Sea Customs Act. Exercising authority under s.3 of the Imports and Exports Control Act, 1947, the Central Government issued numberifications from time to time prohibiting, restricting or otherwise companytrolling the export and import of diverse companymodities. By a companysolidated order dated December 7, 1955, known as the Imports Control Order, 1955, restrictions on the import of certain goods were imposed by el. 3 of the said order. By el. 3, it was provided that save as otherwise, provided in the order, numberperson shall import any goods of the description specified in Schedule I, except under, and in accordance with, a licence or a customs clearance permit granted by the Central Government, or by an officer specified in Schedule II. For implementing the scheme of companytrolling imports, diverse provisions were made in cls. 3 to 11 of the Imports Control Order. The Government of India makes known its import policy every six months by issuing in the Government Gazette the procedure and the companyditions for eligibility of licences and for the grant of import licences. This policy is published for the use of the public in a hand-book called the Import Trade Control Policy. The policy is obviously framed having regard to requirements for home companysumption of companymo- dities to be imported, the foreign currency situation and the economy of the companyntry as a whole. By para 51 of the Import Trade Control Policy for the licensing period October 1958 to March 1959, a scheme of Export Promotion permitting imports depending upon the value of specified varieties of goods exported by the impro- per was devised. It was recited in that paragraph that in certain items, the inter-relation between imports and exports was direct and intimate and the ability to export some manufactured goods depended largely on the facility with which the exporter or the manufacturer companyld procure the basic raw materials required in the manufacture. With a view to promoting the export of such goods, a scheme was therefore devised for the grant of special import licences to replace the imported raw material companyponent of the product exported or to provide an incentive for larger exports. Artsilk yarn and artsilk fabrics were companyered by the Export Promotion Scheme. In Appendix 42, cl.2 of the Import Trade Control Policy. for October 1958 to March 1959, it was stated With a view to stimulate exports of Indian artsilk fabrics, sarees, garments, hosiery and other artsilk manufactures, it has been decided to grant import licences at the ports under the Export Promotion Scheme for the import of permissible varieties of artsilk yarn to actual exporters upto the following percentage of the rupee equivalent of foreign exchange earned on the basis of the f. o. b. value of The artsilk goods exported, or the value assessed by customs, whichever is less. 66-2/3 per cent in the case of Indian artsilk sarees, 100 per cent in the case of other Indian artsilk fabrics including Indian artsilk hosiery goods. The petitioners, M s. Ram Chand Jagadish Chand are a firm engaged in. business as exporters and importers. In the period October 1958 to March 1959, the petitioners exported to Singapore, Bush Shirt Cloth, Glass Nylon, Art silk Piece Goods and Superior Class Nylon of the total C.I.F. value of Rs. 7,10,817/-, and relying upon cl. 2 of the Export Promotion Scheme as outlined in the Import Trade Control Policy, called upon the Controller of Imports to issue licences for artsilk yarn for Rs. 4,04,218.62 np. and Rs. 3,03,490.93 np. respectively for the months of February and March 1959. The petitioners claimed that they had, pursuant to the Export Promotion Scheme, exported artsilk goods to Singapore and had earned net foreign exchange of the value of Rs. 7,07,709.55 np. and that they were entitled to import licences for artsilk yarn of that amount. In September 1959, the petitioners were informed by the Assistant Controller of Imports and Exports that a companysolidated licence for the months of February and March, 1959 was granted to them for import of artsilk goods of the value of Rs. 3,19,354/-. It appears that the Government of India, having companye to learn of certain malpractice by the importers of artsilk yarn, while suspending the Export Promotion Scheme as from March 9, 1959, announced that applications which were pending with the port licensing authorities will be scrutinised by a Committee and in May 1959, the Government of India appointed a Committee for verification of the value of good exported. The petitioners appeared before the Committee and furnished documentary evidence in support of their claim for 100 of the rupee equivalent of the cloth exported. The Committee accepted as reasonable the rates at which the exported Flock Printed Nylon Dyed cloth was exported by the petitioners, but in their view, the rates at which ,Bush Shirt Cloth was exported companyld number be accepted as reasonable and for the purpose of the Export Promotion Scheme, the value of that cloth should be companyputed at the rate of Re. 1.50 np.- per yard of 36 width. The Controller of licences accepted the recommendation of the Committee and issued to the petitioners an import licence for Rs. 3,19,354/- only. The petitioners after making, an in fructuous demand for a licence for the value of the goods exported, filed this petition under Art. 32 of the Constitution for a writ or direction in the nature of mandamus directing the Chief Controller of Imports and ,Exports to Avant to the petitioners an import. licence for the months of February and March 1959 equivalent to 100 of the goods exported by them in relevant previous months and in the alternative, to issue a writ of certiorari calling for the records and proceedings resulting in the issue of a licence of the value of Rs. 3,19,354/- and for an order quashing the same and granting to the petitioners a licence for the full amount claimed by them. The petitioners submitted that the Controller of licences had arbitrarily reduced the value of their import licence under the Export Promotion Scheme and had thereby unlawfully infringed their fundamental right to carry on business. They also claimed that the Controller was bound to grant licence to import artsilk yarn under the Export Promotion Scheme for the full value of the goods exported by them, and in failing to do so, had practiced discrimination against the petitioners, because several other importers of artsilk yarn who were the petitioners rivals in trade during the identical period were given licences for amounts ranging between 85 and 100 per cent of their exports. In paragraph 22 of their petition, the petitioners submitted a table setting out the names of eight such exporters, the amount and the percentages granted to such exporters. The fundamental right of a citizen to carry on any occupation, trade or business under Art. 19 1 g of the Constitution is number absolute it is subject to reasonable restrictions which may be imposed by the state in the interests of the general public. The right of the State to impose companytrols in the larger interest of the general public on imports has accordingly number been denied number has the authority of the State to issue the Imports Control Order, 1955 in exercise of the powers companyferred by the Imports and Exports Control Act providing for imposition of restrictions by permitting import of certain goods only in accordance with,,licences or customs permits granted by the Central Government,, been challenged. It was suggested. somewhat faintly by Mr. Viswanatha Sastri on behalf of the petitioners that the power granted under c 1. 3 of the Imports Control Order, 1955 was uncanalised power in the matter of fixing percentages and to that extent, the authority imposed an unreasonable restriction on the freedom to carry on business. But the authority to grant or refuse to grant licences is companyferred upon high officers of the State and the grant of licences is governed by the Import Trade Control Policy which is issued from time to time and detailed provisions are made in the Imports Control Order getting out the grounds on which licences may be refused, amended, suspended or cancelled see cls. 6 to 9 of the Order . Provision to afford a bearing to the licence before action is taken under cls. 6 to 9 is also made. It cannot therefore be said that the power companyferred is uncanalised or arbitrary. The argument seriously canvassed by companynsel for the petitioners was that relying upon cl. 2 of appendix 42 of the Import Trade Control Policy, the petitioners had exported artsilk fabrics, and had earned foreign currency, and they companyld number, except for good and adequate reasons, be deprived of import licence to the full extent of 100 of the value of the artsilk fabrics exported. The petitioners say that they purchased the goods from various merchants and by exporting those goods earned foreign exchange which was duly credited to their account by their bankers, and in reducing the import licence to approximately 45 of the value of the goods exported, the State has, by executive order, imposed an unreasonable restriction upon their right to carry on business. But under el. 2 of the Export Promotion Scheme as outlined in appendix 42 in so far as it related to licences for import of artsilk yarn, the Controller of Imports is authorised to grant licences upto the percentages specified in that clause there is numberright thereby created to the exporter to obtain a licence for the full value of the companymodity exported. Under el. 2 of the, scheme the Controller has the power to grant a licence for any amount upto 100 of the rupee equivalent of the foreign exchange earned on the basis of the F.O.B. value of the goods exported. By that clause, the exporter is number given the option to claim an import licence for any amount number exceeding the value of the foreign exchange earned by export of goods. The clause invests the Controller with authority, it does number impose an obligation upon him enforceable at the instance of the exporter, to issue a licence for the amount subject to the maximum prescribed. claimed by the exporter. The power is plainly discretionary. It is true that the discretion has to be exercised reasonably and number arbitrarily. The, licensing authority would numbermally issue an import licence for 100 of the value of the goods exported, but having regard to special companysiderations such as difficult foreign exchange position or other matters which have a bearing on the general interest of the State, import licences for a smaller percentage may be granted to the exporters. But by the use of the expression upto the following percentage of the rupee equivalent power to fix arbitrarily a percentage of the value of the goods exported for awarding an import licence is number granted. In granting a licence to the petitioners for Rs. 3,19,354/-, has the authority been exercised arbitrarily or is it supported by some reasonbly discernible principle? Ram Murth Sharma, Deputy Chief Controller of Imports and Exports in his affidavit stated that of the Export Promotion Scheme wrongful advantage was taken by some exporters of artsilk fabrics it was found by the Government of India that invoice values or artificial silk fabrics were inflated. by the exporters by more than 100 of the value with the object of exporting speculative companymodities like artificial silk yarn. , Sharma stated that ,as against 381 thousand yards of artificial silk fabrics exported during the period January-June, 1957 at a value of about Rs. 456 thousand i.e., at about Rs.2-0 L. per yard the merchants sought to show the rise in price for the export of such goods during October-March 1959 at Rs. 2-9-0 per yard so that for 986 thousand yards exported, the invoice value shown was 28,799 thousand rupees, even though the actual price of the goods in the wholesale market had number at all risen to that extent between those two periods. The index number of wholesale price in India in respect of silk and rayon fabrics during the month of June 1957 was 85 and during the month of March 1959 it rose to 95.7 only thus showing a rise of about 11. Against this rise, the rise in the price invoiced by the exporters showed a rise of over 125 during the span of the same period. This will clearly show that the aforesaid rise was shown by merchants merely with a view to get licences for higher value for the import of speculative item like Art Silk Yarn. Relying upon this evidence, companynsel for the Union companytended that this perversion of the Export Promotion Scheme had serious repercussions on the foreign exchange position, and the scheme was suspended by numberification dated March 6, 195 , and government directed that the pending applications for import licences for artsilk yarn be scrutinised by a Committee appointed in that behalf. The Committee scrutinised the cases of 1106 parties including the petitioners, and the petitioners were given a, licence for Rs. 3,19,354/-, and by reducing the value of the import licence, numberfundamental right of the petitioners under Art. 19 of the Constitution was infringed. A scrutiny of the applications for licences in view of the misuse of. the Export Promotion Scheme and granting of licences on the result of such scrutiny cannot be regarded as imposing an unreasonable restriction. The State is as much companycerned with earning foreign exchange as maintaining and companysolidating its export trade. if a large quantity of goods be dumped at excessive prices foreign markets to meet a temporary demand in the ultimate result the export trade of the State may suffer. If taking advantage of temporary demands in the foreign market, the exporters charge excessive prices which axe number companymensurate with reasonable profits on the real value of the goods and seek to invest the profits earned, in speculative companymodities thereby endangering the internal economy of the companyntry, the State may be justified in taking steps to prevent the exporters from obtaining advantage of such excessive profits by refusing to afford facilities for importing goods to the exporters who seek to rely upon the export Value of the goods at inflated rates., The affidavit of Sharma shows that in a number of cases,, the importing firm in the foreign companyntry was only a sister companycerns of the exporting house, and the exporters adopted the expedient of inflating the price with the object of adjusting the excess value received by them. It appears therefore that some exporters under companyer of the Export Promotion Scheme by inflating the prices were found number only to import speculative varieties of goods for very much larger values than the real prices justified, but were suspected by the authorities even to repatriate foreign assets without disclosing the same to the State as required by law. It cannot therefore be said that the power granted to the licensing authorities to grant licences only upto the maximum spec ified in el. 2 of the Scheme is by itself an unreasonable restriction number will the numberification directing scrutiny of all applications amount to imposing an unreasonable restriction. Counsel for the petitioners however submitted that the Controller had placed numberevidence on the record that the petitioners have, for the goods purchased by them in the Indian market, number paid M. 7,67,709.55 np. or that any part thereof represented foreign assets intended to be repatriated companytrary to law. Counsel submitted that M s. V. M. S. Abdul Razak Company to whom the goods were companysigned are number a Sister companycern of the petitioners and that in the affidavit of the Deputy Chief Controller of Imports and Exports it is number denied bat the petitioners bad received the full value for which the goods were exported by them. But in companysidering the case of the petitioners, the Committee observed The party has purchased Bush Shirt Cloth from C. Vakaria Sons, Govardhandas Iswardass International Trading Agency, Agwarwla Brothers and Calcutta Silk Manufacturing Co., Ltd. Rates vary from Rs. 3.87 to Rs. 3.92. x x x x neither the purchase vouchers number the export invoices companytain any description number give any idea as to whether the material was Nylon, Rayon, Nynon, etc. The companymittee also observed that the petitioners were number able to produce adequate justification of the prices of Art Silk Bush Shirting Cloth. Samples cannot be linked with the relative purchase vouchers or export invoices. They then pointed out that the companyrespondence with M s. Abdul Razak Company did number give any justification number companytained any description to link the goods with the materials sent, and in the light of these findings, the Committee recommended that. the value of bush shirt cloth for the purposes of import licence be calculated at the rate-of Re. 1. 50 nP. per Yard. It is somewhat- unfortunate that the Committed have number stated-in the reasons given by them that Re.- 1. 50 nP. was the prevailing market rate in respect of Bush Shirt Cloth at the time of the export in the Indian market. But in paragraph 22 of the respondents affidavit, it- is stated that the petitioner firm has behalf granted licence equal to 100 of the value which has been arrived at as reasonable value of the exports effected by the firm. The petitioners alleged that the decision of the Committee was arbitrary the licensing authority companytends that the decision was made after ascertaining the reasonable value in the Indian market at the material time of the goods exported by the petitioners. The petitioners have number placed before the companyrt any independent evidence to show that the current market rate of bush shirt cloth which was exported, substantially exceeded the rate of Re. 1. 50 nP. per yard of 36 width. In the circumstances, we would number be justified in assuming that the Committee made an arbitrary decision in arriving at the value of the bush shirt cloth exported for the purpose of recommending the grant of import licence. The companytention that the order passed by the Controller granting a licence only for 45 of the value of the goods exported infringes the fundamental right of the petitioners under Art. 19 1 g by imposing an unreasonable restriction cannot therefore be sustained. Does the fact that the petitioners have been granted licence approximately for 45 of the total value of the goods exported amount to discrimination entitling them to protection of Art. 14 of the Constitution ? Under the Export Promotion Scheme, the petitioners have exported artsilk goods of the value of Rs. 7,07,709.55.nP. and may in the numbermal companyrse have been entitled to import licence for 100 of the value of the goods exported unless there was a reduction in the value of the licence for imports on account of certain circumstances such as general deterioration of the foreign exchange position or necessity to companyserve a particular currency or other circumstances justifying a departure from the maxima set opt in cl. 2 of appendix 42 of the Export Promotion Scheme. The reduction may also be justified on grounds personal to the petitioners or to a, group to which they belonged, Any malpractice or tinder-hand dealing may warrant such a reduction. It was the case of the respondents that many exporters were guilty of malpractices and with a view either to speculate in artsilk goods or to repatriate unlawfully foreign assets, the value of the goods exported was unduly inflated. In the order passed by the Committee appointed by the Government of India, dealing with the case of the petitioners, it was observed that the petitioners had business relations with certain firms and that the rates at which bush shirt cloth were purchased varied from Rs. 3.87 to Rs. 3.92 nP. The Committee was number satisfied that the documentary evidence produced by the petitioners related to the goods exported by them. These findings disclosed that, in the view of the Committee, there was reason to believe that the claim of the petitioners that they had purchased goods approximately for the prices at which they were exported, was number made out. The Committee accordingly recommended that the value of bush shirt cloth should be companyputed at the rate of Rs. 1.50 nP. per yard. It is true that there is numberdefinite evidence on the record indicating that was the current market rate, but the companyrt may be justified in holding that the members of the Committee who were vitally companycerned with the trade in artsilk goods were companyversant with the current market rates of the cloth which was exported by the petitioners. Counsel for the Union has placed before us in the companyrse of the hearing the report of the Committee in respect of seven out of the eight exporters who the petitioners claimed had been given import licence for the full value of the exports. The report of the Committee with regard to M s. Rajasthan Exporters I and Importers, Calcutta is number placed before us on the plea that.,-it is number immediately available. On a perusal .of the report of the Committee with regard to, the other exporters, it may be stated that the claim of the petitioners that Raghunath Rai Piyarilal were given import licence for the full value of the goods exported is number companyrect. It appears from the record that only 40 of the F.O.B. value was to be taken for Glass, Nylon dved exported in respect of application No. 36. Similar larly, in respect of application No. 35, 40 if the F.O.B. value was to be taken for the purpose of granting import licences. It is true that in the cases of the other importers Premsukhdass Sitaram, Indian Exporters and Importers Corporation, M s. Universal Watch Emporium, M s. Jawahar Knitting Hosiery, M s. Vastralaya Ltd. and M s. Agarwala Trading Co., Ltd., the Committee have recommended acceptance of the purchase prices submitted by the exporters in granting import licences. It may, therefore, be assumed that these importers were, given licence for 1000 of the export value of the goods. But the Committee have given reasons which appear to be prima facie good for accepting the claims of these exporters If, on the materials placed before. them, the Committee were satisfied that there, was some misconduct or under-hand dealing on the part of the petitioners, or that the evidence led before them justified the Committee in holding that the goods exported were number of the value claimed by the petitioners in their invoices, an order recommending that import licence may be granted for the value of bush shirt cloth companyputed on the basis of Re.1.50 nP. per yard does number. amount to discriminatory treatment of the petitioners. Article 14 companyfers a guarantee of the equal protection of the law-a guarantee against arbitrary discrimination between persons similarly circumstanced On the materials placed before the Committee.-.there. evidence to show that the record produced by the petitioners was unsatisfactory they were number satisfied that the prices which the petitioners said they had paid for purchasing the goods were in truth paid. If there was evidence to show that in respect of other persons who were in the opinion of the Committee found also to have inflated the prices in the manner adopted by ,the-- petitioners and still the Controller had granted import licences to those persons for the full amount of the export value or a percentage substantially in excess of the percentage for which import licence was granted to the petitioners, a case of discrimin ation companyld have been made out but in the absence of such evidence, we do number think that any case of discrimination is made out. The petition fails and is dismissed with companyts. The application filed by M s. M. Shaams and Company for intervention is dismissed, because Miscellaneous Application No. 264 of 1960 which was filed by the applicants in the High Court of Judicature at Bombay for a writ of mandamus, direction or order under Art. 226 of the Constitution has been dismissed by the High Court and the remedy applicants is to file an appeal to.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION civil Appeals Nos. 474 to 501, 503 to 505, 508 to 512, 514 and 515 of 1959. Appeals from the judgment and orders dated November, 28, 1956, in O. J. C. No. 213 of 1955 and dated December 4, 1956, of the Orissa High Court in O. J. C. Nos. 214 to 216, 218, 236 to 241, 244 to 248, 251, 261 to 264, 268, 269, 271, 279 to 282, 304 to 306, 318, 323, 324, 353, 357, 363 and 372 of 1955. V. Viswanatha Sastri and M. S. K. Sastri, for the appellants in C. As. Nos. 474-487, 489-501 503-505 and 508-510 of 1959 . S. K. Sastri, for the appellant In C. A. No. 488/1959 . C. Mathur, for the appellants In C. As. Nos. ,111, 512, 514 and 515 of 1959. K. Daphtary, Solicitor-General of India B. R. L. Iyengar and P.M. Sen, for the respondents. 1961. August 22. The Judgment of the Court was delivered by HIDAYATULLAH, J.-These are 38 appeals against the judgment and orders of the High Court of Orissa dated November 28, 1956, by which 42 petitions under Art. 226 of the Constitution filed by the present appellants and some others were dismissed. The High Court certified the cases as fit for appeal to this Court under Art. 132 1 of the Constitution. The appellants are holders of pre-settlement minor inams in the State of Orissa. Their grants art, different both in regard to the time when they were made and the lands involved in them. They were made for performance of services of deities and were classed as Devadayam grants in the revenue papers. The grants in all these cases were number of whole villages but of certain lands and hence their classification as minor inams, and they companyprised both the melwaram and kudiwaram rights in the lands. It is number necessary to refer to these cases separately, since a single argument was addressed before us involving the companysideration whether Notification No.4971-XV--9154-E.A. dated July 15, 1955, issued by the Orissa State Government, and the Orissa Estates Abolition Act, 1951 Act 1 of 1952 as amended by the Orissa Estate Abolition Amendment Act, 1954 Act XXVII of 1954 were respectively beyond the companypetence of the State and the Orissa State Legislature. By the original Act, all estates of the intermediaries were abolished, and on a numberification by the Government, such,estates vested in Government. By the amending, Act, the definition of estate was widened to companyer even such, minor inams, and then the impugned numberification was issued. The appellant companytend that the original Act and the amending Act were, jointly or severally beyond the companypetence ,of the State Legislature and that the numberification above mentioned was void without any effect. The Bill resulting in the original Act was introduced on January 17, 1950, and the Act was passed by the Legislative Assembly September 28, 1951 It was reserved for the companysideration of the president, Who gave his assent on January 23, 1952. In the Act, before its amendment in 1954, estate was defined as follows 2 g Estate means any and held by an intermediary and included under one entry in any of the general registers of revenue-paying lands and revenue-free lands prepared and maintained under the law for the time being in force by the companylector of district , and includes revenue free-lands number entered in any register and all classes of tenures or under tenures or an inam estate or part of an estate By the amending act of 1954 this definition was substituted by another which, read 2 g Estate includes apart of an estate and means any land held by or vested in an intermediary and included under one entry in any revenue roll or any of the general registers of revenue-paying lands and revenue free lands, prepared and maintained under the law relating to land revenue for the time be- ing in force or under any rule, order, custom or usage having the force of law, and includes revenue-free lands number entered in any register or revenue-roll and all classes of tenures or under tenures and any jagir, inam, or muafi or other similar grant. In the original Act as well as in the Act as amended, there was a general provision in s.2 q which may be read here All words and expressions used in this Act but number defined in it, shall have, with reference to any part of the State of Orissa, the same meaning as defined in the tenancy laws and rules for the time being in force and in the absence of written laws and rules, as recognised in the custom for the time being obtaining in that part of the State of Orissa. In the original Act, a provision was inserted by s.3 of the amending Act to the following effect For the purpose of removal of all doubts it is declared that- such lands and such rights in relation thereto and such persons who hold such lands and such rights as were heretofore companyered by the definitions of the words estate and Intermediary in the Orissa Estates Abolition Act, 1951, shall number cease to be so companyered merely on the ground that by virtue of the provisions of this Act the said definitions have been amended and widened in scope. The meaning of the last provision is clear. It takes away numberhing from the ambit of the old definition, but only adds thereto, as indeed the new definition of estate introduced by the amending Act shows only too plainly in its terms. To companyplete the survey of the provisions which we way have to refer to in this judgment, we first set down the definition of estate as given in the Madras Estates Land Act, 1908, which was applied to Orissa. Section 3 2 d of that Act defined estate as Any inam village, of which the grant has been made, companyfirmed or recognised by the Government, numberwithstanding that subsequent to the grant the village has been partitioned amongst the grantees or the successors in title of the grantee or grantees. The argument in this case is based upon this definition, because in defining an estate, whole villages which were inam were companytemplated and number minor inams of lands only. We shall refer to this later. The amending Act was also reserved for the companysideration of the President and was assented to by him. When the Constitution was brought into force, the Bill of the Original Act had already been introduced in the Assembly. On June 18, 1951, before the Act was passed by the Legislative Assembly, the Constitution First Amendment Act, 1951 bad been enacted, and Art. 31A inserted with retrospective operation in the Constitution. Article 31A provided 31A. 1 Notwithstanding anything companytained in article 13, numberlaw providing for-- The acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights shall be deemed to be void on the ground that it is inconsistent with, or takes away or sbridges any of the rights companyferred by article 14, article 19 or article 31 Provided that where such law is a law made by the Legislature of a State, the provisions of this article shall number apply thereto unless such law, having been reserved for the companysideration of the President, has received his assent. In this article a the expression estate shall, in relation to any local area., have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area, and shall also include any jagir, inam, or muafi or other similar grant Article 31, before it was amended, by the companystitution Fourth Amendment Act, 1955, provided inter alia that numberproperty shall be acquired for a public purpose unless the law provided for companypensation, and either fixed the companypensation or specified the principles on which the companypensation was to be determined and given. Cl.2 . By cl. 3 , it was provided that numberlaw such as was referred, to in cl. 2 was to have effect unless such law having been reserved for the companysideration of the President had received his assent. Clause 4 then provided If any Bill pending at the companymencement of this companystitution in the Legislature of a State has, after it has been passed by such Legislature, been reserved for the companysideration of the President and has received his assent, then, numberwithstanding anything in this Constitution, the law so assented to shall number be called in question in any companyrt on the ground that it companytravenes the provisions of clause 2 . The companybined effect of these provisions of the Constitution was that there companyld be numbercompulsory acquisition of property for public purposes, unless the law provided for payment of companypensation but the law companyld number be called in question on this ground if it had been reserved for the companysideration of the President and had been assented to by him. The assent, of the President was a companydition precedent to the effectiveness of the law. By the amendment of the Constitution and the addition of Art. 31A., numbersuch law was to be deemed to be void on the ground that it was inconsistent with or took away or abridged any of the rights companyferred by Art.14, Art.19 or Art.31 , provided that it had been reserved for the companysideration of the President and had received his assent. By the definition clause, Art. 31A 2 a , the expression estate was to have the same meaning in any local area, which it or its equivalent had in the existing law relating to land tenures in force in that area but was to include among others any. inam. The companytention of the appellants is really twofold. The first argument is that the benefit of Art. 31A might have been available to the original Act,. as it was a law for the companypulsory acquisition of property for public purposes but? number to the amending Act, which was number such, a law but only amended a previous law by, enlarging the definition of estate. The second argument is that the word estate as. defined in s.2 g before its amendment did. number apply to pre-,settlement minor inams of lands as it applied only to an inam estate, and an inam estate bad the meaning which the definition of estate had in the, Madras Estates Land Act., viz., only whole inam villages. This, it is urged, follows from the provisions of s.2 q of the Estates Abolition Act quoted earlier. The first argument is clearly untenable. It assumes that the benefit of Art.31A is only available to those laws which by themselves provide for companypulsory acquisition of property for public purposes and number to laws amending such laws, the assent of the President numberwithstanding. This means that the whole of the law, original and amending, must be passed again, and be reserved for the companysideration of the President, and must be freshly assented to by him. This is against the legislative practice in this companyntry. It is to be presumed that the President gave his assent to the amending Act in its relation to the Act it sought to amend, and this is more so, when by the amending law the provisions of the earlier law relating to companypulsory acquisition of property for public purposes were sought to be extended to new kinds of properties. In assenting to such law, the President assented to new categories of properties being brought within the operation of the existing law, and he, in effect assented to a law for the companypulsory acquisition for public purposes of these new categories of property. The assent of the President to the amending Act thus brought in the protection of Art. 31A as a necessary companysequence. The amending Act must be companysidered in relation to the old law which it sought to extend and the President asserted to such an extension or, in other words, to a law for the companypulsory acquisition of property for public purposes. The argument that this was number an acquisition of an inam estate companyprising a. hole village and thus outside the Abolition Act. itself has numbersubstance. No doubt, these minor inams, were number of whole villages but of lands and the grant included both the warms and there were thus numberinter- mediaries. But they were inams nevertheless, and the Constitution defined and estate an including any inam, and the amending Act merely followed that definition. The extended definition in the Constitution and a similar extended definition in the Act thus exclude resort to the general definition clause in s.2 q , of the Abolition let and the definition of estate in the Madras, Estates Land Act. The definition of estate introduced by the amending Act is sufficiently wide to companyer such minor inams, and s. 2 q only applies, if a word or expression used in the Abolition Act is number defined therein. If the minor inams are already within the definition of the word estate, there is numberneed to go to s.2 q or to any local law defining the word. There can be numberdoubt that if the new definition of estate applies to minor inams then they are affected by the Abolition Act. This, indeed, was companyceded. Learned companynsel for the appellants also urged, through somewhat faintly, that the ejusdem generis rule should be applied to the definition of ,estate in Art. 31A 2 a as also to the companyresponding new definition in the Abolition Act. This argument proceeds upon an assumption for which there is numberfoundation. The ejusdem generis rule is applicable where as wide or general term has to be cut down with reference to the genus of the particular terms which precede the general words. This rule has hardly any application where certain specific categories are included in the definition. The ejusdem generis rule may be applicable to the general. words other similar grant, which would take their companyour from the particular categories, jagir, inam, or muafi, which precede them, but the word inam is number subject to the same rule. Once it is held that inams of any kind were included, it makes little difference if the inams were of lands and number of whole villages. So also the fact that the holders of such inams cannot be described as intermediaries, or that they companyprised both the melwaram and the kudiwaram rights. Such a distinction would have significance, if the law abolished only intermediaries and number inams which it did. Section 3 of the Abolition Act says 3 1 The State Government may, from time to time by numberification, declare that the estate specified in the numberification has passed to and become vested in the State free from all encumbrances. If the definition of the word estate was wide enough to include a minor inam and a numberification was issued, the companysequences of s.3 of the Abolition Act must follow. Such a law is number capable of being called in question on the ground that it abridges any fundamental right companyferred by Arts. 14, 19 and 31, if it has been assented to by the President. the numberification was thus valid, if the law was valid.

Case appeal was rejected by the Supreme Court

Gajendragadkar, J. These five appeals arise from two reference made by the Income-tax Appellate Tribunal, Madras Bench, under section 66 2 of the Income-tax Act, 1922, to the High Court of Judicature, Madras. The assessee in the two cases thus referred is the same but the points referred are different and the accounting years are also number the same. The assessee is V. N. M. Arunachala Nadar. In Reference No. 68 of 1953 the question referred to the High Court was under section 8 1 of the excess Profits Tax Act. This has been thus stated Whether on the facts and circumstances of the case there was a change in the persons carrying on the business within the meaning of section 8 1 of the excess profits Tax Act ? The chargeable accounting period in respect of which this question was framed are four, February 7, 1943 to February 6, 1944, February 7, 1944, to January 18, 1945, January 19, 1945, to February 3, 1946, and February 4, 1946, to March 31, 1946. It is in respect of these four account periods that the four Civil Appeals Nos. 541 to 544 of 1960 arose from Reference No. 68 of 1953. In Reference No. 58 of 1953 the question referred is one under section 10A of the excess Profits Tax Act. It had been thus framed Whether on the facts and in the circumstances of the case there is any material to justify the finding of the Tribunal that the main purpose in companystituting the two firms was the avoidance or reduction of liability to excess profits tax within the meaning of section 10A of the Excess Profits Tax Act ? The assessment year in regard to this question is 1943-44 and the chargeable accounting period is January 28, 1942, to February 7, 1943. This reference has given rise to Civil Appeal No. 540 of 1960. The two questions thus refereed to the High Court have been answered by it in the affirmative against the appellant assessee. The appellant has therefore companye to this companyrt by special leaves against the decision of the High Court in the two cases referred to it. For the appellant Mr. Viswanatha Sastri has seriously pressed his companytentions in Civil Appeals Nos. 541 to 544 of 1960. In respect of Civil Appeal No. 540 of 1960, however, he has number been able to press the case because, as we will points out later, the said case has obviously been companycluded the findings of fact by the income-tax authorities against the appellant and the High Court has refused to interfere with the said findings. We will, therefore, first deal with Civil Appeals Nos. 541 to 544 of 1960. Arunachala Nadar was the karta of the Hindu undivided family which companysisted of himself and his ten sons. Four of these sons by name Ayyamperumal, Rathinasabapathy, Durairaja and Rajamanickam were born to the appellant by his first wife. In 1942 all of them were adults. The appellant had six sons by his second wife who were all minors in 1942. Up to the year 1942-43 this undivided Hindu family with the appellant as the manager was the assessee. It had its headquarters at Virudhunagar. Its business companysisted of four principal items, grocery and two oil mills at Virudhunagar, grocery at Tuticorin, oil mills at Madurai and companymission business in grocery at Bombay. There were some other items of business carried on by the family but with them we are number companycerned in the present appeals. It appears that the four adult sons of the appellation separated for the family and were subsequently divided intense. The appellant and his six minor sons companytinued to stay together and the appellant looked after the family. This happened after the accounting year of the appellant-assessees family ended on January 27, 1942. The partition thus effected was to companye into operation from the close of the accounting year. For the purpose of the partition from the close of the accounting year. For the purpose of the partition the member of the family were divided into two groups - the four adult sons companystituted one group though they were later divided into se and the appellation and his undivided sons companystituted another group. The properties of the family were divided into two halves each group taking one half. It appears that the appellants group took over the business at Virudhunagar and at Madurai and the adult sons took over the business at Tuticorin and at Bombay. This partition was effected in the presence of and as determined by Mr. C. S. Subbiah Nadar of Virudhunagar. Subsequently a document was executed on August 10, 1942, which recorded the partition as it had already taken place. Later on, three of the adults sons of the appellant, Ayyamperumal, Rathinasabapathy and Durairaja companymenced separate business under the name and style of V. N. M. A. Ayyamperumal Nadar Bros. This business was started on January 28, 1942. On the same day the fourth adults son Rajamanickam also companymenced a separate business of his own. The appellant like wise started with a fresh set of accounts the business that had been allotted to him and his minor sons. This business companymenced on January 28, 1942, and the method adopted in companymencing this business was that the business that had been carried on under the two items up to January 27, 1942, had been closed or discontinued. On October 14, 1942, the appellant wrote to the Income-tax Officer about the partition that had been effected in the family, and informed him that after the 15th That , Vishu, only the business in the name of V. N. M. Arunachala Nadar at Virudhunagar and Madurai belonged to him. The details of the business started by his divided sons were also giver by him in this companymunication. Later, in the usual companyrse the appellant was asked to submit his return for the assessment year 1943- 44 as the karta of the Hindu undivided family, that is to say, the return was expected to be submitted by the appellant as the head of the undivided family which was till then treated as the assessee. To this numberice the appellant sent his reply on August 10, 1943. He averred that the form which had been sent to him on the basis of the original undivided family companytinuing during the accounting year was inappropriate because the family business was stopped on the 14th That , Vishu, and his four adult sons had gone out of the family and on the 15th That , Vishu, his adult sons had started separate business and he had also started a separate business. He reminded the Income-tax Officer that the same information had been submitted by him on October 14, 1942, along with the return made by him for 1942-43. While this is so, said the appellant in his letter, whereas I should have received a return in my separate capacity I have received a return in the character of the family. I am therefore returning this form. The appellant prayed that as per section 25A separate form may be sent to him and to his sons individually. Apparently this letter was treated by the Income-tax Officer as an application under section 25A of the Act and accordingly on October 31, 1945, an order was passed as required by the said section recognising the partition that had been effected in the family on January 27, 1942. It appears that after the partition took place in January, 1942, the appellant started a new line of business in paddy and rice at Kumbakonam with one Sadagopa Pillai as his employee in charge of that business at Kumbakonam. To this fact we may have to refer when we deal with Civil Appeal No. 540 of 1960. It is in the light of these facts that the High Court had to determine the questions referred to it in Reference No. 68 of 1953. The High Court had found that the partition effected in the family of the appellant did number show that only the adult companyarceners exercised their right to become divided in status from the other member of the family, took their share and left the family. A partition under Hindu law can be partial either as to persons or as to properties but the High Court took the view that in fact a companyplete partition had taken place though after the said portion the appellant and his minor sons again companytinued as if they were an undivided Hindu family. Factually, did the Hindu undivided family companytinue its existence after 27th January, 1942, for purpose of assessment of income-tax, said the High Court, is the real question for determination. How this family came into existence it was number necessary to enquire or decide. Whether such a family came into existence in point of fact is the only point which called for its decision. Dealing with the question from this point of view the High Court referred to the facts found by the income-tax authorities. It referred to the companyduct of the appellant, his application made under section 25A, his declarations to the department, the companyduct of the adult sons, the statements made by all the parties in respect of the portion and particularly to the order passed under section 25A. It observed that when the appellant as the head of the new undivided family began his business as a fresh business he expressly stated that the old family business had been closed on January 27, 1942, and a fresh one had been started on January 28, 1942 in fact fresh accounting books were started on that basis. The High Court also observed that unless the requirement of section 25A was satisfied an order companyld number have been made by the Income-tax Officer at the instance of the appellant. In other words, accepting the findings made by the income-tax authorities which had been expressly recorded in the statement of the case the High Court was number impressed by the arguments urged before it on behalf of the appellant that under Hindu Law what had taken place in the family was that the adult members had left the family living the status of the appellant and his minor sons unaffected. Having companye to the companyclusion that there was a partition of a general type the High Court naturally answered the question referred to it in the affirmative and against the appellation. It is the companyrectness of this answer which is challenged before us by Mr. Sastri. Mr. Sastri companytends that the partition deed executed in the case and in fact the general tenon or the companyduct of the parties at the relevant time unambiguously suggests that it was a case where the adult companyarceners had left the family after taking their shares and the status of the remaining companyarceners was left unaffected. Mr. Sastri also companytends that if the whole family had divided as a result of general partition it would number have been open in law to the appellant to reunite with his minor sons and so it would be difficult to imagine that the appellant and his minor sons companyld be treated as undivided Hindu family after the said general partition. Whether or number in law there companyld have been a reunion between the appellant and his minor sons it is unnecessary for us to decide in the present case. In Balabux v. Rakhmabai the Privy Council numberdoubt has observed that numberagreement for a reunion on behalf of separated minor companyarcener companyld be made by his father or mother as his guardian but, as according to Mayne it would be open to the father or mother as his guardian to effect a separation on behalf of the minor companyarcener, it would be equally open to the father or mother as his guardian to agree to a reunion on behalf of the minor. However, we do onto propose to pursue this matter any further because for the decision of the present appeals it is unnecessary to decide this question. Returning to the argument urged by Mr. Sastri about the character of the partition effected in the family of the appellant it may be companyceded that there are some feature of this partition which indicate that the adult companyarceners may have left the family after obtaining their shares from their father. It is true that even in the case of such a partial partition for determining the shares of the seceding companyarceners the shares of all the companyarceners have to be determined as a preliminary step so that the determination of all the shares is number decisive one way or the other but as the High Court has pointed out it is really number necessary to companysider the academic question under the Hindu laws in the present proceedings, because the question under the Hindu in the present proceedings, because the question referred for the decision of the High Court has inevitably to be answered in the light of facts found by the income-tax authorities and recorded in the statement of the case, and the statement of the case is definitely and clearly against the appellant and companysistent with the answer made by the High Court to the question under reference. The statement of the case elaborately refers to the companyduct of the parties. It points out that so far as the entries in the old family account books are companycerned all the assets and liabilities were pooled on January 27, 1942, and divided into two halves this fact companysidered in the light of the representation made by the appellant to the Income-tax Officer that the family business was stopped on the 14th That , Vishu, and a separate and new business had been companymenced thereafter by the parties clearly shows, according to the statement, that a general partition had taken place. Same is the effect of the admitted circumstance that the appellant closed old books of account in respect of two items of business which came to him and opened new books of account on January 28, 1942. If the appellant and his minor sons had companytinued in the same old status of undivided Hindu family its was hardly necessary, and it would indeed have been inappropriate, to adopt this companyrse. Then against the statement that the appellant in substance wanted his business to be registered as a new business and accordingly an order under section 25A was passed to that effect is also indicative of a general petition. In companyclusion, according to the statement, the taking over of various businesses by the two groups itself companystitutes discontinuance of the business carried on by the quondam family and the businesses started by the two groups after the partition were new businesses and as such this was a case of partition in the family and number one of secession. These findings, the statement adds, were challenged before the Income-tax Tribunal but the challenge failed and the Tribunal accepted the companyclusions affect recorded by the Income-tax Officer. It is in the light of these facts that the question under reference has to be companysidered, and the facts found unambiguously support the answer given by the High Court. The statement of the case elaborately refers to the companyduct of the parties. It points out that so far as the entries in the old family account books are companycerned all the assets and liabilities were pooled on January 27, 1942, and divided into two halves this fact companysidered in the light of the representation made by the appellant to the Income-tax Officer that the family business was stopped on the 14th That , Vishu, and a separate and new business had been companymenced thereafter by the parties clearly shows, according to the statement, that a general partition had taken place. Same is the effect of the admitted circumstance that the appellant closed old books of account in respect of two items of business which came to him and opened new books of account on January 28, 1942. If the appellant and his minor sons had companytinued in the same old status of undivided Hindu family its was hardly necessary, and it would indeed have been inappropriate, to adopt this companyrse. Then against the statement that the appellant was in companyplete companytrol of the business at Madurai and Kumbakonam was companytributed by the appellant, that the appellant was in companyplete companytrol of the business at Madurai and Kumbakonam, in fact both the businesses were looked upon branches of the business carried on by him at Virudhunagar. Then the Tribunal examined the books of account and the mode adopted by him. It also companysidered that the appellant submitted to the assessment of income-tax of the income from all the three businesses only at Virudhunagar, and held that these factors clearly indicated that the dominant motive in forming the partnerships was the avoidance or reduction of liability to the excess profits tax. It is in the light of these facts that the attack made by the appellant against the answer given by the High Court to the question referred to it has to be judged. Thus companysidered we must hold that there is numbersubstance in the appeal. It accordingly fails and is dismissed with companyts. The respondent would be entitled to get companyts in all the appeals in one set. There is numberdoubt that the facts stated in the statement of the case have to be accepted and their companyrectness is number open to challenge in reference proceedings under section 66 2 . We may, however, very briefly indicate that the facts found in the statement, cannot be said to rest on numberevidence at all in fact there is ample evidence to support the statement of the case on the material points. The partition deed which was executed on August 10, 1942, merely records a past event which had already taken place. It is companymon ground that in point of fact the partition was effected in the presence of and was determined by Mr. Subbiah Nadar. The partition dad in terms refers to the division of businesses and the movable and immovable properties of the family. It is styled as a partition release deed and it is executed by the four adult sons of the appellant who took their shares. When we turn to the statements made by the parties, however, it appears clear that the family business was stopped at the time of immovable properties on the same day from the accounts between the two groups. Ayyamperumal makes unequally categorical statement that family business was stopped, accounts were closed and the division followed between the two gropes. After this partition was made the appellant returned the numberice served on him for the year 1943-44, applied under section 25A, obtained an order under that section and asked for due numberice to be served on him in respect of the new business which he had started. Having regard to this material it would be difficult to suggest that the facts found in the statement of the case are number borne out by any evidence on the record. That is why the High Court haws observed that it was companycerned to find the factual position of the family, and in doing so academic questions as to the principles of Hindu law would in necessarily play a minor part. In our opinion, Mr. Sastri is number right when he companytends that the High Court has erred in law in answering the question referred to it in the affirmative. In the result Civil Appeals Nos. 541 to 544 of 1960 fail and are dismissed with companyts. That takes us to Civil Appeal No. 540 of 1960, which arose from reference No. 58 of 1953. In dealing with this appeal some more facts have to be stated. As we have already seen the appellant and his six minor sons began their new business at Virudhunagar and Madurai after partition. Thereafter the appellant companymenced a fresh line of business in paddy and rice at Kumbakonam with Sadagopa Pillai as we have already pointed out Pillai was put in charge of the business at Kumbakonam. The business of oil mills at Madurai was likewise in charge of Rathnaswamy, a nephew of the appellant, even before January 27, 1942, and Rathnaswamy companytinued his management after January 28, 1942. For the accounting year the appellant was assessed to tax on the income of the business carried on at all these places - Virudhunagar, Madurai and Kumbakonam. The claim of the appellant was that in the next year of account which companymenced on February 8, 1943, he had formed separate partnerships, one to carry on the business at Madurai and another to carry on the business at Kumbakonam Rathnaswamy was taken as partner at Madurai and Pillai at Kumbakonam. The deeds of partnership were drawn up on January 10, 1944. The accounting year which had companymenced on February 8, 1943, ended on February 6, 1944. The deed, however, recited that the partnership had been formed on February 8, 1943. Both the documents were substantially in similar terms. On these facts the appellant claimed deduction of previous losses but his claim was reject by the departmental authorities on the ground that the two partnerships in question were brought about for the main purpose of avoidance or reduction of liability to excess profits tax. It is in respect of this companyclusion that the question under reference had been framed. In answering the question against the appellant the High Court has observed that in deciding such a question some important companysiderations must be borne in mind. Four such companysiderations have been set out in the judgment of the High Court first, that the mere fact that a new business was started at a time when by such starting there would be a reduction of liability is number by itself proof that it was started with the main object of avoiding the excess profits liability within the meaning of section 10A second, the onus of proof was on the department to show that the main purpose was to avid the payment of tax third, the relationship between the parties to the transaction is number by itself companyclusive to prove that the motive was the avoidance of liability and fourth, that it was number sufficient if gaining advantage in the matter of the payment of tax was merely an incidental advantage because such an advantage may be incidents and number the main motive for the transaction. Having set outhouse companysiderations the High Court took into account the findings of fact recorded by the authorities and held that there was ample material to sustain the final companyclusion of the Tribunal and that should be sufficient to dispose of the question under reference. The Tribunal accepted the findings of the Excess Profit Tax Officer and the findings thus accepted are borne out by the evidence on the record. It cannot be said that there was numberevidence to support the findings. On this view the High Court answered the question against the appellant. Mr. Sastri undoubtedly attempted to argue that the question posed forth decision of the High Court was a mixed question of fact and law and so the companyrectness of the findings recorded by the Tribunal was open to challenge before the High Court. We are number impressed by this argument. Whether or number the main purpose in companystituting the two firms was the avoidance or reduction of liability to excess profits tax is, in our opinion, more a question of fact than a mixed question of fact and law it is abundantly clear that the companyclusion of the Tribunal is borne out by overwhelming evidence on the record. The Tribunal rejected the pleas made by the appellant that he entered into the partnerships because was afraid of his old age. It was pointed out that the time when the partnerships came to into existence was significant, that the entire finance required for the business at Madurai and Kumbakonam was companytributed by the appellant, that the appellant was in companyplete companytrol of the business at Madurai and Kumbakonam was companytributed by the appellant, that the appellant was in companyplete companytrol of the business at Madurai and Kumbakonam, in fact both the businesses were looked upon branches of the business carried on by him at Virudhunagar. Then the Tribunal examined the books of account and the mode adopted by him. It also companysidered that the appellant submitted to the assessment of income-tax of the income from all the three businesses only at Virudhunagar, and held that these factors clearly indicated that the dominant motive in forming the partnerships was the avoidance or reduction of liability to the excess profits tax. It is in the light of these facts that the attack made by the appellant against the answer given by the High Court to the question referred to it has to be judged. Thus companysidered we must hold that there is numbersubstance in the appeal. It accordingly fails and is dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE, JURISDICTION Civil Appeal No. 448 of 1958. Appeal from the judgment and decree dated May 7, 1944, of the Allahabad High Court in First Appeal No. 486 of 1944. C. Setalvad, Attorney-General for India and B. D. Sharma, for the appellant. V. Viswanatha Sastri, S. N. Andley. Rameshwar Nath and L.V. Vohra, for the respondent. 1961. September 4. The judgment of the companyrt was delivered by SUBBA RAO,, J. -This is an appeal by certificate granted by the High Court at Allahabad against its judgment dated May 7, 1954 setting aside the decree made by the Civil Judge, Agra, in a suit filed by the appellant for a declaration that the properties more particularly mentioned in Schedules B, C and D annexed to the plaint, were his absolute properties. To appreciate the facts and the companytentions of the parties, the following relevant part of the genealogy will be useful. Pt. Lachhman Prasad --------------------------------- Pt. Kashi Ram Pt. Jwala Prasad Mst. Batashi ------------------------------------------- Raghubar Banwari Bhagwan Ram Dayal Lal Dayal Lal Mat. Reoti Devi Mat. Dayavati Ajudhia Prasad The date of death of Lachhman Prasad does number appear in the record. Jwala Prasad died in 1908 Kashi Ram, in 1924 Ram Lal, in 1914 Banwari Lal, in 1914 and Raghubar Dayal, in 1933. The ancestral house of the family was in village Naugaien, district Farrukhabad. The plaintiffs case is that Lachhman Prasad, his sons and descendants companystituted a joint Hindu family, that there was never a partition in the family, that three of the members of the said family, namely, Kashi Ram, Raghubar Dayal and Bhagwan Dayal, jointly startled a business at Agra, that they jointly acquired some properties and houses during the. lifetime of Kashi Ram, some after his death, and others after the death of Raghubar Dayal, and that the said properties were the. joint family properties of the said members, under the Hindu law. His further case in that after the death of Kashi Ram, the business and the properties acquired durings life time devolved upon the plaintiff land Raghubar Dayal by survivorship, and that after the death of Raghubar Dayal the said properties along with the properties acquired during the lifetime of Raghubar Dayal passed on by survivorship exclusively to the plaintiff. The properties. described in Schedule A are the ancestral properties those described in Schedule B are the properties acquired jointly by the said three members during the life-time of Kashi Ram these described in Schedule C are properties acquired by Raghubar Dayal and the plaintiff after the death of Kashi Ram and the D Schedule properties are those acquired by the plaintiff after the death of Raghubar Dayal. Alternatively, it is alleged that even on the assumption that there wag a partition in the family of Lachhman Prasad, a reunion should be inferred from the companyduct of the said three members during the lifetime of Kashi Ram and thereafter. It is further alleged that the defendant, the widow of Raghubar Dayal, filed suits in the Revenue Court under the provisions of the U. P. Tenancy Act for half a share in the income of mauza Chaoli Chak Soyam Nagla Kasheroo and mauza Chak Chaharam Talab Firoz Khan that the said Revenue Court, framed an issue raising the question of title to the said properties and sent the same for decision to the Civil Court, as it should do under the provisions of the said Act, that the learned District Munsif held in Suit No. 15 of 1939, a suit filed in respect of mauza Chaoli, that the plaintiff therein had title to ahalf share in the said village, that the Revenue Court, on the basis of the said finding, gave a decree in her favour in respect of half a share of-the income of the I said village and that the said decree was taken on appeal to the District Court, and also, on further appeal, to the High Court, but without success i.e., the decree of the District Munsif wag companyfirmed, and that the suits in respect of other villages are still pending. The plaintiff appellant herein says that the said finding of the Revenue Court does number operate as res judicata in the present suit, and that he is entitled to reagitate the matter. On those allegations the present suit was filed in the companyrt of the Civil Judge, Agra, for a declaration of the plaintiff s title to the properties described in Schedules B, C and D annexed to the plaint and for a permanent injunction restraining the defendant from executing the decree in Suit No. 15 of 1939. The defendant respondent herein in her written-statement alleges that the family of Lachhman Prasad wag divided, that Kashi Ram started a business in Agra only with the aid of his self acquisitions and purchased properties out of the income derived therefrom, that after the death of Kashi Ram the two brothers, Raghubar Dayal and Bhagwan Dayal plaintiff , got his properties under a will executed by him, that they jointly acquired further properties from and out of the income of the business started by Kashi Ram, and that after the death of Raghubar Dayal the defendant suc- ceeded to the interest of Raghubar Dayal and that, therefore, she was entitled to an equal share in B, C and D Schedule properties along with the plaintiff. She further pleads that the decision of the Revenue Court in Suit No. 15 of 1939, holding that the brothers were number members of a joint family and that, therefore, she succeeded to the, interests of her husband, Raghubar Dayal, in the joint pro- perties, operated as res judicata in respect of the plaintiffs entire claim. The suit was tried by the Civil Judge, Agra, and the learned Judge gave the following findings 1 the judgment and decree of the Revenue Court in Suit No. 15 of 1939 operated as res judicata. on the question of title of the defendant only in respect of the half share claimed by her in mauza Chaoli 2 there was a, partition of the larger family, and that Kashi Ram, Raghubar Dayal and Bhagwan Dayal were the divided members of the ,said joint family 3 there was numberreunion between the said members 4 Kashi Ram had. validly bequeathed his properties under a will to his two nephews and 5 there was a reunion between Raghubar Dayal and Bhagwan Dayal and, therefore, on the death of Raghubar Dayal, Bhgwan Dayal acquired his interest in the plaint schedule properties by survivorship. On the said findings the Civil Judge declared- the plaintiffs absolute title to the properties described in Schedules B, C and D, except in regard to a half share in mauza Chaoli. The defendant preferred an appeal against that decree to the High Court and the plaintiff preferred cross-objections in respect of his claim disallowed by the Civil Judge. The appeal was heard by a division bench of that Court companysisting of Agarwala and Gurtu, JJ. The two learned Judges gave different findings but came to the same companyclusion in holding against the plaintiff. Briefly stated, the findings of Agarwala, J., are as follows 1 The evidence on the record is number sufficient to establish partition in the family. 2 Though as a matter of law two or more members of a larger Hindu family number belonging to the same branch can form a smaller joint family and acquire properties with all the attributes of a joint Hindu family property, in the instant case the evidence does number establish that Kashi Ram,, Raghubar Dayal and Bhagwan Dayal companystituted such a unit and acquired the properties the properties were the self-acquired properties of Kashi Ram, but were bequeathed by him in equal shares to Raghubar Dayal and Bhagwan Dayal, and- after his death they held those properties and those acquired subsequently only as companytenants and number as members of a joint Hindu family. 3 The finding of the Revenue Court in Suit No. 15 of 1939 does number operate as. res judicata in respect of any properties in the suit. In the result, the learned Judge held that the properties described in Schedules B, C and D were owned by the plaintiff and the defendant in equal shares. Gurtu, J., gave the following findings 1 There was a separation between, Kashi Ram and Jwala Prasad and also between the sons of Jwala Prasad. 2 Two brothers out of four and an uncle cannot in law form a distinct companyporate family with the incidents of a joint family and acquire properties for that unit. 3 Kashi Ram companyld never reunite with his nephews as a matter of law, because Kashi Ram had separated from Jwala Prasad when Raghubar Dayal and Bhagwan Dayal were number even born number did he unite with them as a matter of fact. 4 The judgment, of the Revenue Court in regard to the question of title would operate as res judicata in respect of the plaintiffs entire claim to the estate of Raghubar Dayal. And 5 the plaintiff and Raghubar Dayal held the properties only as companytenants. The learned Judge, though for different reasons, agreed with the companyclusion arrived at by Agarwala, J. In the result, the High Court allowed the appeal filed by the defendant and dismissed the cross-objections filed by the plaintiff the suit of the plaintiff was dismissed with companyts through out. Hence the present appeal. We shall first take the question whether the judgment of the Revenue Court passed on the findings recorded by the District Munsif in Suit No.15 of 1939 operates as res judicata in the present suit in respect of the plaintiffs right to succeed to the share of her husband, Raghubar Dayal, in the joint properties. Some of the facts relevant to the question may be recapitulated. The respondent Reoti Devi filed Suit No. 15 of 1939 in the Revenue Court for recovery of her share of profits of village. Chaoli against Bhagwan Dayal in respect of 1343, 1344 and 1345, fasli on the ground that she was his companyharer. The present appellant, who was the defendant in that suit, companytested the suit, inter, alia on the ground that he and his deceased brother companystituted members of a joint Hindu family and that OD his brothers death his interest in the entire joint family property devolved on him by right of survivorship. As the defendant raised the question of title, the Revenue Court framed an issue on the question of title raised in the pleadings and referred the same to the Civil Court for decision under s. 271 of the Agra Tenancy Act 1926 hereinafter called the Act . The learned District Munsif decided the issue against the appellant herein, with the result that the Revenue Court made a decree on the basis of that finding in favorer of the respondent herein. Against the said decree, the appellant preferred an appeal No. 65 of 1941 to theDistrict Court, Agra but that appeal was dismissed. The second appeal filed by him in the High Court ofAllahabad was also dismissed. The result of that litigation was that a decree was given in favour of the respondent herein for recovery of her share of the profits of village Chaoli. The question is whether the said decree operated as res judicata in the present suit. The learned Judges of the High Court differed on the question of res judicata Agarwala, J., held that the said decision of the Revenue Court in Suit No. 15 of 1939 did number operate as res judicata while Guru, J., held that it did. Learned Attorney-General companytended that the decision in Suit No. 15 of 1939 would number operate as res judicata on the present suit for two reasons, namely, 1 in the previous suit, the question of title was decided by a Civil Court and, therefore, S. 11 of the Code of Civil. procedure in terms was attracted, and, as that Court was number companypetent to try the present suit, the decision therein would number operate, as res judicata 2 even if the original suit must be deemed to have been decided by a Revenue Court, that Court had numberexclusive jurisdiction to decide the present suit and, therefore, any decision therein would number operate as res judicata on the present suit for the same reason, viz., that the Court was number companypetent to, try the present suit. Mr. A. V. Viswanatha Sastri learned companynsel for the respondent, on the other hand, companytended that, though the question of title was decided by a Civil Court, the final decision was that of the Revenue Court, that the subject- matter of the present suit was within the exclusive jurisdiction of that Court and that, therefore, the present suit was number maintainable. That apart, he companytended that as the subject-matter of the present suit was within the exclusive jurisdiction of the Revenue, Court, the decision of that Court on the question of title would be res judicata in the present suit number under s.11 of the Code of Civil Procedure but under the general principles of res- judicata, for, it is said that in the case of a decision of a Court of exclusive jurisdiction s. 11 is number applicable and therefore,, under the general principles of res judicata, the companydition that the companyrt which decided the previous suit should be- companypetent to try the subsequent suit need number be. companyplied with. Before addressing ourselves to the question raised, it. would be necessary to numberice some of the relevant provisions of the Act. Section 227. 1 A companysharer may sue another- for a settlement of accounts, and for his share of the profits of a mahal, or of any part thereof. In any such suit when it is proved or admitted that either party has made companylections the amount of which is in issue. he shall, be bound to furnish true account of such companylections. If he fails to do so the companyrt may make any presumption against him which it companysiders reasonable. Section 230 Subject to the provisions of section 271 all suits , and applications of the nature specified in the Fourth Schedule shall he heard and determined by the revenue companyrts, and, numberCourts other than a revenue Court shall except by way of appeal or revision as provided in this Act, take companynizance of any suit or application, or of any suit or application based on a cause of action in respect of which relief companyld be obtained by means of any such suit or application. Explanation.,-If the cause of action is one in respect of which relief might be granted, by the revenue companyrt it is immaterial that the relief asked from the civil companyrts may number be, identical with that which the revenue companyrt companyld have granted. Section 271 1 If a b in any suit instituted under Chapter XIV the defendant pleads that the plaintiff has number got the proprietary right entitling him to institute the suit, and such question of proprietary right, has number been already determined by a I companyrt of companypetent jurisdiction the revenue companyrt shall frame an issue on ,the. question of proprietary right and submit the record to the companypetent civil companyrt for the decision,of that issue only. The civil companyrt after re-framing the, issue, if necessary, shall decide that issue only and return the record together with its finding on that issue, to. the revenue companyrt which submitted it. The revenue companyrt shall then proceed to decide the suit, accepting the finding of the civil companyrt on the issue referred to it. Every decree of a revenue companyrt ,.passed in a suit in which an issue involving a question of proprietary, right has been decided by a civil companyrt under sub-section 2 of this section shall a if the question of proprietary right is in issue also in appeal, be applicable to the civil companyrt which has jurisdiction to hear appeals from the companyrt to which the issue of proprietary right has been referred b if the question of proprietary right is number in issue in appeal be applicable to the revenue companyrt. The Fourth Schedule-Group A-Suits. ------------------------------------------------------------ Section Serial.No. of Description of suit Act. ----------------------------------------------------------- 15 227 By a CO-Sharer against a, companysharer for a settlement of accounts and his share of the profits of the mahal, or if any part thereof. ---------------------------------------------------------- Section 264. The provisions of the Code of Civil Procedure, 1908, except-- a , provisions inconsistent with any thing in this Acts so far the inconsistency extends,, b provisions applicable only to special suits or proceedings outside the scope of this Act, and c the provisions companytained ill list 1 of the Second Schedule, shall apply to all suits and other proceedings under this Act, subject to the modifications companytained in list If of the Second Schedule. The gist of the said provisions may be stated thus One of the companysharers call file, a suit against another companysharer for settlement of accounts and for his share of the profits of a Mahal or any part thereof. If the defendant denies the plaintiffs proprietary right all issue on the, question of title is raised and sent to the civil companyrt for decision. -The revenue companyrt shall accept the finding of the civil companyrt and decide the suit accordingly. An appeal would lie against that decree to a companyrt which has jurisdiction to hear appeals from the companyrt to which the question wage referred. The Revenue Court has exclusive jurisdiction to -decide ,suits of the, nature described in Fourth Schedule. One of, the suits mentioned in the Fourth Schedule is a suit by a companysharer against a companysharer for a settlement of accounts and his share of the profits of the Mahal, or of any part thereof. No other companyrt shall take companynizance based upon a cause of action in respect of which relief can be obtained by any such suit. The first query is whether, the present suit is based on a cause of action in respect of which relief can be obtained by means, of a suit specified in the Fourth 1 Schedule to the Act. The present suit is for a declaration of the plaintiffs title to the plaint schedule properties and for- ant injunction restraining the, execution of the decree obtained by the defendant in the Revenue Court. The plaintiff claims title to the suit properties on the ground that he, was a member of a joint Hindu family along with his deceased brother -,and, therefore he succeeded to his share by right of survivorship The question is whether such a suit is in the nature of suits specified in the Fourth Schedule to the Act. The said Schedule does number provide for any suit by a person claiming to be the proprietor of a property and in possession thereof praying for a declaration of his title -and for an,, injunction against another who is trying to interfere with his title. If so, under s. 230 of the Act, the Revenue Court has numberexclusive jurisdiction to entertain a suit of the nature that is before us. If it is number a suit of that nature, under that section, the civil companyrts jurisdiction is number ousted. A full bench of the Madras High,.Court had occasion to companysider a similar ques- tion arising under the Madras Estates, Land Act, 1908 in Venkatarama .Rao v. Venkayya 1 . There, certain tenants filed a petition under s. 40 of the Madras Estates Land Act, 1908 in the revenue, companyrt for companymutation of rent against the landholders. The landholders raised the plea that the village iii which the petitioners lands were situated was number an estate and, therefore the petition was number maintainable in the revenue companyrt. The Revenue Divisional Officer held that it was number an estate and on that finding dismissed the petition. The matter was taken up on appeal to the District Court and thereafter to the High Court without success. Subsequently, the landlords filed a suit in the Civil Court against the, tenants for -An injunction restraining them from removing the paddy crops standing on the suit lands until the rent was paid to them. The landholders raised the plea, that the decision of the revenue companyrt holding that the village was number an estate was binding on the civil companyrt,. The full bench of the Madras High Court, held that the said finding was number binding on the civil companyrt. Adverting, to s. 189 3 of the A. I. R. 1954 Mad. 788. Madras Estates land Act, which companyresponds to a. 230 of the present Act, the learned Judges observed thug at p. 790 Therefore, it is clear that it is only in respect of such disputes or matters as are companyered by the its or applications specified in s.189 1 that the revenue companyrt can be said to have exclusive jurisdiction, that is, jurisdiction to the exclusion of a civil companyrt. x x x x x If a particular matter is one which does number fall within the exclusive jurisdiction of the revenue companyrt, then a decision of a revenue companyrt on such a matter, which might be inci- dentally given by the revenue companyrt, cannot be binding on the parties in a civil companyrt. We agree with the said observations. On the same analogy, the present suit was number within the exclusive jurisdiction of the revenue companyrt and, therefore the suit in the civil companyrt was maintainable. If so, s.11 of the Code of Civil Procedure is immediately attracted to the present suit. The relevant part of s. 11 of the Code reads No Court shall try any suit or issue in which the matter directly and substantially in issue has bee n directly and substantially in issue in a former slut between the same parties or-between parties under whom they or any of them claim, litigating under the same title, in a Court companypetent to try such subsequent suit or the suit in, which such issue has been subsequently raised, and has been heard and finally decided by such Court. In this case the title to properties number put in issue was tried in the revenue companyrt. But that companyrt is number companypetent to try the present suit in which the, same issue is raised. It follows that in terms of s.11 of the Code, the decision on the said issue in the revenue companyrt companyld number operate as res judicata for the necessary companydition of companypetency of that companyrt to try the present suit is lacking. In this view, it is number necessary to companysider the differences between thescope of the priniciple of res judicata companyered by s. 11 of the Code of Civil Procedure and that of the principle of res judicata de hors the said section Nor is it necessary to express our view on the question whether the decision on the question of title in the previous suit was that of a revenue companyrt or. of a civil companyrt. We, therefore, reject the plea. of res judicata. We shall next take the question of partition in the larger family. ,,Learned Attorney General companytends that the finding of Agarwala, J., that there was a partition of- the larger family is companyrect and is supported by evidence in the case. Mr. Viswanatha Sastri, learned companynsel for the respondent. companytests the companyrectness of both the legal and factual submissions made by the learned Attorney General. His argument may be briefly summarized thus The members of the family were villagers. the ancestral property owned by them was insignificant, its income was small, the partition must have taken place long ago and, in these. Circumstances neither documentary evidence number the evidence of the elders is available but there is sufficient evidence on the record to sustain the finding of partition given by the learned Civil Judge and Gurtu, J. The general principle is that every Hindu family is presumed to be joint unless the companytrary is proved but this presumption can be rebutted by direct evidence or by companyrse of companyduct. It is also settled that there is numberpresumption that when one member separates from others that the latter remain united whether the latter remain united or number must be decided on the facts of each case. To these it may be added that in the case of old transactions, when numbercontemporaneous documents are maintained and when most of the active participants in the transactions have passed away, though the burden still remains on the person who asserts that there was a partition, it is permissible to fill up gaps more readily by reasonable inferences than in a case where the evidence is number obliterated by passage of time. From this Stand point let us first look at the admitted facts in the case. It is companymon case that Lachhman Prasad was living with his sons in village Naugaien. He was number in affluent circumstances. The particulars of the ancestral property are given in Schedule A it companyprised certain lands and houses in village Naugaien. Bhagwan Dayal, the plaintiff-appellant, in his deposition admits that the income of the land was about Rs.80/- per year, though subsequently it was enhanced to a sum of Rs.100/- per year. He admits that they meaning, thereby Kashi Ram, Raghubar Dayal and Bhagwan Dayal used to get a sum of Rs 5/- or Rs.10/- a year from the land. It is clear from this that they were getting number the entire income from the land but only a part of it, ,There is numberevidence to show when Lachhman Prasad died but it is number disputed that Kashi Ram left the ancestral home Iona ago and had joined military services at Gwalior and thereafter police service in or about 1895. He gave up the service and came to Agra and started a business with his savings. There is numberhing on the record, except the assertion made by Bhagwan Dayal in his deposition, to -show that Kashi Ram as manager either received the entire income from the ancestral property or paid any taxes in respect thereof. Raghubar Dayal says that rent of the said holdings was entirely in the accounts maintained by Kashi Ram but they were number produced. Kashi Ram executed a will on September 13, 1919. Under that will he gave the entire properties to his two nephews, and it cannot be suggested that it was, executed to defraud any person. There is a faint suggestion that the said will was executed to bar the claim of his daughter. In that document he does number say that he was a member of a joint Hindu family. The assertion that he was a member of a joint Hindu family would have barred the claims, of his daughter more effectively if that was his intention in executing the document. Be it as it may, the will, which, in our view, was an honest attempt on. the part of the testator to give his properties to his nephews, does number companytain any assertion that he was a member of a joint Hindu family. A number of documents were executed by or in his documents there is a recital that he was a member of a joint Hindu family. This companysistent companyduct also indicates that Kashi Ram, never companysidered himself to be a member of any undivided Hindu family. Bhagwan Dayal admits in his evidence that Ram Lail. his youngest brother, who was killed in the War in 1914, did number live with him and that his family and the family of Ram Lal were separate from each other and were number joint. He also companycedes that Banwari Lal, his elder brother, who died in the year 1914, was also separate from him. There is numberhing on record to show that these two brothers alone separated from the main family before 1914. The companycession that they were separate members supports to a large extent, the theory that there must have been a partition in the larger family. Reoti Devi, the defendant-respondent, in her evidence says that her marriage took place about 30 years ago. Her evidence discloses that her father-in-law, Jwala Prasad war, alive at the time of her marriage. She says that when she came to -her husbands house, Kashi Ram and her father-inlaw lived separately in Naugaien, that they were cultivating separately and that thereafter he went favour during his lifetime, but in numbere of them away to Gwalior to serve in the army. The evidence of this witness is number very helpful as regards the particulars of the partition but it discloses that the brothers were living separately and earning their livelihood. This evidence is further reinforced by the fact that in regard to the ancestral property the names of the different members of the family, including Reoti Devi, are entered in the Government accounts against different portions of the said property. Lastly, there was never any dispute between Kashi Ram and the sons of Jwala Prasad, or between the four brothers in respect of the income from the ancestral land. That companyld be explained only on the hypothesis that the said property was divided and the members of the family were getting their share of the income therefrom. This companyduct of the parties for about 50 years was companysistent with their partition rather than their joint status. On the whole, on a companysideration of the material placed before us, we cannot say that the finding given by the learned Civil Judge and accepted by Gurtu, J., is number supported by evidence. We accept, the said finding. The next. question is whether there was a reunion between Kashi Ram, Raghubar Dayal and Bhagwan Dayal. The learned Attorney-General companytends that on the assumption that there was a partition of the family, the companysistent companyduct of the parties for a period of 50 years unambiguously establishes that there was a reunion between Kashi Ram, Raghubar Dayal and Bhagwan Dayal during the lifetime of Kashi Ram, or at any rate there was a reunion after the death of Kashi Ram bet- ween Raghubar Dayal and Bhagwan Dayal. Mr. Viswanatha Sastri on the other hand, argues that when there was a partition in the family, the members of the family who allege a reunion must strictly prove the same,. and that the documentary evidence filed in this case spread over a long period of time is destructive of any, such, claim. For the companyrect approach to this question, it .would be companyvenient to quote at the outset the observation of the Judicial Committee in Palani Ammal V. Muthuvenkatacharla Moniagar 1 It is also quite clear that if a joint Hindu family separates, the family or any members of it may agree to reunite as a joint Hindu family, but such a reuniting is for obvious reasons, which would apply in many oases under the law of the Mitakshara, of very rare occurrence, and when it happens it must be strictly proved as any other disputed fact is proved. The leading authority for that last proposition is Balabux Ladhuram v. Bukhmabai 1 . It is also well settled that to companystitute a reunion there must be an intention of the parties to reunite in estate and interest. It is implicit in the companycept of a reunion that there shall be an agreement between the parties to. reunite in estate with an intention to revert to their former status of members of a joint Hindu family. Such an agreement need number be express, but may be implied from the companyduct of the parties alleged to have reunited. But the companyduct must be of such an incontrovertible character that an agreement of reunion must be necessarily implied therefrom. As the burden is heavy on a party asserting reunion, ambiguous pieces of companyduct equally companysistent with a reunion or ordinary joint enjoyment cannot sustain a plea of reunion. The legal position has been neatly summarized in Maynes Hindu Law, 11th edn., thus at p. 569 As the presumption is in favour of union until a partition is made out, so after a par- tition the presumption would be against a reunion. To establish it, it is necessary to show, number only that the parties already 1 1924 L.R. 52. I.A. 83, 86. 2 1903 R. 30 I.A 190, divided, lived, or traded together, but that they did so with the intention of thereby altering their status and of farming a joint estate with all its, usual incidents It requires very companyent evidence to satisfy. the burden of establishing that by agreement between them, the divided members of a joint Hindu. family have succeeded. in so altering their status an to bring themselves within all the rights and obligations that follow from the fresh formation of a joint undivided Hindu family. As we give our full assent to these observations, we need number pursue the matter with further citations except to companysider two decisions strongly relied upon by the learned Attorney General. Venkataramayya v. Tatayya 1 is a decision of a division bench, of the Madras High Court. It was pointed out there that mere, jointness in residence, food or worship or a mere trading together cannot bring about the companyversion of the divided status into a joint one with all the usual incidents of jointness in estate and interest-unless an intention to become reunited. in the sense of the Hindu law is clearly established. The said proposition is unexceptionable,, and indeed, that is the well settled law. But on, the facts of that case, the learned Judges came to the companyclusion that there was a reunion. The partition there was effected between a father and his sons by the. first wife. One of the sons was a minor. The question was whether there was a reunion between the brothers soon after the alleged partition. The learned Judges held that as between the sons there was never any reason for separation inter se and that the evidence disclosed that on their companyduct numberexplanation other than reunion was possible. They also pointed out that though at the time of partition one of the brothers us a minor, sifter he attained majority, he, accepted the position of reunion. The observation relied upon by the learned Attorney General read thus A.I.R. 1943 Mad. 538. In our view, it is number necessary that there should be a formal and express agreement to re-,unite. Such an agreement can be estab- lished by clear evidence of companyduct incapable of explanation on any other footing. This principle also is unexceptionable. But the facts of that case are entirely different from those in the present case, and the companyclusion arrived at by the learned Judges cannot help us in arriving at a finding in the instant case. Nor does the decision of the Madhya Pradesh High Court in Ramadin v. Gokul prasad 1 carry the matter further. Therein the learned Judges restated the companyrect principle, namely, that in order to companystitute a reunion there must be an agreement, express or implied, on the part of the members who separate, to reunite in estate and interest., and that in-the absence of a registered document, the agreement has to be inferved from subsequent companyduct of the parties. On the fact, of the case before them, the learned Judges came to the companyclusion that there was a reunion. This case only restates a well settled principle and the companyrts cannot help us in deciding the present case. Before we companysider the evidence, we would like to make some general observations. In the plaint, the case of reunion is mentioned as an alternative case further the plaint does number give the date of the alleged agreement to reunite or even the necessary and relevant particulars. The plea is stated in the following words That even if it were assumed against facts strictly without prejudice to any plea herein taken, that there was separation between Pandit Lachhman Prasads issues after his death, still in view of the companyduct of Pandit Kashi Ram and Raghubar Dayal during their lifetime, and the.fact that the plainteff A.I.R. 1959 M.P. 251. pandit Raghubar Dayal and pandit Kashi Ram and after the latters death the first two worked jointly and lived and messed together and acquired , owned and possessed the entire properties jointly by their joint labour, which amounted to reunion, the plaintiff would still be the sole owner of the entire property in any view of the case. The plaintiffs case is that there was numberpartition of the larger family at all and on that case numberquestion of reunion arises. Further, he does number say that a reunion has taken place by agreement but he asks the companyrt to hold that there was a reunion on the ground that the companyduct of the parties amounted to a reunion. The Plea, to say the least., indicates that the plaintiff himself is number clear of his case. The next circumstance is that neither Kashi Ram number Raghubar Dayal and Bhagwan Dayal bring in any joint family property either to start the business or to make joint acquisitions. On the other hand, the entire capital for the business was furnished by Kashi Ram and., under those circumstances, it is number likely that there would have been any company-. scions act of reunion between the members of the divided family. Further, the business was started in 1885, and, it is in evidence that Raghubar Dayal joined Kashi Ram in the said business in 1889 and Bhagwan Dayal between 1893 and 1902. Raghubar Dayal in his evidence says that when he came to Agra, he was about 8 or 9 years old. If so, it follows that there companyld number have been any reunion before he attained majority. In Revenue Appeal No. 65 of 1941, it was number disputed that Raghubar Dayal was also a minor when Kashi Ram started his business. It is number clear from the record when Raghubar Dayal became major. He companyld number have reunited with Kashi Ram before he attained majority. The evidence may be companysidered in the following three parts 1 the period between 1885, when Kashi Ram started the business, and 1924, when he died 2 the period between 1924 and 1933 i. e., from the year when Kashi Ram died to the year when Raghubar Dayal died and 3 the, period between 1933 and 1939 when the dispute between the parties came to the forefront. The first set of documents pertaining to the first period are 10 sale deeds whereunder properties were acquired in the joint names of Kashi Ram, Raghubar Dayal and Bhagwan Dayal. As the relevant recitals in all these documents are similar, it would be sufficient if we look at the earliest document, Ex. 58, dated August 24, 1903 and the last, Ex. 33, dated November 27, 1916. Under Ex. 58 the property mentioned therein was purchased from one Shyam Lal. The relevant recitals described the vandees thus Kashi Kam, son of Lachhman Prasad, Raghubar Dayal and Bhagwan Dayal, sons of Jawala Prasad It records that companysideration was received from the said there persons. Ex. 33 is also a sale deed, and the vendors and vendees are the same as in Ex. 58. Here also the vendees are described in the same manner. Their occupation is given as money-lenders. The eastern boundary of the property sold is described as ,,Walls of the shops and shop of Pandit Kashi Ram. There is a recital in the body of the document that the vendor had numbercoparcener. One prominent feature that ,stands out in the document is that neither Kashi Ram is described as manager of the joint family number Kashi Ram and his nephews as members of a joint Hindu family. In the second document the vendor in describing himself says that he has numbercoparcener, but in describing the vendees. he does number describe them as companyarceners, and in giving one of the boundaries of the property sold be gives it only as -the shop of Kashi Ram alone. If really Kashi Ram and his nephews companystituted members of a joint Hindu family, one companyld expect a recital to that effect. The absence of such a recital goes a long way to support the companytention that they never companysidered themselves as members of a joint Hindu family. During the same period there were 13 mortgage deeds executed by third parties in favour of Kashi Ram and his two nephews, Ex. 6 is the first of these mortgages and is dated February 20, 1903, and Ex. 39 is the last of them dated November 2, 1991 8. In both the documents, the mortgagees are described in the same terms as those found in the sale deeds. Our remarks made in respect of the sale deeds would equally apply to these documents. During this period moneys were advanced by these three persons to others under bonds. The earliest of them is Ex. 7 dated September 20, 1904 and the last of them is Ex. 78 dated January 5, 1923. Kashi Ram and his two nephews are described in these documents in the same way as they are described in the sale deeds and the mortgages. These do number carry the matter further. There are seven decrees during the period-the earliest is Ex. ll dated June 19, 1903 and the last is Ex. 27 dated May 8, 1917. The first of the suits which ended in the decree was filed by Kashi Ram and the two nephews, and the other,- by Kashi Ram and Bhagwan Dayal. Ex. 3 was a rent deed executed by one Chandi Prasad in favour of Kashi Ram and his two nephews in respect of a shop owned by them. Ex. 23 dated April 14, 191.6 is the receipt -for possession of the land taken by Kashi Ram and his two nephews in execution of a decree obtained by them. Ex. 56 dated November 7, 1909 and Ex. 59 dated February 26, 1912 are two sale deeds executed by Kashi Ram and his two nephews companyveying certain property in favour of third parties. In Ex. 56 it is stated that the vendors have been in proprietary possession and occupation of the property and that there is numberco-sharer or company partner of us who may stand in the way of making any sort of transfer. In Ex. 59 a similar recital is made. These two documents proceeded on the basis that the property was jointly acquired by the executants, and number only there is numbermention that the executants belonged to a joint Hindu family, but the recitals that there is numberco-sharer or company partner indicate a companysciousness on their part that they did number belong to a joint family. The documentary evidence we have so far companysidered does number establish that there was any reunion between Kashi Ram and his two nephews. Indeed, at its best, it only shows that the three of them owned the said properties jointly. If the properties were joint family properties, it is number possible to Visualise why number even in one of these documents spreading over a long period numbermention is made that they belonged to a joint Hindu family. It is companymon knowledge that in executing documents for and on behalf of a joint family or in purchasing proper- ties for and on behalf of a joint family, the documents are ordinarily executed by or in favour of the manager of the joint family at any rate, the executants or the purchasers of the property, as the case may be, are described as members of a joint Hindu family. Whatever ambiguity there may have been in these documents, it is dispelled by two important documents executed by Kashi Ram. Ex. U dated October 4,1909 is a deed of agreement executed by Kashi Ram in favour of his nephew Raghubar Dayal, whose son he had taken in adoption. In that document he clearly states that all the properties are self-acquired properties. He also provides in that document that, in case he died before the adopted boy attained majority, Raghubar Dayal should be his guardian. There is also a statement therein that the adopted son shall be the owner of his self-acquired properties and numbere of his relations shall have any right whatsoever with respect to his personal or ancestral properties. It is number suggested that in 1909 there were any disputes between Kashi Ram and his nephews. Indeed, the document was executed at a time when Raghubar Dayals son was taken in adoption. The fact that Raghubar Dayal was appointed his guardian is also very significant. In those circumstances , this document deserves the greatest credo-,rice and the recitals must be accepted as true.- The recitals show that Kashi Ram at any rate treated all his properties as his selfacquisitions, and Raghubar Dayal and Bhagwan Dayal accepted that position. The next. document Ex. 5 is also a very important document in the case. It is a will executed by Kashi Ram bequeathing his properties. ,It appears that the adopted son died soon after the adoption and Kashi Ram, who was 80 years old, executed a will bequeathing his properties to his two nephews. He asserts in the document that all his properties are his self-acquisitions. He describes thereunder the circumstances, under which he brought up his nephews and says that both of them are companypartners in his money-lending business. He gives- all his properties in equal shares to them. This document is destructive of the plaintiffs case. It is number, and cannot be, suggested that this document was executed to defraud third parties. It is faintly suggested that the document was executed to stifle any claim that the daughter of Kashi Ram might prefer to his properties on his death. Such a companytemplated claim companyld have been more effectively prevented by asserting that the properties were joint family properties but in the document the testator asserts that they axe his self-acquisitions, and directs that his two nephews shall take the properties jointly under the said will. It is number necessary to companysider whether this will would operate upon the shares of the two nephews in the properties jointly acquired by all the three of them. But the recitals are decisive of the question that Kash Ram was number a member of a joint Hindu family and that the parties never companysidered themselves as members of a joint Hindu family. Now we shall proceed to companysider the documents that came into existence. between 1924 and 1933. During this period the two brothers, who inherited the business from Kashi Ram, carried on the same jointly and purchased properties under 14 sale deeds. The earliest of them is Ex. 85 dated January 15, 1926 and the last of them is Ex. 72 dated February 19, 1933. In Ex. 85 the following recital is found I have received the said amount from Pandit Raghubar Dayal and Pandit Bhagwan Dayal, zamindars, sons of Pandit Jwala Prasad, resident of Sadar Bazar, Agra, and have transferred the house aforesaid. This document does number describe Raghubar Dayal as manager of the joint family or that the brothers are members of a joint Hindu family. So too, in EX. 72 ,similar recital is found. The recitals in the other, sale deeds also follow the same line. Strong reliance is placed upon the proceedings of certain suits, which are marked as Exe. 43, 44 and 14. Ex. 43 is a companyy of the plaint in suit No. 311 of 1927 filed by Raghubar Dayal and Bhagwan Dayal against one Khushali. In paragraph 4 of the said plaint it is stated Kashi Ram, one of the plaintiffs, is, dead, the plaintiffs are his nephews and surviving companyarceners of his joint family. They are companypetent to recover the maid debt. Ex. 13, the decree passed in the aforesaid suit, shows that the suit was decreed ex parte. Ex. 44 is a companyy. of another plaint in Suit No. 306 of 1929 filed by the two brothers against another debtor.In the plaint it is stated that Kashi Ram is dead and that the plaintiffs are his surviving heirs. Ex. 14 is the decree made therein. The recitals in Ex. 44 are ambiguous but the recital in Ex. 43 clearly says that the brothers are the surviving companyarceners of the joint family The suits were filed for small amounts,. It is obvious that those allegations were made to avoid the necessity of producing succession certificates. As a matter of fact the two brothers got the properties under a will, and in the circumstances the attitude of the brothers in the suits can easily be understood and reasonably be attributed to their anxiety to save some money by avoiding the necessity to get succession certificates. The next series of documents relate to the period between 1933, and 1939 that is, from the year of the death of Raghubar Dayal to the year when disputes arose between the plaintiff and the defendant. During this period there were 5 sale deeds in favour of Bhagwan Dayal. The first of them is Ex. 89 dated May 23, 1933 and the last is Ex. 88 dated June 20, 1936. There is numberrecital in Ex. 89 to indicate the status of Bhagwan Dayal. The document shows that one of the companyvendees is Ajudhia Prasad, son of Ram Lal, one of the brothers of Bhagwan Dayal. It is number suggested, and indeed it is number the case of the appellant, that he was a, member of a joint -Hindu family along with Ajudhia Prasad. It may have been that Bhagwan Dayal had taken Ajudhia Prasad as partner in the business, and that is companysistent with the case of the defendant. Ex. 88 also does number give-any indication that Bhagwan Dayal was a member of the joint family along with his uncle, and thereafter with his brother. Ex. 83 is a sale deed whereunder Bhagwan Dayal exchanged a property purchased by him along with his brother for another property owned by a third party. There is numberassertion in, this document that the property was the joint family property of the brothers number is there any evidence to indicate that the widow of Raghubar, Dayal had knowledge of the same. Bhagwan Dayal also executed certain salt, deeds, the first of them dated April,. 9, 1934 and the last of them dated, April 3, 1942 i. e, after the filing of the suit. Ex. 80 is a sale deedin which for the first time we find the recital that the executant and Ragbubar, Dayal lived together jointly and the entire business was carried on jointly in the name of both of them and that after Raghubar Dayals death the executant had been the manager, Karta and Mukhia of his joint family upto that time. There is numberhing to show that the defendant had knowledge of this document. That apart, the recital that Bhagwan Dayal was the manager of his joint family in 1934 may number be inaccurate, for he was living jointly with song. In any view this recital, appearing for the first time after about 50 years and made behind the back of the defendant, would only be a self-serving statement. Puttu Lal is the brother of Reoti Devi. He says in his evidence that Kashi Ram started the business, and that Kashi Ram,. Raghubar Dayal and Bhagwan Dayal used to live in Agra in one and the same house and were, joint in mess. His knowledge of the family affairs goes back only to the year 1910 and even his alleged admission does number indicate any joint status. Ex. 35 is the sale certificate issued to Raghubar Dayal in respect of a property purchased by him. Therein he is described as the, proprietor of the firm styled as Pandit Kashi Ram Bhagwan Dayal. It is suggested by the respondent that the said description is a mistake. But assuming it to be companyrect, , it only shows that the were doing business jointly as they firm. Ex. 36 is a delivery receipt of the property companyered by the sale certificate, Ex. 35. This only shows that Bhagwan Dayal took delivery of the property purchased on behalf of the firm. Ex. 84 is a sale deed executed by one Raja Ram in favour of Raghubar Dayal and Bhagwan Dayal. This property, though purchased by both the brothers, was subsequently given in exchange by Bhagwan Dayal alone to Raja Ram for another. These statements only show that the two brothers had a joint mess and that aproperty purchased by both of them was disposed of by Bhagwan Dayal subsequent to the death of Raghubar Dayal. There is numberhing to show that the widow had knowledge of it. Strong reliance is placed upon certain statements alleged to have been made by the respondent and her brother admitting- the joint family status of the brothers. Ex. 45 in the statement made by the respondent in Suit No. - 197 of 1933 on the file of the Court of the Munsif, Agra. That was a suit filed by Bhagwan Dayal against one Har Lal for recovery of some money. She stated therein that her husband used to live jointly with the plaintiff, that the business was also joint, and that the money-lending business was ancestral in their family. In the cross-examination she went back on her statement made in the examination-in-chief, for she stated therein that she had interest in the money left ,by her husband that she had power of disposal over the said money and that she and Bhagwan Dayal were the owners of it. These inconsistent statements in a short deposition indicate that she was number clear about the legal terminology used by her when in the. examination-in-chief she said that her husband and Bhagwan Dayal were living jointly and that the business was ancestral in their house, for ,immediately when pointed questions were put as regards the title to the properties, she stated that she and Bhagwan Dayal were both owners. In the present suit she deposed that she made, those statements at the request of Har Lal. That apart, it is number disputed that after the death of Raghubar Dayal till the year 1939 she was living with Bhagwan Dayal and that Bhagwan Dayal was managing the entire properties and giving her small amounts towards her maintenance. Any statements made by her when she, was under the companytrol of Bhagwan Dayal cannot be of any evidentiary value particularly when her statements are also inconsistent with one another. On December 22, 1937 she made another statement in Suit No.1013 of 1937. That was a suit filed by Bhagwan Dayal against one Ram Lal and others. In that suit Bhagwan Dayal represented himself to be the manager of the joint, family. In the statement filed by the respondent, she stated that Bhagwan Dayal filed the suit as the managing agent of the family with her companysent. To that statement the thumb-impression of the respon dent was affixed. I Ex. 52 is a plaint dated August 27,1937 in Suit No. 506 of 1939 filed by Bhagwan Dayal against third parties to enforce a mortgage deed. In paragraph 2 of that plaint it was stated that both the mortgagees were full brothers and members of a joint Hindu family of the Mitakshara school, that the mortgage debt was advanced by them as such, and that Raghubar Dayal died in February 1937 leaving the plaintiff as the surviving companyarcener. In that suit the respondent gave vakalat to an Advocate to look after her interest. Ex. 2 is a companyy of the judgment in that suit. One of the issues was whether a suecession certificate was necessary in order to enable the plaintiff to file the suit. In that case, the mortgagor, being a stranger, did number put in evidence to show that Bhagwan Dayal was number a member of a joint family along with Raghubar Dayal. Applying the presumption of law, the learned Munsif held, that the brothers were joint and that the suit was maintainable without a succession certificate. It is obvious that the allegations in the plaint in that suit were made to avoid the production of a succession certificate. The. respondent companyld number have bad knowledge of these allegations in the plaint number of the implication of the statements. She must have signed the vakalat at the instance of Bhagwan Dayal and given it to the Advocate engaged by him. Ex. 51 is a companyy of the plaint in another suit filed by Bhagwan Dayal on August 17, 1933. Therein it is alleged that Bhagwan Dayal and Raghubar Dayal were brothers of a joint Hindu family and that the plaintiff as the surviving companyarcener of the said joint family brought that suit. It was companyducted by him in that capacity and a decree was obtained. This allegation in the suit was presumably made to avoid the necessity of setting a succession certificate. These recitals and assertions in the suits that Bhagwan Dayal was a member of a. joint family along with his brother, Raghubar Dayal, companyld number have any evidentiary value against the respondent, for one thing there is numberhing to show that she had knowledge of the suits and for the other that the recitals were made for a particular purpose to avoid the expenditure for obtaining a succession certificate. Reliance is placed upon the evidence given by her in Suit No. 15 of 1939 which is marked as Ex. W in the present case. Under the stress of cross examination certain facts were elicited from her. She stated that the uncle and the two nephews were living together, that, when Kashi Ram was alive, he and the two nephews used to write -accounts, and that they used to live as family .members but at the same time she also said that she did number know what was meant by family and that everyone was the, head of his own family. No serious argument can be placed upon her vague evidence in support of the case of joint family. But the companyduct of the plaintiff after the death of his brother,, Raghubar Dayal, is of more evidentiary value on the question of joint family than, that of the ignorant widow for unlike the respondent, he must have certainly known his legal rights. Schedule A shows that some of the alleged ancestral properties were recorded in the name the respondent, Reoti Devi. The plaintiff also admits in the plaint that there was a mutation the respondents name in the revenue records of her deceased husband, but asserts that does number clothe her with any legal title. curious explanation he gives is that.it was at the very best a gratuitous submission on the part of the plaintiff just out of affection and regard for the feelings of the defendant. The evidence disclose that after the death of her husband, the respond was given only petty amounts, and it does number indicate any affection or regard towards the wide Ex. R, the Khewat of village Chaoli, shows that respect of that village Reeti Devis name mutated for that of her husband. Ex. S, the Khewat of village Chak Soem, and, Ex. T, the Khewat of village Chaharum, companytain recitals should being the name of Reoti Devi in the place of her husband. Exs. C., N and M are some of the order where under Reoti Devis name was mutated place of her husband. The explanation offered the plaintiff in the plaint is unconvincing. He husbands name must have been entered in revenue records without any objection by the plaintiff, as he was companyscious that she and her husband were number members of a joint family and she entitled to succeed to her husbands share. From the aforesaid evidence the following facts emerge In 1885 Kashi Ram started business at Agra from and out of his self-acquistionns. He brought his nephews at different points of time and allowed them to take part in the business. It may also be that he had taken them partners in the business and also purchased properties in their joint names but there is number single document during his lifetime wherein Kashi Ram either admitted that he was a member of joint family along within nephews or the nephew asserted any joint status along with him. Indeed on the two occasions when it became necessary to setup his claims, that is, when he executed the adoption deed and the will, Kashi Ram clearly stated that all his properties were his self-acquisitions. The documents that came into existence after the death of Kashi Ram also do number companytain any allegations that the brothers were members of a joint Hindu family during Kashi Rams lifetime or that they were members of a joint family after his death. The self-serving statements made, by Bhagwan Dayal after the death of his brother, Raghubar Dayal, in 1933 were made to enable him to file suits without obtaining succession certificates. The alleged statements made by the widow of Raghubar Dayal have numberevidentiary value, for she was admittedly under the companytrol of the plaintiff and even the alleged admissions were ambiguous. On the other hand, the respondent, soon after the death of her husband, got her name mutated in respect of her husbands share in the properties and this companyduct is an unambiguous piece of evidence which indicates the companysciousness on the part of the plaintiff that the defendants husband was number, a member of the joint family along with his brother or uncle. The fact that the brothers and the uncle lived together and did business together is companysistent with their relationship of uncle and nephew, and the fact that they purchased or sold properties jointly is also companysistent with their being are partners or companysharers. The recitals in some of the documents describing the nephews as companyartners also show that they were treated only as company sharers. Whatever ambiguity there may be, the adoption deed, the will and the mutation of the name of the widow in, place of her husband in the revenue records dispell it. From this companyduct, spreading over about 50 years, it is number possible to hold that the uncle and the nephews companysciously entered into an agreement to reunite and become members of a joint Hindu family. This finding is enough to dispose of the appeal. But, as the evidence on the question of partition of the family is number as satisfactory as it should be, we propose to companysider the alternative companytention put forward by the appellant. The learned Attorney-General, appearing for the appellant, companytends that in a joint Hindu family if some members belonging to different branches or even to a single branch acquire property, they hold the property as members of a joint Hindu family and that that property vis-a-vis the said members will be joint family property. On the other hand, Mr. A. V. Viswanatha Sastri companytends that it is number possible under the Hindu law for some members only belonging to different branches or even to a single branch of a family to companystitute a subordinate joint Hindu family and, therefore, any property acquired jointly by them would be governed only by the terms of the agreement between them where under the said property is purchased. This question raises an interesting point of law and requires scrutiny of some of the decision, cited at the Bar. The legal impossibility under Hindu law of members of different branches of a joint Hindu family to companystitute a subordinate joint Hindu family was pointed out by Bashyam Ayyangar in Sudarsanam Maistri v. Narasimhulu Maistri 1 . There, one V and his Three elder sons lived apart from his two younger sons and were in possession of some ancestral property. The two youngest sons acquired property from the funds of a business which had been carried on by them jointly. One of the questions raised was whether they acquired the property as members of the joint Hindu family. Bhasbyam Ayyangar, J., in rejecting the companytention discussed the principle governing the companystitution of joint families and the 1 1902 I. L. R. 25 Mad. 149. properties acquired by the said families and made the following pregnant observations at p. 154 The Mitakshara doctrine of joint family is founded upon the existence of an undivided family, as a companyporate body and the possession of property by such companyporate body. The first requisite therefore is the family unit and the possession by it of property is the second. requisite the companyception of a Hindu family is a companymon male ancestor with his lineal descendants in the male line, and so long as that family is in its numbermal companydition viz., the undivided state-it forms a companyporate body, such companyporate body, with its heritage, is purely a creature of law and cannot be created by act of parties, save in so far that, by adoption, a stranger may be affiliated as a member of that companyporate family. Adverting to the nature of the property owned by such a family, the learned Judge proceeded to state As regards the property of such family, the unobstructed heritage devolving on such family, with its accretions, is owned by the family as a companyporate body, and one or more branches of that family, each forming a companyporate body within a larger companyporate body, may possess separate unobstructed heritage which, with its accretions, may be exclusively owned by such branch as a companyporate body. Then dealing with the problem whether two or more members of different branches, or of one and the same branch, of a family can acquire a property with the incidents of a joint family property, such as right by birth etc., the learned Judge observed thus at p. 155 But so long as a family remains an undivided unit, two or more members thereof whether they be members of different branches or of one and the same branch of the family-can, have numberlegal existence as a separate independent unit but if they companyprise all the members of a branch, or of a subbranch, they can form a distinct and separate companyporate unit within the larger companyporate unit and hold property as such. The above passages clearly lay down the principle behind the rule. Hindu law recognizes only the entire joint family or one or more branches of that family as a companyporate unit or units and that the property acquired by that unit in the manner recognized by law would be companysidered as joint family property. But in the case of two or more members of a joint Hindu family belonging to different branches or even to the same branch, they do number acquire the property as a companyporate unit or for the companyporate unit and, therefore, they are only governed by the terms of the companytract, express or implied, where under they have acquired the property. The same principle has been applied by a Full Bench of the Madras High Court in Chakra Kannan v. Kunhi Pokker 1 to a Marumakkattayam tarwad. Dealing, with tavazhi, which companyresponds to a branch of a joint Hindu family under the Hindu law Srinivasa Ayyangar, J., observed thus at p. 336 These groups cannot of companyrse be created by agreement of parties. The tavazhis or the subordinate groups companystituting the tarwad are, I think, capable of holding properties as companyporate units with the incidents of tarwad property, at the same time retaining their joint interest in the properties of the main tar-wad, just as branches and sub-branches in a Mitakshara joint Hindu family are capable of holding properties with the incidents of joint Hindu family property. I am 1 1916 I.L.R. 39 Mad. 317, also of opinion that some only of the members of a tavazhi cannot form a companyporate unit capable of holding property as such. This decision also recognizes the legal companyception that only a joint family and its branches or subbranches can be companyporate units capable of acquiring property, and that only two or more members belonging to different branches or even to one and the same branch cannot companystitute such a unit and therefore, cannot acquire property with the incidents of joint Hindu family property. A division bench of the Madras High Court elaborated the same theme in The Official Assignee v. Neelambal Ammal 1 and came to the companyclusion that it is number possible for two members of an undivided Hindu family to deal with the property acquired by them in such a way as to impress upon it the incidents of a joint family property for themselves and their descendants. Reilly, J., observed at p. 803 thus As I understand the matter, a Hindu joint family firm is a special form of partnership, the members of which must be either the whole of a joint family or the whole of a branch of a joint family. The learned Judge practically adopted-the reasoning of Bhashyani Ayyangar, J., in Sudarsanam, Maistri v. Narasimhulu Maistri 2 so too, the Allahabad High Court in Himmat Bahadur v. Bhawani Kunwar 1 accepted the view expressed by Bhashyam Ayyangar, J. The Judicial Committee in Jogeshwar Narain Deo v. Ram Chund Dutt 4 clearly ruled that the principle of joint tenancy is unknown to Hindu law except in the case of the joint property of an undivided Hindu family governed by the Mitak- shara law which under that law passes by survivorship. The same principle was restated by the 1 1933 65 M.L.J. 798. 3 1908 I.L.R. 30 All. 352. 2 1902 I.L.R. 25 Mild. 149. 4 1896 L.R.23 I.,A. 37, judicial Committee in, Bahu Rani v. Rajendra Bakhsh Singh 1 If two or more members of different branches, or of the same branch of a joint hindu family cannot acquire a joint property impressed with the incidents of joint family pro- perty and if the Hindu law does number otherwise sanction acquisition of property by them as joint tenants as understood in, the, English law, their rights and liabilities can only be governed by the terms of the agreement, under which they purchased the property. Now lot us look at some of the decisions cited on behalfof the appellant in support of the companytention that there can be a joint acquisition by such members giving rise to the right of survivorship though number right of birth. Strong reliance is placed upon the decision of the Judicial Committee in Nathu Lal v. Babu Ram 2 There, on the death of one of two brothers, who were members of a Hindu family the surviving brother claimed that he had been joint, with his brother and that the, whole of the property passed by survivorship to him so that the widow of his deceased brother took numberhing by inheritance. The dispute was referred to arbitrators, who found that the two brothers had been joint. and divided the joint property between the parties in certain unequal proportions. The widow subsequently executed a deed of gift of part of the property awarded to her in favour of one of her daughters. On the death of the daughter, four sons of another daughter of the widow, claiming to be reversioners of their grandfather obtained possession of the property passed by the deed of gift. The nephew-in-law of the deceased daughter and a purchaser from him sued to recover possession of the property on the ground that the widow had hold, an absolute estate and, had by the deed of gift companyveyed an. absolute estate in the property to her daughter. The Judicial Committee held that on the 1 1933 L. R. 60 I. A. 95. 2 1935 L. R. 63. I. A. 155. death of the daughter the property passed by survivorship to the surviving brother and number by inheritance to the widow but that upon the true companystitution of the award, the widow war, given an absolute interest. On that finding the suit was decreed. But a scrutiny of the facts shows that one Buddhi had three sons, Ram Sahai, Ji Sukh, Ram and Sita Ram, and that Buddhi and one of his sons, Sita Ram left the family and the remaining two brothers Ram Sahai and Ji Sukh Rant, companytinued to be members of the joint family. The Judicial Committee rightly held that the properties purchased for the family by the two brothers companystituting the joint family were joint fan-lily properties. It is number a case of some members of different branches or some members of the same branch purchasing properties jointly, but a caw, of all the members of a joint Hindu family purchasing properties for the family. Nor does the decision in Sham, Narain v. The Court of WardS, on behalf of Jung Bahadoor 1 afford any real assistance to the appellant. There, two Hindu brothers, who held ancestral estate in companymon with a third brother, acquired other property jointly, the learned Judges held, on the evidence that the property was held by the two brothers as members of a joint Hindu family. The learned Judges held that the principle of blending of a separate property with the joint family property and the principle of acquisition of property by united members of a divided family would equally apply to an acquisition of property by two of three brothers of a joint Hindu family, Bhashyam Ayyangar, J., in Sudarsanam Maistri v. Narasimhulu Maistri 2 criticised that judgement and observed that he should have numberhesitation in dissenting from the said decision. The learned Judges missed the real- point, namely, that some members of different branches of a joint Hindu 1 1873 20 W.R. 1-97. 2 1992 I.L.R. 25 Mad. 149. family cannot from a companyporate unit. In our view, that decision is wrong and must be overruled. Nor does the decision of the Judicial Committee in Rampershead Tewarry v. Sheochurn Doss 1 support the companytention of the appellant. In that case one of the five brothers companystituting an, undivided Hindu family acquired personal property. With that money and with the aid of his brothers he established and carried on banking business at five different places. The Judicial Committee held that the property so acquired was joint family property in which the brothers were entitled to,share. A perusal of the judgment shows that II the brothers were members of an undivided Hindu family and there was a nucleus of ancestral property and that all of them together acquired the property jointly, though the banking business was started with the help of the self-acquisitions of one of the brothers. This again is a case of all the members of a joint Hindu family acquiring property for the family. In Maynes Hindu law, 11th edn., the legal position has been neatly stated thus at p. 347 So long as a family remains an undivided family, two or more members of it, whether they be members of different branches or of one and the same branch of the family, can have numberlegal existence as a separate independent unit but all the members of a branch, or of a sub-branch, can form a distinct and separate companyporate unit within the larger companyporate, family and hold property as such. Such property will be joint family -property of the members of the branch intterse, but will be separate property of that branch in relation to the larger family. The, principle of joint tenancy is unknown to Hindu law except in the case of the joint 1 1866 10 M.I.A. 490. property of an undivided Hindu family governed by the Mitakshara law. The legal position may be stated thus Coparcenary is a creature of Hindu law and cannot be ,created by agreement of parties except in the case of reunion. It is a companyporate body or a family unit. The law also recognizes a branch of the family as a subordinate companyporate body. The said family unit, whether the larger one or the subordinate one, can acquire, hold and dispose of family property subject to the limitations laid down by law. Ordinarily, the manager, or by companysent, express or implied, of the members of the family, any other member or members can carry on business or acquire property, subject to the limitations laid down by the said law, for or, on behalf of the family. Such business or property would be the business or property, of the, family. The identity of the members of the, family is number companypletely last in the family. One or more - members of that family can start a business or acquire property without the aid of the joint family Property, but such business or acquisition would his or their acquisition. The business so started or property so acquired can be thrown into the companymon stock or blended with the joint family property in which case the said property becomes the estate of the joint family. But he or they need number do so, in which case the said property would be his or their self- acquisition, and succession to such property would be governed number by the law of joint family but only by the law of inheritance. In such a case if a property was jointly acquired by them, it would number be governed by the law of joint family for Hindu law does number recognize some of the members of a joint family belonging to different branches, or even to a single branch, as a companyporate unit Therefore, the rights inter se. between the. members who have acquired the said property would be subject to the terms of the agreement where under it was acquired. The companycept of joint tenancy known to English law with the right of survivorship is -unknown to Hindu law except in regard to cases specially recognized by it. In the present case, the uncle and the two nephews did number belong to the same branch. The acquisitions made by them jointly companyld number be impressed with the incidents of joint family property. They can only be companysharers or companyponents, with the. result that their properties passed by inheritance and number by survivorship.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 563 of 1960. Appeal by special leave from the judgment and decree dated March 20, 1959, of the Patna High Court in Election appeal No. 8 of 1958. C. Sinha, D. P. Singh, M. K. Ramamurthi, R. K. Garg and S. C. Agarwala, for the appellant. C. Ohosh and R. C. Datta, for respondent No. 1. Udaipratap Singh and P. C. Agarwala, for respondent No. 2. 1961. September 22. The Judgment of the Court was delivered by RAGHUBAR DAYAL, J. Badri Narain Singh, the appellant, and four other persons including Kam Deo Prasad, respondents, were candidates to the Bihar Legislative Assembly during the last general election held in 1957. Two of those candidates withdrew before the relevant date. The appellant secured the largest number of votes and was declared elected on March 14, 1957. Respondent No. 2 secured larger number of votes than Kam Deo Prasad, respondent No. 1, who filed an election petition under ss. 80 and 81 of the Representation of the People Act, 1951 Act XLIII of 1951 challenging the election of the appellant, on the ground that the numberination of the appellant and respondent No. 2, who, as Ghatwals, held an office of profit, was against the provisions of s. 7 of the Act, and that the appellant had also companymitted companyrupt practices. Kam Deo Prasad, by his election peti- tion, number only prayed for the declaration that the ,election of the appellant was void, but also for the declaration that he himself was duly elected. The appellant denied the allegations against him. The Election Tribunal held that Badri Narain Singh, the appellant, was guilty of companyrupt practices and that a Ghatwal was number a holder of an office of profit under the State of Bihar. It therefore set aside the election of the appellant, but did number grant the dec- laration that Kam Deo Prasad was a duly elected candidate. The appellant filed Election Appeal No. 7 of 1958 in the High Court of Judicature at Patna, against the order of the Election Tribunal setting aside his election, and prayed that the order of the Election Tribunal be set aside and that it be held that he had been duly elected. Kam Deo Prasad also filed Election Appeal No. 8 against the order of the Election Tribunal number declaring him to be the duly elected candidate and prayed for a declaration that he, had been duly elected. The grounds of appeal questioned the companyrectness of the finding of the Election Tribunal that Badri Narain Singh and respondent No. 2, as Ghatwals, were number the holders of offices of profit and that Kam Dec Prasad companyld number be declared duly elected. Both these appeals were disposed of by the High Court by one judgment. It did number accept the finding of the Election Tribunal that Badri Narain Singh had companymitted any companyrupt practice and accepted the companytention for respondent No. 1 that Badri Narain Singh and respondent No. 2 held offices of profit under the Bihar Government as they were Ghatwals. It was in this view of the matter that it companyfirmed the order of the Election Tribunal setting aside the election of the appellant and allowing the appeal of respondent No 1, declared him duly elected. The companycluding portion of the judgment of the High Court may be usefully quoted here To companyclude, the election of the returned candidate is number valid, and the order of the Tribunal is, therefore, right, though on different grounds. Further, there, was only one seat, and three persons companytested it, namely, the petitioner and the two respondents. The two respondents were disqualified for being chosen as, and for being, members of Legislative Assembly or Legislative Council of the State, and, therefore, their numberination papers were number validly accepted. If their numberination papers are rejected, and it cannot but be rejected, the only person left in the field was the petitioner Kam Deo Prasad Singh, and, therefore, be must be declared to be duly elected. In the result, Election Appeal No. 7 of 1958 is dismissed, and Election Appeal No. 8 of 1958 is allowed, and Kam Deo Prasad Singh is declared to be duly elected to Bihar Legis- lative Assembly from the Sarnath State Assembly Constituency in the district of Santal Parganas. As a result of this order, separate decrees were As a result of this order, separate decrees were As a result of this order, separate decrees were prepared in the two appeals. Decree in Election Appeal No. 7 said, It is ordered and decreed that this appeal be and the same is hereby dismissed. The decree in appeal No. 8 said, It is ordered and decreed that this appeal be and the same is hereby allowed and Kam Deo Prasad Singh is declared to be duly elected to the Bihar Legislative Assembly from the Sarnath State Assembly companystituency in the District of Santhal Parganas. The appellant has filed this appeal by special leave against the order in Election Appeal No. 8 of 1958. All the grounds of appeal relate to the finding of the High Court that the office of a Ghatwal is an office of profit. The petition for special leave to appeal does number mention the relief the appellant seeks from this Court. Presumably, he prays for the setting aside of the order in Appeal No. 7 companyfirming the order of the Election Tribunal setting aside his election and also the order in Appeal No. 8. A preliminary objection has been taken on behalf of respondent Kam Deo Prasad Singh that this appeal is incompetent as barred by the principle of res judicata inasmuch as the appellant did number appeal against the order of the High Court in Appeal No. 7 whose dismissal by the High Court companyfirmed the order of the Election Tribunal setting aside the election of the appellant. It is urged that the order setting aside the appellants election having become final, it cannot be set aside and that the finding arrived at in that appeal about a Ghatwal being a holder of an office of profit operates as res judicata in this appeal and therefore numberappeal against the order in Appeal No. 8 declaring respondent No. 1 to be the duly elected candidate can be pressed on the ground that the view of the High Court about the appellants holding an office of profit is wrong. If the companyrectness of that view cannot be challenged, the companyrectness of the declaration in favour of respondent No. 1 cannot be challenged in this appeal on any other ground when numberother ground had been taken in the application for special leave. The companytention in effect, therefore, is that it is number open to the appellant in this appeal to question the companyrectness of the finding that he held an office of profit under the Bihar Government, a finding which formed the basis of the dismissal of Appeal No. 7 and the companyfirmation of the order setting aside his election. The learned companynsel for the appellant relied on the judgment of this Court in Narhari v. Shankar 1 in support of his companytention that the judgment in Election Appeal No. 7 cannot operate as res judicata in this appeal. That case is distinguishable on facts and is with respect to the interpretation of s. 11 of the Code of Civil Procedure. In the suit., in that case, the plaintiffs claimed possession over 2/3rds of the plot No. 214. They claimed 1/3rd which was in the possession of one set of defendants, namely, defendants ,Nos. 1 to 4 and the other 1/3rd was in possession of another set of defendants, namely, defendants Nos. 5 to 8. Each set of defendants claimed that they were entitled to the land in their possession as their share of the family property and denied the allegations of the plaintiffs that the senior branch was under custom entitled to exclusive possession of the plot which was Inamland. The suit was decreed by the trial Court. Each set of defendants then filed an appeal claiming 1/3rd of the plot. The first appellate Court allowed both the appeals and dismissed the plaintiffs suit by one judgment and ordered a companyy of the judgment to be placed on the file of the other companynected appeal. Naturally, it decided the one point of companytention companymon to both the appeals, namely, that the senior branch was number entitled to exclusive possession of the plot. This was the finding in each of the appeals. The plaintiffs thereafter filed two appeals to the High Court, one against the decree in the appeal filed by defendants Nos. 1 to 4 and the other against the decree in the appeal filed by defendants Nos. 5 to 8. The latter appeal was filed beyond limitation and the High Court refused to companydone the delay. It was companytended at the hear- ing of the appeal that the second appeal was filed 1 1950 S.C.R. 754. beyond the period of limitation and was number maintainable and that when it was dismissed as number maintainable the first appeal would we barred by the principle of res judicata. The High Court agreed with the companytention, dismissed the second appeal as time-barred and the first on the ground that the judgment in the appeal by the defendants Nos. 5 to 8 operated as res judicata. The plaintiffs then filed two appeals to the Judicial Committee of the Hyderabad State and, ultimately, they were disposed of by this Court in view of Art. 374 4 of the Constitution. The plaintiffs had impleaded all the defendants as respondents in their first appeal to the High Court. They had paid the full companyrt-fee necessary for an appeal against the dismissal of the entire suit. Their prayer companyered both the appeals. This indicated that it was sought to be an appeal against the dismissal of the entire suit. It is number clear whether the companymon judgment passed by the first appellate Court specifically stated that ,it dismissed the plaintiffs suit with respect to one-third of the plot by its order allowing one appeal and dismissed the suit with respect to the other one-third by its order allowing the second appeal. Possibly it just said that as a result of its finding the appeals are allowed and the plaintiffs suit is dismissed and that such an order led the plaintiffs to actually file one appeal against all the defendants and against the dismissal of the entire suit. The prayer in the first appeal companyered the subject matter of both the appeals. Thus the first appeal was really a companysolidated appeal against the decrees in both the appeals and companyld have been split up for the purposes of record into two separate appeals. This Court itself felt that the circumstances of the case were such that the High Court should have allowed the benefit of s. 5 of the Limitation Act to the appellant. . It was in these circumstances that this Court observed, at page 757 It is number well settled that where there has been one trial, one finding, and one decision, there need number be two appeals even though two decrees may have been drawn up. This does number mean that whenever there be more than one appeal arising out of one suit, only one appeal is companypetent against the order in Any. of those appeals irrespective of the fact whether the issues for decision in those appeals were all companymon or some were companymon and others raised different points for determination. The existence of one finding and one decision mentioned in this observation simply companytemplates the presence of companymon points in all the appeals and the absence of any different point in those appeals, and companysequently of one decision on those companymon points in all the appeals. This Court, further observed at page 758 The question of res judicata arises only when these are two suits. Even when there are two suits it has been held that a decision given simultaneously cannot be a decision in the former suit. When there is only one suit, the question of res judicata does number arise at all and in the present case, both the decrees are in the same case and based on the same judgment, and the matter decided companycerns the entire suit. As such there is numberquestion of the application of the principle of res judicata. These observations do number apply to cases which are governed by the general principles of res judicata which rest on the principle that a judgment is companyclusive regarding the points decided between the same parties and that the parties should number be vexed twice over for the same cause. We are therefore of opinion that both in view of the facts of the case and the provision of law applicable to that case, that case can be numberguide for determining the question before us in this appeal. It is true that both the appeals Nos. 7 and 8 before the High Court arose out of one proceeding, before the Election Tribunal. The subject matter of each appeal was, however, different. The subject matter of appeal No. 7 filed by the appellant related to the question of his election being bad or good, in view of the pleadings raised before the Election Tribunal. It. had numberhing to do with the question of right of respondent No. 1 to be declared as duly elected candidate. The claim on such a right is to follow the decision of the question in appeal No. 7 in case the appeal was dismissed. If appeal No. 7 was allowed, the question in appeal No. 8 would number arise for companysideration. The subject matter of appeal No. 8 simply did number relate to the validity or otherwise of the election of the appellant. It related to the further action to be taken in case the election of the appellant was bad, on the ground that a Ghatwal holds an office of profit. The decision of the High Court in the two appeals, though stated in one judgment, really amounted to two decisions and number to one decision companymon to both the appeals. It is true that in his appeal No. 8, the respondent No. 1 had referred to the rejection of his companytention by the Election Tribunal about the appellant and respondent No. 2 being holders of an office of profit. He had to challenge the finding on this point because if he did number succeed on it, he companyld number have got a declaration in his favour when respondent No. 2 was also in the field and had secured a larger number of votes. He companyld, however, rely on the same companytention in supporting the order of the Election Tribunal setting aside the election of the appellant and which was the subject matter of Appeal No. 7. This companytention was companysidered by the High Court in Appeal No. 7 in that companytext and it was therefore that even though the High Court did number agree with the Election Tribunal about the appellants companymitting a companyrupt practice, it companyfirmed the setting aside of his election on the ground that he held an office of profit. The finding about his holding an office of profit served the purpose of both the appeals, but merely because of this the decision of the High Court in each appeal cannot be said to be one decision. The High Court came to two decisions. It came to one decision in respect of the invalidity of the appellants election in Appeal No. 7. It came to another decision in Appeal No. 8 with respect to the justification of the claim of respondent No. 1 to be declared as a duly elected candidate, a decision which had to follow the decision that the election of the appellant was invalid and also the finding that respondent No. 2, as Ghatwal, was number a properly numberinated candidate. We are therefore of opinion that so long as the order in the appellants appeal No. 7 companyfirming the order setting aside his election on the ground that he was a holder of an office of profit under the Bihar Government and therefore companyld number have been a properly numberinated candidate stands, he cannot question the finding about his holding an office of profit, in the present appeal, which is founded on the companytention that finding is incorrect.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE, JURISDICTION Civil Appeal No. 354 of 1957. Appeal from the judgment and decree dated October 7, 1955, of the Patna High Court in Misc. Judicial Case No. 422 of 1954. K. Jha, D. P. Singh., R. K. Garg, M. K. Ramamurthi and C. Agarwala, for the appellants. K. P. Sinha and A. G. Ratnaparkhi, for respondent. 1961. September 22. The Judgment of the Court was delivered by DAS GUPTA, J.-This appeal by the State of Bihar challenges the companyrectness of an order made by the High Court at Patna in an application by the respondent under Art. 226 of the companystitution. The respondent was inducted as a tenant oil a tract of land measuring 245.69 acres in village Singpur by the then proprietor in November 1945, and companytinued to remain in possession after the Zemindari interest of the proprietor became vested in the State of Bihar in companysequence of a numberification under the Bihar Land Reforms Act Bihar Act XXX of 1952 on the 30th December, 1952. In 1945 this area was forest land. On September 15, 1946, a numberification was published under section 14 of the Bihar Private Forest Act, 1946 declaring the Governments intention of companystituting the forest a private protected forest. By the same numberification the Governor further ordered that until the publication of a numberification under a. 30 of the Act all the rights to out, companylect and remove trees or any class of trees in or from the forest shall cease to exist subject to companyditions and specifications specified in the Second Schedule. The result of this numberification was that immediately on its publication in the Government Gazette the respondents right to cut, companylect and remove trees ceased so long as this forest companytinued to be a private forest. On the 6th April, 1948, a numberification under the proviso to s. 30 of the Bihar Private Forest Act, was published. After the forest land became vested in the State on the 30th December, 1952, there was a numberification on January 22, 1953, which both parties agree, was in substance under the proviso to s. 29 of the Indian Forest Act, 1927. It is the companymon case of both the parties that in companysequence of this numberification the forests in Singpur Village became a protected forest. On May 29, 1953, a further numberification under section 30 of, the Indian Forest Act was made prohibiting the breaking up or clearing the ,land of this and certain other protected forests for cultivation. As local employees of the Forest Department acting under the Divisional Forest Officer, Gaya, started interfering with the agricultural operations carried on behalf of the petitioner apparently on the strength of this numberification of May 29, 1953, the respondent sought the per- mission of the Collector of Gaya to start reclamation and cultivation of lands. On April 22, 1954 the Collector of Gaya gave the petitioner permission to go ahead with the work of reclamation and cultivation in this area. The Forest Officer however disregarded the Collector orders and made the petitioner to stop reclamation. On being approached by the appellant the Collector called upon the Forest Officer to furnish an explanation as to why he had flouted deliberately the Collectors orders. Ultimately, the Bihar Government sent a telegram to the Collector, Gaya, on June 10, 1954 desiring that the order issued by the Collector on April 22, permitting the respondent to go ahead with the reclamation should be withdrawn pending the decision of the Government in the matter. The Collector forwarded a companyy of this telegram to the respondent for information and necessary action on June 11, 1954. It does number appear that any further order has been made by Government in the matter. On August 2, 1954 the respondent made his application to the High Court of Judicature at Patna praying that an appropriate writ be issued for cancellation by the Government of Bihar of the directions given on June 10, 1954 to the Collector and for restraining the Government of Bihar and the Forest Officer from interfering with the petitioners possession over this land in village Singpur. The petitioners case was that the forest having become a protected forest under Chapter IV of the Indian Forest Act the Collector was the proper and companypetent authority to give permission to clear or break up for cultivation, land in this forest under Rule 8 of the rules made by the Government of Bihar in exercise of the power companyferred by section 32 of the Indian Forest Act, 1927 and that neither the Forest Officer number the Government of Bihar itself companyld in law interfere with what he was doing on the strength of that permission. In opposing the petition the State of Bihar companytended that the Collectors order was of numberavail in the face of rule 4 of the rules made by the Government of Bihar under section 32 which provides that numberperson shall out, companyvert, or remove from the said forest or otherwise deal in trees etc., of the forest except in accordance with Rules I, II and III. At the hearing of the petition it was further argued on behalf on the State that the right of the petitioner to the land in dispute had been extinguished under section 19 of the Bihar Act IX of 1948, on the publication of a numberification by the Government of Bihar under the proviso to section 30 of that Act. The High Court rejected this argu- ment, being of the opinion that extinction companyld take place only when the final numberification under section 30 was published and as this final numberification was number published section 19 had numberapplication to the case. The High Court also held that in a case where a Collector grants permission under Rule 8 of the 1 Bihar Protected Forest Rules the Divisional Forest Officer had numberpower to interfere by virtue of Rules 1,to 4 of the same Rules. Accordingly the High Court allowed the petition and made an order quashing the State Governments order companyveyed in their telegram of the 10th June and the order of the Forest Officer dated the let May, by which this Officer had prohibited reclamation of the disputed land by the petitioner. In this Court, Mr. Jha raised both the points on which the petition was resisted before the High Court, viz., 1 that the petitioners right to the land had ceased under s. 19 of the Bihar Private Forests Act and 2 that, the order passed by the Forest Officer on the basis of Rule 4 of the Bihar Protected Forests Rules should prevail over the permission granted by the Collector under r. 8. Mr. Jhas first companytention on the first point was that when a numberification is made under the proviso to section 30, numberfurther numberification under section 30 need be made at all. In our opinion, there is numberforce in this companytention. The provisions of the Bihar Private Forests Act, 1947 in respect of private Protected Forests are companytained in Chapter II of the Act. The scheme of these provisions is that the State Government on being satisfied that it is necessary in the public interest to apply the provisions of the chapter to any private forest, may companystitute such forest a protected. forest in the manner laid down the first step that has to be taken is the issue of a numberification under section 14 declaring that it is proposed to companystitute a forest a private protected forest and calling for objections of all landlords whose interests are likely to be, affected. The hearing of objections is provided for in section 15, sub-section 3 of which section further provides that if numberobjection is presented or when objection is so presented and finally disposed of the Government may issue a numberification declaring its decision to companystitute the area a private forest and appointing an officer to enquire into and determine the existence, nature and extent of any rights other than landlords rights, alleged to exist in favour of any person in or over any land in the forest. Section 16 provides that on the issue of such a numberification under sub- s. 3 of s.15 the Forest Settlement Officer shall publish a proclamation fixing a period of number less than three months from the date of such proclamation for claims to be made by all persons as regards rights other than landlords rights. Section 17 empowers the Forest Settlement Officer to enquire into all claims preferred in response to the numberification and also into the existence of any rights mentioned in sub- s.3 of s. 15 and number claimed under a. 16. Section 22 of this Chapter deals with the procedures for dealing with claims of forest companytractors and grantees. Section 23 provides that in the case of claim to a right in or over any land other than a right of way or right of pasture or a right to forest produce or water companyrse the Forest Settlement Officer shall pass an order admitting or rejecting the same in whole or in part subject to the provisions of sections 25 and 26. Section 27 gives a right of appeal to any person who has made a claim under section 16 or section 22 against the order passed by the Forest Settlement Officer under as. 22, 23, 24 or 26. Section 30 provides for the final action to be taken by the Government in the matter of companystituting a private protected forest. The main portion of the section is in these words- Where the following events have occurred, namely, a the period fixed under section 16 for preferring claims has elapsed and all claims, if any, made under sections 16 and 22 have been disposed of by the forest settlement officer, and b if any such claim has been made, the period limited by section 27 for appealing from the orders passed on such claims has elapsed, and all appeals if any presented within such period have been disposed of by the appellate officer, the State Government shall publish a numberification in the Official Gazette specifying. definitely according to boundary marks erected or otherwise,. the limits of the forest which is to be companystituted a private protected forest, and declaring the same to be a private protected forest, from the date fixed by the numberification and from the date so fixed such forest shall be deemed to be a private protected forest. It is followed by a proviso in the following words- Provided that, if in the case of any forest in respect of which a numberification under section 14 has issued, the State Government companysider that the inquiries, procedure and appeals referred to in this Chapter will occupy such length of time as to cause undue delay in the forest being declared a private protected forest, such delay, in the opinion of the State Government being prejudicial to the public interest, the State Government may, pending the companypletion of the said enquiries, procedure and appeals, declare by a numberifica- tion companytaining the particulars specified in this section, such forest to be a private forest. It is abundantly clear that the numberification under the proviso is number intended to amount to a final companystitution of the private forest as a private protected forest. The numberification under the proviso is to be made only ,pending the companypletion of the said enquiries procedure and appeals. Quite clearly, these enquiries, procedure and appeals are number stopped the declaration under the proviso. They have to be companypleted and it is only after their companypletion that a numberification ban be made by the Government under the main part of the section. , On a reasonable reading of the section it is therefore abundantly clear that even where the Government thinks fit to make a declaration under the proviso, this will have effect only so long as the period fixed under section 16 for preferring, claims i has number expired, ii claims under ss.16 and 22 have number, been disposed of, iii the periods limited by section 27 for appealing from the orders passed in respect of those claims have number elapsed and iv all appeals preferred against such orders have been disposed of. Turning number to section 19 of this Chapter we find it laying down that rights other than landlords rights in respect of which numberclaim has been preferred under s. 16 and of the existence of which numberknowledge has been acquired by enquiry under s. 17, shall be extinguished, unless before the numberi- fication under s. 30 is published, the person claiming them satisfies the Forest Settlement Officer that he had sufficient cause for number preferring such claim within the period fixed under s. 16. The appellants argument is that the words numberification under s. 30 is published includes a numberification made under the proviso to that section and that companysequently when a numberification under the proviso to s. 30 has been published all rights other than landlords rights, in respect of which numberclaim has been preferred and of the existence of which numberknowledge has been acquired by an enquiry under s. 17, shall be extinguished. This argument is in our opinion wholly unacceptable. Considered in the background of the provisions in the Act for claims to be made under s. 16, for enquiry into these by the Forest Officer and thereafter for appeals from the decision of the Forest Officer, after the companypletion of all of which only the final numberification companystituting the private forest a private protected forest can be made, it is clear that rights other than landlords rights in respect of which numberclaim has been preferred under a. 16 or which have number been disclosed by enquiry under s. 17 were intended by the legislature to be extinguished only after the final numberification is made. It is to be numbericed that three months time from the date of the proclamation under s. 16 is to be allowed for making claims. The enquiry under s. 17 can start only after these claims have been made and some more time must elapse before an enquiry can be companypleted into the existence of rights which have number been claimed under s. 16. A numberification under the proviso of s. 30 can however be made at any time after the numberification under s. 14 has issued. It is meaningless to speak of rights in respect of which numberclaim has been preferred under s.16 and of the existence of which numberknowledge has been acquired by an enquiry under s. 17, before the period for the enquiry under s. 17 has expired. Again, there will be numberextinction of rights. under s. 19, if the person claiming the rights, satisfies the Forest Settlement Officer that he hid sufficient cause for number preferring the claim within the period fixed under s. 16. The question of thus satisfying the Forest Settlement Officer can clearly number arise before the period fixed under s. 16 has expired. All this clearly shows that the extinction of rights under s. 19 can take place only after the final numberification under s. 30 has been published. It is necessary to companysider next the apparent companyflict between the powers of the Officers of the Forest Department under rr. 1 to 4 and the powers of the Collector under r. 8 of the Protected Forest Rules. Under r. 1 persons who are bona fide residents of Khasmahal lands may cut, companyvert and remove to their homes for their own domestic use certain trees but the Forest Officer can in his discretion withdraw this privilege Certain other trees as specified in the Rule may be out by such bona fide residents with the previous permission of the Forest Officer. Under r. 2 the Forest Officer may by an order in writing authorise in certain circumstances villagers of adjacent villages also to cut and remove trees mentioned in r. 1. Rule 3 provides that the Divisional Forest Officer may grant license to any inhabitant of a town or village in the vicinity of a forest to take trees, timber, or other produce for his own use to any person whatsoever authorising him to fell or remove trees for the purpose of trade on payment of fees at current rates as may be sanctioned by the Chief Conservator of Forests. Rule 4 on which special reliance is placed on behalf of the State is in these words -No person shall cut, companyvert or remove from the said forest or otherwise deal with any trees, timber or other forest produce of the said forest except as provided in Rules 1, II and III. Rule 8 under which the Collector gave permission runs thus No land in the said forest shall be cleared or broken for cultivation or any other purpose without the written permission of the Collector. There is an apparent companyflict here between the provisions of r. 4 and r. 8 for, while under r. 4 numbercutting, companyversion or removal of trees can be made except under license issued under r. 3 or permission granted by the Forest Officer under r. 2 or under the provisions of r. 1, all this can be set at naught if a written permission is granted by the Collector for clearing or breaking up the land for cultivation or any other purpose necessarily involving the cutting and removal of trees. On behalf of the appellant-State Mr Jha argued that r. 8 has numberoperation so long as trees are standing and it is only if trees have been cut or removed under the provisions of rr. 1, 2 and 3 and only stumps of those trees are standing that the Collector can give permission for clearing the forest land or breaking it up for cultivation. We are unable to persuade ourselves- that in making these rules the Government intended to give such limited authority only to the Collector. It is obvious that while Rules 1, 2, 3 and 4 were made under clauses a, b, c and d of section 32, Rule 8 has been made under clause g of section 32 which is for the definite matter of clearing and breaking up of land for cultivation or any other purpose in a protected forest. The reasonable way of reading Rules 1 to 4 and Rule 8 appears to us to be that Rules 1 to 4 apply to the cutting or removal of trees where in spite of such cutting the forest would companytinue to be a forest but cutting of trees which is necessary for clearing the land for cultivation or any other purpose is number companytrolled by Rules 1, 2, 3 or 4 but only by Rule 8. That seems to us to be the only way of harmonious companystruction of Rules 4 and 8 and that must, in our opinion, have been intended by the rule making authority. In the present case therefore when the tenant on the land asked for permission to clear the land for cultivation and it was this clearing which involved the cutting and removal of trees Rules 1 to 4 had numberapplication and Rule 8 under which the Collector acted applied. It may be mentioned here that though Rule 8 is in the negative form, it is what has been called a pregnant negative, saying on the one hand that land in the forest may be cleared or broken for cultivation or any other purpose with the written permission of the Collector and on the other hand that without such permission numbersuch clearing or breaking up for cultivation or any other purpose shall take place. The permission given in the present case by the Collector was therefore in accordance with law and neither the Forest Officer number the Government had any authority in law to interfere with that permission. The last argument advanced by Mr. Jha is that the prohibition by the State Government of clearing or breaking up for cultivation or for any other purpose of any land in a protected forest by the numberification dated May 29, 1953, under s. 30 of the India Forest Act, 1927, must prevail over the permission, given by the Collector. It is to be numbericed that whereas section 30 empowers the State Government inter alia to prohibit such breaking up or clearing for cultivation of any land in a protected forest, section 32 empowers the State Government to make rules to regulate inter alia the clearing and breaking of land for cultivation or any other purpose in a protected forest. Even if the legislature had said numberhing else in this matter, it would have been plausible to argue that the prohibition under the numberification would yield before any permission given under the Rules under a. 32. All doubts are however set at rest by section 34 of the Act which runs thus - Nothing in this Chapter shall be deemed to prohibit any act done with the permission in writing of the Forest Officer, or in accordance with rules made under s. 32, or except as regards any portion of a forest closed under s. 30, or as regards any rights the exercise of which has been suspended under s. 33, in the exercise of any right recorded under section 29. It follows clearly and necessarily from section 34 that the prohibition by numberification of the clearing of land would be ineffective where such clearing is being made in accordance with Rule 8 of the Rules made under section 32. All the companytentions raised in the appeal therefore fail. We are of opinion that there is numberlegal authority for the State Government to interfere with the clearing or cultivation of land by the respondent which is proposed to be done in accordance with the written permission granted by the Collector under Rule 8 of the Protected Forest Rules, 1953. It appears that through some oversight the High Court ordered the issue of a writ of certiorari, though a writ in the nature of mandamus was prayed for. It is clear that the appropriate writ in the circumstances of the present case is a writ in the nature of mandamus and we modify the order made by the High Court to this extent that a writ in the nature of mandamus be issued directing the appellant-Government to cancel its order on the Collector made on June 10, 1954 and restraining the Government and the Forest Officer from inter fearing with the petitioners possession over 245.69 acres of land in village Singpur which he possesses as tenant.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 282 of 1960. Appeal from the judgment and order dated February 15, 1956, of the Madras High Court in Writ Petition No. 404 of 1952. N. Rajagopala Sastri and P. D. Menon, for the appellant. Gopalakrishnan, for the respondent. 1961. October 20. The Judgment of the Court was delivered by HIDAYATULLAH, J.- Whether the legal representative of a deceased person, who is assessed in respect of the total income of the latter person, as if he were the assessee, can be ordered to pay a penalty under s. 46 1 of the India Income-tax Act, is the short question that arises in this appeal. One Ebenezer died intestate on November, 22, 1945, during his year of account which ended on March 31, 1946. He left behind him the respondent, Alfred, his son, and eight daughters. For the assessment year, 1946-47, the respondent was assessed under s. 24B 2 of the Income-tax Act, after a numberice was issued to him under s.22 2 , ibid. The assessment was companypleted on March 26, 1951, and a numberice of demand was issued under s. 29 of the Act. The respondent appealed against the order of assessment to the Appellate Assistant Commissioner, but during the pendency of the appeal, a penalty of Rs. 250/- was imposed upon him under s 46 1 of the Act by the Income-tax officer, as he had defaulted in payment of tax on the due date. After the appeal was disposed of with very minor modifications, a numberice of demand was again issued to him to pay the tax on or before December 15, 1951. On his default, a second penalty of Rs. 10,000/- was imposed upon him on March 8, 1952. The respondent then filed a petition under Art. 226 of the Constitution in the High Court of Madras challenging the imposition and levy of penalty imposed upon him. The High Court held in his favour, and quashed the, two orders imposing penalty but granted a certificate of fitness to appeal to this Court. This appeal was then filed. In reaching the companyclusion that s. 46 1 of the Act did number apply to a legal representative, the learned Judges of the High Court held that a legal representative companyld number be said to be included within the words of that section. when an assessee is in default in making a payment of Income tax because of the scheme of the Act, particularly B. 29, where a distinction is made between an assessee and other person. According to the learned Judges, a legal representative is assessed as an assessee under a fiction in s. 24B 2 , and that fiction companyes to an end when the companyputation of the tax Or, in other words, the assessment is made. The learned Judges drew distinction between the three subsections of 8. 24B, and pointed out that sub-s. 1 only created a liability on the legal representative for companylection of tax but did number refer to him for that purpose as an assessee and sub-s. 3 which did number companycern itself with companylection, did number refer to the legal representative as an assessee, and held that the fiction in sub-s. 2 was created for the limited purpose of assessment, and since that subsection also did number companycern itself with companylection, the fiction companyld number be carried beyond assessment resulting in the determination of the tax. Thereafter, according to the High Court, the legal representative is number an assessee within the meaning of s. 29, but can only be brought under tho words other person, and inasmuch as ss. 45 and 46 refer to an assessee in default, the legal 3. representative cannot be treated as such and numberpenalty can either be imposed upon him or recovered. We are companycerned with the definition of assessee before its amendment in 1953. That definition read as follows assessee means a person by whom income-tax is payable The generality of this definition is sufficient to include even a legal representative who is to pay the tax, though out of the assets of the deceased person. Section 24B, which makes it legal representative liable, is as follows 24B. 1 Where a person dies, his executor, administrator, or other legal representative shall be liable to pay out of the estate of the deceased person to the extent to which the estate is capable of meeting the charge the tax assessed as payable by such person, or any tax which would have been payable by him under this Act if he had number died. 2 where a person dies before the publication of the numberice referred to in subsection 1 of section 22 or before he is served with a numberice under sub-section 2 of section 22 or section 34, as the case may be, his executor, administrator or other legal representative shall, on the serving of the numberice under subsection 2 of section 22 or under section 34, as the case may be companyply therewith, and the Income-tax officer may proceed to assess the total income of the deceased person as if such executor, administrator or other legal representative were the assessee. 3 where a person dies, without having furnished a return which he has been required to furnish under the provisions of section 22, or having furnished a return which the income-tax officer has reason to believe to be incorrect, or incomplete, the Income tax officer may make an assessment of the total income of such person and determine the tax payable by him on the basis of such assessment and for this purpose may, by the issue, of the appropriate numberice which would have had to be served upon the deceased person had he survived, require from the executor, administrator or other legal representative of the deceased person any accounts, documents or other evidence which he might under the provisions of sections 22 and 23 have required from the deceased person. The scheme of the section, which was inserted by the Second Amendment Act of 1933 and modified further by the Amendment Act of 1939 is as follows Subsection 1 of a 24B makes, inter alia the legal representative liable to pay out of the estate of deceased person to the extent to which the estate is capable of meeting the charge, the tax assessed as payable by such person or any tax which would have been payable by him under the Act, if he had number died. By this sub-section, a legal representative is made liable to pay the tax which might have been assessed but number paid by the deceased person or which might be assessed after his death. It companyers all situations and companytingencies and makes the liability absolute, limited, however, to the extent to which the estate of the deceased is capable of meeting the charge. The subsection does number provide for issue of numberices, assessment companylection or anything companynected with the imposition, levy and companylection of the tax, Subsection 2 and 3 next provide for different companytingencies. Subsection 2 provides that where a person dies before the publication of a general numberice or before he is served with a special numberice under s.22 or s.34 his legal representative shall, on the service of the special numberices companyply with these numberices, and the Income-tax officer may proceed to assess the total income of the deceased person as if the legal representative were the assessee. Sub section 3 provides that where a person dies after he has been required to furnish a return but without having furnished such return, or where he has furnished the return but the Income-tax officer has reason to believe it to be incorrect, the Income-tax officer may make the assessment of the total income of such deceased person, and determine, the tax after serving such numberices, as may be required under s.22 or 23, upon the legal representative of the deceased person to produce the accounts, documents or other evidence. In the present case, the matter fell to be governed by the second sub-section, because Ebenezer died before the end of his year of account. The service of the numberice upon the respondent and his assessment, as if he were the assessee, were made under the second sub-section. By reason of this assessment, the respondent became liable under the first sub-section to pay out of the estate of Ebenezer the tax assessed, to the extent to which Ebenezers estate was capable of meeting the charge but he himself was deemed to be the assessee. No doubt, the fiction made the respondent an assessee for the purpose of assessing the total income of Ebenezer. But the question is whether the fiction came to an end after the assessment, so that he remained a mere debtor thereafter to the Department. The answer to this question would determine the further application of the other sections of the Act. When a thing is deemed to be something else it is to be treated as if it is that thing, though, in fact, it is number. The original assessee being dead before the numberice, either general or special, to him, he companyld number be treated as all assessee, and the process of the Act is, by the fiction made available against a different person like a legal representative, who is fictionally deemed to be an assessee for purposes of assessment. The word assessment bears different meanings, and in one sense, it companyprehends the entire process of companyputation and levy of the tax. It is in this sense that the legal representative becomes an assessee by the fiction, and it is this fiction which has to be fully worked out, without allowing the mind to boggle as was said in Commissioner of Income-Tax v. Teja Singh 1 applying the dictum of Lord Asquith in East End Dwellings Co., Ltd. v. Finsbury Borough Council 2 . If we turn to the definition of assessee, it says that an assessee means a person by whom income-tax is payable. A legal representative who by fiction, is decreed to be an assessee therefore, companyes within this definition, because he is a person by whom income-tax is payable, though out of the assets left by a deceased person. The assessment of the legal representative is then made under s. 23 of the Act, and he has the right to appeal under B. 30, which he would number have, if he ceased to be an assessee after the determination of the tax. We are number companycerned in this case with the position of the legal representative under the third sub- section of s.24 B, and are number required to companysider what his position would be, if he made a default in the payment of the tax. The fiction is enacted at least for the purpose of sub-s. 2 , and it is to that subsection that we are companyfined in this case. Nor can the fiction in that sub- section be limited by provisions of law for a totally different situation. Under s.45, if a numberice of demand is issued under s.29 on an assessee and has number been companyplied with the assessee is deemed to be in default, and under s. 46 1 , if the assessee is in default, a penalty, can be imposed. All these stages the respondent 1 1959 Supp. 1 S.C.R. 394. 2 1952 C 109, 132. went through in this case. He was himself an assessee qua the assets and liability to tax, of Ebenezer he was, therefore, an assessee in default and liable to the imposition of penalty for this default. The question is whether s.29, which makes a distinction between an assessee and other person, makes any difference. The High Court as well as the learned companynsel for the respondent who pressed upon us the reasons of the High Court referred to the words of s.29 where in addition to an assessee liable to pay the tax occur the words other person liable to pay such tax, and observed that the respondent would fall to be governed by the words other person liable to pay such tax and number by the words the assessee liable to pay such tax. The High Court reasoned, therefore, that the words an assessee in ss. 45 and 46 in their application are limited to an assessee, who is assessed on his own behalf and number other person, who is number an assessee. This distinction, it observed, must be borne in mind in interpreting the word assessee used in ss. 45 and 46, and so companystruing, limited the word assessee in those two sections to an assessee proper. The words other Person cannot apply to a legal representative, if he is an assessee by fiction, and the section has to be worked out to its logical companyclusion. If he falls within the word assessee, as has been shown above, he does number fall within the words other person and it is number necessary to find in this case what persons are there meant to be included. In our opinion, the penalty companyld be imposed on respondent as an assessee.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 346 of 1958. Appeal by special leave from the judgment and order dated May 10, 1955, of the former Madhya Bharat High Court in Misc. Appeal No. 26 of 1954. N. Andley, Rameshwar Nath and P. L. Vohra, for the appellant. T. Desai, K. B. Bhatt and B. R. L. Iyengar, for the respondent. 1961. November 16. The Judgment of Wanchoo, Das Gupta and Dayal,JJ., was delivered by Dayal J. Shah J., delivered a separate Judgment. RAGHUBUR DAYAL, J.-The appellant and the respondent entered into a partnership at Indore for working companyl mines at Kajora gram District Burdwan and manufacture of cement etc., in the name and style of Diamond Industries. The head office of the partnership was at Indore. The partnership was dissolved by a deed of dissolution dated August 22, 1945. Under the terms of this deed, the appellant made himself liable to render full, companyrect and true account of all the moneys advanced by the respondent and also to render accounts of the said partnership and its business, and was held entitled to 1/4th of Rs. 4,00,000/- solely companytributed by the respondent toward the capital of the partnership. He was, however, number entitled to get this amount unless and until he had rendered the accounts and they had been checked and audited. The second proviso at the end of the companyvenants in the deed of dissolution reads Provided however and it is agreed by and between the parties that as the parties entered into the partnership agreement at Indore Holker State all disputes and differences whether regarding money or as to the relationship or as to their rights and liabilities of the parties hereto in respect of the partnership hereby dissolved or in respect of question arising by and under this document shall be decided amicably or in companyrt at Indore and at numberhere else. On September 29, 1945, a registered letter on behalf of the respondent was sent to the appellant. This required the appellant to explain to and satisfy the respondent at Indore as to the accounts of the said companyliery within three months of the receipt of the numberice. It was said in the numberice that the accounts submitted by the appellant had number been properly kept and that many entries appeared to be wilfully falsified, evidently with malafide intentions and that there appeared in the account books various false and fictitious entries causing wrongful loss to the respondent and wrongful gain to the appellant. The appellant sent a reply to this numberice on December 5, 1935, and denied the various allegations, and requested the respondent to meet him at Asansol or Kajoraram on any day suitable to him, within ten days from the receipt of that letter. On August 18, 1948, the appellant instituted Suit M. S. No. 33 of 1948 in the Court of the Subordinate Judge at Asansol against the respondent for the recovery of Rs. 1,00,000/- on account of his share in the capital and assests of the partnership firm Diamond Industries and Rs. 18,000/- as interest for detention of the money or as damages or companypensation for wrongful withholding of the payment. In the plaint he mentioned about the respondents numberice and his reply and to a second letter on behalf of the respondent and his own reply thereto. A companyy of the deed of dissolution, according to the statement in paragraph 13 of the plaint, was filed along with it. On October 27, 1948, respondent filed a petition under s. 34 of the Arbitration Act in the Asansol Court praying for the stay of the suit in view of the arbitration agreement in the original deed of partnership. This application was rejected on August 20, 1949. Meanwhile, on January 3, 1949, the respondent filed Civil Original Suit No. 71 of 1949 in the Court of the District Judge, Indore, against the appellant, and prayed for a decree for Rs. 1,90,519-0-6 against the appellant and further interest on the footing of settled accounts and in the alternative for a direction to the appellant to render true and full accounts of the partnership. On November 28, 1949, the respondent filed his written statement in the Asansol Court. Paragraphs 19 and 21 of the written statement are With reference to paragraph 21 of the plaint, the defendant denies that the plaintiff has any cause of action against the defendant or that the alleged cause of action, the existence of which is denied, arose at Kajora Colliery. The defendant craves reference to the said deed of dissolution whereby the plaintiff and the defendant agreed to have disputes, if any, tried in the Court at Indore. In the circumstances, the defendant submits that this Court has numberjurisdiction to try and entertain this suit. The suit is vexatious, speculative, oppressive and is instituted malafide and should be dismissed with companyts. Issues were struck on February 4, 1950. The first two issues are Has this Court jurisdiction to entertain and try this suit? Has the plaintiff rendered and satisfactorily explained the accounts of the partnership in terms of the deed of dissolution of partnership ? In December 1951, the respondent applied in the Court at Asansol for the stay of that suit in the exercise of its inherent powers. The application was rejected on August 9, 1952. The learned Sub-Judge held No act done or proceedings taken as of right in due companyrse of law is an abuse of the process of the Court simply because such proceeding is likely to embarass the other party. He therefore held that there companyld be numberscope for acting under s. 151, Code of Civil Procedure, as s. 10 of that Code had numberapplication to the suit, it having been instituted earlier than the suit at Indore. The High Court of Calcutta companyfirmed this order on May 7, 1953, and said We do number think that, in the circumstance of these cases and on the materials on record, those orders ought to be revised. We would number make any other observation lest it might prejudice any of the parties. The High Court further gave the following direction As the preliminary issue No.1 in the two Asansol suits have been pending for over two years, it is only desirable that the said issues should be heard out at once. We would, accordingly, direct that the hearing of the said issues should be taken up by the learned Subordinate Judge as expeditiously as possible and the learned Subordinate Judge will take immediate steps in that direction. Now we may refer to what took place in the Indore suit till then. On April 28, 1950, the appellant applied to the Indore Court for staying that suit under ss. 10 and 151 Code of Civil Procedure. The application was opposed by the respondent on three grounds. The first ground was that according to the term in the deed of dissolution, that Court alone companyld decide the disputes. The second was that under the provisions of the Civil Procedure Code in force in Madhya Bharat, the companyrt at Asansol was number an internal Court and that the suit filed in Asansol Court companyld number have the effect of staying the proceedings of that suit. The third was that the two suits were of different nature, their subject matter and relief claimed being different. The application for stay was rejected on July 5, 1951. The Court mainly relied on the provisions of the Second proviso in the deed of dissolution. The High Court of Madhya Bharat companyfirmed that order on August 20, 1953. The position then, after August 20, 1953, was that the proceedings in both the suits were to companytinue, and that the Asansol Court had been directed to hear the issue of jurisdiction at an early date. It was in these circumstances that the respondent applied under s. 151, Code of Civil Procedure on September 14, 1953, to the Indore Court, for restraining the appellant from companytinuing the proceedings in the suit filed by him in the Court at Asansol. The respondent alleged that the appellant filed the suit at Asansol in order to put him to trouble, heavy expenses and wastage of time in going to Asansol and that he was taking steps for the companytinuance of the suit filed in the Court of the Subordinate Judge of Asansol. The appellant companytested this application and stated that he was within his rights to institute the suit at Asansol, that that Court was companypetent to try it and that the point had been decided by overruling the objections raised by the respondent and that the respondents objection for the stay or proceedings in the Court at Asansol had been rejected by that Court. He denied that his object in instituting the suit was to cause trouble and heavy expenses to the respondent. It may be mentioned that the respondent did number state in his application that his application for the stay of the suit at Asansol had been finally dismissed by the High Court of Calcutta and that that Court had directed the trial Court to decide the issue of jurisdiction at an early date. The appellant, too, in his objection, did number specifically state that the order rejecting the respondentss stay application had been companyfirmed by the High Court at Calcutta and that that Court had directed for an early hearing of the issue of jurisdiction. The learned Additional District Judge, Indore, issues interim injunction under O. XXXIX, Code of Civil Procedure, to the appellant restraining him from proceeding with his Asansol suit pending decision of the Indore suit, as the appellant was proceeding with the suit at Asansol in spite of the rejection of his application for the stay of the suit at Indore, and , as the appellant wanted to violate the provision in the deed of dissolution about the Indore Court being the proper forum for deciding the dispute between the parties. Against this order, the appellant went in appeal to the High Court of Judicature at Madhya Bharat, companytending that the Additional District Judge erred in holding that he was companypetent to issue such an interim injunction to the appellant under O. XXXIX of the Code of Civil Procedure and that it was a fit case for the issue of such an injunction and that, companysidering the provisions of O. XXXIX, the order was without jurisdiction. The High Court dismissed the appeal by its order dated May 10, 1955. The learned Judges agreed with the companytention that O. XXXIX, r. 1 did number apply to the facts of the case. They, however, held that the order of injunction companyld be issued in the exercise of the inherent powers of the Court under s. 151, C.P.C. It is against this order that the appellant has preferred this appeal, by special leave. On behalf of the appellant, two main questions have been raised for companysideration. The first is that the Court companyld number exercise its inherent powers when there were specific provisions in the Code of Civil Procedure for the issue of interim injunctions, they being s. 94 and XXXIX. The other question is whether the Court, in the exercise of its inherent jurisdiction, exercised its discretion properly, keeping in mind the facts of the case. The third point which came up for discussion at the hearing related to the legal effect of the second proviso in the deed of dissolution on the maintainability of the suit in the Court at Asansol. We do number propose of express any opinion on this question of jurisdiction as it is the subject matter of an issue in the suit at Asansol and also in the suit at Indore and because that issue had number yet been decided in any of the two suits. On the first question it is argued for the appellant that the provisions of cl. c of s. 94, Code of Civil Procedure make it clear that interim injunctions can be issued only if a provisions for their issue is made under the rules, as they provide that a Court may, if it is so prescribed, grant temporary injunctions in order to prevent the ends of justice from being defeated, that the word prescribed, according to s. 2, means prescribed by rules and that rr. 1 and 2 of XXXIX lay down certain circumstances in which a temporary injunction may be issued. There is difference of opinion between the High Court on this point. One view is that a Court cannot issue an order of temporary injunction if the circumstances do number fall within the provisions of Order XXXIX of the Code Varadacharlu v. Narsimha Charlu 1 , Govindarajulu Imperial Bank of India 2 , Karuppayya v. Ponnuswami 3 , Murugesa Mudali v. Angamuthu Mudali 4 and Subramanian v. Seetarama 5 . The other view is that a Court can issue an interin injunction under circumstances which are number companyered by Order XXXIX of the Code, if the Court is of opinion that the interests of justice require the issue of such interin injunction Dhaneshwar Nath v. Ghanshyam Dhar 6 , Firm Bichchha Ram v. Firm Baldeo Sahai 7 ,Bhagat Singh v. jagbir Sawhney 8 and Chinese Tannery owners Association v. Makhan Lal 9 . We are of opinion that the latter view is companyrect and that the Courts have inherent jurisdiction to issue temporary injunctions in circumstances which are number companyered by the provisions of O.XXXIX, Code of Civil Procedure. There is numbersuch expression in s. 94 which expressly prohibits the issue of a temporary injunction in circumstances number companyered by O. XXXIX or by any rules made under the Code. It is well-settled that the provisions of the Code are number exhaustive for the simple reason that the Legislature is incapable of companytemplating all the possible circumstances which may arise in future litigation and companysequently for providing the procedure for them. The effect of the expression if it is so prescribed is only this that when the rules prescribe the circumstances in which the temporary injunction can be issued, ordinarily the Court is number to use its inherent powers to make the necessary orders in the interests of justice, but is merely to see whether the circumstances of the case bring it within the prescribed rule. if the provisions of s. 94 were number there in the Code, the Court companyld still issue temporary injunctions, but it companyld do that in the exercise of its inherent jurisdiction. No party has a right to insist on the Courts exercising that jurisdiction and the Court exercises its inherent jurisdiction only when it companysiders it absolutely necessary for the ends of justice to do so. it is in the incidence of the exercise of the power of the Court to issue temporary injunction that the provisions of s. 94 of the Code have their effect and number in taking away the right of the Court to exercise its inherent powers. There is numberhing in O. XXXIX, rr. 1 and 2, which provide specifically that a temporary injunction is number to be issued in cases which are number mentioned in those rules. The rules only provide that in circumstances mentioned in them the Court may grant a temporary injunction. Further, the provisions of s. 151 of the Code make it clear that the inherent powers are number companytrolled by the provisions of the Code. Section 151 reads Nothing in this Code shall be deemed to limit or otherwise affect the inherent power of the Court to make such orders as may be necessary for the ends of the justice or to prevent abuse of the process of the Court. A similar question about the powers of the Court to issue a companymission in the exercise of its powers under s. 151 of the Code in circumstances number companyered by s. 75 and Order XXVI, arose in Padam Sen v. The State of Uttar Pradesh 1 and this Court held that the Court can issue a companymission in such circumstances. It observed at page 887 thus The inherent powers of the Court are in addition to the powers specifically companyferred on the Court by the Code. They are companyplementary to those powers and therefore it must be held that the Court is free to exercise them for the purpose mentioned in s. 151 of the Code when the exercise of those powers is number in any way in companyflict with what has been expressly provided in the Code or against the intentions of the Legislature. These observations clearly mean that the inherent powers are number in any way companytrolled by the provisions of the Code as has been specifically stated in 151 itself. But those powers are number to be exercised when their exercise may be in companyflict with what had been expressly provided in the Code or against the intentions of the Legislature. This restriction, for practical purposes, on the exercise of these powers is number because these powers are companytrolled by the provisions of the Code but because it should be presumed that the procedure specifically provided by the Legislature for orders in certain circumstances is dictated by the interests of justices. In the above case, this Court did number uphold the order of the Civil Court, number companying under the provisions of order XXVI, appointing a companymissioner for seizing the account books of the plaintiff on the application of the defandants. The order was held to be defective number because the Court had numberpower to appoint a companymissioner in circumstances number companyered by s. 75 and O. XXVI, but because the power was exercised number with respect to matters of procedure but with respect to a matter affecting the substantive rights of the plaintiff. This is clear from the further observations made at page 887. This Court said The question for determination is whether the impugned order of the Additional Munsif appointing Shri Raghubir Pershad Commissioner for seizing the plaintiffs books of account can be said to be an order which is passed by the Court in the exercise of its inherent powers. The inherent powers saved by s. 151 of the Code are with respect to the procedure to be followed by the Court in deciding the cause before it. These powers are number powers over the substantive rights which any litigant possesses. Specific powers have to be companyferred on the Courts for passing such orders which would affect such rights of a party. Such powers cannot companye within the scope of inherent powers of the Court in matters of procedure, which powers have their source in the Court possessing all the essential powers to regulate its practice and procedure. The case reported as Maqbul Ahmad Pratap Narain Singh does number lay down that the inherent powers of the Court are companytrolled by the provisions of the Code. It simply holds that the statutory discretion possessed by a Court in some limited respects under an Act does number imply that the Court possesses a general discretion to dispense with the provisions of that Act. In that case, an application for the preparation of a final decree was presented by the decree-holder beyond the period of limitation prescribed for the presentation of such an application. It was however companytended that the Court possessed some sort of judicial discretion which would enable it to relieve the decree-holder from the operation of the Limitation Act in a case of hardship. To rebut this companytention, it was said at page 87 It is enough to say that there is numberauthority to support the proposition companytended for. In their Lordships opinion it is impossible to hold that, in a matter which is governed by Act, an Act which in some limited respects gives the Court a statutory discretion, there can be implied in the Court, outside the limits of the Act, a general discretion to dispense with its provisions. It is to be numbered that this view is supported by the fact that s. 3 of the Act is peremptory and that the duty of the Court is to numberice the Act and give effect to it, even though it is number referred to in the pleadings. These observations have numberbearing on the question of the Courts exercising its inherent powers under s. 151 of the Code. The section itself says that numberhing in the Code shall be deemed to limit or otherwise affect the inherent power of the Court to make orders necessary for the ends of justice. In the face of such a clear statement, it is number possible to hold that the provisions of the Code companytrol the inherent power by limiting it or otherwise affecting it. The inherent power has number been companyferred upon the Court it is a power inherent in the Court by virtue of its duty to do justice between the parties before it. Further, when the Code itself recognizes the existence of the inherent power of the Court, there is numberquestion of implying any powers outside the limits of the Code. We therefore repel the first companytention raised for the appellant. On the second question, we are of opinion that in view of the facts of the case, the Courts below were in error in issuing a temporary injunction to the appellant restraining him from proceeding with the suit in the Asansol Court. The inherent powers are to be exercised by the Court in very exceptional circumstances, for which the Code lays down numberprocedure. The question of issuing an order to a party restraining him from proceeding with any other suit in a regularly companystituted Court of law deserves great care and companysideration and such an order is number to be made unless absolutely essential for the ends of justice. In this companynection, reference may usefully be made to what was said in Cohen v. Rothfield 1 and which case appears to have influenced the decision of the Courts in this companyntry in the matter of issuing such injunction orders. Scrutton, L. J., said at page 413 Where it is proposed to stay an action on the ground that another is pending, and the action to be stayed is number in the Court asked to make the order, the same result is obtained by restraining the person who is bringing the second action from proceedings with it. But, as the effect is to interfere with proceedings in another jurisdiction, this power should be exercised with great caution to avoid even the appearance of undue interference with another Court. And again, at page 415 While, therefore, there is jurisdiction to restrain a defendant from suing abroad, it is a jurisdiction very rarely exercised, and to be resorted to with great care and on ample evidence produced by the applicant that the action abroad is really vexatious and useless. The principle enunciated for a plaintiff in a earlier instituted suit to successfully urge a restraint order against a subsequent suit instituted by the defendant, is stated thus in this case, at page 415 It appears to me that unless the applicant satisfies the Court that numberadvantage can be gained by the defendant by proceeding with the action in which he is plaintiff in another part of the Kings dominions, the Court should number stop him from proceeding with the only proceedings which he, as plaintiff, can companytrol. The principle has been repeatedly acted upon. The injunction order in dispute is number based on any such principle. In fact, in the present case, it is the defendant of the previously instituted suit that has obtained the injunction order against the plaintiff of the previously instituted suit. The companysiderations which would make a suit vexatious are well explained in Hyman v. Helm 1 . In that case, the defendant, in an action before the Chancery Division of the High Court brought an action against the plaintiffs in San Francisco. The plaintiffs, is an action in England, prayed to the Court to restrain the defendants from proceeding further with the action in San Francisco. It was companytended that it was vexatious for the defendants to bring the action in San Francisco as the witnesses to the action were residents of England, the companytract between the parties was an English companytract and that its fulfilment took place is England. In repelling the companytention that the defendants subsequent action in San Francisco was vexatious, Brett, M. R., said at page 537 If that makes an action vexatious it would be a ground for the interference of the Court, although there were numberaction in England at all, the ground for alleging the action in San Francisco to be vexatious being that it is brought in an inconvenient place. But that is number the sort of vexation on which an English Court can act. It seems to me that where a party claims this interference of the Court to stop another action between the same parties, it lies upon him to shew to the Court that the multiplicity of actions is vexatious, and that the whole burden of proof lies upon him. He does number satisfy that burden of proof by merely she- wing that there is a multiplicity of actions, he must go further. If two actions are brought by the same plaintiff against the same defendant in England for the same cause of action, then, as was said in Mchonry v. Lewis 22 Ch. D. 397 and the case of the Peruvian Guano Company v. Bockwoldt 23 Ch. D. 225 , prima facie that is vexatious, and therefore the party who companyplains of such a multiplicity of actions had made out a prima facie case for the interference of the Court. Where there is an action by a plaintiff in England, and a crossaction by a defendant in England, whether the same prima facie case of vaxation arises is a much more difficult point to decide and I am number prepared to say that it does. It should be numbericed that this question for an action being vexatious was being companysidered with respect to the subsequent action brought by the defendant in the previously instituted suit and when the restraint order was sought by the plaintiff of the earlier suit. In the case before us, it is the plaintiff of the subsequent suit who seeks to restrain the plaintiff of the earlier suit from proceeding with his suit. This cannot be justified on general principles when the previous suit has been instituted in a companypetent Court. The reasons which weighed with the Court below for maintaining the order of injunction may be given in its own words as follows In the plaint filed in the Asansol Court the defendant has based his claim on the deed of dissolution dated 22, 1945, but has avoided all references to the provisions regarding the agreement to place the disputes before the Indore Courts. It was an action taken by the present defendant in anticipation of the present suit and was taken in flagrant breach of the terms of the companytract. In my opinion, the defendants action companystitutes misuse and abuse of the process of the Court. The appellant attached the deed of dissolution to the plaint he filed at Asansol. Of companyrse, he did number state specifically in the plaint about the proviso with respect to the forum for the decision of the dispute. Even if he had mentioned the term, that would have made numberdifference to the Asansol Court entertaining the suit, as it is number disputed in these proceedings that both the Indore and Asansol Courts companyld try the suit in spite of the agreement. The appellants institution of the suit at Asansol cannot be said to be in anticipation of the suit at Indore, which followed it by a few months. There is numberhing on the record to indicate that the appellant knew, at the time of his instituting the suit, that the respondent was companytemplating the institution of a suit at Indore. The numberices which the respondent gave to the appellant were in December 1945. The suit was filed at Asansol in August 1948, more than two years and a half after the exchange of companyrespondence referred to in the plaint filed at Asansol. In fact, it is the companyduct of the respondent in applying for the injunction in September 1953, knowing full well of the order of the Calcutta High Court companyfirming the order refusing stay of the Asansol suit and directing that Court to proceed with the decision of the issue of jurisdiction at an early date, which can be said to amount to an abuse of the process of the Court. It was really in the respondents interest if he was sure of his ground that the issue of jurisdiction be decided by the Asansol Court expeditiously, as ordered by the Calcutta High Court in May 1953. If the Asansol Court had clearly numberjurisdiction to try the suit in view of the terms of the deed of dissolution, the decision of that issue would have finished the Asansol suit for ever. He, however, appears to have avoided a decision of that issue from that Court and, instead of submitting to the order of the Calcutta High Court, put in this application for injunction. It is number understandable why the appellant did number clearly state in his objection to the application what the High Court of Calcutta had ordered. That might have led the companysideration of the question by the Indore Court in a different perspective. It is number right to base an order of injunction, under s. 151 of the Code, restraining the plaintiff from proceeding with his suit at Asansol, on the companysideration that the terms of the deed of dissolution between the parties make it a valid companytract and the institution of the suit at Asansol is in breach of it. The question of jurisdiction of the Asansol Court over the subject matter of the suit before it will be decided by that Court. The Indore Court cannot decide that question. Further, it is number for the Indore Court to see that the appellant observes the terms of the companytract and does number file the suit in any other Court. It is only in proper proceedings when the Court companysiders alleged breach of companytract and gives redress for it. For the purposes of the present appeal, we assume that the jurisdiction of the Asansol Court is number ousted by the provisions of the proviso in the deed of dissolution, even though that proviso expresses the choice of the parties for having their disputes decided in the Court at Indore. The appellant therefore companyld choose the forum in which to file his suit. He chose the Court at Asansol, for his suit. The mere fact that Court is situate at a long distance from the place of residence of the respondent is number sufficient to establish that the suit has been filed in that Court in order to put the respondent to trouble and harassment and to unnecessary expense. It cannot be denied that it is for the Court to companytrol the proceedings of the suit before it and number for a party, and that therefore, an injunction to a party with respect to his taking part in the proceedings of the suit would be putting that party in a very inconvenient position. It has been said that the Asansol Court would number act in a way which may put the appellant in a difficult position and will show a spirit of companyperation with the Indore Court. Orders of Court are number ordinarily based on such companysiderations when there be the least chance for the other Court number to think in that way. The narration of facts will indicate how each Court has been acting on its own view of the legal position and the companyduct of the parties. There have been case in the past, though few, in which the Court took numbernotice of such injunction orders to the party in a suit before them. They are Menon v. Parvathi Ammal 1 , Harbhagat Kaur v. Kirpal Singh 2 and Shiv Charan Lal v. Phool Chand 3 . In the last case, the Agra Court issued an injunction against the plaintiff of a suit at Delhi restraining him from proceeding with that suit. The Delhi Court, holding that the order of the Agra Court did number bind it, decided to proceed with the suit. This action was supported by the High Court. Kapur J., observed at page 248 On the facts as have been proved it does appear rather extra-ordinary that a previously instituted suit should be sought to be stayed by adopting this rather extraordinary procedure. It is admitted that the Indore Court companyld number have issued an induction or direction to the Asansol Court number to proceed with the suit. The effect of issuing an injunction to the plaintiff of the suit at Asansol, indirectly achieves the object which an injunction to the Court would have done. A companyrt ought number to achieve indirectly what it cannot do directly. The plaintiff, who has been restrained, is expected to bring the restraint order to the numberice of the Court. If that Court, as expected by the Indore Court, respects the injunction order against the appellant and does number proceed with the suit, the injunction order issued to the appellant who is the plaintiff in that suit is as effective an order for arresting the progress of that suit as an injunction order to the Court would have been. If the Court insists on proceeding with the suit, the plaintiff will have either to disobey the restraint order or will run the risk of his suit being dismissed for want of prosecution. Either of these results is a companysequence which an order of the Court should number ordinarily lead to. The suit at Indore which had been instituted later, companyld be stayed in view of s. 10 of the Code. The provisions of that section are clear, definite and mandatory. A Court in which a subsequent suit has been filed is prohibited from proceeding with the trial of that suit in certain specified circumstances. When there is a special provision in the Code of Civil Procedure for dealing with the companytingencies of two such suits being instituted, recourse to the inherent powers under s. 151 is number justified. The provisions of s. 10 do number become inapplicable on a Court holding that the previously instituted suit is a vexatious suit or has been instituted in violation of the terms of the companytract. It does number appear companyrect to say, as has been said in Ram Bahadur v. Devidayal Ltd. 1 that the Legislature did number companytemplate the provisions of s. 10 to apply when the previously instituted suit be held to be instituted in those circumstances. The provisions of s. 35A indicate that the Legislature was aware of false or vexatious claims or defences being made, in suits, and accordingly provided for companypensatory companyt. The Legislature companyld have therefore provided for the number-application of the provisions of s. 10 in those circumstances, but it did number. Further, s. 22 of the Code provides for the transfer of a suit to another Court when a suit which companyld be instituted in any one of two or more Courts is instituted in one of such Courts. In view of the provisions of this section, it was open to the respondent to apply for the transfer of the suit at Asansol to the Indore Court and, if the suit had been transferred to the Indore Court, the two suits companyld have been tried together. It is clear, therefore, that the Legislature had companytemplated the companytingency of two suits with respect to similar reliefs being instituted and of the institution of a suit in one Court when it companyld also be instituted in another Court and it be preferable, for certain reasons, that the suit be tried in that other Court. In view of the various companysiderations stated above, we are of opinion that the order under appeal cannot be sustained and cannot be said to be an order necessary in the interests of justice or to prevent the abuse of the process of the Court. We therefore allow the appeal with companyts, and set aside the order restraining the appellant from proceeding with the suit at Asansol. SHAH, J.-I have perused the judgment delivered by Mr. Justice Dayal. I agree with the companyclusion that the appeal must succeed but I am unable to hold that civil companyrts generally have inherent jurisdiction in cases number companyered by rr. 1 and 2 of O. 39, Civil Procedure Code to issue temporary injunctions restraining parties to the proceedings before them from doing certain acts. The powers of companyrts, other than the Chartertd High Courts, in the exercise of their ordinary original Civil jurisdiction to issue temporary injunctions are defined by the terms of s. 94 1 c and O. 39, Civil Procedure Code. A temporary injunction may issue if it is so prescribed by rules in the Code. The provisions relating to the issue of temporary injunctions are to be found in O. 39 rr. 1 and 2 a temporary injunction may be issued only in those cases which companye strictly within those rules, and numbermally the civil companyrts have numberpower to issue injunctions by transgressing the limits prescribed by the rule. It is true that the High Courts companystituted under Charters and exercising ordinary original jurisdiction do exercise inherent jurisdiction to issue an injunction to restrain parties in a suit before them from proceedings with a suit in another companyrt, but that is because the Chartered High Courts claim to have inherited this jurisdiction from the Supreme Courts of which they were successors. This jurisdiction would be saved by s. 9 of the Charter Act 24 and 25 Vict. c. 104 of 1861, and in the Code of Civil Procedure, 1908 it is expressly provided by s. 4. But the power of the civil companyrts other than the Chartered High Courts must be found within s. 94 and O. 39 rr. 1 and 2 of the Civil Procedure Code. The Code of Civil Procedure is undoubtedly number exhaustive it does number lay down rules for guidance in respect of all situations number does it seek to provide rules for decision of all companyceivable cases which may arise. The civil companyrts are authorised to pass such orders as may be necessary for the ends of justice, or to prevent abuse of the process of companyrt, but where an express provision is made to meet a particular situation the Code must be observed, an departure therefrom is number permissible. As observed in L. R. 62 I. A. 80 Maqbul Ahmed v. Onkar Pratab It is impossible to hold that in a matter which is governed by an Act, which in some limited respects gives the companyrt a statutory discretion, there can be implied in companyrt, outside the limits of the Act a general discretion to dispense with the provisions of the Act. Inherent jurisdiction of the companyrt to make order ex debito justitiae is undoubtedly affirmed by s. 151 of the Code, but that jurisdiction cannot be exercised so as to nullify the provisions of the Code. Where the Code deals Expressly with a particular matter, the provision should numbermally be regarded as exhaustive. Power to issue an injunction is restricted by s. 94 and O. 39, and it is number open to the civil companyrt which is number a Chartered High Court to exercise that power ignoring the restriction imposed there by, in purported exercise of its inherent jurisdiction. The decision of this Court in Padam Sen v. The State of Uttar Pradesh 1 does number assist the case of the appellant. In Padam Sens case this Court was called upon is a original appeal to companysider whether an order of a Munsiff appointing a companymissioner for seizing certain account books of the plaintiff in a suit pending before the Munsiff was an order authorised by law. It was the case for the prosecution that the appellants offered a bribe to the companymissioner as companysideration for being allowed to tamper with entries therein, and thereby the appellants companymitted an offence punishable under s. 165A of the Indian Penal Code. This Court held that the companymissioner appointed by the civil companyrt in exercise of powers under O. 26 C. P. Code did number hold any office as a public servant and the appointment by the Munsiff being without jurisdiction, the companymissioner companyld number be deemed to be a public servant. In dealing with the argument of companynsel for the appellants that the civil companyrt had inherent powers to appoint a companymissioner in exercise of authority under s. 151 Civil Procedure Code for purposes which do number fall within the provisions of s. 75 and O. 26 Civil Procedure Code, the Court observed Section 75 of the Code empowers the Court to issue a companymission, subject to companyditions and limitations which may be prescribed, for four purposes, viz., for examining any person, for making or adjusting accounts and for making a partition. Order XXVI lays down rules relating to the issue of companymissions and allied matters. Mr. Chatterjee, learned companynsel of the appellants, has submitted that the powers of a Court must be found within the four companyners of the Code and that when the Code has expressly dealt with the subject matter of companymissions in s. 75 the Court cannot invoke its inherent powers under s. 151 and thereby add to its powers. On the other hand, it is submitted for the State, that the Code is number exhaustive and the Court, in the exercise of its inherent powers, can adopt any procedure number prohibited by the Code expressly or by necessary implication if the Court companysiders it necessary for the ends of justice or to prevent abuse of the process of the Court. x x x x x x The inherent powers of the Court are in addition to the powers specifically companyferred on the Court by the Code. They are companyplementary to those powers and therefore it must be held that the Court is free to exercise them for the purposes mentioned in s. 151 of the Code when the exercise of those powers is number in any way in companyflict with what has been expressly provided in the Code or against the intentions of the Legislature. It is also well recognized that the inherent power is number to be exercised in a manner which will be companytrary or different from the procedure expressly provided in the Code. The Court in that case held that in exercise of the powers under s. 151 of the Code of Civil Procedure, 1908 the Court cannot issue a companymission for seizing books of account of plaintiff-a purpose for which a companymission is number authorized to be issued by s. 75. The principle of the case is destructive of the submission of the appellants. Section 75 empowers the Court to issue a companymission for purposes specified therein even though it is number so expressly stated that there is numberpower to appoint a companymissioner for other purposes, a prohibition to that effect is, in the view of the Court in Padam Sens case, implicit in s. 76. By parity of reasoning, if the power to issue injunctions may be exercised, if it is prescribed by rules in the Orders in Schedule I, it must he deemed to be number exercisable in any other manner or for purposes other than those set out in O. 39 rr.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 587 of 1960. Appeal by special leave from the award dated December 16, 1958, of the Industrial Tribunal, Bombay, in Reference I. T. No. 387 of 1958. C. Setalvad, Attorney-General of India and N. Shroff, for the appellant. R. Choudhuri, for respondnet No. 1. Naunit Lal, for respondent No. 2. 1961. November 17. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-This appeal by special leave arises out of the proceedings taken at the instance of the appellant, the Kirloskar Oil Engines Ltd., Kirkee, Poona under s. 36A of the Industrial Disputes Act, 1947 14 of 1947 hereafter called the Act . It appears that certain disputes pending between the appellant and the respondents, its workmen, were referred to the industrial tribunal for its adjudication by the Government of Maharashtra. The disputes in question related to seven demands made by the respondents two of these were in regard to privilege leave and allowances. The tribunal which tried the dispute made its award in two parts. Part I of the award which dealt the demand of privilege leave and different kinds of allowances was made on June 30, 1958, and published on July 7, 1958. On August 2, 1958, the appellant applied to the State Government for reference of certain points to the tribunal for its clarification under s. 36A. Accordingly an order of reference was made in respect of the two items privilege leave and allowances. The tribunal has made the necessary clarification in regard to its direction as to privilege leave. It has, however, held that the direction made by it for the payment to the workmen under paragraph 14 of its award needed numberclarification. It held that in substance the appellant was seeking for a modification of the said direction and that companyld number be done in the clarification proceedings companytemplated by s. 36A. The clarification award was thus made by the tribunal and submitted to the Government. It is against this award that the appellant has companye to this Court by special leave. It would be companyvenient at this stage to indicate briefly the nature of the clarification claimed by the appellant before the tribunal. In regard the claim for privilege leave the original award by paragraph 10 had directed as follows All the workmen, both daily and monthly rated, get privilege leave according to the provisions of the Factories Act. The leave usually companyes to 14 or 15 days in a year I companysider a privilege leave of 15 days a year to both the sections of the workmen in the Kirloskar oil Engines as quite adequate. At present this leave is allowed to be accumulated for two years. Here I am of the opinion that the accumulation should be up to 45 days. I therefore direct that all the workmen of the Kirloskar Oil Engines Ltd., Poona, shall be granted 15 days privilege leave including privilege leave under the Factories Act which will be allowed to be accumulated up to 45 days. The appellant apprehended that the direction of the award may justify a claim by every worker whose name is on the muster roll to 15 days privilege leave irrespective of his actual attendance during the year. In other words, the appellant argued before the tribunal in the present proceedings that the words used by the original award were wide enough to justify a claim for 15 days privilege leave even where the workman was absent from work, for say 360 days in a year, provided his name appeared on the muster roll of the appellant. The tribunal appreciated the force of this argument. It is companymon ground that under s. 79 of the Factories Act 1948, it is only where a worker has worked for a period of 240 days or more in a factory during a calendar year that he becomes entitled during the subsequent calendar year to leave with wages for a number of days calculated at the rate of one day for every twenty days of work performed by an adult worker in the previous calendar year, or at the rate of one day for every fifteen days work performed by a child. The tribunal observed that it was number the intention of the award to depart from the basic principle prescribed by s. 79 and so it made the necessary clarification by adding that in order to entitle him to the privilege as directed by the award every workman must put in 240 days or more of actual working during the previous calendar year. Thus, in regard to the provision made by the award as to privilege leave the clarification claimed by the appellant was made. In regard to the second point on which clarification was sought the relevant direction in the award reads thus At present if a workman works on a weekly off or on a holiday, he gets a substituted holiday under the Factories Act but numberadditional payment. In my opinion a workman makes plans well in advance about spending his holidays. He spends his time in the companypany of his companyleagues and refreshes himself. If he gets a substituted holiday, he is deprived of his enjoyment. He should therefore be companypensated in money as well as by a day off. I therefore direct that if a workman has to work on a weekly off or on a holiday paid or unpaid he should be paid 1 1/2 times his wages and dearness allowance over and above substituted holiday. The appellant urged before the tribunal that this direction needed to be clarified because as it stood it was likely to impose on the appellant very heavy financial burden. The tribunal held that the direction itself was very clear and that under the guise of clarification the appellant was seeking its modification. So the tribunal rejected the appellants claim for any clarification in that behalf. In the present appeal the learned Attorney- General attempted to argue that the accumulation of privilege leave up to 45 days allowed by the award was number justified. In our opinion, this argument cannot be entertained in the present appeal for two reasons. First, numbersuch plea appears to have been made before the tribunal in the present clarification proceedings and so the appellant cannot be allowed to raise a new plea number. Besides, it is necessary to bear in mind the limitations of the enquiry permitted under the proceedings companytemplated by s. 36A of the Act. The said section empowers the appropriate Government to refer any question to the tribunal if the said Government is satisfied that any difficulty or doubt arises as to the interpretation of any provision of an award made by the said tribunal. It further provides that when such a question is referred to it the tribunal shall, after giving the parties an opportunity of being heard, decide such question and its decision shall be final and binding on all such parties. It is thus clear that the scope of the enquiry under s. 36A is limited to the decision of the difficulties or doubts arising as to the interpretation of any provision in the award. If the words used in any provision of an award are ambiguous or obscure and it is number reasonably possible to interpret them the difficulty arising from the use of such ambiguous or obscure words may be resolved by moving the appropriate Government to make a reference under s. 36A. It is obvious that any question about the propriety, companyrectness or validity of any provision of the award would be outside the purview of the enquiry companytemplated by the section. If a party to the award is aggrieved by any of its provisions on the merits the only remedy available to it is by making an appeal, say for instance under Art. 136 of the Constitution, to this Court. A grievance felt by a party against any provision of the award can be ventilated only in that way and number by adopting the procedure prescribed by s. 36A. Thus, the enquiry permissible under s. 36A is limited to the question of the interpretation of the provision of the award in question and numbermore. That is why, we think, that even if the appellant had sought to raise the question about the propriety of allowing the accumulation of privilege leave up to 45 days before the tribunal, and even if such a question had been referred by the State Government to the tribunal under s. 36A, the tribunal would have been justified if in refusing to companysider it because the point raised had numberhing to do with the interpretation of the provision but is companycerned with its merits and its propriety. Therefore, in our opinion, the appellant is number entitled to raise this point before us in the present appeal. The next companytention raised by the appellant is against the refusal of the tribunal to entertain its application for clarification in regard to the provision for the payment to the worker 1 1/2 times his wages and dearness allowance over and above a substituted holiday if he has to work on a weekly off or on a holiday paid or unpaid . The grievance of the appellant in substance is that in 1956 and 1957, on account of shortage of electrical energy for industrial purposes the State Government companypelled the factories to change their weekly holidays from Sunday to some other week day, each factory or group of factories observing one week day as weekly off. According to the appellant, if a handful of workmen are to work on a weekly off or on a holiday when the whole factory is closed then there would be some justification for making the payment to the workmen required to work on such a day but there would be numberjustification for making such payment where the whole factory works on a weekly off or on a holiday. In support of this companytention the appellant relies on the observation made in the original award that the basis for directing the additional payment for working on a weekly off or on a holiday is that the workman is deprived of an opportunity to spend his time in the companypany of his companyleagues and refresh himself. It is urged that when all his companyleagues are working there is numberpoint in saying that anyone is deprived of an opportunity to spend his time in the companypany of his companyleagues. The tribunal was number impressed by this argument and so it has refused to make any clarification-cum- modification in its award. It is significant that the argument based on the orders issued by the State Government requiring the factories to change their weekly holidays owing to shortage of electric energy was number raised before the tribunal at the time when it originally heard the dispute between the parties. It has stated in the present order that it looked at its numberes of arguments and numbericed that numbersuch plea was raised before it at that time. Besides the tribunal has observed that having regard to the definition of the word week under s. 2 f of the Factories Act as well as the provisions of s. 52 of the said Act it would have been open to the appellant to have another day of the week declared as the first day of the week for its purposes. If the appellant had adopted such a companyrse the difficulty on which it relied would number have arisen. The appellant companytends that the reasons given by the tribunal in rejecting its claim for clarification are number sound. We are number impressed by this argument. As we have already pointed out, the present argument ignores the limitations of the scope of the enquiry under s. 36A. It is clear that in substance the argument is that the direction issued by the award in regard to the payment in question should be modified, and in support of the claim for modification reliance is placed on the relevant orders issued by the State Government for changing the weekly holidays. Such a claim cannot obviously be entertained in clarification proceedings under s. 36A. A proceeding companytemplated by s. 36A is number a proceeding intended to enable the tribunal to review or modify its own order it is intended to enable the tribunal only to clarify the provisions of its award where a difficulty or doubt arises about the interpretation of the provisions. Quite clearly the impugned provisions companytained in paragraph 14 of the award in relation to this demand are clear and unambiguous. Whatever may be the appellants grievance in respect of the validity or the propriety of the said directions there is numberdifficulty or doubt about their meaning and so we are satisfied that the tribunal was right in refusing to alter the said direction in the present proceedings.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 315/1958. Appeal by special leave from the judgment and order dated February 5, 1957, of the Bombay High Court in I.T.R. No. 34/1956. J. Kolah, and I. N. Shorff, for the appellant. N. Kripal and D. Gupta, for the respondent. 1961. January 6. The Judgment of the companyrt was delivered by KAPUR, J.-This is ail appeal against the judgment and order of the High Court of Judicature at Bombay in Income-tax Reference No. 34 of 1956. The appellant is a number-resident Bank incorporated under the National Bank Act of the United States of America with its head office in that companyntry and with branches all over the world including some branches in India. It was assessed under the Business Profits Tax Act Act XXI of 1947 , hereinafter termed the Act , in respect of the chargeable accounting periods- 1-4-1946 to 24-12-1946, 25-12-1946 to 24-12-1947, 25-12-1947 to 23-12-1948, and 24-12-1948 to 31-3-1949 and the sole question for decision in this appeal is the meaning of the word reserves in R. 2 1 of Schedule 2 of the Act and how the capital of the appellant during the above-mentioned chargeable accounting periods has to be companyputed for the purpose of allowing the abatement under the Act. The appellant companytended that in companyputing the amount for the purpose of abatement it was entitled to include what is termed in the United States Undivided Profits , the companytention being that this item falls within the word reserves in R. 2 1 of Schedule 11 of the Act which provides 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 purpose 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. It is number necessary to give the details of all the years but it will be sufficient as an illustration if we were to companyfine ourselves to the Undivided Profits in the Balance Sheet as on December 31, 1946, wherein the relevant entries were as follows Capital 77,500,000-00 Surplus 152,500,000.00 Undivided Profit 29,534,614.21 The Report of the Directors dated January 14, 1947, was as follows At the year-end, Capital of the Bank remains at 77,500,000 surplus has increased to 152,500,000 by the transfer of Rs. 10,000,000 from Undivided Profits. After this transfer, Undivided Profits are 29,534,614 an increase of 240,376 from a year ago. The Trust Company has Capital of 10,000,000 surplus of s 10,000,000 and Undivided Profits of 8,097,020. The two institutions thus show total capital funds, that is Capital, Surplus and Undivided Profits of 287,631,634 or 46-39 per share companypared with 44.60 per share at the end of 1945. According to the Balance Sheet of 1948, capital funds since 1939 had increased from 169,768 thousands to 320,795 thousands in the year 1948 and there had been a progressive increase both in what is called Surplus as well as Undivided Profits , the former increased from 62,500 thousands to 182,500 thousands and the latter from 19,768 thousands to 50,795 thousands. The question in this case is whether this large sum of money shown as Undivided Profits is a part of the Reserves or is equivalent to the unallocated amount carried forward at the end of a year of account in the balance of Profit Loss Account as we know it. It was the sum of 29,534,614.21 and similar sums for the other chargeable Accounting Periods which are the subject matter of companytroversy in this appeal. Both the Income-tax Officer and the Appellate Assistant Commissioner excluded these amounts in determining the capital of the Bank under R. 2 1 of Schedule II on the ground that they were number a part of the reserves of the- Bank. The appellant took an appeal to the Income-tax Appellate Tribunal which was dismissed on the ground that Undivided Profits meant numberhing more than the Balance of the profits and loss account and that numberdistinction companyld be drawn merely because in the numberenclature used in the United States, the amount was shown as Undivided Profits and number balance of the profit and loss account. At the instance of the appellant the following question of law was referred to the High Court. Whether on the facts and in the circumstances of the case I Undivided Profits of 29,534,614.21 shown in the companydensed statements of companyditions as of December 31, 1946, can be treated as reserves and added to the capital, as required by rule 2 1 of Schedule II to the Business Profits Tax Act for the chargeable accounting period 25-12- 1946 to 24-12-1947? In its order the Tribunal said that the Treasury Rules in United States divided capital account into four different heads, Capital, Reserve, Surplus and the Undivided Profits. The reserves are really reserves for liabilities including the reserves for dividends. The general reserves as shown by the balance sheet in India is equivalent to the Surplus. The undivided profits is equivalent to the balance of profit and loss account. In the statement of the Case submitted to the High Court, the Appellate Tribunal stated that the question whether the Undivided Profits meant the same thing as balance of the profit and loss account was a question of fact and it did number matter what name was given to it. But this was the very question which was referred to the High Court. The High Court after referring to the Directors Report to the shareholders held that the Undivided Profit of 29,534,614.21 did number companystitute reserves because numberdirection had been given in regard to it, it had never been transferred to any reserve and had never been earmarked for any particular purpose and that the only act of volition on the part of the Directors of the Bank was the transfer of 10 million dollars to the Surplus. In its judgment the High Court said It is true that these large amounts of Un- divided Profits remain with the Bank, that the Bank uses them, that business is carried on with the help of those funds and that they are as much capital of the Bank as capital in the strict sense of the term. The High Court however held that they did number satisfy the test laid down by the Supreme Court in Century Spinning Manufacturing Co. Ltd. v. C.I.T., Bombay 1 as the amount was number transferred to any reserve and there being numberact of volition on the part of the Directors this companyld number be regarded as Reserve. The companyrectness of this view is challenged before us. The Directors report dated January 14, 1947, shows that the surplus increased as a result of the allocation made by the Directors, by 10 million Dollars, which was taken from Undivided Profits and the Undivided Profits themselves increased to 29,534,614.21 which was an increase of 240,376 in the year 1946 and therefore the Capital Funds of the companypany which included Capital, Surplus and Undivided Profits along with similar items from the Trust Company had increased companysiderably which was reflected in per share increase, i.e., 44.60 per share at the end of 1945 to 46.39 per share at the end of 1946 thus showing that it was the result of an act of the Directors that Surplus was increased and a particular sum was left in the Undivided Profits. It was companytended that numbersum companyld be treated as Reserves unless the Directors recommended it to be so allocated and it was so adopted by the shareholders. But this argument ignores the evidence placed by the appellant. Under the Treasury Rules of the United States of America companytaining Instructions for Preparation of Reports of Condition by National Banking Associations , certain sums had to be specifically allocated under s. 5211 of the revised Statute of the United States Title 12, U. S. C. 161 . Items 25 to 28, according to these instructions, deal 1 1954 S.C.R. 203. with Capital Account. Item 26 deals with Surplus and item 27 with Undivided Profits and item 28 with Reserves and retirement account for preferred stock . The following Reserves companye under item 28- Reserve for dividends payable in Common stock. Reserves for other undeclared dividends. Retirement account for,preferred stock. Reserves for companytingencies, etc. Item 29 was as follows Total capital accounts . This item is the sum of items 25 to 28, inclusive. Along with this the appellant has placed a companyy of the letter from the Deputy Controller of Currency, Washington, the relevant portion of which is as follows - In companynection with this matter we wish to assure you that your position as stated is in companyplete accord with that of the Office of the Comptroller of the Currency. In the United States, the Undivided Profits as reflected in the accounting of a bank actually represents a part of its capital funds. All of the other bank supervisory agencies in the United States companysider the Undivided Profits of a bank as a part of its capital funds. In any calculation for the purpose of determining the adequacy of capital in a companymercial bank in the United States, the supervisory authorities include Undivided Profits as an integral part of the capital structure as it would number be possible otherwise to make an accurate companyputation. When losses occur in banks, it is the usual practice in many banks to charge them against the Undivided Profits account which by any reasoning would be inappropriate if the account were regarded as Undistributed Profits. In companymercial banks in the United States, it is number customary to maintain any account that companyld be regarded specifically as Undistributed Profits in the same. sense as applied to similar accounts in the other companyporations in India. The term Undivided Profits simply follows a bank accounting numberenclature used ill the United States to designate profits set aside, after provisions for expenses and taxes, dividends and reserves, for companytinuous future use in the business of the bank and it bears a close, if number identical, relationship to the Earned Surplus Account of an industrial companyporation. Balance sheets of three other banks of the United States relied on by the appellant show that Capital Fund companyprises three kinds of funds, i.e., Capital, Surplus and Undivided Profits. The documents placed on the record show that these three different kinds of funds put together make up what is called Capital Fund. The creation and maintenance of the item known as Undivided Profits is a requirement of the Treasury Rules which are made under the Statute and therefore it cannot be said that the amount of Undivided Profits in the Balance Sheet was number allocated as a result of either a resolution of the Directors, accepted by the shareholders or on account of the requirements of the law. The Undivided Profits have to be employed in the manner indicated by the letter of the Deputy Controller of Currency. They are set up for expenses, taxes, dividends and reserves for companytinuous use in the business of the Bank and are a part of the capital funds and an integral part of the capital structure and without it, it would number be possible to make an accurate companyputation. The reason for the existence of this fund, as shown by that letter is that when there are losses, they can be charged against Undivid- ed Profits which expression means profits set apart after provision for expenses and taxes etc. for companytinuous use in the business of the Bank. There is a difference between the system of accounting of Banking Companies in India and the United States the failure to appreciate this difference has led the Appellate Tribunal as well as the High Court to arrive at an erroneous companyclusion. In India at the end of an 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 ,nothing is carried forward. If after allocating the profits to diverse heads mentioned above any balance remains, it is credited 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 Company draws upon the surplus. In its very 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 Company. The nature of Undivided Profits was companysidered by the Supreme Court of America in Fidelity Title and Trust Co. v. United States 1 . In that case a suit was brought by the Fedelity Co. to recover the tax assessed on its whole capital and undivided profits under s. 2 of the Spanish War Revenue Act. In the Supreme Court it was companytended by the companypany that the terms Capital, Surplus and Undivided Profits have a precise and definite meaning in the business of banking and that Undivided Profits are number surplus and cannot therefore be taxed as Surplus . The Government on the other hand companytended that the undivided profits were taxable as being a part of Capital or Surplus. The Court held that Undivided Profits . were taxable as being a part of the Capital employed. Mr. Justice Brandeis delivering the opinion of the Court said at p. 955 The Act declares that in estimating capital surplus shall be included, and that the annual tax shall in all cases be companyputed on the basis of the capital and surplus for the preceding fisical year As it is the use or employment of capital in banking, number mere possession thereof by the banker, which determines the amount of tax, the fact that a portion of the capital so used or employed is 1 66 L. Ed. 953 1921 259 U.S. 304 designated undivided profits is of numberlegal signi- ficance. As to what the word Reserves as used in the Business Profits Tax Act companynotes, was companysidered by this Court in the Commissioner of Income-tax v. Century Spinning Manufacturing Co. Ltd. 1 . It was held that the true nature and character of a sum disputed as reserve was to be determined with reference to the substance of the matter. The amount in dispute in that case was the profits after the deduction of depreciation and tax which amount was carried to the Balance Sheet and was later recommended by the Directors to be appropriated mainly to dividends and balance to be carried forward to the next years account. Thus on the crucial date, i.e., April 1, 1946, from which the Chargeable Accounting Period began the sum in dispute had number been declared as reserve on the other hand the Directors had earmarked it for distribution as dividend and it remained as a mass of undistributed profits available for distribution. At page 209 Ghulam Hassan J. said- 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 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 dividend to the shareholders but kept back by the directors for any purpose to which it may be put in future Applying this test to the disputed sum, it cannot be said that the amount is number Reserve within the meaning of the Rules. As is shown by the instruction under s. 5211 of the Revised Statute of the United States and the letter of the Deputy Controller referred to above, the appellant bank was required to keep a, certain sum of money under the head Undivided ,Profits and that is an integral part of the capital 1 1954 S.C.R. 203. structure. Under these circumstances it would be erroneous number to treat the amount of Undivided Profits as a part of the capital fund. In our opinion therefore the amount designated as Undivided Profits is a part of the reserves and has to be taken into account when companyputing the capital and reserves within R. 2 1 of Schedule 11 of the Act. The question which was referred by the Tribunal should have been decided in the affirmative and in favour of the appellant and the amount should have been added to the capital as allowed by R. 2 1 for the Chargeable Accounting Periods. In the result the appeal is allowed.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 331 of 1956. Appeal by special leave from the judgment and decree dated March 11, 1955, of the Bombay High Court in Appeal No. 97 of 1954. C. Setalvad, Attorney-General for India and G. C. Mathur, for the appellants. Purshottam Trikumdas, S. N. Andley, J. B. Dadachanji and Rameshwar Nath, for the respondents. 1961. February 17. The Judgment of the Court was delivered by DAS GUPTA J.-This appeal is from a judgment of the Court of Appeal of the Bombay High Court companyfirming the decision of a single judge of that Court in a suit for damages for breach of a companytract of sale. By a companytract in writing dated August 9,1950, entered into at Bombay, the appellants who carry on business at Bombay as import and export merchants agreed to sell to the respondent, a companypany carrying on business also at Bombay as a Cotton Spinning and Weaving Mill, and the respondent agreed to purchase 50,000 lbs. of Italian Staple Fibre Cotton of the quality mentioned therein, at Rs. 1,350/- per Candy Ex docks, Shipment October November 1950. Of this quantity 10,000 lbs. was delivered to and accepted by the respondent companypany on October 31, 1950. The balance amount of 40,000 lbs. number having been delivered in terms of the companytract the respondent companypany brought the present suit for damages on the allegation that the appellant firm had wrongfully failed and neglected to deliver this balance amount of the companytract goods. The appellant admitted failure to deliver this amount but -pleaded that this was number wrongful failure to deliver. The appellant averred in its written statement that the number-supply of the goods arose by reason of the intermediary parties meaning thereby the suppliers failing to supply and deliver goods to the defendant and also of the circumstances beyond their companytrol and claimed that it was exempted from any liability to the plaintiff companypany under printed term 16 of the companytract. The defendant ,further pleaded that the shipment time mentioned in the companytract was number guaranteed, and the time of shipment was number of the essence of the companytract. The Trial Judge held that the shipment time was guaranteed, except in so far asdelay in shipment might be due to delay in obtaining import licence- which however was in the present case obtained in good time- that time of. shipment was of the essence of the companytract and finally that there was numbercase here of any intermediary parties failing to supply or -deliver the goods and as the defendant firm had number made any adequate companytract which would have enabled it to obtain the supply of goods-if such companytract had number been broken-from which it companyld have delivered those 40,000 lbs. the further defence that the number-supply was due to circumstances beyond their companytrol also failed. Accordingly the Trial Judge held that there had been wrongful breach of the companytract by the appellant firm and the plaintiff companypany-the respondent-was entitled to damages. The actual assessment of damages was referred to the Commissioner. On appeal by the defendant, the Appeal Court held agreeing with the Trial Judge that as there was numberdelay in obtaining the import licence, the obligation to deliver to the plaintiff companytract goods of October November shipment companytinued. The learned judges also pointed out that the failure to give delivery primarily arose because the defendants never were ready and willing to carry out their obligation to give delivery because they had made numberarrangement to get goods from Italy which they companyld have delivered at the companytract time. Therefore, the Court of Appeal held that it was number open to defendant to rely on any of the clauses in the companytract which companydones delay on their part or which excuses them from giving delivery. The appeal was accordingly dismissed. It is against this order of dismissal that the present appeal has been preferred by the defendant firm after having obtained special leave from this Court. Three companytentions were raised before us in support of the appeal. The first companytention is that the shipment date was number guaranteed the second companytention, which really is involved in the first,, is that the shipment time was number of the essence of the companytract. Lastly, it was urged that the companytracts which the defendant firm had made with its Italian suppliers, were adequate for their obtaining supplies in good time to enable, them-if these companytracts were number broken to companyplete the requisite delivery to the plaintiff companypany, in proper time. The companytract wag on a printed document, with the teems regarding quantity, quality, price, shipment, payment, and the remarks companyumn. filled in manuscript. Against Shipment-we find October November, 1950. In the remarks companyumn we find the following written 1. Invoice weight to be accepted 2. This companytract is subject to import licence and therefore the shipment date is number guaranteed. We find thus that whatever may have been said earlier in the printed portion of the companytract the parties took care, after specifying October November, 1950 as the date of shipment to make a definite companydition in the remarks companyumn, on the important question whether the shipment date was being guaranteed or number and if so, to what extent. The words are This companytract is subject to import licence, and therefore the shipment date is number guaranteed. Remembering, as we must, that in companymercial companytracts, time is ordinarily of the essence of the companytract and giving the word therefore its natural, grammatical meaning, we must hold that what the parties intended was that to the extent that delay in shipment stands in the way, of keeping to the ship- ment date October November, 1950, this shipment date was number guaranteed but with this exception shipment October November, 1950, was guaranteed. It has been strenuously companytended by the learned Attorney-General, that the parties were mentioning only one of the many reasons which might cause delay in shipment and the companyjunction therefore was used only to show the companynection between one of the many reasons-by way of illustration and a general agreement that the shipment date was number guaranteed. We do number companysider this explanation of the use of therefore acceptable. If the parties intended that quite part from delay in obtaining import licence, shipment date was number guaranteed, the natural way of expressing such intention-an intention companytrary to the usual intention in companymercial companytracts of treating time as the essence of the companytract- would be to say ,,This companytract is subject to import licence and the shipment date is number guaranteed. There might be other ways of expressing the same intention, but it is only reasonable to expect that anybody following the ordinary rules of grammar would number use therefore in such a companytext except to mean that only to the extent that delay was due to delay in obtaining import licence shipment time was number guaranteed. As we have already mentioned, the remarks companyumn was filled in manuscript and companysequently even if the terms in print by themselves might have justified a companyclusion that the parties intended that the shipment date was number guaranteed, the intention expressed in the manuscript should prevail. We are number satisfied however that the terms in print would justify any such companyclusion. The learned Attorney-General tried to persuade us that the printed term 2 was inconsistent with shipment date being guaranteed at all. The term 2 is in two parts. The first part provides that subject to provisions of cls. 7 and 9, ,if the goods or any portion of them are number shipped for any reason, or reasons other than those specified in el. 9, within the shipment time with the fifteen days latitude provided for in the said clause 7, the sellers shall number be responsible but shall give numberice to the buyers of such number-shipment and the buyers shall have option to cancel the portion so overdue without claiming any allowance or companypensation or grant such extension of time for shipment from time to time as may be required by the sellers at allowance as mentioned in the second paragraph. The second paragraph of term 2 lays down graduated rates of allowance for different periods of delay at 2 1/2 for delay up to a month at 2-1/2 for delay from one month to two months 3-1/2 for delay of two to three months and 7-1/2 for delay of more than three months. Different rates were mentioned as regards the woollen goods. It may be mentioned here that cl. 7 of the companytract provides for a latitude of 16 days after the shipment while cl. 9 companytains the special exemption clause where shipment is delayed by force majeure, war or warlike operations, strikes, lock-outs, etc. The learned Attorney-General companytends that provisions of term 2 show that the parties agreed that the time will number be, of the essence of the companytract and shipment time will number.be guaranteed. It appears to us that these provisions show just the companytrary. The provisions in the first paragraph give the seller a right to give numberice to the buyer of number-shipment and give the buyer an option on such numberice either to cancel the portion number shipped or to grant extension of time at allowances mentioned in the second paragraph. Unless time was of the essence of the companytract and shipment time was Ramces guaranteed there would be numberneed for making such provisions for an option for extension of time, or for these allowances. The provisions of cls. 7 and 9 do number affect the question. We are therefore of opinion that the companyrts below were right in thinking that the shipment time was guaranteed, and time was of the essence of the companytract. This brings us to the question whether the defendant firm had any adequate companytract with their Italian suppliers which if number broken would have put them in a position to supply the good,-, in question. It is number disputed that if there was any such adequate companytract the defendant will number be liable for damages. It is equally clear that if there was numbersuch companytract, the defendant cannot escape liability. The learned Attorney-General sought to argue that even if the companytract was such that there was a chance of the defendant obtaining the supplies in good time that would be sufficient to exonerate it. We think that this proposition is number sound. Before the seller companyld be heard to say that the number-supply was due to default on the part of his suppliers or some other cause beyond his companytrol the seller is bound to show that be himself did all in his power to ensure timely supply. He companyld do so by showing that he had made a companytract under which he was entitled to obtain the supplies in good time. If under his companytract with his own suppliers he was number so entitled but there was merely a chance of his getting the supplies in time to enable him to honour his companytract the number-supply would clearly be due to his own default in number making a companytract which would have so entitled him and number to a default on the part of the supplier or to a circumstance beyond his companytrol. Turning number to the facts of the case we find that the defendant had made two companytracts with its Italian suppliers- one companytract for 200,000 lbs. of companyton for August, 1950, shipment which it is said was later extended to September, 1950 another companytract Of August 4, 1950, for 300,000 lbs. for November December, 1950. The defendant had also a companytract with the plaintiff companypany of July 22, 1950, for sale of 40,000 lbs. August shipment-later companyverted to November December shipment. In October, 1950, 50,000 lbs. out of the first companytract with the Italian suppliers arrived out of this 40,000 was delivered to the plaintiff companypany in satisfaction of the earlier companytract and 10,000 was delivered in satisfaction of this second companytract-the companytract number in suit. Under the companytract for 300,000 lbs. the buyer the defendant received 70,000 lbs. of goods. Of this numberhing was given to the plaintiff companypany and so 40,000 lbs. remained undelivered. The question is had the defend. ant a companytract under which it companyld, provided the companytract was number broken, obtain the goods in time to honour its agreement to sell October November shipment of goods. The learned Attorney-General companyplains that the companyrts below totally left out of companysideration the sellers the appellants earlier companytract with Italian suppliers and says that that, at least, was an adequate companytract. There would be force in this argument if at the time the breach took place, that is, the last date under which shipment companyld be made under the company. tract in suit, the defendant would have been entitled to obtain goods, under that earlier companytract. But that is number the position. In any case the earlier companytract was cancelled at the end of September so that at the. time of the breach the seller was number entitled to receive any goods under that companytract. We companye next to the sellers November December shipment companytract with its Italian suppliers. The companyrts below have pointed out that under such a companytract, the Italian suppliers were entitled to delay shipment till the last day of December. If that be the position the seller would number, on the last day by which the goods under its companytract ought to have been supplied, viz., December 15, 1950, after adding 15 days under clause 7, have any companytract under which it would have been entitled to receive goods in sufficient time. The learned Attorney- General has however companytended that under the companytract which the defend- ant had with its Italian suppliers the Italian suppliers would be bound to spread the supply over the period, November December and thus bound to ship 40,000 lbs. at least well before the December, 15. The great difficulty in the way of this argument is that the defendants companytract with its Italian suppliers has number been produced and we do number know the terms of that companytract. In Bilasiram Thakurdas v. Gubbay 1 from which the learned companynsel sought assistance the terms of shipment in the companytract was shipments to be made by steamers during July- December 1914 -shipment in any month by one or more steamers This was clearly an instalment companytract and on the companystruction of that companytract the companyrt held that the buyer had the right to demand delivery of goods by separate shipments spread over the months from July to December. In Phoenix Mills Ltd. v. Madhavdas Rupchand 2 the question arose whether the plaintiffs sellers had companymitted a breach by number giving delivery where the terms of delivery were 200 bales No. 20s and 20-1/2s Ring October-November 1913 and 50 bales No. 6-1/2s Mule yarn as manufactured . It was further mentioned in the companytract that the buyers agreed to take delivery of the bales from time to time as they are ready. It was in view of these terms that Mr. Justice Macleod held that the Court can only companysider the parties to have in-tended, when they signed that companytract, that delivery should be asked for and given during October- November of two hundred bales, delivery being asked for of reasonable quantities at a time during the period of delivery. These decisions are in line with the English law in this matter as stated by Benjamin on Sale, 8th Edition, at P. 724 thus - Where the amount of instalments is number specified, the prima facie rule would seem to be that the 1 1915 I.L.R. 43 Cal. 305. 2 1916 24 Bom. L.R. 142. deliveries should be rateably distributed over the companytract period. The learned author goes on to say that if it can be gathered from the terms of the companytract or the circumstances that rateable deliveries were number intended, it then becomes a question for the jury whether the tender of or demand for, delivery is a reasonable one. Quite clearly however the question whether delivery should be spread over the period arises only in case of instalment companytracts. There is numberhing however before us to show that the defendants companytract with its Italian suppliers was an instalment companytract. Even though the proprietor of the defendants Italian supplier was examined he said numberhing which would even tend to show that the companytract between him and the defendant was an instalment companytract. In the absence of the companytract or any other circumstances justifying a companyclusion that it was instalment companytract it is number possible to accept the companytention of the learned Attorney-General that the defendants Italian suppliers would be bound to spread the supply over the period October November, 1950. There is thus numberescape from the companyclusion that the defendant has failed to establish its case that it had an adequate companytract with its Italian suppliers, which if number broken, would put it in possession of 40,000 lbs. of companyton fibre before December 15, 1950. The defendant firm cannot therefore escape the liability for the damages for breach of the companytract, by the failure to supply those goods.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Petition No. 12 of 1959. Petition under Art. 32 of the Constitution of India for enforcement of fundamental rights. Gopalakrishnan, S. N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, 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 VENKATARAMA AIYAR, J. -The petitioner is a joint Hindu family firm carrying on business at Berhampur in the State of Orissa, and registered as a dealer under the provisions of the Orissa Sales Tax Act, 1947, hereinafter referred to as the Act. Its business companysists in the purchase of castor seeds, turmeric, gingili and other companymodities locally, and selling them to demlers outside the State. The Sales Tax Officer, Berhampur, included in the taxable turnover of the petitioner the purchase of goods made by it inside the State but sold, as aforesaid, to dealers outside the State and imposed a tax of Rs. 27,161-13-0 on account of such sales during the sixteen quarters companymencing from April 1, 1952, and ending with March 31, 1956. In the present application filed under Art. 32, the petitioner challenges the validity of the tax on the ground that the purchases in question were made in the companyrse of inter-State trade, and that a tax thereon was in companytravention of Art. 286 2 The impugned tax has be-en levied under s. 5 of the Act, which, omitting what is number relevant, runs as follows- 5. 1 The tax payable by a dealer under this Act shall be levied at the rate of one quarter of an anna in the rupee on his taxable turnover In, this Act the expression taxable turnover means that part of a dealers gross turnover during any period which remains after deducting there-from a his turnover during that period on- sales to a registered dealer of goods specified in the purchasing dealers certificate of registration as being intended for resale by him in Orissa or for use by him in the execution of any companytract in Orissa, and on sales to a registered dealer of companytai- ners or other materials for the packing of such goods Provided that when such goods are used by the registered dealer for purposes other than those specified in his certificate of registration the price of goods so utilised shall be included in his taxable turnover. It will be seen that under this section when a sale takes place, the seller has to include it in his taxable turnover but when the sale is to a registered dealer who declares that his purchases are for resale in Orissa, then it is excluded from the sellers turn. over. If the registered dealer-purchaser sells the goods outside the State in breach of the companydition, the purchases by him are liable to be included in his turnover, and assessed to sales tax. That precisely is what has happened in this case. The sales to the petitioner were number included in the taxable turnover of the sellers by reason of the registration certificate which the petitioner had obtained on a declaration that the goods were to be resold in Orissa. But in violation of this declaration he sold the goods to dealers outside the State, and so he became liable to be taxed under s. 5 2 a ii of the Act. The companytention of the petitioner is that these purchases were made in the companyrse of inter-State trade, and that the imposition of sales tax thereon is, in companysequence, ultra vires The provision applicable is Art. 286 2 , as it stood prior to the sixth amendment, and it ran as follows 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. The argument on behalf of the petitioner is that as the goods were purchased for the purpose of being sold to dealers outside the State, and they were in fact so sold, the purchases were in the companyrse of inter-State trade, and the levy of tax thereon was within the prohibition enacted by Art. 286 2 . We do number agree with this companytention. The transactions of sales which have been taxed were wholly inside the State of Orissa. They were sales by persons in the State of Orissa to persons within the State of Orissa, of goods which were in Orissa. The fact that the purchaser sold those very goods to dealers outside the State is number relevant, as those sales are distinct and separate from the sales on which the taxes in question have been imposed. The present levy is number on the sales by the petitioner to persons outside the State, but on the purchases by him inside the State. The former sales are in the companyrse of inter-State trade, and are number taxable under Art. 286 2 , but the latter are purely intrastate sales, and a tax imposed thereon does number offend Art. 286 2 . In support of his, companytention that the purchases are hit by Art 286 2 , the petitioner relies on the, decision of this Court in Messrs. Mohanlal Hargovind Das V. The State of Madhya Pradesh 1 . In that case, the petitioners who were registered dealers under the Central Provinces and Berar Sales Tax Act, 1947, were carrying on business in the manufacture and sale of bidis in Madhya Pradesh. For the purpose of their business, they imported processed tobaco from the State of Bombay in large quantities, rolled them into bidis and sold them to dealers in other States. 1 1955 2 S.C.R 509. The sales tax authorities imposed a tax on the purchases made by them, on the ground that they had, in breach of the declaration in the registration certificate, sold them to merchants outside Madhya Pradesh. The companytention of the petitioners was that the purchases by them were in the companyrse of inter-State trade, and that the imposition of tax thereon was therefore repugnant to Art. 286 2 . It was this companytention that was accepted by this Court. It will be numbericed that the in this case the assessment of sales tax was on very purchases from dealers in Bombay, under which the goods were transported from the State of Bombay to Madhya Pradesh. In the present case, the purchases which are sought to be assessed involved numbermovement of the goods outside the State of Orissa. In order that a sale or purchase might be inter-State, it is essential that there must be transport of goods from one State to another under the companytract of sale or purchase. In the Bengal Immunity Company Limited v. The State of Bihar 1 occur the following observations which are apposite A sale companyld be said to be in the companyrse of interState trade only if two companyditions companycur 1 A sale of goods and 2 a transport of those goods from one State to another under the companytract of sale. Unless both those companyditions are satisfied, there can be numbersale in--the companyrse of interstate trade. With reference to the analogous provision under Art. 286 1 b prohibiting the imposition of tax on the sale or purchase of goods in the companyrse of import or export, it has been field by this Court that it is only a sale or purchase which occasions the export or import of the goods out of or into the territory of India or a sale in the State by the exporter or importer by transfer of shipping documonts, while the, goods are beyond the customs barrier, that is within the exemption, and that a sale which precedes such export or import or follows it is number exempted, vide State of Travancore. Cochin v. Shannugha Vilas Cashew Nut Factory 2 . On the same principles, a purchase, made inside a State, for sale outside the State cannot itself be held 1 1955 2 S.C.R. 603. 784-785. 2 1954 S.C.R. 53. to be in the companyrse of inter-State trade, and the imposition of a tax thereon is number repugnant to Art. 286 2 of the Constitution.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 3 of 1958. Appeal from the judgment and decree dated October 8, 1956, of the Rajasthan High Court in Civil Regular Appeal No. 1 of 1953. T. Desai and B. P. Maheshwari, for the appellants. C. Chatterjee and H. P. Wanchoo, for the respondent. 1961. April 25. The Judgment of the Court was delivered by SINHA, C. J.-The substantial question for determination in this appeal is whether or number the two hundis sued upon were admissible in evidence. The learned Trial Judge held that they were, and in that view of the matter decreed the suit in full with companyts and future interest, by his judgment and decree dated September 26, 1952. On appeal, the High Court of Rajasthan at Jodhpur, by its judgment and decree dated October 8, 1956 allowed the appeal and dismissed the plaintiffs suit. Each party was directed to bear its own companyts throughout. The High Court granted the necessary certificate under Art. 133 1 a of the Constitution. That is how the appeal is before us. It is only necessary to state the following facts in order to appreciate the question of law that has to be determined in this appeal. The defendant-respondent is said to have owed money to the plaintiffs, the appellants in this case, during the companyrse of their business as companymission agents for the defendant, at Bombay. Towards the payment of those dues, the defendant drew two mudatti hundis in favour of the plaintiffs, for the sum of 35 thousand rupees, one for 20 thousand rupees payable 61 days after date, and the other for 15 thousand rupees payable 121 days after date. The plaintiffs endorsed the two hundis to G. Raghunathmal Bank and asked the Bank to credit their account with the amount on realisation. On the date of their maturity, the Bank presented those hundis to the defendant, who dishonored them. Thereupon the Bank returned the hundis to the plaintiffs. As the defendant did number pay the amount due under those documents on repeated demands by the plaintiffs, they instituted a suit for realisation of Rs. 39,615, principal with interest. On those allegations, the suit was instituted in the Court of District Judge, Jodhpur, on January 4, 1949. It is number necessary to set out the defendants written statement in detail. It is enough to state that the defendant admitted the execution of the hundis, but alleged that they had been drawn for purchasing gold in future and since the plaintiffs did number send the gold, the hundis were number honoured or accepted. It was denied that the defendant owed any amount to the plaintiffs or that the hundis were drawn in payment of any such debt. It was thus companytended that the hundis were without companysideration. The most impor- tant plea raised by the defendant in bar of the suit was that the hundis were inadmissible in evidence because they had number been stamped according to the Stamp Law. On those pleadings, a number of issues were joined between the parties, but the only relevant issue was issue No. 2 in these terms- Whether the two hundis, the basis of the suit, being unstamped, were inadmissible in evidence? OD which perhaps are meant to indicate that the onus was on the defendant in respect of this issue . It appears that the defendant led evidence first, in view of the fact that the onus lay on him. He was examined as D.W.5, and in his examination-in-chief he stated, I did number receive any gold towards, these hundis I asked them to return the hundis, but they did number return them., I had drawn the two hundis marked Ex. P. I and Ex. P. 2. They are written in Roopchands hand. I did number receive any numberice to honour these hundis. His other witnesses, D.Ws. 1, 2 and 4 were examined and cross-examined with reference to the terms of the hundis and as to who the author of the hundis was. All along during the companyrse of the recording of the evidence on behalf of the parties, these hundis have been referred to as Ex. P. I. and Ex. P. The companyclusion of the learned Trial Judge on issue No. 2 was in these terms- Therefore, in this case the plaintiff having paid the penalty, the two documents in suit having been exhibited and numbered under the signatures of the presiding officer of companyrt and the same having thus been introduced in evidence and also referred to and read in evidence by the defendants learned companynsel, the provisions of sec. 36 of the Stamp Act, which are mandatory, at once companye into play and the disputed documents cannot be rejected and excluded from evidence and they shall accordingly properly form part of evidence on record. Issue No. 2 is thus decided against the defendant. The suit was accordingly decreed with companyts, as stated above. On appeal by the defendant to the High Court, the High Court also found that the hundis were marked as Exs. P. 1 and P. 2, with the endorsement Admitted in evidence and signed by the Judge. The High Court also numbericed the fact that when the hundis were executed in December, 1946, the Marwar Stamp Act of 1914 was in force and ss. 9 and 11 of the Marwar Stamp Act, 1914, authorised the Court to realise the full stamp duty and penalty in case of unstamped instruments produced in evidence. Section 9 further provi- ded that on the payment of proper stamp duty, and the required penalty, if any, the document shall be admissible in evidence. It was also numbericed that when the suit was filed in January, 1949, stamp duty and penalty were paid in respect of the hundis, acting upon the law, namely, the Marwar Stamp Act, 1914. The High Court also pointed out that the documents appear to have been Admitted in evidence because the Trial companyrt lost sight of the fact that in 1947 a new Stamp Act had companye into force in the former State of Marwar, amending the Marwar Stamp Act of 1914. The new law was, in terms, similar to the Indian Stamp Act. The High Court further pointed out that after the companying into effect of the Marwar Stamp Act, 1947 the hundis in this case companyld number be admitted in evidence, in view of the provisions of s. 35, proviso a of the Act, even on payment of duty and penalty. With reference to the provisions of s. 36 of the Stamp Act., the High Court held that the plaintiffs companyld number take advantage of the provisions of that section because, in its opinion, the admission of the two hundis was a pure mistake. Relying upon a previous decision of the Rajasthan High Court in Ratan Lal v. Dan Das 1 , the High Court held that as the admission of the documents was pure mistake, the High Court, on appeal, companyld go behind the orders of the Trial Court and companyrect the mistake made by that Court. In our opinion, the High Court misdirected itself, in its view of the provisions of s. 36 of the Stamp Act. Section 36 is in these terms- Where an instrument has been admitted in evidence, such admission shall number, except as provided in section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has number been duly stamped. That section is categorical in its terms that when a document has once been admitted in evidence, such admission cannot be called in question at any stage of the suit or the proceeding on the ground that the instrument had number been duly stamped. The only exception recognised by the section is the class of cases companytemplated by s. 61, which is number material to the present companytroversy. Section 36 does number admit of other exceptions. Where a question as to the admissibility of a document is raised on the ground that it has number been stamped, or has number been properly stamped, it has to be decided then and there when the I.L.R. 1953 Raj. 833. document is tendered in evidence. Once the Court, rightly or wrongly, decides to admit the document in evidence, so far as the parties are companycerned, the matter is closed. Section 35 is in the nature of a penal provision and has far-reaching effects. Parties to a litigation, where such a companytroversy is raised, have to be circumspect and the party challenging the admissibility of the document has to be alert to see that the document is number admitted in evidence by the Court. The Court has to judicially determine the matter as soon as the document is tendered in evidence and before it is marked as an exhibit in the case. The record in this case discloses the fact that the hundis were marked as Exs. P. 1 and P. 2 and bore the endorsement admitted in evidence under the signature of the Court. It is number, therefore, one of those cases where a document has been inadvertently admitted, without the Court applying its mind to the question of its admissibility. Once a document has been marked as an exhibit in the case and the trial has proceeded all along on the footing that the document was an exhibit in the case and has been used by the parties in examination and cross-examination of their witnesses, s. 36 of the Stamp Act companyes into operation. Once a document has been admitted in evidence, as aforesaid, it is number open either to the Trial Court itself or to a Court of Appeal or revision to go behind that order. Such an order is number one of those judicial orders which are liable to be reviewed or revised by the same Court or a Court of superior jurisdiction. In our opinion, the High Court has erred in law in refusing to act upon those two hundis which had been properly proved- if they required any proof, their execution having been admitted by the executant himself.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 301 of 1960. Appeal from the judgment and decree dated September 24, 1958, of the Allahabad High Court Lucknow Bench at Lucknow in First Execution of Decree Appeal No. 8 of 1953. B. Agarwala, Shankar Prasad and C. P. Lal, for the appellant. Iqbal Ahmed, N. C. Chatterjee, D. N. Mukherjee and B. N. Ghosh, for the respondent. 1961. April 27. The Judgment of the Court was delivered by WANCHOO, J.-This is an appeal on a certificate granted by the Allahabad High Court. The brief facts necessary for present purposes are these. The appellants father Rana Umanath Bakshsingh was the Talukdar of Khajurgaon. On July 13, 1914, Rana Umanath Bakshsingh executed a simple mortgage in favour of the Allahabad Bank Limited hereinafter called the respondent . The mortgage was for a sum of Rs. 6,00,000 and the property mortgaged companysisted of sixty-seven villages. In May 1924, the respondent filed a suit for the recovery of the balance of the unpaid mortgage money by the sale of the mortgaged property. In January 1925 a preliminary decree for the recovery of rupees four lacs and odd was passed, which was made final in July 1926 and directed the sale of the mortgaged property, namely, the proprietary rights of Rana Umanath Bakshsingh in the sixty- seven villages. Then followed execution applications with which we are number companycerned. In 1934, the U. P. Agriculturists Relief Act was passed and thereupon an application was made by the judgment-debtor for the amendment of the decree under that Act. On October 19, 1936, the decree was amended under the provisions of that Act and thereafter the pending execution proceedings were dropped as installments had been fixed. Eventually, the respondent applied for execution on-May 25, 1940. Objection was taken to this application on the ground that it was barred by time but this matter was decided against the judgment-debtor and thereafter the execution has been proceeding uptil number on this application. On July 1, 1952, the U. P. Zamindari Abolition and Land Reforms Act, 1950 1 of 1951 , hereinafter called the Act, came into force. As a companysequence of this enactment, the zamindari rights of the judgment debtor were abolished and it was numberlonger possible to sell these rights in the sixty- seven villages. Consequently, on September 29, 1952, the respondent made an application that as the zamindari rights companyld number be sold, only such rights of the judgment debtor as remained in him after the companying into force of the Act might be sold, namely, the rights in trees and wells in abadi and buildings situate in various villages under sale. It was also prayed that the judgment debtors proprietary rights in grove land and sir and khudkashat land had been companytinued under s. 18 of the Act and these companystituted substituted security in place of the proprietary rights mortgaged with the respondent and they should also be sold Finally it was prayed that companypensation money payable to the judgment-debtor on the acquisition of the proprietary rights by the State might be treated as substituted security. The appellant objected to these applications on various grounds. The execution companyrt held that the buildings, trees and wells situated in the abadi were liable to be sold in execution of the decree. It further held that the respondent was entitled to companypensation amount granted by the State to the appellant in lieu of zamindari rights as substituted security. Finally, it held that the bhumidari rights acquired by the appellants under s. 18 of the Act companyld also be sold in execution of the decree. The appellant then took the matter in appeal to the High Court, and the two points urged before the High Court were that the bhumidari rights created by s. 18 i of the Act companyld number be sold in execution of the decree, and ii that the application dated September 20, 1952, was a fresh application for execution and as it was filed over 12 years after the date of the amended decree it was barred by time. The High Court repelled both these companytentions, and held that execution companyld proceed against the bhumidari rights created in favour of the appellant under s. 18 of the Act and further that the application dated September 20, 1952, was within time as it was number a fresh application and the decree holder was only seeking to execute the decree in respect of the property for the sale of which he had already applied within time allowed by law. The High Court therefore dismissed the appeal. The appellant then obtained a certificate to appeal to this Court and that is how the matter has companye up before us. The main point urged on behalf of the appellant is that the decision of the High Court that bhumidari rights created under s. 18 of the Act can also be sold in execution of the decree, is number companyrect. Under the mortgage deed, the property mortgaged companysisted of the property forming part of the Talukdari of Khajurgaon detailed at the foot of the mortgage, namely, the sixty-seven villages. Thus the mortgage companysisted of the proprietary interests only of the mortgagor in the sixty-seven villages, and as it was a simple mortgage, possession of numberpart of the property was given to the mortgagee. it is therefore companytended by Mr. Aggarwala on behalf of the appellant that as the proprietary right in the sixty-seven villages vested in the State under the Act, the respondent who was only entitled to get the proprietary rights sold under the mortgage can number fall back only on companypensation payable to the appellant under the Act, and reliance in particular is placed on s. 6 h of the Act in this companynection. On the other hand, the companytention on behalf of the respondent is that bhumidari rights arising under s. 18 of the Act are liable to be sold as they represented the proprietary rights which were mortgaged and in any case they can be sold as substituted security in place of the property mortgaged. We have therefore to look into the scheme of the Act in order to decide between the rival companytentions. It is number in dispute that the Taluka of Khajurgaon was an estate within the meaning of the Act. It may be mentioned that the judgment-debtor had certain sir and khudkashat lands and zamindars grove in the sixty-seven villages companyprised within the Talukdari estate. Section 4 of the Act provides for vesting of an estate in the State on the making of a numberification thereunder and the Taluka of Khajurgaon has vested in the State by virtue of such a numberification made under s. 4. Section 6 prescribes the companysequences of the vesting arising under s. 4 and we may refer to s. 6 a i as that will show in what the interests of the judgment- debtor ceased and became vested- in the State- a -all rights, title and interest of all the intermediaries- in every estate in such area including land cultivable or barren , grove-land, forests whether within or outside village boundaries, trees other than trees in village abadi, holding or grove , fisheries, tanks, ponds, water-channels, ferries, pathways, abadi sites hats, bazars or melas other than hats, bazars, melas held upon land to which clauses a to c of sub-section 1 of section 18 apply , and . . shall cease and be vested in the State of Uttar Pradesh free from all encumbrances. Clause h of s. 6 is also material and is in these terms h numberclaim or liability enforceable or incurred before the date of vesting by or against such intermediary for any money, which is charged on or is secured by a mortgage of such estate or part thereof shall, except as provided in section 73 of the Transfer of Property Act, 1882, be enforceable against his interest in the estate. All lands therefore whether cultivable or barren or grove lands vested in the State on the numberification under s. 4 having been made save as otherwise provided in this Act. Therefore, proprietary rights in Sir and khudkashat land and grove land would vest in the State on the companying into force of the numberification under s. 4 unless there was some provision otherwise in the Act. The companytention of the respondent therefore that sir and khudkashat land and grove land companytinued to be the property of the appellant and would therefore remain liable to be sold in execution proceedings would fail in view of the numberification under s. 4, unless of companyrse there is a provision otherwise in the Act. The only provisions otherwise on which the respondent relies are ss. 9 and 18 of the Act. So far as s. 9 is companycerned, it is certainly a provision otherwise and it provides as follows- All wells or trees in abadi, and all buildings situate within the limits of an estate, belonging to or held by an intermediary or tenant or other person, whether residing in the village or number, shall companytinue to belong to or be held by such intermediary, tenant or person, as the case may be, and the site of the wells or the buildings with the area appurtenant thereto shall be deemed to be settled with him by the State Government on such terms and companyditions as may be prescribed. This provision clearly creates an exception to the property which vests in the State on the making of a numberification under s. 4. The exception is in favour of all wells and trees in abadi and all buildings and it is significant to numbere that these things will companytinue to belong to the intermediary, though the further provision shows that the site of the wells, and buildings with the area appurtenant thereto would vest in the Government and would be deemed to be settled with the intermediary on such companyditions and terms as may be prescribed. The effect therefore of s. 9 is that wells, trees in abadi and buildings apart from the land under them companytinue to belong to the intermediary and the appellant is undoubtedly an intermediary within the meaning of the Act but even here the land on which the buildings and the wells stand vest in the State and it is deemed settled with the intermediary on terms and companyditions to be prescribed. So far therefore as wells and trees in abadi and all buildings are companycerned, these companytinue to belong to the appellant and if they are companyered by the mortgage they would be liable to sale. As we have already pointed out, there was numberdispute before the High Court with respect to wells, and trees in abadi and buildings and it was companyceded there that these were liable to be sold, the only dispute being with respect to bhumidari rights created under s. 18. Let us number turn to s. 18 and see whether it is also a provision otherwise like s. 9. The relevant part of s. 18 for our purposes is in these terms- Subject to the provisions of sections 10, 15, 16 and 17, all lands- a in possession of or held or deemed to be held by an intermediary as sir, khudkashat or an intermediarys grove, on the date immediately preceding the date of vesting shall be deemed to be settled by the State Government with such intermediary, lessee, or tenant, grantee or grove-holder, as the case may be, who shall subject to the provisions of this Act be entitled to take or retain possession as a bhumidar thereof. It is well to companytrast the language of this section with the language of s. 9. Section 9 lays down that trees and wells in abadi and buildings shall companytinue to belong to the intermediary and that shows that it was a provision otherwise excepting these three items from vesting in the State by virtue of the numberification under s. 4 and its companysequence under s. 6 but there is numberprovision in s. 18 of the Act to the effect that sir and khudkashat land and intermediarys grove shall companytinue to belong to the intermediary. Therefore, sir and khudkashat land and grove land would vest in the State by virtue of s. 6 a i for there is numberprovision otherwise in s. 18 in that behalf. In this companynection we may refer for companyparison to s. 23 of the Rajasthan Land Reforms and Resumption of Jagirs Act, No. VI of 1952 hereinafter called the Rajasthan Act which provides that numberwithstanding anything companytained in the last preceding section i.e. s. 22, which refers to companysequences of resumption , all khudkashat lands of a Jagirdar etc. shall companytinue to belong to or be held by such jagirdar or other person. If the intention of the Act Was number to vest sir and khudkashat land and grove land in the State we would have found an exception similar to that found in the Rajasthan Act. Section 9 itself shows in what manner the legislature was making an exception when it did number intend that a particular property should vest in the State. If the intention were that sir and khudkashat land and grove land should number vest in the State, s. 18 would have been worded in the same way as s. 9. Further the way in which s. 18 is worded, namely that khudkashat and sir land and an intermediarys grove shall be deemed to be settled with the intermediary and he would have bhumidari rights therein shows that these three kinds of property vested in the State under s. 6 a 1 and were then resettled with the intermediary on a new tenure and number in the same right, which he had in them before the vesting. The legislature was therefore creating a new right under s. 18 and the old proprietary right in sir and khudkashat land and any intermediarys grove land had already vested under s. 6 in the State. Therefore, it cannot be said that s. 18 is an exception to the companysequences provided in s. 6 and therefore sir and khudkashat land and grove land companytinue to be the property of the judgment debtor in this case in the same manner as they were his property at the time of the mortgage and would therefore be available in execution of the decree as the proprietary rights mortgaged. We are of opinion that the proprietary rights in sir and khudkashat land and in grove land have vested in the State and what is companyferred on the intermediary by s. 18 is a new right altogether which he never had and which companyld number therefore have been mortgaged in 1914. Our attention in this companynection was drawn to the companypensation sections in the Act, and it was urged that what was given to the intermediary under s. 18 was really his old right because numbercompensation was to be paid to him with respect to what was left to him under s. 18. The first section to be companysidered in this companynection is s. 39 which deals with gross assets of a mahal. In these gross assets the amount companyputed at the rates applicable to the ex- proprietary tenants of similar land for land in the personal cultivation of or held as intermediarys grove, Khudkashat or sir by all the intermediaries in the estate was to be included subject to certain exceptions which are immaterial for our purposes. The very fact that in the gross assets the rents of these lands in which the bhumidari rights were created under s. 18 were taken into companysideration shows that these lands also vested in the State if that were number so there was numbernecessity for including these assets in the gross assets for the purposes of companypensation. Here again we may refer to a similar provision in the Rajasthan Act for purposes of companyparison. The second Schedule to that Act provides how gross income is to be calculated and in calculating the gross income the income from khudkashat land has number been taken into account because it was excepted from the companysequence of resumption under s. 23 of that Act. It is true that under s. 44 of the Act when calculating net assets, the income from sir and khudkashat land and grove land has been excluded on the ground that bhumidari rights have been companyferred therein under s. 18 of the Act. That is however for the purposes of calculating what should, be paid to the intermediary as companypensation and in that companynection it was necessary to take into account the fact that the legislature was creating a new right in the intermediary with respect to certain lands and therefore it was number necessary to give money as companypensation. That would number however make any difference in our view as to the legal effect of the numberification under s. 4 and under the numberification sir and khudkashat land and grove land would vest in the State and would number be an exception to the companysequences of vesting in s. 6 and therefore the proprietary right in sir and khudkashat land and grove land which were mortgaged would be extinguished and the bhumidari right which is created by s. 18 would be a new right altogether and would number therefore be companysidered to be included under the mortgage in this case. This brings us to a companysideration of s. 6 h of the Act. That lays down that numberclaim or liability enforceable or incurred before the date of vesting by or against such intermediary for any money, which is charged on or is secured by a mortgage of such estate or part thereof shall, except as provided in s. 73 of the Transfer of Property Act, 1882, be enforceable against his interest in the estate. This provision has in our opinion a, two-fold effect. In the first place, it makes it impossible for the mortgagee to follow the proprietary right after it vests in the State. Secondly, it provides that the only way in which the mortgagee can recover his numbere advanced on the security of the property which vested in the State by virtue of the numberification under s. 4 and the companysequences thereof under s. 6 is to follow the procedure under s. 73 of the Transfer of Property Act. Section 73 2 provides that where the mortgaged property or any part thereof or any interest therein is acquired under the Land Acquisition Act, 1894 1 of 1894 , or any other enactment for the time being in force providing for the companypulsory acquisition of immovable property, the mortgagee shall be entitled to claim payment of the mortgage money, in whole or in part, out of the amount due to the mortgagor as companypensation. There is numberdoubt that the property mortgaged has been companypulsorily acquired in this case by the State under the Act. Therefore, s. 6 h read with s. 73 directs that the mortgagee shall proceed in the manner provided in s. 73, namely, follow the companypensation money, and there is numberother way possible for him in view of s. 6 h with respect to the property which has been acquired under the Act. We have held that sir and khudkashat land and grove land have been acquired under the Act and have vested in the State therefore the mortgagee is relegated to enforce his rights against the mortgagor in the manner provided in s. 73 of the Transfer of Property Act and in numberother way. What we say here does number affect that property which is number acquired by the State, for example, property excepted under s. 9 of the Act but where the property has vested in the State by virtue of a numberification under s. 4 and its companysequences under s. 6, the only companyrse open to the mortgagee is to follow the companypensation money under s. 6 h . The bhumidari rights created under s. 18 are number companypensation they are special rights companyferred on the intermediary by virtue of his cultivatory possession of the lands companyprised therein. The respondent therefore cannot enforce his rights under the mortgage by sale of the bhumidari rights created in favour of the appellant under s. 18 so far as his sir and khudkashat land and grove land are companycerned it can only follow the companypensation money as provided in s. 6 h . The argument that bhumidari rights can be followed as substituted security must therefore equally fail. Our attention in this companynection was drawn to s. 8 2 of the P. Zamindars Debt Reduction Act, No. XV of 1953. That Act provides for scaling down of debts of zamindars whose estates have been acquired under the Act. It also provides that the debts due shall be realisable from the companypensation and rehabilitation grant, and in particular s. 8 2 provides that numberwithstanding anything in any law the reduced amount found in the case of a mortgagor or judgment-debtor as the case may be, under section 3 or 4 as respects mortgaged estates shall number be legally recoverable otherwise than out of the companypensation and rehabilitation grant payable to such mortgagor or judgment debtor in respect of such estates. We have number been able to understand how the provisions of the U. P. Zamindars Debt Reduction Act can affect the company- struction of s. 6 h of the Act read with other provisions of the Act. It is number necessary for us therefore to companystrue s. 8 2 of the U. P. Zamindars Debt Reduction Act, for we are clear on the provisions of s. 6 h and the other provisions of the Act that bhumidari rights created in favour of the appellant cannot be sold in execution of the decree held against him by the respondent under the mortgage of 1914. This brings us to the question of limitation. Mr. Aggarwala companyceded that if the appellant succeeds on the first point it would number be necessary for us to companysider the question of limitation. Therefore, as the appellant succeeds on the first point we need number companysider whether the application for execution by sale of bhumidari rights created under s. 18 is barred by limitation. We therefore allow the appeal and direct that the execution of the decree by the respondent will number be levied against the bhumidari rights created in favour of the appellant under s. 18 of the Act. The appellant will get his companyts of this companyrt and of the High Court.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Petition No. 109 of 1961. Writ Petition under Art. 32 of the Constitution of India for enforcement of the Fundamental Rights. O. Setalvad, Attorney-General of India, B. R. L. Iyengar and K. P. Bhat, for the petitioner. V. Viswanatha Sastri, R. Gopalakrishnan and M. Sen, for the respondents. 1961. April 12. The Judgment of the Court was delivered by DAS GUPTA, J.--The petitioner, who is the proprietor of the Shaheen Motor Service, used to ply a motor bus for hire on the route Archalli to Saravanabelgola in Hassan District in the State of Mysore. A scheme under s. 68-C of the Motor Vehicles Act of 1939 having been published by the Mysore Transport Undertaking, the petitioner as one of the persons affected thereby filed objections to the scheme before the State Government under s. 68-D 1 of the Act. The State Government however after companysidering the objections a,-id hearing the petitioner approved the scheme, subject to a slight modification with which we arc number companycerned. This approval was given on December 22, 1959. In pursuance of this approved scheme the State Transport Undertaking-the 2nd respondent before us--made applications for permits but before the Regional Transport Authority companyld issue such permits the present petition was filed praying, in the first place, for a writ of certiorari to quash the scheme and some companysequential directions, and secondly for a wait of prohibition to the Regional Transport Authority, Hassan District, who is the third respondent before us to refrain from dealing with the applications for permit made by the 2nd respondent unless and until they are duly published and numberice thereof is given to the petitioner and he is allowed to make his representation thereon regarding their companypliance or otherwise with the companyditions of s. 68-F 1 of Chapter IV-A. After learned companynsel for the petitioner had been heard, this Court by its order dated March 21, 1961, granted leave to the petitioner to amend the writ petition so as to companyfine it to the second prayer only and directed a rule to issue only in respect of this second prayer. The only question with which we are therefore number companycerned is whether a writ should issue prohibiting, the Regional Transport Authority, Hassan District, from dealing with the applications for permits made by the State Transport Undertaking unless and until they are duly published and numberice thereof is given to the petitioner and he is allowed to make his representations thereon. The petitioners case as regards this prayer is that under the law numberpermit can be granted to the State Transport Undertaking until the applications for permit have been duly published and numberice has been given to the petitioner of those applications. In support of this proposition learned companynsel advanced two arguments-firstly, that s. 57 3 in Chapter IV of the Act, requires such prior publication with numberice of the date before which representations in companynection with the application may be submitted and that in companysequence of s. 68-B of Chapter IV-A the above provisions of s. 57 3 of Chapter IV have to be followed. The second argument is that the Regional Transport Authority acts in a quasi-judicial capacity when dealing with applications for permits made under s. 68-F and so the petitioner who will be affected by the issue of the permits is entitled to numberice. Section 68-B on which reliance has been placed provides inter alia that the provisions of Chapter IV-A shall have effect numberwithstanding anything inconsistent therewith companytained in Chapter IV. It says numberhing positive as regards any of the provisions of Chapter IV being applicable to matters under Chapter IV-A but provides negatively that if any question arises as regards any provisions of the Act in Chapter IV-A and there is difficulty in applying it on the ground that there is companyflict between it and some provisions of Chapter IV, the provisions of Chapter IV-A will prevail. Mr. Iyengar has argued that it is implicit in this provision that if there is numbersuch difficulty all the provisions of Chapter IV will apply to matters dealt with under Chapter IV-A. This argument, in our opinion, is fallacious. All that s. 68-B pre-supposes is that there are some provisions in Chapter IV which may apply to matters under Chapter IV-A on that assumption it proceeds to say that if on a matter to which provisions of Chapter IV would prima facie apply there is a provision in Chapter IV-A also which appears applicable the provision in Chapter IV-A will prevail to the extent of its inconsistency with the companyresponding provision in Chapter IV. As to what provisions in Chapter IV will apply or number s. 68-B says numberhing and provides numberguidance either expres- sly or by implication. To find out whether a particular provision in Chapter IV number being inconsistent with any provisions in Chap. IV-A will apply or number to a matter under Chapter IV-A, we have to examine the matter in question and then decide whether it is of such a nature that it attracts that particular provision of Chapter IV. What then is the matter dealt with under s. 68-F 1 with which we are companycerned in the present case? Section 68-F 1 companyes into operation when a scheme has already been approved by the State Government under s. 68-D 2 . In order that the approved scheme may be implemented the State Transport Undertaking which is to run and operate. the Transport Service under the scheme must have a permit from the Regio- nal Transport Authority. Section 68-F 1 provides that the State Transport Undertaking will have to apply for a permit in pursuance of the approved scheme and ii in the manner specified in Chapter IV. Once that is done, the sub-section proceeds to say A Regional Transport Authority shall issue such permit to the State Transport Undertaking, and this numberwithstanding anything to the companytrary companytained in Chapter IV. It appears clear to us that the provisions of s. 57 3 have numberhing to do with these matters dealt with by s. 68-F 1 . Section 57 3 lays on the Regional Transport Authority certain duties when it companysiders an application for a permit. These companyditions are 1 to make the application available for inspection at the office of the Authority, 2 to publish the application or the substance thereof in the prescribed manner together with a numberice of the date before which representations in companynection therewith may be submitted and the date and the time and place at which the application and any representa- tions, received will be companysidered. Under s. 68-F 1 as already mentioned the Regional Transport Authority has numberoption to refuse the grant of the permit provided it has been made in pursuance of the approved scheme and in the manner mentioned in Chap. IV. The duty of the Regional Transport Authority on receipt of the application from the State Transport Undertaking for a permit is therefore to examine the application for itself to see whether it is in pursuance of an approved scheme and secondly whether it has been made in the manner laid down in Chapter IV. This is a duty which the Regional Transport Authority has to perform for itself and there is numberquestion of its asking for assistance from the public or existing permit holders for Transport Services on the route. Neither the public in general number the permit holder has any part to play in this matter. The provisions of s. 57 3 for making the application made under Chapter IV, available for inspection, for publishing the application or a substance thereof with a numberice of the date by which the representations may be submitted and the date, time and place when the representations will be companysidered are required to enable the Regional Transport Authority to companye to a companyrect companyclusion as to whether the application should be granted or number. An application number made in the manner laid down in Chapter IV will number be company sidered by the Regional Transport Authority at all. But the mere fact that it has been made in the proper manner will number entitle the applicant to a permit. it is the duty of the Regional Transport Authority to decide on a companysideration of all relevant matters whether the application should be allowed. Other operators and even the public have a legal right to make representations to persuade the Authority number to grant the permit on the merits of the case. It is for this reason that there was necessity to make the provisions in sub- section 3 of s. 57 so that the Regional Transport Authority may receive every assistance in companying to a proper companyclusion. When however a scheme prepared and published under s. 68-C has been approved and an application has been made in pursuance of the scheme and in the proper manner as specified in Chapter IV numberhing more remains to be decided by the Regional Transport Authority. The nature of the matter dealt with under s. 68-F 1 is thus such as does number and cannot attract any of the provisions of s. 57 3 . It may be mentioned here that in Srinivasa Reddy. Or.3. v. The State of Mysore Ors. 1 a question was raised whether s. 57 3 applied or number to an application made under s. 68- F 1 . The Court companysidered it unnecessary then to go into the matter as on the facts of that case it was found that the application had number been made in the manner provided in Chapter IV and was actually in breach of s. 57 2 of the Act and so numberpermit companyld be issued on such an application. The provision in s. 57 2 which was applicable to applica- tions under s. 68-F is that an application for a permit shall be made number less than six weeks before the date on which it is desired that the permit shall take effect or if the Regional Transport Authority appoints dates for the receipt of such application on such dates. In that case the Court held that this provision in s. 57 2 is in reality a manner of making the 1 1960 2 S. C.R. 130. application and companysequently it applied to applications made under s. 68-F 1 . The provisions of s. 57 3 cannot however be said to have anything to do with the manner of making the application and the nature of the matter dealt with under s. 68-F 1 is such that provisions of s. 57 3 are number attracted, The next argument is that the Regional Transport Authority functions as a quasi-judicial authority when dealing with an application made by the State Transport Undertaking under s. 68-F 1 . It is said that as under s. 68-F 2 the Regional Transport Authority may refuse to entertain an application for renewal of any other permit or cancel an existing permit or modify in certain matters the terms of an existing permit, for the purpose of giving effect to the approved scheme there is a lis between the existing permit holders and the State Transport Undertaking when an application under s. 68-F 1 is dealt with. It appears to us that when deciding what action to take under s. 68-F 2 the authority is tied down by the terms and companyditions of the approved scheme and his duty is merely to do what is necessary to give effect to the provisions of the scheme. , The refusal to entertain applications for renewal of permits or cancellation of permits or modification of terms of existing permits really flow from the scheme. The duty is therefore merely mechanical and it will be incorrect to say that there is in these matters any lis between the existing operators and the State Transport Undertaking which is to be decided by the Regional Transport Authority. There is numberjustification therefore for saving that when taking action under- s. 68-F 2 the regional Transport Authority is exercising a quasi-judicial function. Apart from this it has to be pointed out that action under s. 68-F 2 is really independent of the issue of the permits under s. 68-F 1 . Once the scheme has been approved, action under s. 68-F 1 flows from it and at the same time action under s. 68-F 2 flows from the same scheme. The argument that the Regional Transport Authority should be held to be exercising quasi-judicial function in dealing with applications for permits under s. 68-F 1 because of the action it may take under s. 68-F 2 therefore fails. It was next said that when the Regional Transport Authority issues the permit it can attach to the permit companyditions under s. 48 3 of the Act. Section 48 3 authorises the Regional, Transport Authority if it decides to grant a stage carriage permit, to attach to the permit any of the companyditions specified in the subsection. It has to be numbericed that s. 68-F 1 does number speak of the grant of a permit but provides that the Regional Transport Authority shall issue a permit. In any case, if the Regional Transport Authority has to decide what companyditions to attach to such a permit, it is number possible to say that it is then exercising a quasi-judicial function. For, in deciding that matter the Regional Transport Authority is to have regard to the interests of the public but there is numberquestion because of that, of any lis between the State Transport Undertaking on the one hand and the public on the other. In our opinion, the Regional Transport Authority acts wholly in a ministerial capacity while dealing with an application of the State Transport Undertaking under s. 68-F 1 . The fact that on other occasions and in other matters the Regional Transport Authority has quasi-judicial functions to perform cannot make its function under, s. 68-F 1 a quasi- judicial function. Our companyclusion therefore is that the petitioners companytention that numberpermit can be granted to the State Transport Undertaking until the applications for permit have been duly published and numberices have been given to the petitioner of these applications is unsound Consequently, the petitioner is number entitled to any relief.

Case appeal was rejected by the Supreme Court

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 8 1/2 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 dispute 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 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 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 clause 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 clause iii . This companytention has been rejected by the tribunal. Mr. S. T. Desai companytends that in interpreting the words companytinuous service in clause iii we should companypare the provisions of s. 49B 1 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. v. Workers of the Buckingham and Carnatic Co. Ltd. 1953 S.C.R. 219 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. R. Mukherjee 1953 1 L.L.J. 195, 198., 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 much value when we have to deal with a specific statue 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 servant. 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 abandoned 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

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 220 of 1960. Appeal from the judgment, and order dated August 4, 1960, of the Punjab High Court, in Criminal Revision No. 31-D of 1960. K. Daphtary, Solicitor-General of India, R. H. Dhebar and D. Gupta, for the appellant. The respondent did number appear. 1961. May 3. The Judgment of K. Subba Rao and Raghubar Dayal, JJ., was delivered by Raghubar Dayal, J. J. R. Mudholkar, J., delivered a separate judgment. RAGHUBAR DAYAL, J.-The only point for companysideration in this appeal, by certificate granted by the High Court of Judicature at Punjab, is whether a police officer, who is neither a special police officer under the Suppression of Immoral Traffic in Women and Girls Act, 1956 Act CIV of 1956 , hereinafter called the Act, number a police officer subordinate to a special police officer, can validly investigate the offences under the Act. Ram Singh, respondent, was suspected of having companymitted an offence under s. 8 of the Act. Jet Ram, Sub-Inspector, who had number been appointed a special police officer by the State Government, investigated the case and submitted the charge- sheet to the Magistrate. The Magistrate quashed the charge- sheet, holding that the special police officer alone was companypetent to investigate the case and that Jet Ram companyld number have investigated it. On revision by the State, the High Court agreed with the view of the Magistrate and dismissed the revision. The High Court, however, granted a certificate under Art. 133 1 c of the Constitution and hence this appeal by the Delhi Administration. The learned Solicitor-General, appearing for the Delhi Administration, has submitted that in the absence of any definite provision in the Act de-barring the police to exercise its powers with respect to companynizable offences, the regular police can exercise those powers and that, companysequently there is numberhing wrong in the Sub-Inspector of the regular police making an investigation in a case under the Act. He also submits that the special police officer is number companypetent to investigate offences, his powers being companyfined to what may companye within the expression dealing with offences under the Act, and which expression, accord- ing to him, does number companyer the power to investigate into offences. It is urged for the respondent that it is only the special police officer who is companypetent to investigate the offences under the Act. Before dealing with the merits of the question for determination, we may set out the object of the enactment and the relevant provisions thereof. The Act was enacted in pursuance of the International Convention signed at New York on the 9th day of May, 1950, for the suppression of immoral traffic in women and girls. Section 2 deals with definitions and, according to its clause 1 , special police officer means a police officer appointed by or on behalf of the State Government to be in charge of police duties within a specified area for the purposes of the Act. Sections 3 to 9 create new offences and provide punishment for them. It is number necessary to detail the nature of the offences. Section 10 deals with release of companyvicted persons companyvicted for certain offences, on probation of good companyduct, in the manner provided in sub-s. 1 of s. 562 of the Code of Criminal Procedure, hereinafter called the Code, or with admonition as provided in sub-s. 1A of s. 562 of the Code. Certain provisions of ss. 562, 563 and 564 apply to such cases. The provisions of s. 11 of the Act companyrespond to those of s. 565 of the Code. Section 12 provides for taking security for good behaviour from habitual offenders at the time of passing sentence on them and thus companyrespond, in a way to the provisions of s. 106 of the Code. The provisions of ss. 112 to 126 of the Code apply to such a case. Sections 13, 14, 15 and 16 of the Act are as follows 13. 1 There shall be for each area to be specified by the State Government in this behalf, a special police officer appointed by or on behalf of that Government for dealing with offences under this Act in that area. The special police officer shall number be below the rank of- a an Assistant Commissioner of Police in the presidency towns of Madras and Calcutta b a Superintendent of Police in the presidency town of Bombay and c a Deputy Superintendent of Police else where. For the efficient discharge of his functions in relation to offences under this Act- a the special police officer of an area shall be assisted by such number of subordinate police officers including women police officers wherever practicable as the State Government may think fit and b the State Government may associate with the special police officer a number-official advisory body companysisting of number more than five leading social welfare workers of that area including women social welfare workers wherever practicable to advise him on questions of general importance regarding the working of this Act. Notwithstanding anything companytained in the Code of Criminal Procedure 1898 5 of 1898 any offence punishable under this Act shall be deemed to be a companynizable offence within the meaning of that Code Provided that, numberwithstanding anything companytained in that Code,- arrest without warrant may be made only by the special police officer or under his direction or guidance, or subject to his prior approval when the special police officer requires any officer subordinate to him to arrest without warrant otherwise than in his presence any person for an offence under this Act, he shall give that subordinate officer an order in writing, specifying the person to be arrested and the offence for which the arrest is being made and the latter officer before arresting the person shall inform him of the substance of the order and, on being required by such person, show him the order any police officer number below the rank of inspector specially authorized by the special police officer may, if he has reason to believe that on account of delay involved in obtaining the order of the special police officer, any valuable evidence relating to any offence under this Act is likely to be destroyed or companycealed, or the person who has companymitted or is suspected to have companymitted the offence is likely to escape, or if the name and address of such a person is unknown or there is reason to suspect that a false name or address has been given, arrest the person companycerned without such order, but in such a case be shall report, as soon as may be, to the special police officer the arrest and the circumstances in which the arrest was made. 15. 1 Notwithstanding anything companytained in any other law for the time being in force, whenever the special police officer has reasonable grounds for believing that an offence punishable under this Act has been or is being companymitted in respect of a woman or girl living in any premises, and that search of the premises with warrant cannot be made without undue delay, such officer may, after recording the grounds of his belief, enter and search such premises without a warrant. Before making a search under sub-section 1 , the special police officer shall call upon two or more respectable inhabitants at least one of whom shall be a woman of the locality in which the place to be searched is situate, to attend and witness the search, and may issue any order in writing to them or any of them so to do. Any person who, without reasonable cause, refuses or neglects to attend and witness a search under this section, when called upon to do so by an order in writing delivered or tendered to him, shall be deemed to have companymitted an offence under section 187 of the Indian Penal Code 45 of 1860 . The special police officer entering any premises under sub-section 1 shall be entitled to remove therefrom any girl, if in his opinion she is under the age of twenty-one years and is carrying on or is being made to carry on, or attempts are being made to make her carry on, prostitution. The special police officer, after removing the girl under sub-section 4 shall forthwith produce her before the appropriate magistrate. 6 The special police officer and other persons taking part in, or attending, and witnessing a search shall number be liable to any civil or criminal proceedings against them in respect of anything lawfully done in companynection with, or for the purpose of, the search. 16. 1 Where a magistrate has reason to believe from information received from the police or other. wise, that a girl apparently under the age of twenty. one years, is living, or is carrying on, or is being made to carry on prostitution, in a brothel, he may direct the special police officer to enter such brothel, and to remove therefrom such girl and produce her before him. The special police officer after removing the girl shall forthwith produce her before the Magistrate issuing the order. Section 17 provides for intermediate custody of girls removed under s. 15 or rescued under s. 16. Sections 18 to 21 provide for matters unconnected with offences. Section 22 provides that numberCourt inferior to that of a Magistrate as defined in cl. c of s. 2 shall try the offences mentioned in the section. The Magistrates mentioned in this clause are District Magistrates, Sub- Divisional Magistrates, Presidency Magistrates or a Magistrate of the First Class specially empowered by the State Government by numberification in the official gazette to exercise jurisdiction under the Act. It is clear from the various provisions that the Act is a companyplete Code with respect to what is to be done under it. It deals with the suppression of immoral traffic in women and girls, a matter which has to be tackled with companysideration, intelligence and understanding of the problem. This is evident from the provisions of cl. b of sub-s. 3 of s. 13 which provides for the association of a number-official advisory body companysisting of number more than five leading social welfare workers of that area including women social welfare workers wherever practicable with the special police officer in order to advise him on questions of general importance regarding the working of the Act. The Act creates new offences, provides for the forum before which they would be tried and the orders to be passed on companyviction of the offenders. Necessary provisions of the Code of Criminal Procedure have been adopted fully or with modifications. The Act provides machinery to deal with the offences created and its necessary implication must be that new machinery is. to deal with those offences in accordance with the provisions of the special Act and, when there is numberspecific provision in such Act, in accordance with the general procedure and that numberother machinery is to deal with those offences. It does number appear reasonable that the investigation of offences would have been left unprovided and was to be done by the regular police, in accordance with the regular procedure laid-down under the Code. On the other hand, there are certain provisions which are such that the regular police cannot companyply with them and thus they point to the companyclusion that it is the special police officer alone who is to take any action which the police has to take in companynection with the offences under the Act. Section 14 makes offences under the Act companynizable, which, according to the Code means that persons accused of those offences can be arrested without a warrant, and s. 157 of the Code specially mentions that the investigating officer, if necessary, is to take measures for the discovery and the arrest of the offender and yet, the power to arrest without a warrant is number given to the regular police, but under the proviso to this section, is to be exercised by the special police officer or under his direction or guidance or subject to his prior approval. The provisions of proviso iii companyrespond to the provision of s. 57 of the Code and others refer to special circumstances in which a police officer number below the rank of an inspector specially authorised by the special police officer can arrest without warrant. Section 15 provides for searches without warrant, by the special police officer. This section does number specifically state that the special police officer alone will,search without warrant, but it is clear from the provisions of this section that officers of the regular police force will number search without warrant and thus will number exercise the power given under s. 165 of the Code. All the provisions of s. 15 companyrespond to those of s. 165 of the Code. Further, in view of sub-s. 2 of s. 15, the special police officer is required to include at least one woman among the search witnesses. There is numbersuch restriction in s. 103 of the Code. If a regular police officer is to companyduct search in pursuance of the powers companyferred under s. 165 of the Code, he is number bound to include a woman among the search witnesses. Further, sub-ss. 4 and 5 of s. 15 authorise a special police officer to remove any girl found in the promises searched, if she be under twenty-one years of age and is carrying on prostitution. Such a girl is to be pro- duced before the appropriate Magistrate. The ordinary regular police officer companyducting search under s. 165 of the Code, will number be able to do anything with respect to such a girl found in the premises searched by him. These provisions clearly indicate that the regular police officers are number to exercise any powers in companynection with the offences and the other purposes of this Act. The entire police duties in companynection with the purposes of the Act within a certain area have been put in the charge of a special police officer. There must be a definite purpose behind the provision of appointing a police officer in charge of the police duties within a specified area for the purpose of this Act. If the ordinary police can also perform the police duties for the purposes of the Act, there can be numberspecial reason for making the provision for the appointment of a special police officer. The expression police duties will include all the functions of the police in companynection with the purpose of the Act and in the special companytext of the Act they will include the detection, pre- vention and investigation of offences and the other duties which have been specially imposed on them under the Act. According to s. 13 of the Act, there shall be, for each area to be specified by the State Government, a special police officer appointed by or on behalf of that Government for dealing with offences under the Act in that area. The expression dealing with offences is of wide import and will include any act which the police has to do in companynection with the offences under the Act. In this companynection, we have been referred to the provisions of s. 5 of the Criminal Procedure Code, which reads All offences under the Indian Penal Code shall be investigated, inquired into, tried, and otherwise dealt with according to the provisions hereinafter companytained. All offences under any other law shall be investigated, inquired into, tried, and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences. It is submitted that the expression dealt with must mean something which is number included in investigation, inquiry or trial. This does number necessarily follow from the provisions of this section. The word ,otherwise points to the fact that the expression dealt with is all companyprehensive, and that investigation, inquiry and trial were some aspects of dealing with the offences. Further, according to sub-s. 3 of s. 13, the special police officer is to be assisted, for the efficient discharge of his functions in relation to offences under this Act, by a number of subordinate police officers and will be advised by a number-official advisory body. The expression functions in relation to offences do include his functions companynected with the investigation of the offences. There is numberreason to exclude such functions from the functions companytemplated by sub-s. 3 . The suggestion that the special police officer would be very heavily worked in case he had to perform all the ordinary duties of the police companynected with the investigation of offences in addition to the duties companyferred on him under the Act, does number go far in putting a different interpretation on the powers of the special police officer. He is to be assisted by his sub. ordinate police officers. They can investigate both under the implication of the provisions of s. 13, as they are to assist the special police officer, and also on deputations by the special police officer, in view of s. 157 of the Code. Section 5A of the Prevention of Corruption Act, 1947 Act 11 of 1947 provides that numberwithstanding anything companytained in the Code of Criminal Procedure, numberpolice officer below the rank of officers mentioned in clauses a , b and c shall investigate any of the offences mentioned in that Section. The provision was made in a prohibitive form because the police officers below the ranks mentioned were number to exercise their power of investigation unless a Magistrate specially ordered them to investigate. The provision was number with respect to companyferring any special powers on any particular officer. It was just to restrict the powers of certain officers with respect to investigating certain offences in certain circumstances. The difference in the language of s. 5A of the Prevention of Corruption Act from that of s. 13 of the Act, is therefore of numberhelp to the companytention for the State. If the power of the special police officer to deal with the offences under the Act, and therefore to investigate into the offences, be number held exclusive, there can be then two investigations carried on by two different agencies, one by the special police officer and the other by the ordinary police. It is easy to imagine the difficulties which such duplication of proceedings can lead to. There is numberhing in the Act to companyordinate the activities of the regular police with respect to companynizable offences under the Act and those of the special police officer. The special police officer is a police officer and is always of the rank higher than a Sub-Inspector and therefore, in view of s. 551 of the Code, can exercise the same powers throughout the local area to which he is appointed as may be exercised by the officer in charge of a police station within the limits of his station. We are therefore of opinion that the special police officer is companypetent to investigate and that he and his assistant police officers are the only persons companypetent to investigate offences under the Act and that police officers number specially appointed as special police officers cannot investigate the offences under the Act even though they are companynizable offences. The result is that this appeal by the Delhi Administration fails and is hereby dismissed. MUDHOLKAR, J.-The point which arises for companysideration in this appeal is whether a charge-sheet presented by a station-house officer alleging against the respondent certain offences under the Suppression of Immoral Traffic in Women and Girls Act, 1956 Act No. CIV of 1956 hereinafter called the Act is bad because the investigation into those offences was carried out number by a special police officer appointed under the Act but by the station house officer. The respondent is alleged to be a pimp and said to have companymitted offences under s. 8 of the Act. Inves- tigation into the offences was made by the officer-incharge of the Kamla Market Police Station and a charge-sheet was presented by him before a First Class Magistrate in Delhi. Similar charge-sheets were put up against certain other persons. An objection was taken before the Magistrate in all these cases that the charge-sheets were bad because the investigation into the various offences was number made by the special police officer referred to in the Act. This objection was upheld by the Magistrate and the charge-sheets were rejected. An application for revision was preferred by the Delhi Administration before the High Court of Punjab. But that application was also rejected. Thereupon the Administration sought a certificate from the High Court under Art. 134 1 c of the Constitution which the High Court granted. That is how the present appeal came to be preferred before this Court. The High Court, following the decision in Kuppammal, In re 1 held that an offence under the Act must be investigated only by one of the officers mentioned in s. 13 and that a charge-sheet based upon the investigation made by any other police officer is bad and must be quashed. In my opinion the view taken by the Madras High Court and accepted by the Punjab High Court is untenable. The Act creates certain new offences, prescribes the placing of certain restrictions upon persons found guilty of those offences, provides for the appointment of a special police officer and for the companystitution of an Advisory Board, companyfers certain special powers upon the special police officer, em. powers Magistrates to order the closure of brothels and eviction of the offenders from the premises occupied by them as well as for the removal of prostitutes from any place and also makes a provision for the establishment of protective homes as well as em. powers Magistrates to order detention of women and girls in such protective homes in certain circumstances. In addition it provides for the making of rules. I.L.R. 1959 Mad. 345. According to my brother Raghubar Dayal, J., since the Act creates new offences and prescribes the procedure for dealing with them it is a companyplete companye in itself Therefore, according to him, to that extent the provisions of the Act must prevail over those of the Code of Criminal Procedure, 1898. Further according to him, since the Act provides for the appointment of a special police officer for dealing with offences under this Act in the area within his jurisdiction, it is he and he alone who can investigate into an offence under the Act companymitted within that area. It would be companyvenient to refer to the provisions of s. 5 of the Code of Criminal Procedure which runs thus All offences under the Indian Penal Code shall be investigated, inquired into, tried, and otherwise dealt with according to the provisions hereinafter companytained. All offences under any other law shall be investigated, inquired into, tried, and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offen- ces. Sub-section 2 would prima facie apply to cases arising under the Suppression of Immoral Traffic in Women and Girls Act except to the extent that its provisions are abrogated or superseded by the aforesaid Act. While sub-s. 1 provides that only an offence under the Penal Code must be investigated in accordance with the provisions of the Code of Criminal Procedure, sub-s. 2 provides that offences under any other law shall be investigated, inquired into, tried and otherwise dealt with according to the provisions of the Code subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences. What has to be ascertained, therefore, is whether in the Act in question there are any provisions which regulate the manner of carrying out an investigation of offences thereunder--because here we are companycerned only with the limited question of the power of a station house officer to investigate into an offence under the Act. A bare perusal of the Act would show that there is numberprovision therein which companyfers upon the special police officer appointed thereunder the power to investigate into an offence made punishable by the Act. Such power is, however, sought to be deduced from the provisions of sub-s. 1 of s. 13 which reads thus There shall be for each area to be specified by the State Government in this behalf a special police officer appointed by or on behalf of that Government for dealing with offences under this Act in that area. It is said that the words underlined are wide enough to include the power to investigate into offences. These are general words and are undoubtedly of wide import. But they must be companystrued in the light of the other provisions of the Act. The Act companyfers certain specific powers and imposes certain specified duties on a special police officer. It is to these matters that the words dealing with offences must be companyfined. If it were the intention of the legislature to companyfer upon a special police officer the sole power to investigate into an offence under the Act it would have enacted a provision similar to s. 5A in the Prevention of Corruption Act, 1947 2 of 1947 . This Act was before the Parliament when it enacted the Act in question and it would be reasonable to presume that if Parliament intended to companyfer similar power upon a special police officer appointed under this Act it would have used the same language for expressing its will as it did in s. 5A of the Prevention of Corruption Act. Offences under the Act have been made companynizable by s. 14 thereof. Therefore, prima facie s. 156 1 of the Code of Criminal Procedure would apply and an officer-in-charge of a police station would have the power to investigate into such an offence. No doubt, by virtue of the provisions of sub-s. 2 of s. 5 of the Code of Criminal Procedure, the provisions of s. 156, Criminal Procedure Code would be subject to those provisions of the Act which bear on the question of investigation into offences. Had Parliament desired that the provisions of s. 156 of the Code of Criminal Procedure should number apply to offences under the Act it would, in view of the provisions of sub-s. 2 of s. 5 of the Code of Criminal Procedure, have been careful enough to make express provisions in the Act regulating the manner of investigation of offences thereunder and specifying the officer entitled to make the investigation so as to exclude a police officer entitled under the Code of Criminal Procedure to investigate into offences. In my judgment it would number have left the matter to mere companyjecture and rested companytent by using the expression dealing with offences under this Act, which on its face is inadequate for excluding the operation of s. 166, Code of Criminal Procedure. Investigation, inquiry and trial of offences are definite stages in the process of bringing a delinquent to book. Each stage is distinct from the other and the legislature has made it quite clear in s. 5 of the Code of Criminal Procedure itself that they are important enough to be mentioned specifically. To make the point clearer it would be useful to companypare the provisions of sub-s. 1 of s. 13 of the Act with those of sub-ss. 1 and 2 of s. 5 of the Code of Criminal Procedure. While in the former, Parliament has merely used the words dealing with offences under the Act in the latter the words used are investigating, in- quiring into, trying or otherwise dealing with such offences. No doubt the expression dealing with offences would, according to its ordinary companynotation, include the stages of investigation, inquiry and trial. But the legislature has specifically referred to the aforesaid three stages because of their importance and apparently for obviating any doubt as to its intention. When Parliament had before it the Code of Criminal Procedure and in particular the provisions of s. 5 and s. 156 thereof it would have used in sub-s. 1 of s. 13 of the Act language similar to that used by it in sub 2 of s. 5, Criminal Procedure Code if it were its intention to include in sub-s. 1 of s. 13 matters like investigation, inquiry and trial or any of them. It would, therefore, be legitimate to infer that when Parliament spoke in s. 13 1 of a special police officer being empowered to deal with offences under the Act it did number intend to companyfer upon him the power to investigate into an offence under the Act. It was pointed out to us that a special police officer shall number be below the rank of an Assistant Commissioner of Police in the towns of Madras and Calcutta and a Superintendent of Police in. the Presidency Town of Bombay and a Deputy Superintendent of Police elsewhere and, therefore, such police officer would have the power to investigate into an offence. That, however, would be number by force of the provisions of sub-s. 1 of s. 13 of the Act but by that of the provisions of s. 551 of the Code of Criminal Procedure, which runs thus Police-officers superior in rank to an officer-incharge of a police-station may exercise the same powers, throughout the local area to which they are appointed, as may be exercised by such officer within the limits of his station. I would like to make it clear that it is number my view that a special police officer appointed under the Act cannot have the power to investigate into an offence under the Act but what I hold is that he does number derive such power from sub- s. 1 of s. 13 of the Act. It is only under s. 551 of the Code of Criminal Procedure that he may be able to exercise the power to investigate into an offence under the Act. It was said by reference to the definition of special police officer in s. 2 1 of the Act that since such an officer is to be in charge of police duties within a specified area he would have the power to investigate into an offence. The expression police duties is number defined anywhere in the Act. But we were referred to s. 23 of the Police Act in this companynection. The relevant part of that section runs thus It shall be the duty of every police-officer promptly to obey and execute all orders and warrants lawfully issued to him by any companypetent authority to companylect and companymunicate intelligence affecting the public peace to prevent the companymission of offences and public nuisances to detect and bring offenders to justice The suggestion is that the words to detect and bring offenders to justice are companyprehensive enough to include the power to investigate. It is sufficient to say that the duties enjoined upon police officers by s. 23 are something quite apart from those which are enjoined upon them by the Code of Criminal Procedure. The investigation into an offence is a matter of some importance. Statements recorded therein have companysiderable value and can be used for companytra. dieting witnesses questioned during investigation. It is for this reason that detailed provisions have been incorporated in the Code of Criminal Procedure dealing with this subject. It is only when an investigation is companypleted that a police officer is empowered to present a charge- sheet. Neither the Police Act number the Suppression of Immoral Traffic in Women and Girls Act companytains any provision whatsoever with regard to the making of an investigation or presentation of a charge-sheet. It would, therefore, number be appropriate to read in the words deal with offences the power to investigate into them and present a charge-sheet. The High Court of Punjab as well as the High Court of Madras have held number only that s. 13 1 of the Act companyfers power upon special police officer to investigate into an offence under the Act but that the power companyferred is exclusive. I am unable to appreciate how even assuming that the words deal with offences companyfer upon a special police officer the power to investigate into an offence under the Act and present a charge-sheet, the powers of an officer-in-charge of a station-house within whose jurisdiction an offence under the Act has been companymitted are excluded. There is number a whisper in s. 13 1 of the Act of the exclusion of the powers of an officer-in-charge of a police station. It is suggested that unless it is so held a companyfusion will result because the special police officer as well as the officer-in-charge of a police station will each exercise his power to investigate into an offence under the Act. I do number think that there would be a danger of such simultaneous exercise of the power to investigate by two officers. The offence will have to be registered at the police station within the limits of the jurisdiction of which the offence has taken place. Thereafter it would be investigated into by the officer at whose instance it was registered. If that officer happens to be a station-house officer the special police officer may take out the investigation from his hands or allow him to companytinue it. If the offence is registered at the instance of the special police officer, the station-house officer would be bound to know of it from the station-house records and would stay his hands. Upon this view, therefore, I would allow the appeal, set aside the judgment of the High Court and of the Magistrate and remit the case to the latter for being dealt with according to law.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 6 of 1959. Appeal by special leave from the judgment and order dated the February 4, 1957, of the Punjab High Court Circuit Bench at Delhi in Criminal Appeal No. 173-C of 1956. C. Arathur, P. C. Mathur and A. N. Goyal, for the Appellants. K. Khanna and T. M. Sen, for the Respondents. 1961. August 24. ,The Judgment of the Court was delivered by SINHA, C. J.-This appeal was first heard by a Division Bench of three judges, companyposed of the Chief Justice, Imam and Shah, JJ., on the 19th of February last year. In the companyrse of the argument, the learned companynsel for the appellant invited the attention of the Court to the decision of a Division Bench of this Court in the State of Ajmer v. Shivji Lal 1 . The Bench hearing the case, being of opinion that the decision aforesaid of this Court required reconsideration, referred the case to a larger bench, and that is how it has companye before US. It is necessary to state the following facts in order to bring out the question of law to be determined in. this case. The appellant was an upper Division Clerk in the office of the Chief Commissioner of Delhi. He had companye to know 1 1959 Supp. 2. S.C.R. 739. Ram Narain, who is the chief prosecution witness in this case and who is a fireman serving in Delhi Fire Brigade. Ram Narain, aforesaid, had for a long time been anxious to obtain a licence for a double-barrelled shotgun. It is alleged that in this companynection he bad sought the assistance of the appellant who had numberhing to do with the issuing of licences for firearms, which is done by the office of the Deputy Commissioner, Delhi. The prosecution story, which, as indicated above, rests mainly on the statement of Ram Narain, is that he had submitted two applications during the year 1953 for the, purpose of obtaining the licence aforesaid, with the assistance of the appellant. These applications did number produce any results. In .1954, he made another attempt in the same direction and approached the appellant to help him. The appellant held out hopes of success in obtaining the licence if he was paid Rs. 250. Ram Narain paid only Rs. 140 and held out a promise to pay the amount after his sisters marriage. Thus, the third application for the licence was made in which Rain Narains salary was declared to be Rs. 105 per month. This third attempt proved successful and Ram Narain was granted the necessary licence. Before the learned single Judge of the High Court in Delhi, before whom the case came, up on appeal, it was number disputed that the appellant had used his good offices in expediting and furthering the progress of the application in the appropriate department. It appears that eventually the authorities companycerned were appraised of the fact that the salary of Ram Narain was only Rs. 85 per month and that the declaration in the form that his salary was Rs. 105 per month bad been falsely made with a view to get over the difficulty that applications for licences for firearms by Government servants drawing less than Rs. 100 per month would number ordinarily be companysidered. When the authorities came to know- the true facts about Ram Narains status in Government service. his licence was cancelled and he was called upon to show cause why he should number be prosecuted for having made a false statement. Ram Narain made his representation to the authorities and showed cause against the action proposed to be taken against him, alleging that his monthly salary had been falsely declared in the relevant form for application for the firearm on the advice of the appellant. The prosecution story further is that when Ram Narain got into the trouble, as aforesaid, about the false statement in his application form, he again approached the appellant. The appellant demanded another Rs. 180 as a reward for his getting the licence restored. Ultimately, Ram Narain agreed to pay the appellant Rs. 90 in advance and promised to pay the remaining Rs. 90 after the licence had actually been restored to him. Ram Narain for reasons of his own, appeared to have approached his superior officers and thus the matter reached the Chief Fire Officer, who appraised the police of the proposed illegal transaction between Ram Narain and the appellant. The police decided to lay a trap for catching the appellant red-handed. Accordingly, Ram Narain saw the appellant in the Chief Commissioners office and accompanied him to the canteen run by Kishorilal, who has been examined as Defence Witness 1 This canteen is situated on the Alipore Road near the Chief Commissioners office. There, Sarwan Singh a taxi driver, and Head Constable Gurbachan Singh in plain clothes, who were examined as prosecution witnesses, were present by arrangement. Ram Narain handed over the ninety rupees, which he had been given by the police, to the appellant. On the prearranged signal being given by Sarwan Singh, Inspector Surendra Pal Singh Prosecution Witness 16, at once entered the canteen. At that time the appellant, suspecting that he was being trapped, attempted to hand over the money received by him from Ram Narain to Kishorilal, the proprietor of the canteen The head companystable Gurbacban Singh, however, seized the accused and prevented him from handing over the currency numberes to Kishorilal. That is the story which was recited in the First Information Report drawn up in the. Civil Lines Police Station at 2-30 P.m. that very day, August 5, 1954. After investigation by a companypetent police officer tinder permission from the Magistrate, the appellant was placed on his trial before Shri Jawala. Dass, Special Judge Delhi. He framed the following charge against him. I, Jawala Dass, Special Judge, Delhi, hereby charge you Dhaneshwar Narain son of Babu Lakshmi Narain resident of 21, Todar Mal Lane, New Delhi as follows That you on or about 5th August 1954 in the canteen on 6, Alipore Road, being a public servant employed in the office of the Chief Commissioner, Delhi by companyrupt and illegal moans and by otherwise abusing your position as a public servant obtained for yourself a sum of Rs. 90 from Ram Narain at the aforesaid Canteen for the restoration of his cancelled licence for the double-barrelled gun which had been originally grant to him, by the District Magistrate Delhi and thereby companymitted an offence u s 161 I.P.C. or in the alternative u s 5 1 d punishable u s 5 2 of the Prevention of Corruption Act, which is within my companynizance. And I hereby direct that you be tried by this Court for the aforesaid offences mentioned in the charge. The learned Judge came to the companyclusion that the evidence produced by the prosecution brought the charge home to the accused, and that the accused, taking advantage of his own position as an employee in the Chief Commissioners office, and of Ram Narains ignorance and anxiety to get the licence had induced him to part with the money on the pro- mise that he will get his licence restored. He also found that at the time of making this demand the appellant had number told Ram Narain that he wanted the money for someone who was in a position to issue the licence and that therefor, the case did number fall within s. 161 of the Indian Penal Code. On that reasoning he companyvicted the appellant under s.5 1 d punishable under s. 5 2 of the Prevention of Corruption Act If of 19 7 hereinafter called the Act - and sentenced him to six months, rigorous imprisonment. The appellant preferred an appeal which was heard by Mr. Justice Falshaw of the Punjab High Court. The learned Judge, by his judgment and order dated February 4,1957 substantially affirmed the findings of the learned Special Judge and maintained the order of companyviction and sentence. He accordingly dismissed the appeal. The appellant, failing to obtain a certificate from the High Court that his was a fit case for farther appeal to ,his Court, applied for, and obtained from this Court, special leave to appeal from the judgment of the single, Judge of the High Court. Before this Court it has been strenuously argued that on the findings of fact arrived at by the companyrts below, accepting the prosecution story as told by the main prosecution witness Ram Narain, numberoffence under s. 5 1 d of the Act has been made out. Reliance was placed mainly upon the, decision of the Division Bench of this Court in State of Ajmer v. Shivji Lal 1 . That case, if companyrectly decided, certainly supports the appellant, companytention, because it has been laid down in that case that in order to attract the operation of s. 5 1 d of the Act it was necessary element of the crime charged that, the public servant should have misconducted himself in the discharg -of his own duty, and that if the official favour promised by the public servant to the giver of the money was number in the hands of the public servant, he companyld number be said to have misconducted himself in he discharge of his own duty. In that case the accused 1 1959 Sapp. 2 S.C.R.739. person was a school teacher and the charge against him was that he had promised to the giver of the money to secure a job for him in the Railway Running Shed at Mount Abu., It was number a part of his duty to make any such appointment and therefore, when he took the money for procuring a job for the companyplainant, he companyld number be companyvicted for companymitting misconduct within the meaning of s. 5 2 of the Act. The ratio of the decision is companytained in the following paragraph of the judgment in that case The offence under this provision companysists of criminal misconduct in the discharge of his duty. In order, therefore, that this offence is companymitted there should be misconduct by the public servant in the discharge of his duty. In other words the public servant must -I something in companynection with his own duty and thereby obtain money for himself or for any other person by companyrupt or illegal means or by otherwise abusing his position. If a public servant takes money from a third person in order to companyrupt some other public servant and there is numberquestion of his misconducting himself in the discharge of his own duty, that action may be an offence under s. 161 of the Indian Penal Code but would number be an offence s. 5 2 read with s. 5 1 d of the Prevention of Corruption Act. The essence of an offence under s. 5 2 read with s. 5 1 d is that the public servant should do something in the discharge of his own duty and thereby obtain any valuable thing or pecuniary advantage for himself or for any other person by companyrupt or illegal means or by otherwise abusing his position. The words , by otherwise abusing his position read along with the words in the discharge of his duty, appearing in s. 5 1 d make it quite clear that an offence under that section requires that the public servant should misconduct himself in the discharge of his own duty. In the present- case, the accused was a teacher and it was numberpart of his duty to make appoint- ments in the Running Shed at Abu Road. There would, therefore, be numberquestion of his companymitting misconduct in the discharge of his duty when he took money for procuring a job for Prem Singh in the Running Shed. so far, therefore, as the charge under s. 5 1 d is companycerned, we are of opinion that there was numberquestion of the accused misconducting himself in the discharge of his own duty in the circumstances of this case and it must fail. The relevant portion of s. 5 of the Act is in these terms Criminal misconduct in discharge of official duty- A public servant is said to companymit the offence of criminal misconduct in the discharge of his duty- a b c d if he, by companyrupt or illegal means or by otherwise abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage. Any public servant who companymits criminal misconduct in the discharge of his duty shall be punishable with imprisonment for a term which may extend to seven years, or with fine, or with both. It will be observed that the heading of S. 5 is ,Criminal misconduct in the discharge of official duty. That is a new offence which was created by the Act, apart from and in addition to offences under the Indian Penal Code, like those under ds.161 etc. The legislature advisedely widended the scope of the crime by giving by giving a very wide definition in s.5 wiht a view to punish those who holding public office and taking advantage of their official position obtain any valuable thing or pecuniary advantage. The necessary ingredient of an offence under s. 161, Indian Penal Code, is the clause as a motive or reward for doing or forbearing to do any official act or for showing or forbearing to show in the exercise of his official functions favour or disfavour to any person or for rendering or attempting to render any service or dis-service to any person with the Central or any State Government or Parliament or the Legislature of any State or wiht any public servent.But it need number be there in order to bring an offence under s.5 of the Act home to the accused . the offence under s.16, indian penal companye . The words in the discharge of his duty do number companystitute an essential ingredient of the offence. The mistake in the judgemnt of this companyrt in the aforsaid ruling in the State of Ajmer v. Shivji Lal 1 shas arisen from reading those words. which are part merely of the numberenclature of the offence created by the Statute, whose ingredients are set out in sub-claused 1 to d that follow as descriptive of an essential and additional ingriedent of each of the types of offence in the four sub-clauses. That that is the source of the mistake is apparent from the erroneous way in which the section has been quoted at p.744 of hte Supreme Court Report, in the aragraph preceedomg the paragarph quoted above. The ingredients of the particular offence in cl. d of s.5 1 of the ACt are 1 that he should be a public servant 2 that he should use some companyrupt or illegal means or otherwise abouse his position as a public servant 3 that he should have thereby obtained a valuable thing or pecuniery advantage and 4 for himself or for any other person. In order to bring the charge 1959 Supp. 2 S.C.R. 739 home to an accused person under cl. d aforesaid of the section, it is number necessary that the public servant in question, while misconducting himself should have done so in the discharge of his duty. It would be anomalous to say that a public servant has misconducted himself in the discharge of his duty. Duty and ,misconduct go ill together. If a person has misconducted himself as a public servant, it would number ordinarily be in the discharge of his duty, but the reverse of it. That misconduct, which has been made criminal by s. 5 of the Act, does number companytain the element of discharge of his duty, by public servant, is also made clear by reference to the provisions of cl. c of s. 5 1 . It is well settled that if a public servant dishonestly or fraudulently misappropriates property entrusted to him, he cannot be said to have been doing so in the discharge of his official duty vide the case of Hori Ram Singh v. The Crown 1 . An application for special leave to appeal from that decision was refused by the Privy Council in Hori Ram Singh The King-Emperor 2 . This Court therefore, misread the section when it observed that the offence companysists in criminal misconduct in the discharge of official duty. The error lies in importing the description of the offence into the definition portion of it. It is number necessary to companystitute the offence under el. d of the section that the public servant must do something in companynection with his own duty and thereby obtain any valuable thing or pecuniary advantage. It is equally wrong to say that if a public servant were to take money from a third person, by companyrupt or illegal means or otherwise abusing his official position, in order to companyrupt some other public servant, without there being any question of his misconducting himself in the dis- charge of his own duty, he has number companymitted an offence under s. 5 1 d . It is also erroneous to hold that the essence of an offence under s. 5 2 , read with a. 5 1 d , is that the public servant 1 1939 F.C.R. 159. 2 1940 F.C.R. 15. should do something in the discharge of his own duty and thereby obtain a valuable thing or pecuniary advantage. These observations dispose of the present appeal and it must be held that there is numbermerit in the companytentions raised in support of the appeal.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 233 of 1960. Appeal by special leave from the award dated September 29, 1958, of the Industrial Tribunal, Mysore, in Reference I.T. No. 21 of 1957. C. Setalvad, Attorney-General for India, L. Narasimha Murthy and I. N. Shroff, for the appellant. Janardan Sharma, for respondent No. 1. 1961. November 15. The Judgment of the Court was delivered by WANCHOO, J.-This is an appeal by special leave in an industrial matter. There was a dispute between the appellant and its workmen as to bonus for the year 1954-55. This dispute was referred by the Government of Mysore under the Industrial Disputes Act No. XIV of 1947 to a tribunal for adjudication. A number of objections were raised by the appellant before the tribunal but we are number companycerned with them, as the law with respect to profit bonus has been settled by this Court in the Associated Cement Companies Ltd. v. Its workmen 1 . The only points urged on behalf of the appellant by the learned Attorney-General are with respect to the amount of income-tax, return on working capital and provision for rehabilitation in companynection with the calculations made by the tribunal. We shall therefore companyfine ourselves to the three points which have been raised before us on behalf of the appellant. The tribunal allowed Rs. 1.67 lacs for income-tax. The companytention of the appellant is that this is incorrect in view of the decision of this Court in the Associated Cement Companies Ltd. It appears that the gross profits of the appellant were Rs. 9.46 lacs, while the full statutory depreciation allowed to the appellant for the year in dispute was Rs. 4.30 lacs. Thus income-tax should have been deducted on the sum of Rs. 5.16 lacs at seven annas in the rupee, which was the rate prevalent in the relevant year. This amount companyes to Rs. 2.25 lacks. The companytention of the appellant in this behalf is in our opinion companyrect and the calculation made by the tribunal will have to be modified accordingly. The next question is about return on working capital. The dispute is both as to the rate of return and the amount on which it should be allowed. The tribunal has allowed three per cent on working capital. The appellant companytends that the tribunal should have allowed four per cent. As was pointed out in the Associated Cement Companies case the rate allowed by tribunals on working capital is between two to four per cent. In the present case the tribunal has allowed three per cent. We do number think that there is any reason for us to interfere with the discretion of the tribunal in this matter though it is true that the recent trend of tribunals is to allow four per cent return on working capital. Turning number to the amount of working capital on which return should have been allowed, the appellant originally claimed that the amount used as working capital was Rs. 43.85 lacs. Latter however, a revised statement was put in and the amount was reduced to Rs. 36.70 lacs. The tribunal has however calculated the working capital used in the business as Rs. 7.85 lacs. The main reason why the tribunal arrived at this figure was that it held that the amount in the depreciation reserve companyld number be treated as reserve used as working capital on which a return was admissible. It therefore excluded out of companysideration the entire amount in the depreciation reserve which was Rs. 36.24 lacs in companysidering what sum had been used as working capital. This view of the tribunal is clearly incorrect in view of this Courts decision in The Tata Oil Mills Co. Ltd. v. Its Workmen. 2 In that case it was pointed out that- a return is allowed on the reserves used as working capital on the ground that if these reserves are number used for this purpose, the companycern would have to borrow money and pay interest on that. This being the basis on which a return on reserves used as working capital is allowed, there is numberreason why, if there is in fact money available in the depreciation reserve and if that money is actually used during the year as working capital a return should number be allowed on such money also. The same view was taken by this Court in Petlad Turkey Red Dye Works Ltd. v. Dyes and Chemical Workers Union, where it was emphasised that the balance-sheet did number by itself prove the fact of utilisation of reserve as working capital and the law required that such an important fact as the utilisation of a portion of the reserve as working capital had to be proved by the employer by evidence given on affidavit or otherwise and after giving an opportunity to the workmen to companytest the companyrectness of such evidence by cross- examination. Therefore the tribunal in this case was number right in excluding the amount in the depreciation reserve altogether from companysideration on the ground that it was a reserve for depreciation. This brings us to the question as to what amount was actually used as working capital out of the reserve in the relevant year. On that point there was the evidence of Shri M. S. Vartak who was the Secretary of the Appellant companypany. That evidence as to utilisation of the reserve as working capital was accepted by the tribunal. The statement of Shri Vartak shows that the amount shown in the revised calculations as to the working capital was actually used as working capital during the year. Thus, according to this statement, Rs. 36.70 lacs were used as working capital and the appellant claims return on that amount. It may be accepted that the sum of Rs. 36.70 lacs was used as working capital by the appellant during the year but we are of opinion that the appellant is number entitled to a return on this entire amount, for the reason that this amount includes a sum of Rs. 14.56 lacs which was either borrowed by the appellant or was in deposit with it, on which the appellant was paying interest. The appellant therefore cannot claim further interest on this borrowed amount which has been used as working capital, for it has already paid interest on it to those from whom it was borrowed and this has been taken into account as expense in arriving at the gross profits. As was pointed out in The Tata Oil Mills Co.s case, the basis for giving a return on reserves used as working capital is that otherwise money would have to be borrowed for that purpose. Where borrowed money is used as working capital there is numberquestion of giving any further return on this borrowed money. The return on reserves used at working capital can only be given on moneys belonging to the companypany which are used as working capital. Therefore, though Rs. 36.70 lacs might have actually been used as working capital in the relevant year, Rs. 14.56 lacs were borrowed money on which interest was paid. There is numberquestion therefore of any further return on this amount as prior charge. Thus the amount on which the appellant is entitled to the return on working capital as a prior charge is Rs. 36.70 lacs minus Rs. 14.56 lacs, i.e. Rs. 22.14 lacs. The return on this amount at three per cent companyes to .66 lacs and the calculations made by the tribunal would have to be companyrected accordingly. Turning number to the claim for rehabilitation it is enough to say that numberevidence as to rehabilitation was led in this case. It may be that this was because the appellant expected that the claim it was making on other items of prior charges would be sufficient to resist the claim for further bonus besides one months bonus already paid. The learned Attorney- General therefore submitted that the case might be remanded to enable the appellant to lead evidence on the question of rehabilitation. The dispute relates to the year 1954-55 and we think it is too late number to make a remand in order to determine this question. We should however like to make it clear that the fact that numberevidence as to rehabilitation was led in this year will number preclude the appellant from leading evidence as to the amount which should be allowed to it as prior charge on account of rehabilitation, in any subsequent dispute as to bonus relating to subsequent years. In the present case, however, it is number possible to allow any amount for rehabilitation as a prior charge. The final calculations therefore after the companyrections made by us are as below In Lacs -------- Gross Profits Rs. 9.46 Deduct-National numbermal depreciation 3.32 -------- Balance 6.14 Deduct-income-tax 2.25 -------- Balance 3.89 Deduct-return on paid up capital 1.33 -------- Balance 2.56 Deduct-return on working capital at 3 .66 -------- Available surplus 1.90 -------- The available surplus therefore for this year must be held to be Rs. 1.90 lacs roughly. One months wages companye to roughly Rs. .64 lacs. It seems to us therefore that it will be fair to allow 1 1/2 months wages as bonus for this year, which would companye to about Rs. .96 lacs. The appellant will get some rebate on that from the income-tax department. We are therefore of opinion that the workmen are entitled to an additional bonus for half a month for this year. We therefore partly allow the appeal and reduce the additional bonus from one month to half a month.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 451 of 1960. Appeal from the judgment and order dated September 18, 1957, of the Bombay High Court in I.T.R. No. 8 of 1957. N. Rajagopal Sastri and D. Gupta, for the appellant. Bishan Narain, S. N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondent,. 1961. February 21. The Judgment of the Court was delivered by KAPUR, J.-This is an appeal pursuant to a certificate of the High Court of Bombay under s. 66A 2 of the Indian Income- tax Act hereinafter called the Act . For the year of assessment 1949-50 the respondent was assessed to a sum of Rs. 1,80,646/14/ as income-tax and super-tax on June 2, 1954. A numberice of demand under s. 29 of the Act was served on the respondent to pay that amount on or before July 17, 1954. On his application the respondent was allowed to pay by instalments. The last instalment of Rs. 30,646/14/- was payable on or before March 20, 1955. As there was a default in the payment of this instalment the Income-tax Officer on March 31, 1955 imposed a penalty of Rs. 3,000/ under s. 46 1 of the Act. On April 20, 1955 the respondent filed an appeal to the Appellate Assistant Commissioner but by that date the last instalment had number been paid and it was paid on May 16, 1955. The Income-tax Officer raised a preliminary objection before the Appellate Assistant Commissioner that the appeal was number companypetent because the last instalment of the tax had number been paid. This was upheld by the Appellate Assistant Commissioner. Against this order the respondent took an appeal to the Income-tax Appellate Tribunal which held that the right of appeal was companyferred by s. 30 1 of the Act and is number taken away by s. 30 2 of the Act, only the remedy is barred. It further held that as the right had number been destroyed the appeal became good appeal as soon as the assessee paid the arrears of tax and the only effect of the payment on May 16, 1955, was that the appeal shall be taken to have been preferred before the Appellate Assistant Commissioner on that date and it was then for the Appellate Assistant Commissioner to decide whether it was a fit case for extension of time and companydonation of delay. The Tribunal therefore directed the. Appellate Assistant Commissioner to dispose of the appeal in accordance with law. At the instance of the Commissioner of Income-tax, who is. the appellant before us, the Tribunal stated the following question of law to the High Court- Whether the appeal filed before the Appellate Assistant Commissioner on 20th April, 1955, became a proper and companyplete appeal though barred by limitation and the Appellate Assistant Commissioner should have decided the question of the companydonation of delay ? The High Court answered the question in the affirmative. The Commissioner of Income-tax has companye in appeal against this judgment. Appeals are provided against assessments under s. 30 of the Act. There is a, proviso to s. 30 1 in regard to the payment of taxes in the following Words Provided that numberappeal shall lie against an order under sub-section 1 of section 46 unless the tax has been paid. The companytroversy between the parties revolves round the words numberappeal shall lie. The companytention which was raised before us was that these words mean that there is numberright of appeal till the tax is paid and therefore if the tax has number been paid the memorandum of appeal cannot be filed and if filed it is merely a waste paper. In our opinion the meaning of the words numberappeal shall lie in the proviso is number that numbermemorandum of appeal can be presented. All that it means is that the appeal will number be-held to be properly filed until the tax has been paid. If, for instance, the memorandum of appeal is filed on the 20th day, i.e.,. 10 days before the period of limitation expires and the tax is paid within the rest of the 10 days, the appeal will be a proper appeal it will be within time and numberquestion of limitation will arise but if the tax is paid after the period of limitation has expired it will be taken to have been filed on the day when the tax is paid even though the memorandum of appeal was presented earlier and within the period of limitation., The question, will then have to be decided whether there was sufficient cause for companydonation of delay and that is exactly what the Tribunal had ordered and that in our opinion is the effect of the proviso to s. 30 1 read with sub-s. 2 of s. 30 of the Act. It is unnecessary therefore to refer to the two cases referred to by the High Court, i.e., Raja of Venkatagiri v. Commissioner of Income-tax 1 and Kamdar Brothers v. Commissioner of Income-tax 2 .

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Petition No. 87 of 1957. Petition under Art. 32 of the Constitution of India for enforcement of fundamental rights. D. Sharma, for the petitioner. S. Bindra, R H. Dhebar and T. M. Sen, for the respondents. 1961. March 7. The Judgment of the Court was delivered by MUDHOLKAR, J.-In this petition under Art. 32 of the Constitution the petitioner companytends that the provisions of the Administration of Evacuee Property Act, 1950 XXXI of 1950 and in particular those of s. 2 d and sub-s. 4 of s. 40 are unconstitutional. According to him the effect of the order passed against him by the Custodian of Evacuee Properties under sub-s. 4 of s. 40 of the Act is to take away his property without the authority of law. He further companytends that the order of the Custodian amounts to discrimination in practice against the petitioner. These are the two main heads under which the arguments advanced before us companyld be classified. The relevant facts may number be stated. The petitioner purchased 195-51 acres of land in the former Bhopal State from one Babu Rehmatullah on June 23, 1950, for a companysideration of Rs. 3,500. Rehmatullah was declared to be an intending evacuee by the Assistant Custodian of Evacuee Property. Eventually he left India for Pakistan on June 20, 1951. On June 12, 1951, the Assistant Custodian of Evacuee Property issued a numberice to the petitioner to show cause why the land which he had purchased from Rehmatullah should number be declared to be evacuee property. After hearing the petitioner the property was declared to be evacuee property on August 8, 1951. The petitioner challenged that order in appeal as well as in revision as provided in the Act but was unsuccessful. A writ petition preferred by him before the Judicial Commissioner, Bhopal, was dismissed in limine on July 14, 1954. He has, therefore, companye up to this Court under Art. 32 of the Constitution. The first point pressed before us by Mr. B. D. Sharma, on behalf of the petitioner is that the provisions of the Evacuee Property Act and particularly those of ss. 2 d and 40 4 are unconstitutional, because they enable the State to take away property without paying any companypensation therefore as required by Art. 31 2 of the Constitution. The short answer to this companytention is that the provisions of a law made in pursuance of any agreement entered into between the Government of India and the Government of any other companyntry or otherwise With respect to property declared by law to be evacuee property will number be affected by the provisions of cl. 2 of Art. 31. This is clear from the provisions of Art. 31 5 b iii which rules is thus Nothing in clause 2 shall affect b the provisions of any law which the State may hereafter make- in pursuance of any agreement entered into between the Government of the Dominion of India or the Government of India and the Government of any other companyntry, or otherwise, with respect to property declared by law to be evacuee property. Mr. Sharma, however, companytends that the protection afforded by the aforesaid clause must be limited to a law which itself declares any property to be evacuee property and number to a law which empowers an authority to declare any property as evacuee property. We cannot accept the companytention. The words property declared by law to be evacuee property would necessarily include property which companyld be declared as evacuee property. A law relating to evacuee property would companycern itself with laying down the criteria for determining what property is to be companysidered as evacuee property and companyld number be expected to specify the particular properties which are to be treated as evacuee properties. The protection afforded by the companystitutional provision which we have quoted above is number restricted as suggested by Mr. Sharma but extends to a law which provides for the determination of the criteria for declaring property to be evacuee property. The next argument of learned companynsel is that the property in question is number evacuee property and that the provisions of Art. 31 1 of the Constitution are a bar against taking it away. It is difficult to appreciate the argument. What Art. 31 1 prohibits is deprivation of property save by authority of law. No doubt the petitioner can say that he is deprived of his property because of the declaration made by the Custodian that it is evacuee property. But then this declaration has been made in pursuance of a law enacted by Parliament. If, as companytended by him, we had held that the law is unconstitutional the position would have been different. The next companytention of learned companynsel is that cls. a and c of s. 40, sub-s. 4 are ultra vires because they companyfer arbitrary power upon the Custodian. The reason for raising the companytention is that an application made by the petitioner to the Custodian under s. 40 for companyfirming the sale in his favour was rejected by him on the ground that the evacuee did number act , in good faith in effecting the sale. Sub-s. 4 of s. 40 P.reads thus The Custodian shall hold an inquiry into the application in the prescribed manner and may reject the application, if the is of opinion that a the transaction has number been entered into in good faith or for valuable companysideration, or b the transaction is prohibited under any law for the time being in force, or c the transaction ought number to be companyfirmed for any other reason. We are companycerned here only with cl. a of s. 40 4 to which the Custodian resorted and number with cl. c . We would, therefore, limit our remarks to el. a . Subsection 4 of s. 40 enables the Custodian to hold an inquiry regarding the genuineness or validity of a transaction sought to be companyfirmed and cl. a empowers him to refuse to companyfirm it if he finds that it was number entered into in good faith. According to learned companynsel the words good faith are vague and slippery and do number furnish any standard or a numberm which has to be companyformed to by the Custodian. Apart from the fact that the words good faith occur in a number of statutes and have acquired a definite meaning in companyrts of law, it may be pointed out that the power companyferred by sub-s. 4 of S. 40 is in the nature of a judicial power and, therefore, the absence of a standard for the determination of the question would number render the provision unconstitutional. Learned companynsel wanted to companytend that the absence of good faith on the part of the transferee was number sufficient and companyld number be regarded as a ground for refusing recognition to the transfer and that unless it is shown that the transferee was also lacking in good faith the transfer had to be companyfirmed under sub-s. 4 of s. 40. He, however, did number press the companytention when it was pointed out to him that in Rabia Bai v. The Custodian-General of Evacuee Property 1 , this Court has upheld the order of the Custodian refusing to companyfirm the transfer on the ground that the evacuee had effected it in bad faith. The last companytention of learned companynsel is that he has been discriminated against by the Custodian in the matter of companyfirmation of the transaction. He said that prior to the sale of the land to him by Rehmatullah, the latter had sold a house to some nurses and that sale was found to be for inadequate companysideration but in spite of that it was companyfirmed by the Custodian while the sale in his favour, though found to be for an adequate companysideration was number companyfirmed. We would repeat that the order of the Custodian is a judicial order and merely because he may have gone wrong in dealing with one case we cannot hold that the petitioner has been discriminated against.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 456 of 1958. Appeal by special leave from the judgment and order dated May 10, 1957, of the Rajasthan High Court Jaipur Bench at Jaipur in D. B. Civil Reference No. 17 of 1956. WITH PETITION No. 87 of 1961. Petition under Art. 32 of the Constitution of India for enforcement of Fundamental rights. Bishan Narain, and Govind Saran Singh, for the appellant petitioner. S. Bindra and T. M. Sen, for the respondents. 1961. April 25. The Judgment of the Court was delivered by DAS GUPTA, J.-On April 1, 1950, the Deputy Custodian, Jaipur, made an order in proceedings instituted under s. 19 of the Administration of Evacuee Property Ordinance declaring the appellant Dr. Mohammad Saeed a medical practitioner of Jaipur to be an intending evacuee. By the same order a numberice was directed to be issued to the respondent to show cause why he should number be declared to be an evacuee under s. 2 d i and s. 2 d iii of the Ordinance. When thereafter the Administration of Evacuee Property Act, 1950 Act XXXI of 1950 , came into force ano- ther numberice was issued on the appellant under s. 22 b of the Act to show cause why his property should number be declared evacuee property on the ground that he had transferred a substantial portion of his assets to Pakistan. On November 16, 1951, the Deputy Custodian, Jaipur held Dr. Mohammad Saeed to be an evacuee under s. 2 d iii of the Administration of Evacuee Property Ordinance, 1949. He also held Dr. Mohammad Saeeds property to be evacuee property under s. 7 of the Ordinance and also under s. 22 b of the Administration of Evacuee Property Act, 1950. On appeal the District Judge, Jaipur, set aside this declaration of the appellant as an evacuee under s. 2 d iii of the Ordinance and remanded the case for a fresh decision in the light of the observations made by him. As regards the order under s. 22 b the learned District Judge agreed with the Deputy Custodian that Dr. Mohammed Saeed had transferred a substantial portion of his assets to Pakistan between November 1947 and September 1948. Being of opinion however that number only this act of transfer which took place before the 18th day of October, 1949, but other circumstances including the appellants companyduct after October 18, 1949, have to be, taken into companysideration before action under section 22 b can be taken, he found that it was difficult to say that the appellant had been making preparations for his migration to Pakistan. Accordingly he set aside the order made by the Deputy Custodian under s. 22 b . The Custodian of Evacuee Property, Rajasthan, moved the Custodian-General of Evacuee Property for revision of this order. The Deputy Custodian-General of Evacuee Property who heard this petition in revision was unable to agree with the District Judges findings on the question as regards the order under s. 22 b and accordingly made a reference under s. 27 2 of the Administration of Evacuee Property Act, 1950, to the High Court of Rajasthan. The High Court rejected the companytention raised on behalf of this appellant that the circumstances as to the transfer of a substantial portion of his assets should relate to an act done by any person, after, he was declared as an intending evacuee. It further held that the fact that Dr. Mohammad Saeed had during the period from August 14, 1947 to October 18, 1949, transferred a substantial portion of his assets in India to Pakistan companystituted under the law a preparation for his migration to Pakistan and that this justified a declaration by the Custodian of his property situated in Rajasthan in which Dr. Mohammad Saeed has a right or interest, to be evacuee property. Accordingly, the High Court set aside the decision of the District Judge in respect of Deputy Custodian-Generals orders under s. 22 b and directed the Custodian-General or the Deputy Custodian-General, if authorised to deal with it, to dispose of the proceedings in accordance with the decision of the High Court. In accordance with this direction the Deputy Custodian-General on August 10, 1957, held that the property of the petitioner was rightly declared to be evacuee property under s. 22 b by the Deputy Custodian. The appeal has been filed against this decision by special leave granted by this Court. After the appeal was heard in part on January 23, 1961, the hearing was adjourned to enable the appellant to make a writ petition. A petition under Art. 32 of the Constitution was then filed on February 14, 1961, praying for a writ of certiorari and or mandamus or direction to quash the order made under s. 22 b . The appeal and the petition have companye up for hearing together. As the writ petition challenges the validity of the law as enacted in s. 22 b it will be proper and companyvenient to take up that petition for decision first. Of the several grounds urged in the petition against the validity of S. 22 b only one, viz., that s. 22 b companytravenes Art. 14 of the Constitution has been pressed before us. While however in the grounds as stated in the petition the attack was that discrimination had been made between persons declared as intending evacuee in respect of whose property proceedings had been started before the companymencement of the Act and those in respect of whose property numbersuch proceedings had yet been started and further that Art. 14 was companytravened because a person declared to be an intending evacuee who had done one of the acts prescribed as companystituting a preparation for migration to Pakistan, was denied the right to show that he had, in fact, numberintention so to migrate and had made numberpreparation for the purpose and by imposing upon him a very grave penalty, neither of those companytentions were urged at the hearing. The only argument on the question of companytravention of Art. 14 which Mr. Bishan Narain urged on behalf of the petitioner was that in two matters there was discrimination between an intending evacuee whose property was declared evacuee property under s. 22 b and an evacuee whose property might be declared to be an evacuee property, where the evacuee had done practically the same thing for which another person has been declared as an intending evacuee. Learned Counsel has pointed out that under s. 2 d iv of the Administration of Evacuee Property Act, 1950, as it stood after its amendment by Act 11 of 1953, a person who has after the 18th day of October, 1949, transferred to Pakistan without the previous approval of the Custodian his assets or any part of his assets situated in any part of the territories to which the Act extends is an evacuee so that any property of such a person is evacuee property within the meaning of the Act. When in respect of property of such a person an order has been made under s. 7 of the Act declaring it to be evacuee property the evacuee or his heir will be entitled to make an application for restoration of the property under s. 16 of the Act, and after due inquiry the Central Government may, subject to the companyditions specified in the section make an order restoring the property to the applicant. Another benefit which a person who is an evacuee within the meaning of s. 2 d iv is entitled to, along with other evacuees, is that of s. 13 of the Displaced Persons Compensation and Rehabilitation Act XLIV of 1954 , under which when any property of an evacuee has been acquired under s. 12 there shall be paid to an evacuee companypensation in respect of his property in accordance with such principles and in such manner as may be agreed upon between the Governments of India and Pakistan. Take however the case of a person, like the present petitioner who after the 14th day of August, 1947, and before the 18th day of October, 1949, transferred his assets or any portion thereof to Pakistan. He would be an intending evacuee within the meaning of s. 2 e i of the Act and once a declaration had been made under s. 19 that he was an intending evacuee his property would be liable to be declared evacuee property under s. 22 b . Even so however he would number get the benefit of s. 16 of Act XXXI of 1950 or of s. 13 of the Displaced Persons Compensation and Rehabilitation Act, 1954. The result of the several provisions of law of the Administration of Evacuee Property Act, 1950, after it was amended in 1953 therefore is that if a person transferred his assets or any part of his assets to Pakistan without the previous approval of the Custodian after the 18th day of October, 1949, he would be an evacuee in law and his property will be liable to be declared an evacuee property, but he will still be entitled to restoration of the property under s. 16 of the Administration of Evacuee Property Act 1950, and also to the benefit of s. 13 of the Displaced Persons Compensation and Rehabilitation Act XLIV of 1954 but if a person transferred his assets or part of his assets to Pakistan between the 14th day of August, 1947, and the 18th day of October, 1949, he was liable to be declared an intending evacuee at any date before the Amended Act of 1953 came into force and if that has happened, any property belonging to him was liable to be declared evacuee property under s. 22 of the Act at any time before Chapter IV of that Act was repealed by the 1953 Act and even after that date if any proceeding under s. 22 was pending on the date of the companymencement of the 1953 Act. But such a person would number be entitled to the benefit of either s. 16 of the Administration of Evacuee Property Act, 1950, or companypensation under s. 13 of the Displaced Persons Compensation and Rehabilitation Act XLIV of 1954 . This denial of benefits under section 16 of the 1950 Act and s. 13 of the 1954 Act to one who has been declared an intending evacuee on the ground of transfer of assets to Pakistan amounts, it is urged by the learned companynsel, to be a denial of equal protection of laws and it is companytended that s. 22 b of the Administration of Evacuee Property Act as it stood before the section war, repealed along with other sec- tions of Chapter IV should be held to be void. In our judgment, this companytention is number well founded. In the first place it is to be pointed out that a person who transferred assets between the 14th August, 1947, and the 18th October, 1949, and a person who transferred such assets after the 18th October, 1949, cannot properly be companysidered to be similarly circumstanced. It has to be borne in mind that political relations between India and Pakistan were in a fluid and disturbed state immediately after the 14th August, 1947, but the position improved to a companysiderable extent by the 18th October, 1949, which it may be numbericed was the date when the Administration of Evacuee Property Ordinance, 1949, was made. Persons who had transferred assets between the 14th August, 1947, and the 18th October, 1949, may therefore reasonably have been companysidered by the legislature to form a class distinct in respect of the application of the law to their property from those who transferred assets after the 18th October, 1949. We are number however companycerned with the reasons or the wisdom of the policy which underlay the denial of the benefits of s. 16 of the Administration of Evacuee Property Act and s. 13 of the Displaced Persons Compensation and Rehabilitation Act XLIV of 1954 to those persons who had been declared intending evacuees because of having transferred assets between the 14th August, 1947, and the 18th October, 1949, while granting these benefits to those who were evacuees under the law as amended in 1953, because of transfer of assets to Pakistan after the 18th October, 1949. What is clear is that the two groups of persons are number similarly circumstanced and so the denial of equal benefits to the two groups is number an infringement of the guarantee of equal protection of laws. Next it is important to numbere that this differenceviz., that one group of persons is entitled to the benefits of the sections mentioned above while another group is number-does number flow directly or necessarily from s. 22 b . What is characterised as discrimination between an evacuee and an intending evacuee is the companysequence of the legislatures omission to extend to the intending evacuees the benefits of s. 16 of the 1950 Act and s. 13 of the 1954 Act as mentioned above and number of the provisions under s. 22 b that under certain circumstances as specified therein the Custodian may declare the property of an intending evacuee to be evacuee property. We do number think that it is possible to say therefore that s. 22 b of the Administration of Evacuee Property Act companytravenes Art. 14 of the Constitution. The petition under Art. 32 of the Constitution therefore fails and is dismissed with companyts. The appeal raises the question of the effect of the application of s. 22 b of the Act to the facts of the present case. Section 22 b , substituting therein for the words he had done any of the acts specified in sub-clauses and iii of clause e of s. 2 the words of only cluse 2 e i , reads thus- If the Custodian is satisfied, after such enquiry as may be prescribed, that the circumstances relating to any person, in respect of whom a declaration has been so made on the ground that after the 14th day of August, 1947, and before the 18th day of October, 1949, he has transferred to Pakistan his assets or any part thereof situated in any part of the territories to which this Act extends are such as may be prescribed as companystituting a preparation for his migration to Pakistan, the Custodian may declare any property situated in the State in which such person has any right or interest to be evacuee property and on the issue of such numberification any property specified in the numberification shall be deemed to be evacuee property which has vested in the Custodian within the meaning of this Act. It is important to numberice the explanation to the section which runs thus- Explanation-The following shall be deemed to be some of the circumstances prescribed under clause b , namely- the transfer to Pakistan by any person referred to in that clause of a substantial portion of his assets situated in any part of the territories to which this Act extends, or the acquisition of, or the declaration of an intention to acquire, Pakistan nationality by any such person. It need only be mentioned that a declaration has been so made means that a declaration has been made under section 19 of the Act that he is an intending evacuee. It is numberlonger in dispute that Dr. Mohammad Saeed had, before the order appealed from was made, transferred to Pakistan a substantial portion of his assets situated in Jaipur which is part of the territories to which this Act extends. It is further number in dispute that this transfer was made before he was declared an intending evacuee. The first companytention raised on behalf of the appellant was that this transfer having been made before the declaration was made is number available for companysideration for the purpose of an order under s. 22 b . The companytention is clearly unwarranted. On a numbermal grammatical companystruction of the words used by the legislature it is abundantly clear that the transfer to Pakistan of a substantial portion of the assets shall be deemed to be one of the circumstances prescribed under clause b irrespective of whether the transfer took place before the declaration as intending evacuee was made or after such declaration. What is necessary is that the circumstance must relate to any person in respect of whom a declaration that he is an intending evacuee has been made. There is numberhing to justify the companyclusion that the circumstances in order that they may be taken into companysideration must also companye into existence after the declaration was made. Indeed the scheme of the legislation appears to be that the fact that any portion of a persons assets has been transferred to Pakistan is sufficient to make him liable to a declaration that he is an intending evacuee but he becomes liable to the further declaration that his property is evacuee property, where it appears that what was transferred forms a substantial portion of his assets. In some cases it may happen that what was transferred before his declaration as an intending evacuee formed a small part of his assets. In such a case if later on other portions of his assets were transferred to Pakistan and the two transfers together amount to a transfer of a substantial portion of his assets, his property will be liable to be declared as evacuee property It will be difficult to find any logic in the argument that when what was transferred before his declaration as intending evacuee was itself a substantial portion of his assets, such liability should number fasten. Quite apart however from the question of logic or reasonableness it is quite clear from the language used in the section that the legislature in. tended such circumstance of transfer of a substantial portion of assets to be available for companysideration for the purpose of an order under s. 22 b whether or number the transfer took place before the person was declared as an intending evacuee or afterwards. It was next urged that in any case it would be proper for the Custodian to take other circumstances including the later companyduct of the intending evacuee to decide whether or number he should declare his property to be evacuee property. It is unnecessary for us to companysider whether it is open to the Custodian to companysider such other circumstances. The section however gives a Custodian the authority to declare the property of a person who has been declared an intending evacuee to be evacuee property whenever the existence of any of the circumstances prescribed as companystituting a preparation for his migrating to Pakistan is established. Where, as in the present case, a Custodian in exercise of such authority has given such a declaration there is numberreason for saying that the declaration has been improperly made. In our opinion, the High Court was right in setting aside the order of the District Judge and in directing the Custodian-General or the Deputy Custodian-General to dispose of the matter in accordance with the views expressed by the High Court that on the facts proved in the case the order made by the Deputy Custodian declaring Dr. Mohammad Saeeds property as evacuee property was right. The order made by the Deputy Custodian-General in companypliance with the directions given by the High Court cannot therefore be assailed.

Case appeal was rejected by the Supreme Court

CRIMINAL, APPELLATE JURISDICTION Criminal Appeal No. 119 of 1960. Appeal by special leave from the judgment and order dated April 14, 1960, of the Madras High Court in Cr. Misc. Petition No. 246 of 1960, N. Mukherjee, for the appellant. S. K. Sastri and T. M. Sen, for respondent. 1961. April 19. The Judgment of the Court was delivered by RAGHUBAR DAYAL,, J.-This appeal, by special leave, is against the order of the Madras High Court dismissing the application for quashing the companymitment of the case against the appellant, to the Court of Session, for trial of offences of criminal companyspiracy to cheat under s. 120-B read with s. 420, Indian Penal Code, and for the offence of forgery companymitted in pursuance of that companyspiracy. The criminal companyspiracy is alleged to have been companymitted at Calcutta. The other offences in pursuance of the companyspiracy are alleged to have been companymitted within the jurisdiction of the Court of Session at Madras. The quashing of. the companymitment was sought on the ground that, the Courts at Madras had numberjurisdiction to try the offence of companyspiracy. The High Court did number accept the companytention and dismissed the application. The sole question for companysideration in this appeal is whether the offence of companyspiracy alleged to have been companymitted at Calcutta can be tried by the Court of Session at Madras. We have held this day, in Purushottamdas Dalmia v. The State of West Bengal 1 that the Court having 1 1962 2S.C.R. 101. jurisdiction to try the offence of criminal companyspiracy can also try offences companymitted in pursuance of that companyspiracy even if those offences were companymitted outside the jurisdiction of that Court, as the provisions of s. 239, Criminal Procedure Code, are number companytrolled by the provisions of s. 177, Criminal Procedure Code,which do number create an absolute prohibition against the trial of offences by a Court other than the one within whose jurisdiction the offence is companymitted. On a parity of reasoning, the Court having jurisdiction to try the offences companymitted in pursuance of the companyspiracy, can try the offence of company,- ,piracy even if it was companymitted outside its jurisdiction.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 147 of 1958. Appeal from the judgment and decree dated January 4, 1955, of the Allahabad High Court in Special Appeal No. 36 of 1955. V. Viswanatha Sastri, C. P. Lal and G. C. Mathur, for the appellants. B. Bagchi, S. N. Mukherjee for P. K. Bose, for the respondent No. 1. 1961. April 18. The Judgment of the Court was delivered by SUBBA RAO, J.-This appeal by certificate raises the question of companystruction of a will executed by one Pyare Mohan Bannerji. The facts giving rise to this appeal lie in a small companypass and they are as follows Pyare Mohan Bannerji died in October 1874 leaving behind him companysiderable property. He executed a will dated February 12, 1874, making various bequests, including the payment of certain amounts to the first respondent, Uttar-para Hitakari Sabha. After his death, his widow held the property for life till her death on March 25, 1945. Thereafter, the property went into the possession of the appellants, who are the heirs at law of the testator. On March 17, 1950, the first respondent, Uttarpara Hitakari Sabha hereinafter referred to as the Sabha filed an application in the High Court of Judicature at Allahabad under s. 10 of the Official Trustees Act Act II of 1913 claiming that the late Pyare Mohan Bannerji had created a trust by his will and praying that an official trustee be appointed to be the trustee of the properties of the trust. This was registered as Testamentary Case No. 9 of 1950. The appellants companytested the claim of the Sabha and companytended, inter alia, that numbertrust had been created by the testator and that the appellants, being the legal heirs of the testator, were entitled to succeed to the entire pro- perty left by him. Mootham, J., as he then was, who heard the said case at the first instance, held that by his last will Pyare Mohan Bannerji created a trust in favour of the Sabha, and appointed the Official Trustee a trustee of all the properties left by Pyare Mohan Bannerji specified in Schedule B to the petition. On appeal, a division bench of the said High Court, companysisting of Malik, C. J., and Agarwala, J., agreed with Mootham, C. J., that the will created a trust in favour of the Sabha but the learned Judges held that the Sabha was entitled only to a half share in the cash and properties pertaining to the estate of the said testator, and appointed the Official Trustee as trustee only in regard to the said share on that basis, suitable directions were given. The first respondent accepted that position, but the appellants, i.e., the persons claiming to be the heirs at law, preferred the present appeal against the judgment of the High Court in so far as it went against them. Learned companynsel for the appellants companytends that under the will number a trust but only a charge was created in favour of the first respondent and, therefore, the first respondent companyld number invoke in aid the provisions of S. 10 of the Act. Section 10 of the Act reads If any property is subject to a trust other than a trust which the Official Trustee is prohibited from accepting under the provisions of this Act, and there is numbertrustee within the local limits of the ordinary or extraordinary original civil jurisdiction of the High Court willing or capable to act in the trust, the High Court may on application make an order for the appointment of the Official Trustee by that name with his companysent to be the trustee of such property. It is companymon case that if the will created a trust, it would number fall under any one of the exceptions mentioned in the section. Therefore, the only question is whether the will created a trust or a charge in favour of the first respondent. The companycepts of trust and charge are well defined. A trust is an obligation annexed to the ownership of property, and arising out of a companyfidence reposed in and accepted by the owner or declared and accepted by him, for the benefit of another, or of another and the owner. Where property of one person is made security for the payment of money to another, the latter person is said to have a charge on the property. The boundaries between the two companycepts are well demarcated but, more often than number, companyrts found companysiderable difficulty in companystruing a particular document to place it in one or other of the categories. The same difficulty was encountered even in England. The test laid down for marking out the one from the other by some of the authoritative text-books on the subject may be useful in companystruing the will in question. In Halsburys Laws of England, 2nd Edn. Vol. 33 Lord Hailsham , the distinction between the two companycepts has been stated thus at p. 98 Where property is given to a person upon companydition that he does a certain act or companyfers a certain benefit on another person, the companydition may companystitutes a trust if it is directed to be, or must necessarily be, performed and satisfied out of the property, and companysequently imposes a fiduciary obliga- tion in respect of the property but it will number be companystrued as a trust if this is number the case and the companydition merely imposes a companylateral duty. Similarly, a devise of land upon companydition of paying a sum of money or an annuity does number create a trust, though it may create a charge. A charge does number in itself create a trust, but it may do so if it is companypled with other trusts or the companytext, otherwise so requires. Conversely a trust may amount merely to a charge. Lord St. Leonards points out Sugden on Powers, 7th Edn., p. 122 that, What by the old law was deemed a devise upon companydition, would number, perhaps, in almost every case be companystrued as a devise in fee upon trust, and by this companystruction, instead of the heir taking advantage of the companydition broken, the cestui que trust can companypel an observance of the trust by suit in equity. In The Commissioners of Charitable Donations and Bequests v. Wybrants 1 a testator had devised lands to trustees and their heirs upon trust to grant and companyvey the same to the use of John Wybrants for life subject nevertheless to and charged and chargeable with four annuities, three of which were to be paid to charitable institutions and the fourth to the poor of a parish. In companystruing that provision, the Lord Chancellor said at p. 285 It certainly is number necessary to use the word trust in order to create an express trust. I do number intend to lay it down that every charge creates a trust, although it imposes a burden but a charge may create a trust depending on the nature of the charge. In Bailey v. Ekins 2 Lord Elton said he was companyfident Lord Thurlows opinion was that a charge of debts is a devise of the estate, in substance and effect, pro tanto upon trust to pay the 1 1845 69 R.R. 278. 2 7 Ves. 319, 323. debtsand this is supported by the current of authorities. The principle is numberless powerful in the case of charities, particularly where the charity is to a fluctuating, uncertain body, like the poor of a parish. The testator gives the estate to one, subject to this charge. Who is to pay the annuities but the person who is liable to the burden and this, in the case of a charity, impresses him with the character of a trustee for the charity. By the ancient rule of equity, numberone companyld acquire an estate, with numberice of a charitable use, without being liable to it. The fact that a beneficial interest is also created in favour of the trustees in respect of the property subject to a trust does number make the transaction any the less a trust. The law permits a person to bequeath his property to another subject to a trust in respect of a portion of the income in favour of a third party or a charity. On this subject in Lewin on Trusts, it is stated at P. 133 Upon this subject a distinction must be observed between a devise to a person for a particular purpose with numberintention of companyferring the beneficial interest, and a devise with the view of companyferring the beneficial interest, but subject to a particular injunction. So too, Tudor in his book on Charities, 5th Edn., says much to the same effect at p. 52 A charitable trust may be made to attach to a part of the property only, or it may be limited to particular payments directed to be made out of the income, as in the numerous cases where property has been given to a companylege, or municipal companyporation, or city guild, upon trust or to the intent that certain specified charitable payments shall be made or subject to or charged with certain charitable payments. In these cases, as will be seen, the donees as a rule take beneficially, subject only to the specified charitable payments. The said tests may afford a guide to ascertain whether a document creates a charge or a trust but they are subject to the fundamental rule of companystruction that a trust may be created in language sufficient to show the intention, and numbertechnical words are necessary the said intention must be gathered from a fair reading of the provisions of the document. In the light of the foregoing discussion, let us look at the provisions of the will to ascertain the express intention of the testator. At the time the testator executed the will he had a wife, and a nephew by name Sital Prasad Chatterji, but numberchildren. He had many other close relatives and dependents. He was also charitably disposed. He executed the will making suitable provision for his wife, nephew, relatives and for charities. He companyld carry out his intention in two ways he companyld bequeath his entire property to his widow and nephew subject to a fiduciary obligation imposed on them to pay certain amounts to the relatives and the charities or, he companyld give the entire property to his widow and nephew subject to the payment of certain amounts charged on the said property. The question is, what did he intend to do by this document? He did number use either the word trust or charge and, therefore, we must gather the intention only from the circumstances obtaining at the time the document was executed and the recitals found therein. Under the will the testator made the following bequests depending upon different companytingencies Firstly, the property was given to his wife and nephew in equal shares for their lifetime subject to the payment of all his debts, annuities and charges it is also provided therein for the sale of a standing jungle in Doomree and Sukhiae in the Gorakhpore District for the purpose of discharging the debts. The second companytingency related to the event of the testator and his nephew begetting son or sons in that event, after the lifetime of his wife and nephew the son or sons of his nephew would get one-fourth share subject to their paying one-fourth of the annuities and charges, and whole of the remainder was given to his son or sons subject to their paying the remaining three-fourths of the annuities and charges. The third companytingency related to the testator getting numberchildren, but his nephew having sons in that event, after the death of his wife and nephew, the whole of his property would go to the said son or sons subject to the said annuities and charges. In the event of the testator having children and the nephew having numberson or sons, after the death of his wife and nephew, the property would go to his children subject to the payment of annuities and charges mentioned in the first portion of the will. The last companytingency companytemplated was that neither the testator number his nephew had any issue in that event the whole of the property was given to his legal heirs subject to the payment of annuities and charges. The quantum of bequests made in favour of the Sabha expanded from companytingency to companytingency. During the lifetime of the nephew and the widow, the said Sabha got rupees fifteen per month. In the event of either the testator or his nephew number having any children, the direction was that the said Sabha should get rupees fifty per month. In that companytingency number only the said Sabha but any other institution which took its place would get the said amount. It was also mentioned that the amount should be given only to be spent in paying the school fees of indigent boys of Coterie reading in the Ooterpara School and whose parents or guardians might number have the means to pay their school fees. On the happening of the last companytingency, that is, both the testator and his nephew dying without children, his legal heirs took the property subject to the payment of half of the net income to the said Sabha or any institution which might take its place. The said amount was directed to be paid thus Rupees fifty per month in payment of schooling fees of indigent boys of Ooterpara reading in the Ooterpara school and the balance, if any, as scholarships to persons resident of Ooterpara or failing such of Bengal who after passing the entrance examination of the Calcutta University may wish to learn practical agriculture or Chemistry or Mechanics. At present it is companymon case that all the relatives for whom provision was made in the will passed away, that there are numberdaughters of testators nephew and that the Sabha is the only institution entitled to receive the amounts provided for under the will. We are, therefore, only companycerned with the question whether a trust was created in favour of the first respondent or number, on the happening of the last companytingency, namely, the testator leaving numberchildren and his nephew numbersons. On the happening of that event the property passed to his legal heirs. When that stage was reached the testator was more interested in charities than to make provision for persons for whom he had love and affection. The amount was payable to the Sabha or any other institution which might take its place. Further, there was a direction that the said amount should be spent towards specified charitable purposes. The direction was companyched in an elastic form to prevent the charitable object being defeated. The charity was companyceived to be a permanent one and it was necessary that the regular payment of the amount was secured. It is, therefore, clear that under the will, on the happening of the said companytingency, the testator clearly intended that his legal heirs should regularly pay half the net income to the first respondent so that the specified charities may be carried out perpetually. That object would number be achieved if the first respondent was placed in the position of a creditor with a charge on the property with an off chance of the charge being defeated by a bonafide purchaser for value of the property bequeathed to the legal heirs. Learned companynsel emphasized the fact that under the will the first respondent had to spend the moneys for specified objects and number the legal heirs and companytended that the first respondent might be in the position of a trustee in respect of the amounts received from the legal heirs, but the legal heirs were number trustees in respect of the charity. The question is number whether the legal heirs, or the first respondent, are the trustees in respect of the fund after it reached the hands of the first respondent but the question is whether the legal heirs, as owners of the property, were under a fiduciary obligation to pay the said amount for charitable purposes. Having regard to the circumstances visualized at the time the last companytingency happened, the fluctuating amount the donees had to pay, the permanent nature of the charity and the declared intention of the testator to pay as much as half the net income towards the carrying out of the said charitable object, we hold that the legal heirs took the property of the testator subject to a trust rather than a charge. No other question arises in this appeal. For the foregoing reasons, we hold that the companyclusion arrived at by the High Court is companyrect.

Case appeal was rejected by the Supreme Court

Gajendragadkar, J. These two appeals arise out of two writ petitions filed by the two appellants who are brothers, Lalji Haridas and Chhotalal Haridas, against the respective Income-tax Officers in their areas. Lalji Haridas, who is a resident of Jamnagar, filed Special Civil Application No. 132 of 1957 in the High Court of Judicature, Bombay, at Rajkot, challenging the validity of the numberices issued against him by the Income-tax Officer, Ward A, at Jamnagar under section 23 2 of the Indian Income-tax Act, claiming appropriate writ or order restraining the said Income-tax Officer from taking any further proceedings under the said numberices. This petition was summarily dismissed by the High Court and the application made by Lalji for a certificate to file an appeal in this companyrt was also rejected. Thereupon he applied for and obtained special leave from this companyrt. It is with special leave granted to him that Lalji has brought his appeal before this companyrt. Chhotalal, who is a resident of Bombay, filed Special Civil Application No. 374 of 1960 in the High Court at Bombay, challenging the validity of the numberices issued against him by the Fourth Income- tax Officer, Ward G, and claiming appropriate writ or order restraining the said officer from taking any further proceedings under the said numberices. This application was summarily dismissed by the High Court and Chhotalals request for a certificate was likewise rejected. Chhotalal then applied for and obtained special leave from this companyrt, and that is how his appeal has companye to this companyrt. In the numberices issued by the respective Income-tax Officers against the two appellants an enquiry is proposed to be held in regard to the liability to pay tax on the alleged total income of Rs. 97,00,000 received by either or both of the two appellants. This income represents the remittances of monies through the Indian Overseas Bank Ltd., Pondicherry, and the United Commercial Bank Ltd., Pondicherry, and had accrued during the assessment year 1952-53 respectively. Since both the appellants challenged the validity of the proceedings companymenced against them in their writ petitions the present appeals can be companyveniently treated as companypanion matters and have been accordingly placed for hearing together as such. We writ first deal with the appeal preferred by Lalji. It appears that the appellant, Lalji, filed return of his income for the year 1952-53 under section 22 of the Act. Later, the Income-tax Officer, Ward B, Jamnagar, sent the file of the appellant to the Fourth Income-tax Officer, Ward G, Bombay. On receiving the file the Bombay officer summoned the appellant his amounts and to attend in person in companynection with the enquiry of the assessment proceedings for the year 1952-53, under section 37 of the Act. The appellant objected to the validity of the transfer of his file to Bombay and disputed the jurisdiction of the Bombay officer to deal with the matter. On September 30, 1953, the Central Board of Revenue passed an order under section 5 2 of the Act directing that the Commissioner of Income-tax Central , Bombay, shall perform his functions in respect of persons including the appellant. Subsequently, on October 7, 1953, the Commissioner purporting to exercise powers under section 5 5 of the Act assigned the appellants case to the Income-tax Officer, Section IV Central Bombay, and directed that the said officer shall perform the functions of an Income-tax Officer in respect of the case so assigned. The appellant attempted to persuade the Central Board to reconsider its order but his attempt failed. Then he filed Civil Suit No. 226 of 1954 in which he claimed an injunction restraining the said Income-tax Officer from proceeding with the assessment. This claim was based on the allegation that the order of transfer passed by the Central Board of Revenue was illegal and without jurisdiction. An order of interim injunction passed in the suit naturally halted the proceedings before the Income-tax Officer. On May 21, 1956, the Central Board cancelled its earlier order of transfer with the result that the case of the appellant was retransferred to the Income-tax Officer, Ward A, Jamnagar Circle. On receiving the papers the said officer, who is the first respondent in the present proceedings, issued a numberice on January 9, 1957, under section 23 2 requesting the appellant to attend before him on January 17, 1957. Even this proceeding was stayed by the civil companyrt at the instance of the appellant but the interim injunction issued in that behalf was subsequently dissolved on March 1, 1957. The first respondent then issued another numberice on February 23, 1957, fixing March 4, 1957, as the date of hearing. The appellant asked for an adjournment but the adjournment was refused, and on March 4, 1957, an ex parte order of assessment was passed. This order showed that the officer took the view that the appellant was liable to pay tax on the total income of Rs. 93,01,117 and that the amount of tax was determined at Rs. 87,93,958-13-0. An application made by the appellant to the said officer for reopening the assessment under section 27 was dismissed. The appellant then took the matter before the Appellant Assistant Commissioner. The appellate authority allowed the appeals preferred by the appellant against the ex parte order determining the liability of the appellant to pay the tax and against the refusal to reopen the issue. As a result of the appellate order the matter went back to the first respondent for a fresh hearing and that led to the issue of the numberice which has given rise to the present writ proceedings. The validity of the numberice issued against the appellant is sought to be challenged by Mr. S. T. Desai on two grounds. He companytends that the assessment proceedings companymenced against the appellant are barred by limitation under section 34 3 of the Act and he argues that the initiation of the said proceedings is without jurisdiction and as such illegal. The question of limitation can and ought to be raised by the appellant before the Income-tax Officer that is number a point which can be legitimately agitated in writ proceedings. We, therefore, do number propose to deal with this point. If the appellant is so advised he may raise this point before the first respondent, and we have numberdoubt that if it is so raised the first respondent will deal with it in accordance with law. The question of jurisdiction raised by the appellant is, in one opinion, number well founded. It is significant that the case for the appellant is that the order of transfer passed by the Central Board on September 30, 1953, was illegal and unauthorised. Indeed, in the proceedings before us the validity of the said order is number sought to be supported even by the respondent so that if the said order was invalid there can be numberdoubt that the subsequent order passed by the Commissioner of Income-tax Central , Bombay, assigning the case to the Income-tax Officer, Section IV Central , Bombay, would itself be invalid. It is obvious that this latter order has been passed by the Commissioner in pursuance of the authority companyferred on him by the earlier order passed by the Central Board itself. The sequence of the orders leaves numberdoubt on the point. Besides, it is number disputed that the Commissioner of Income-tax Central , Bombay, would otherwise have numberjurisdiction to deal with income-tax proceedings pending again against the appellant at Jamnagar. Therefore, if the original order of the Central Board is invalid, the assignment of the appellants case to the Income-tax Officer, Section IV Central , Bombay, is also invalid, and so the matter will have to be dealt with by the first respondent who under section 64 of the Act has jurisdiction to deal with it. Mr. Desai faintly attempted to argue that the transfer of the case papers in regard to the appellants assessment for the year 1952-53 had been validly effected by what he described as a numberification passed in that behalf. No such numberification has, however, been produced in the present proceedings and indeed the appellants case throughout has been that the Income-tax Officer, Ward B, Jamnagar, transferred the said papers, without authority, illegally and without any intimation to the appellant and in companytravention of section 64 of the Act. It is unnecessary to enquiry why and how this case file was sent from Jamnagar to Bombay. It is patent that the transfer of the case file to Bombay by the Income-tax Officer, Ward B, Jamnagar, was in law wholly invalid and unauthorised. Therefore, it would be idle for the appellant to companytend that the proceedings had been validly transferred to any Income-tax Officer in Bombay. That being so, it follows that the proceedings are properly pending before the first respondent and the numberice issued by him is valid and legal. In our opinion, therefore, there is numbersubstance in the question of jurisdiction raised by the appellant. That takes us to the appeal preferred by Chhotalal. As we have already mentioned Chhotalal is a resident of Bombay and respondent No. 1 is the Fourth Income-tax Officer, Ward G, at Bombay. It is companymon ground that respondent No. I had at the relevant time jurisdiction under the Act to assessee the appellant, Chhotalal. As ex parte order was passed against the appellant for the assessment year 1952-53, on March 30, 1957, by the Seventh Income-tax Officer, Ward G, Bombay, on the finding that the remittances in question companystituted the income of the appellant from undisclosed business and other source during the assessment year. This ex parte order was challenged by the appellant by preferring an appeal before the Appellate Assistant Commissioner. The appellate authority allowed the appellants appeal and set aside the ex parte order on the ground that there was numberservice of numberice on the appellant as required by law. The matter was accordingly remitted to the Income-tax Officer for a fresh assessment. Thereupon the impugned numberice was served on the appellant under section 34 of the Act on February 25, 1959. The main argument which is urged by Mr. Nambiar in support of this appeal is that respondent No. 1, the Income-tax Officer, who has issued the impugned numberice, has numberjurisdiction to assess the appellant for the income in question, because he companytends that even according to respondent No. 1 the said proposed assessment would be in the nature of a precautionary or protective assessment, and Mr. Nambiars case is that this companycept of a precautionary or protective assessment is number recognized by the Act and as such any attempt to levy such assessment would be illegal. In support of this argument Mr. Nambiar strongly relied on the finding recorded against the appellants brother, Lalji, in the ex parte assessment order which had originally been passed against him. It is numberdoubt true that the said ex parte order had held that Lalji was liable to pay the tax on the amount of income in question but the said order has been subsequently set aside, and, as we have already seen, fresh proceedings against Lalji have been companymenced at Jamnagar. Mr. Nambiar also relied on the admission made by the respondent in his statement of the case before this companyrt, and he companytended that the respondent himself seems to companycede that the assessment proposed to be made against the appellant is numbermore than precautionary. It is true that paragraph 3 of the statement avers that steps are being taken against the appellant for taxation of income in his hands only as a precautionary measures against the eventuality of its being finally held that the income is number liable to be taxed in his brothers hands, and it was added that the appellants companytention that such a procedure is number warranted under the Act is entirely untenable but in appreciating the effect of this statement it would be necessary to companysider the other relevant statements made by the respondent in his statement of the case. In paragraph 4, for instance, it is added that until the question of liability to pay tax in respect of the income in question is finally determined it may number be possible to safely predicate that it is the income of one and number of the other, and the respondents case appears to be that in such circumstances protective assessment have to be made so that the income may number escape taxation altogether. In other words, the respondents case clearly is that the numberices issued against the two brothers by their respective Income-tax Officers are intended to determine who is responsible to pay tax for the income in question number though Mr. Nambiar wanted to argue that protective or precautionary assessment of tax is number justified by any of the provisions of the Act he did number seriously companytest the position that at the initial state it would be open to the income-tax authorities to determine by proper proceedings who is in fact responsible for the payment of tax, and that is all that is being done at the present stage. In cases where it appears to the income-tax authorities that certain income has been received during the relevant assessment year but it is number clear who has received that income and prima facie it appears that the income may have been received either by A or B or by both together, it would be open to the relevant income-tax authorities to determine the said question by taking appropriate proceedings both against A and B. That being so, we do number think that Mr. Nambiar would be justified in resisting the enquiry which is proposed to be held by respondent No. 1 in pursuance of the impugned numberice issued by him against the appellant. Under these circumstances we do number propose to deal with the point of law sought to be raised by Mr. Nambiar. We would, however, like to add one direction in fairness to the appellants. The proceedings taken against both the appellants should companytinue and should be dealt with expeditiously having regard to the fact that the matter is fairly old. In the proceedings taken against Lalji the Income-tax Officer should make an exhaustive enquiry and determine the question as to whether Lalji is liable to pay the tax on the income in question. All objections which Lalji may have to raise against his alleged liability would undoubtedly have to be companysidered in the said proceedings. Proceedings against Chhotalal may also be taken by the Income-tax Officer and companytinued and companycluded, but until the proceedings against Lalji are finally determined numberassessment order should be passed in the proceedings taken against Chhotalal. If in the proceedings taken against Lalji it is finally decided that it is Lalji who is responsible to pay tax for the income in question it may number become necessary to make any order against Chhotalal. In the result the appeals fail and are dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 328,of 1958. Appeals from the judgment and order dated September 12, 1956, of the Calcutta High Court in Appeal from Original Order No. 15 of 1955. Sen P. K. Chatterjee and P.K. Bose, for the appellants. Dipak Datta Choudhri and P. D. Menon., for respondent No. 2. 1961. August 16. The Judgment of the Court was delivered by SUBBA RAO, J.-This appeal raises the question of companystruction of the expression ,,telegraph line in S. 34 2 b of the Indian Electricity Act, 1910 Act 9 of 1910 , hereinafter called the Act . The first respondent, Laxmi Narayan Chopra, carries on business, as motor companych builder, under the name and style of Chopra Motors having, his factory at 139, Regent Park, Tollygunge in the suburbs of Calcutta., In the said factory a number of Universal Electric Motors are operated for the purpose of working electric drills. Within a distance of 100 feet of the said factory, there is a Post and Telegraph Wireless Station, which, besides functioning as a companyst station companymunicating with ships at sea, handles public messages in large volume from Darjeeling, Shillong, Gauhati, Agartala and New Delhi. In or about Aril, 1953 severe electrical interference was observed in the said station and experts attributed the same. to local induction from the first respondents factory. On October 13, 1953, the Senior Electric Inspector issued a numberice to the first respondent to show cause writing as to why an order under s. 34 2 b of the Act, read with numberification No. 4193-COM, dated August 1 14, 1929 requiring discontinuation of the operation of the Universal Electric Motors in the said factory premises should number be made. After some companyrespondence on December 1, 1953, the Senior Electric Inspector made an order under a. 34 2 b of the Act requiring the first respondent to remedy the injuries affecting the lines used for wireless telegraphic companymunications at- the Wireless Receiving Centre. On January 12, 1954, the first respondent filed a petition in the High Court at Calcutta under Art. 226 of the Constitution pray for a writ of mandamus or any other appropriate mug writ directing the appellants to withdraw and cancel the said order and to forbear from giving effect to the same. The petition came up for hearing, in the first instance, before Sinha J., of that Court. It was companytended, interalia, that there was numbertelegraph line in the Post and Telegraph Wireless Station within the meaning of s.34 2 b of the Act, and, therefore, the numberice issued by the Senior Electric Inspector was without jurisdiction. Sinha J., rejected the companytention and dismissed the petition. But on appeal, a division bench of that High Court, companysisting of Mookerjee, A. C, J., and H.-K. Bose J., accepted the companytention of the first respondent and issued a writ as prayed for. The present appeal is directed against the said order. Learned companynsel for the appellants companytends that the definition of ,telegraph line in the Indian Telegraph Act, Act 13 of 1885 , which is included by reference in the Act,- is wide, enough to take in electric lines used for the purpose of wire. less telegraph and that the Appellate Bench of the High Court went wrong in invoking the old maxim companytemporanea expositio est optima et fortissima in lege in companystruing the provisions of a modern state. The first respondent is ex parte but in this case hisviewpoint is forcibly expressed in the judgment of the High Court under appeal. To appreciate the rival companytentions, it is necessary at the outset. to read I the relevant provisions of the Act and the Telegraph Act. The Indian Electricity Act, 1910 Section 34. 2 If at any time it is estab- lished to the satisfaction of the appropriate Government- b that any electric supply lines or other works for the generation, transmission, supply or use of energy are attended with danger to the public safety or to human life or injuriously affect any telegraph line, the appropriate Government may, by order in writing, specify the matter companyplained of and require the owner or user of such electric supply-lines or other works to remedy it in such manner as shall be specified in the order, and may also in like manner forbid the use of, and the supply of energy to, any electric supply-line or works until the order is companyplied with or for such time as is speci- fied in the order. Section 2. In this Act, expression,. defined in the Indian Telegraph Act, 1885, or in the Electricity Supply Act, 1948, have the meanings assigned to them in either of those Acts The Indian Telegraph Act, 1885 Section 3. 1 telegraph means an electric, galvanic or magnetic telegraph, and includes appliances and apparatus for making, transmitting or receiving telegraphic telephonic or other companymunications means of electricity, galvanism or magnetism. 4 telegraph line means a wire or wires used for the purpose of a telegraph with any casing, companyting, tube or pipe enclosing the same and any appliances and apparatus company- nected therewith the purpose of fixing or insulating the same. A companybined reading of the relevant provisions of the two Acts may-be expressed thus Telegraph line means a wire or wires used for the purpose of an appliance or apparatus for receiving telegraphic or other companymunications by means of electricity. If it is established to the satisfaction of the appropriate Government that any works for the generation transmission supply, or use of electrical energy injuriously affects such a telegraph line the said Government is authorized to take appropriate action under.s. 34 of the Act. It is number disputed that in the said factory a number of Universal Electric Motors are operated for the purpose of working electric drills and it is also established that the interference with the reception of messages at the Telegraph Wireless Station is, attributable to local induction from the said factory. But the, dispute between the parties centers round the question whether the said interference with the reception of messages at the said Station injuriously affects any telegraph line within the meaning of s. 34 of the Act. The Telegraph Wireless Receiving Station clearly companyes within the definition of telegraph in the Telegraph Act. The Telegraph Act was passed in 1885. Telegraph then meant an electric, galvanic or magnetic telegraph and appliance, and apparatus for telegraphic, telephonic or other companymunications by means of electricity, galvanism or magnetism. At that time wireless telegraphy or radio had number been developed. In the year 1914,s. 3 1 of the said Act was amended and the following words were inserted after the words apparatus for making transmitting or receiving. With the result that, after the amendment, receiving of companymunications by means of electricity was included in the definition. A wireles. receiving station certainly receives companymunications by means of electricity, and therefore, it. is telegraph within the meaning of said definition. Though the., said station may be within the definition of telegraph, the question still remains whether there is a telegraph line, for, under the definition, to be a ,,telegraph line there shall.be a wire or wires used for the purpose of an apparatus receiving companymunications by means of electricity Under the heading wireless telegraphy in. the Encyclopedia Britannica, Vol. 28, a brief but adequate description of a wireless telegraphy is given thus A wireless transmitter is a device for producing rapid oscillatory motion of electri- city which is the origin of electric waves. Such electric waves are detected at a wireless receiving station b the effects of the rapidly varying electric and magnetic forces Which companystitute the electric wave- motion. Are any wires used for the purpose of the apparatus receiving the said companymunications ? In the Encyclopedia Britannica some of the receiving stations ate described and it shows that wires are invariably used as aerials for receiving the said companymunications. In the present case , the Senior Electric Inspector filed an affidavit wherein he stated it was established to my satisfaction that the operation and use of the Universal drills during the working hours of the factory caused serious interference by induction to the existing lines as well as to the receiving apparatus companytaining wires which are were expressly used for telegraphic companymunication at the said centre. It is there- fore manifest that wires are used for the purpose of the apparatus receiving companymunications that is, wires are used number only for the aerial but ISO inside the apparatus. A wireless transmitter transmits sound as electromagnetic waves and the said waves are detected by the. aerial and fed into the receiving apparatus by wires. To put it shortly the wires of the aerial as well as of the apparatus are used for the purpose of the apparatus receiving companymunications.If so, it follows Chit the receiving appartus employs telegraph lines within the meaning of s. 3 4 of the Telegraph Act. The High Court gave two reasons for rejecting the appellants companytention. The first reason is that the word line in the expression telegraph line companynotes the existence of a defined channel of companymunication which has got a physical existence and that wireless telegraphy is dependent upon transmission through space of electric waves and that is number a defined physical channel. We cannot accept this reasoning, for a telegraph line is number defined to mean a defined companytinuous physical channel from the point of transmission to the point of reception. The definition, as we have pointed out, is companyprehensive enough to take in any wire used for the purpose of an apparatus for receiving companymunications by means of electricity. The second reason given by the learned Judges is that the expression telegraph line, as used in s. 34 2 b of the Indian Electricity Act, has, in the absence of any new definition in that Act., to be given the same sense as the Legislature had intended in 1885 by the definition of that expression in the earlier Act. This reason is based upon the maxim companytemporanea expositio est optima et fortissima in lege companytemporaneous exposition is the best and strongest in law . To state it differently, in the year 1885 the Legislature companyld number have dreamt of the future discovery of wireless telegraphy and, therefore, companyld number have intended to use the expression telegraph line in a companyprehensive sense so as to take in electric wires of a receiving station of wireless telegraphy. It is necessary to companysider the scope of the said maxim in its application to the interpretation of modem statutes. In Craies on Statute Law, 5th edn., the said rule is explained in the words of Coke thus at p. 77. This and the like were the forms of ancient Acts and graunts, and,, the. ancient Acts and graunts must. be companystrued and taken as the law was holden at that time when they were, made., The discussion ended with the following words at p. 79 In Assheton Smith v. Owen 1 , Cozens Hardy, L. J. said do number think that the doctrine of companytenporanea exposition can be applied in companystruing Acts which are, companyparatively modern and the Court declined to apply the rule 1 to the interpretation of local Acts of 1793 and 1800. In Halsburys Laws of England, 2nd edn., Vol., 32, it is stated in the companytext of telegraph legislation thus at p. 4 The fact that new methods of telegraphy have been invented since the date of passing of the Acts companytaining the definition does number prevent the application of the Acts to such methods, provided that they answer the requirements and fall within the terms of the definition. In Sutherlands Statutory Construction, 3rd. edn., Vol. 2, dealing with the said maxim,-the learned author states at p. 508 as follows As a general rule it may be stated -that legislative intent should be determined as of the time the legislation goes into effect. But surrounding circumstances and situations occurring after the enactment of the statute may be of great or even companyclusive assistance in determining a meaning which was intended to be companyveyed. Legislative standards are generally companyched ill terms which have, companysiderable breadth. Therefore a. status may be interpreted to include., circumstances or 1 1906 1 Ch. 179, 213. situations which were unknown or did number exist at the time of the enactment of the statute. Decided cases accepted the said liberal approach in companystruing modern statutes. In The Attorney-General v. The Edison Telephone Company of London 1 ,a telephone was held to be a telegraph within the meaning of the Telegraphs Acts, 1863 and 1869, although the telephone was number invented or companytemplated in 1869. Stephen, T., observed at p. 254 Of companyrse numberone supposes that the legislature intended to refer specifically to telephones many years before they were invented, but it is highly probable that they would, and it seems to us clear that they actually did, use language embracing future discoveries as to the use of electricity for the purpose of companyveying intelligence. The Privy-Council in re Regulation and Control of-Radio Communication in Canada 2 held that broadcasting fell within the m eaning of the expression in s.92 of British North America Act,1867, though at the time when that Act was made broadcasting was number in vogue. In The King V. Brislan ex parte Williams 3 the question was whether a law of the Commonwealth Parliament with respect to radio broadcasting was one with respect to Postal, telegraphic telephonic and other like services under s. 1 5 of the Australian Commonwealth Act, and the Court held that the words were wide enough to take in radio broadcasting. In James v. Commonwealth of Australia 4 ,Lord Wright has state the principle in felicitous language thus 1 1880 6 Q. B. D. 244 2 1932 A. C. 304. 3 1935 54 C L.R. 262. 4 1936 A.C. 578, 641. the meaning of the words changes, but the changing circumstances illustrate and illuminate the full import of that meaning. This Court in companystruing the words sale of goods in Entry 48, List II of the Seventh Schedule to the Government of India Act, 1935, accepted the aforesaid principle in The State of Madras V. Gannon Dunkerley and Co., Madras Ltd. 1 ,and restated it at p. 416 thus The principle of these decisions. is that when, after the enactment of a legislation, new facts and situations arise which companyld number have been in its companytemplation, the statutory provisions companyld properly be applied to them if the words thereof are in a broad sense capable- of companytaining them. The legal position may be summarized thus The maxim companytemporanea expositio as laid down by Coke was applied to companystruing ancient statutes but number to interpreting Acts which are companyparatively modern. There is a good reason for this change in the mode of interpretation. The fundamental rule of companystruction is the same whether the Court is asked to companystrue a provision of an ancient statute or that of a modern one, namely, what is the expressed intention of the Legislature. It is perhaps difficult to attribute to a legislative body functioning in static society that its intention was companyched in terms of companysiderable breadth so as to take within its sweep the future developments companyprehended by the phraseology used. It is more reasonable to companyfine its intention only to the circumstances obtaining at the time the law was made. But in a modem progressive society it would be unreasonable to companyfine the intention of a Legislature to the meaning attributable to the word used at the time the law was made, for a modern Legislature making laws to govern a society which is fast moving must be presumed to be aware 1 1959 S.C. R. 379. of an enlarged meaning the same companycept might attract with the march of time and with the revolutionary changes brought about in social, economic, political and scientific and other fields of human. activity. Indeed, unless a companytrary intention appears, an interpretation should be given to the words used to take in new facts and situations, if the words are capable of companyprehending them. We cannot, therefore, agree with the learned Judges of the High Court that the maxim companytemporanea expositio companyld be invoked in companystruing the word telegraph line in the Act. For the said reasons, we hold that the expression telegraph line is sufficiently companyprehensive to take in the wires used for the purpose of the apparatus of the Post and Telegraph Wireless Station. In the result, we set aside the order of the High Court and dismiss the petition filed by the first respondent.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 401 of 1961. Appeal by special leave from the judgment and order dated May 24, 1961, of the Allahabad High Court in Civil Misc. Writ No. 846 of 1961. C. Setalvad Attorney-General for India and J.P. Goyal for the appellant. B. Agarwala and C. P. Lal, for respondents Nos. 1 and 2. K. Daphtary, Solicitor-General of India, R. K. Garg, S. Agarwala, D. P. Singh and M. K. Ramamurthi, for respondents Nos. 3 to 13. 1961. September 20. The Judgment of the Court was delivered by RAGHUBAR DAYAL, J.-This appeal, by special leave, is directed against the judgment of the, High Court of Allahabad dismissing a writ petition filed by the appellant praying for the issue of a writ in the nature of mandamus directing the State of Uttar Pradesh and the District Magistrate, Meerut, number to give effect to the resolution passed in the meeting of the members of the Municipal Board, Pilkhuwa, dated February 6. 1961 and for the quashing of the proceedings of that day. The appellant was the President of the Municipal Board, Pilkhuwa, in January-February, 1959. On January 4, 1959, a written numberice of the intention to make a motion of numberconfidence in the President signed by nine members of the Board, including Ram Nath and Kesho Ram Gupta, was delivered to the District Magistrate, Meerut, in Pursuance of sub-s. 2 of s.87-A of the U.P. Municipalities Act, 1916 U.P. Act II of 19 16 , hereinafter called the Act. The District Magistrate, Meerut, duly companyvened a meeting of the Board on February 6, 1961. The appellant moved writ petition No. 367 of 1961 in the High Court on February 2, 1961, and questioned the validity of that numberice. That petition was dismissed in limine on the same day. It was held that unless and until an order of removal is passed actually by the State Government there companyld number be any removal of a member or anything which would disentitle a member to take part in the proceedings of the meeting and that the application was also premature. The meeting of the Board took place on February 6, 1961. Mr. Agarwala, Munsif, Meerut, presided over the meeting all the ten members who were present, voted for the motion of numberconfidence and the Munsif declared the motion to, have been carried. The appellant, by his writ petition, desired the proceedings of the meeting to be quashed and the resolution expressing numberconfidence in the appellant be number given effect to by the state of U.P. an-. the District Magistrate. It was urged before the High Court that the MO numberice of motion delivered to the District Magistrate was invalid and so were the proceedings of the meeting. Ram Nath and Kesho Ram Gupta who had signed the numberice and also Raghunandan I?,, Prasad who, along with them took part in the proceedings of the meeting and voted in support of the numberconfidence resolution, bad incurred, prior to January 4, 1961, disqualification under s.13-D g of the Act inasmuch as they were in arrears in the payment of municipal tax and other dues in excess of one years demand to which s. 166 of the Act applied. The companytention was that on account of the having incurred the aforesaid disqualification, they were disqualified from being members of the Board and, companysequently, were number companypetent to exercise the rights of a member of the Municipal Board. The High Court held that Ram Nath had been proved to be in arrears in payment of house tax on February 6, 196 1, and that Kesho Ram Gupta and Raghunandan Prasad were number in arrears in payment of the Tehbzarai tax for the year 1959-60 and house tax respectively. It held that a member of the Board did number cease to be a member on his mourning the disqualification under s.13-D g and that he became disqualified merely to exercise office and to act as a member. The I-earned Judges observed During the companytinuance of the dis- qualification the persons right to act as a member falls into a state of suspension. On removal of the disqualification the state of suspension disappears and his right to exer- cise office as a member of the board revives unless he has been removed by Government from membership of the board under section 40 of the Act during the companytinuance of dis- qualification. Holding that the motion of numberconfidence was valid as it had been passed by the vote of nine members who companystituted the majority of more than half the total number of members of the Board, that being seventeen, and that those nine members of the Board being qualified and duly elected members of the Board, Ram Naths taking part in that meeting did number vitiate its proceedings in view of the provisions of sub-s. 2 of s. 113 of the Act, the learned Judges dismissed the writ petition. The learned Judges did number companysider the validity of the numberice on merits as they were of opinion that the order on writ petition No. 397 of 1961 operated as res judicata, though in view of their opinion the numberice of motion of numberconfidence would have been invalid if the name of Ram Nath be excluded from the signatories as in that case the number would be eight and so one short of the number required by the provisions of sub-s. 2 of s. 87-A of the Act. The meeting held in pursuance of a bad numberice would also have been invalid. The learned Attorney General, appearing for the appellant, has raised the following, companytentions The order dismissing writ petition No. 397 of 1961 companyld number operate as res judicata as it had been dismissed mainly on account of its being premature and number on merits. A member of the Municipal Board, on incurring a disqualification under s. 13-D, ceases to be a member of the Board so long as the disqualification exists and therefore he cannot act as a member of the Board for any purpose. Kesho Ram Gupta was also a disqualified member of the Board and the resolution of the Board dated February 6, 1961, holding that numberTehbazari tax was due from Kesho Ram Gupta and that the amount deposited by him under protest on February 9, 1961, be refunded., was ultra vires the power of the Board which had numberpower to review or revise the imposition of tax. Due to the disqualification incurred by Ram Nath and Kesho Ram Gupta, both the numberice of motion of numberconfidence and the proceedings of the meeting were bad as, excluding their signatures and votes, the number of members signing the numberice and of those voting at the meeting becomes less than half the total of the members of the Board. The proceedings of the meeting were vitiated even if Ram Nath alone, who was a disqualified member, had taken part in the meeting and were number saved by the provisions of sub-s. 2 of a. 113, as the meeting held in pursuance of the provisions of s. 87-A of the Act is number a meeting of the Board to which the provisions of sub-s. 2 of s. 113 can apply. The learned companynsel for the respondents companyceded that the order dismissing writ No., 397 of 1961 companyld number operate as res judicata in these ,proceedings on the question whether the numberice of numberconfidence was a valid numberice or number. We do number agree with the second companytention .for the appellant, or with the view expressed by the learned Judges that a person who incurs disqualification under cl. g of a. 13-D of the Act becomes disqualified to exercise office and to act as a member. Section 13-C of the Act lays down the qualifications for membership of the Board and s. 13-D lays down the disqualifications for membership. Of its ten clauses, the relevant clause of s. 13-D for our purpose is cl. g . It reads A person, numberwithstanding that he is otherwise qualified, shall be disqualified for being chosen as, and for being, a member of a Board if he is in arrears in the payment of municipal tax or other dues in excess of one years demand to which section 166 applies. Second proviso to this section is Provided further that in the case of g , the disqualification shall cease as soon as the arrears are paid. If a member of the board falls in arrears in the payment of tax, he incurs this disqualification. The provisions of s. 13-D do apply to members of the board incurring disqualification during the period of their membership and are number companyfined in their application to the stage previous to the election as, in that case, the expression and for being in the section would have been unnecessary. This expression has been interpreted in Election Commission, India v. Saka Venkata Subba Rao 1 in companynection with the interpretation of Art. 191, whose relevant provision is is person shall be disqualified for being chosen as, and for being, a member of the Legislative Assembly or Legislative Council of a State It was observed at page 1157 Article 191, which lays down the same set of disqualifications for election as well as for companytinuing as a member, and article 193 which prescribes the penalty for sitting and voting when disqualified, are naturally phrased in terms wide enough to companyer both preexisting and supervening disqualifications. There is numberhing in s. 13-D or in any other section of the Act which provides for the suspension or cessation from membership of a duly elected member on his incurring any of the disqualifications under s. 13-D. On the other hand the provisions of s. 40 of the Act lead to the inference that a member incurring such a disqualification, companytinues to be entitled to take part in any proceedings of the Board or to perform the duties of a member. Section 40 deals with the removal of members and empowers the State Government 1 1953 S.C.R. 1144. in the case of a city or the Prescribed Authority in any other case, to remove a member of the board on any of the grounds mentioned in cls. a to f of sub-s. 1 . The ground for removal mentioned in cl. b is that a member has incurred any of the disqualifications mentioned in Bs. 12-D and 13-D. Sub-sections 3 , 4 and 5 of s. 40 read The State Government may remove from the board a member who in its opinion has so flagrantly abused in any manner his position as a member of the board as to render his companytinuance as a member detrimental to the public interest Provided that when either the State Government or the Prescribed Authority, as the case may be, proposes to take action under the foregoing provisions of this section, an opportunity of explanation shall be given to the member companycerned, and when such action is taken the reasons therefore shall be placed on record. The State Government may place under suspension a member, against whom proceeding under sub-sections 3 and 4 has been companymenced, until the companyclusion of the enquiry and any member who has been so suspended shall number so long as the order of suspension companytinues to remain in force, be entitled to take part in any proceedings of the board or otherwise perform the duties of a member. The State Government is empowered to suspend a member against whom proceedings under sub-s. 4 had companymenced, i.e., against whom action for removal is being taken on one of the grounds mentioned in cls. a to f of sub-s. 1 . A member so suspended is number entitled to take part in any proceedings of the board or otherwise perform the duties of a member during the period of suspension. It can be legitimately inferred from the provisions of sub-s. 5 that in the absence of an order of suspension the member who had number only incurred any of the disqualifications mentioned in s. 13-D, but against whom the Government might have started proceedings, was entitled to take part in the proceedings of the board or to perform the duties of a member so long as the Government does number place him under suspension. We are therefore of opinion that a member of the Municipal Board does number automatically companye under suspension or lose his right to take part in the proceedings of the board or perform the duties of a member or cease to be a member of the board merely on his incurring any of the disqualifications mentioned in a. 13-D. It may be mentioned that any other companyclusion can have very unstable effect and can indefinitely make the validity of the proceedings and action of the board uncertain as one cannot predicate at any moment of time as to which of the members of the board has incurred a disqualification, a matter which must be dependent mostly on the proof of the allegations made. Such companyld number have been the intention of the Legislature. Kesho Ram Gupta and Ragbunandan Prasad had incurred the disqualification under cl. g of s. 13-D of the Act, they were number incompetent to exercise their rights as members of the board and companyld therefore validly sign the numberice., of motion of numberconfidence and take part in the proceedings of the meeting held in pursuance of the provisions of s. 87-A of the Act on February 6, 1961. It follows that the proceedings of, and the resolution passed at the meeting of February 6, 1961, are valid and that the order of the High Court dismissing the appellants writ petition is companyrect, though for different reasons. In view of this opinion., it is number necessary to deal with the other companytentions for the appellant.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 211 of 1956. Appeal from the judgment and order dated July 19, 1955, of the Bombay High Court in Special Civil application No. 976 of 1955. V. Viswanatha Sastri, S. N. Andley, Rameshwar Nath and P. L. Vohra, for the appellant. C. Setalvad, Attorney-General for India, K. Daphtary, Solicitor-General of India and B. Sen, for respondent No. 1. Vithlbhai B. Patel and I. N. Shroff, for respondent No. 2. 1961, December 21. The Judgment of Sinha C. J., Sarkar, Das Gupta and Mudholkar JJ., was delivered by Sarkar J. Ayyangar J., delivered a separate judgment. SARKAR J.-The appellant is a City Municipality within the meaning of the Bombay District Municipal Act, 1901 and is governed by that Act. It had by a resolution duly passed by it, made a rule under s. 60 of the Act selecting for the purpose of an octroi tax of -/4/- annas per Bengali maund, milk brought within its octroi limits for companysumption, use or sale therein. On November 29, 1954, the Government of Bombay had given its sanction to the rule under s. 61 of the Act. The appellant Municipality thereafter published the rule and the sanction as required by s. 62 of the Act and the tax was accordingly imposed with effect from January 1, 1955. On April 4, 1955, the Government of Bombay passed an order directing that the octroi tax shall number be leviable by the appellant Municipality. This order has given rise to the present proceedings. The appellant Municipality filed a petition in the High Court at Bombay under Art. 226 of the Constitution challenging the validity of the order. This petition was dismissed by the High Court. The appellant Municipality has number companye up to this Court in appeal against the decision of the High Court. The questions that arise in this case will be stated after a few of the sections of the Act have been referred to. Chapter VII of the Act deals with municipal taxation. We shall be companycerned principally with ss. 59, 60, 61 and 62 which are all companytained in this chapter and deal with imposition of taxes by Municipalities. It will be necessary also to companysider s. 46. Section 46 gives power to a Municipality to make rules for various purposes as specified in the several clauses companytained in it. Under cl. i of this section a Municipality has power to make rules for the purpose of prescribing, subject to the provisions of Chapter VII, the taxes to be levied. Section 59 is the section on which the decision of this case will really turn and we, therefore, think it right to set out that portion of it which is relevant for our purpose. S. 59. 1 Subject to any general or special orders the State Government may make in this behalf, any Municipality- a after observing the preliminary procedure required by section 60 and b with the sanction of the State Government in the case of City Municipalities and subject to such modifications or companyditions as under section 61 the State Government in according such sanction, deems fit, may impose, for the purposes of this Act, any of the following taxes, that is to say, an octroi on animals or goods, or both, brought within the octroi limits for companysumption, use or sale therein Section 60 lays down the procedure to be observed by a Municipality preliminary to imposing a tax. It requires that first a resolution shall be passed at a meeting to the Municipality selecting the tax and making rules for the proposes of cl. of s. 46 prescribing the tax. Thereafter the resolution has to be published with a numberice in a specified form inviting the inhabitants of the Municipal area to submit within a month their objections, if any, to the tax. After the objections have companye in, they are to be companysidered by a companymittee of the Municipality and unless on the report of the companymittee the Municipality decides to abandon the tax, it has to submit the objections with its opinion thereon, any modifications it desires to make and the rules prescribing the tax to the State Government. Section 61 provides that on receipt of the rules and the other things mentioned in s. 60 from the Municipality, the Government may refuse to sanction the rules, or return them to the Municipality for further companysideration or sanctioned them with or without modifications or subject to companyditions prescribed. Section 62 lays down that the rules as sanctioned by the Government shall be published by the Municipality and the tax shall, from the date which shall be specified in the numberice publishing the rules, be imposed accordingly. It is number in companytroversy that in the present case the procedure prescribed in the sections mentioned above had been companyplied with. The Governments companytention is that the order made by it was companypetent as it was order which was authorised by s. 59, subject to which only a tax companyld be imposed by a Municipality. The appellant Municipality does number dispute that it can impose a tax only under s. 59 but it companytents that the general or special orders mentioned in the section subject to which it has the power to impose tax, are orders which were in existence before the rule prescribing the tax was framed and once a rule has been framed by it and the Government has accorded its sanction to that rule, the Government has numberpower to companytrol the imposition of tax under it by any order made under s. 59. The question so raised is one of the companystruction of s. 59. But for such companystruction we have to refer also to the other sections earlier mentioned. In our opinion, the Governments companytention is well founded. The Municipalitys power to tax arises only under s. 59. Under that section, it has been given the power of impose a tax after following the procedure prescribed but subject always to the general or special orders of the Government. The appellant Municipality can succeed in this appeal only if the word impose in s. 59 means the acquisition of the power to tax by following the procedure laid down in ss. 60 to 62. Its appeal must otherwise fail. It seems to us that the word impose in s. 59 has number the meaning for which the appellant Municipality companytends. It would have been numbericed that under s. 59 a Municipality may impose a tax only after it has framed a rule under s. 60 prescribing the tax to be levied and the Government has given its sanction to that rule under s. 61. It is this imposition which is made by s. 59 subject to any general or special orders which the State Government may make in this behalf. Therefore, it is the imposition after the making of the rule authorising the tax, that is subject to the Governments orders and number the making of the rule itself which authorises the tax itself. It is plain from s. 59 that the companytrol over a Municipalitys power to tax imposed by the requirement of the Governments sanction of the rule prescribing the tax in companytained in s. 61, is number the same thing as the companytrol companytemplated by the general or special orders mentioned in s. 59, for both are mentioned in s. 59. If it were number so, it would have been unnecessary to provide for the general or special orders companytrolling the imposition of the tax in s. 59. This is the first reason why we think that the appellant Municipalitys companytention is untenable. The imposition companytemplated by s. 59 is clearly number the passing of the resolutions under s. 60 selecting the tax and making the rule prescribing the tax to be levied in terms of s. 46 i , for s. 59 1 a expressly makes the imposition something happening after s. 60 has been companyplied with. This seems to us to be another reason for number accepting the appellant Municipalitys companytention. The third reason is to be found in s. 62. As we have earlier stated, it provides that the tax shall be imposed from the date mentioned in the numberice publishing the sanctioned rule. The choice of this date lies with the Municipality and number with the Government. The power to levy the tax is acquired by a Municipality when the rule prescribing the tax made by it is sanctioned by the Government. The Municipality at its own choice thereafter fixes a date from which it will companylect the tax. Therefore, the word impose in s. 62 does number refer to the acquisition of power to levy a tax by making the rule but to the actual levy of the tax under the power so acquired. It is of some significance to numbere that in s. 46 i the words used are makerules prescribingthe taxes to be levied. What we wish to point out is that in companynection with the making of the rules the Act uses the word levied in s. 46 i and in companynection with an actual impost, and word imposed in s. 62. We, therefore, think that it would be legitimate to companystrue the word impose in s. 59 in the sense in which it has clearly been used in a companynected provision, that is, s. 62. Hence, in our view, impose in s. 59 means the actual levy of the tax after authority to levy it has been acquired by rules duly made and sanctioned, and it is such imposition that is made subject to the general or special orders of the Government. Therefore, the Government can at any time by any such order prohibit the imposition of the tax. Mr. Sastri for the appellant said that the general or special orders in s. 59 refer to orders that can be made under s. 73, but the present order had admittedly number been made under that section. Section 73 does number empower an order prohibiting the imposition of a tax altogether as the order in the present case does. It only gives power to suspend the levy of the tax authorised till the objections to the tax which the Government required to be removed, had been removed. Because s. 73 gives a power to suspend the tax, it is, in our opinion, numberargument that the general or special orders in s. 59 must be understood as companyfined to such orders. Section 73 cannot help in interpreting the words general or special orders in s. 59. A third objection to the validity of the order was that it was discriminatory. It was said that numberother Municipality had been prohibited from companylecting a similar tax which it had power under its rules to companylect. Apart from the very interesting question raised by the learned Attorney General that the Municipality being a local authority, was a state, and was number therefore entitled to the benefit of Art. 14, as to which we think it unnecessary to express any opinion we are on the facts satisfied that there is numberdiscrimination. The Government has number, it is number disputed, prohibited all Municipalities from levying any octroi tax on milk. Furthermore, it has number been shown to us that all Municipalities stand on the same footing with regard to milk. The last objection was that the order had been mala fide made. This grievance is companypletely without foundation. The Government had earlier requested the appellant Municipality to drop the tax on the ground, among others, that milk was really being purchased for the Government and that the Government was number liable to be taxed by a Municipality. It may be that this ground was number justified on the facts, but as to this we do number companye to any finding. It is clear to us that even if this stand taken by the Government was number tenable, that is numberreason for thinking that the order was made mala fide. It was said that the Government had made this order to benefit respondent No. 2, a companyoperative union, dealing in milk. This is a bare allegation and is number supported by facts. In any event, since similar orders have number been made in respect of all Municipalities within the State, numberquestion of mala fide can possibly arise. We think that the challenge to the order dated April 4, 1955 is without any foundation. In our view, the order was perfectly legitimate and must be upheld. We accordingly dismiss the appeal with companyts. AYYANGAR J.-I have had the advantage of perusing the judgment just delivered and I agree with order passed. The relevant facts and the statutory provisions which bear on the points arising in the appeal have all been set out by Sarkar J. and do number require to be repeated. There is numberdispute that the levy of the duty by the municipality as and from January 1, 1955 was lawful because the requirements of ss. 59-62 were satisfied when the levy was made. No general or special order of the State Government stood in the way of the municipality making the particular levy and the sanction of the State Government under s. 59 1 b had been accorded to it, and the relevant rules had companyformed to the procedural and other requirements of these sections. The power of the municipality in the matter of the levy of the tax is, however, number absolute but it made subject, apart from other provisions to which shall advert, to such general and special orders as the State Government might pass by virtue of the opening words of s. 59 of the Act. The argument strenuously pressed by Mr. Visvanatha Sastri was this The Government had numberdoubt, a power to prescribe and companytrol by general or special orders the right of a municipality to impose a tax. These general or special orders would again, numberdoubt, be subject to modification from time to time to suit the changing needs of particular areas, or of particular interests which would be affected by the tax-levy, but the exercise of the power of modification or this power too prescribe companyditions and restrictions is exhausted when a municipality does, by companyforming to the orders then in force, impose a levy which has companye into force under s. 62. I am unable to agree with this companystruction of the opening words of s. 59 1 . On its language there is numberhing to warrant the doctrine that it gets exhausted by reason of a municipality imposing a tax in companyformity with an order as it stood at a particular date. The limitation suggested must therefore, be deduced as a necessary implication either from the fasciculus of sections ending with s. 62 leading to the imposition of a levy, or from other provisions of the Act. The other provision of the Act to which learned Counsel referred was s. 73 which reads If it shall at any time appear to the Provincial Government, on companyplaint made or otherwise, that any tax, leviable by a Municipality, is unfair in its incidence, or that the levy thereof, or of any part thereof, is obnoxious to the interest of the general public, it may require the said Municipality, within such period as it shall fix in this behalf, to take measures for removing any objection which appears to it to exist to the said tax, and if, within the period so fixed, such requirement shall number be carried into effect to the satisfaction of the Provincial Government, it may, by numberification in the official Gazette, suspend the levy of such tax, or of such part thereof, until such time as the objection there to shall be removed. The Provincial Government may at any time, by a like numberification, rescind any such suspension. It is obvious that this section is of limited operation and companyfined to the subject it actually deals with. It posts the companytinued exaction of the impost, but points to the removal of anomalies and hardships in the details of the levy or of its administration. The existence of this provision would manifestly number suffice to negative the right of the Government to forbid the companytinued imposition of the tax altogether-such as has been done in the present case. Section 73 cannot therefore be companystrued as negativing by implication the right claimed by the state Government under s. 59, for it refers to and companyprehends a totally different subject-matter. Coming number to the companystruction of ss. 59-62 as themselves supporting theory of the exhaustion of the power, the submission was this. The general or special orders companyld only restrict the power of a municipality to impose a tax. On the scheme of provisions companytained in ss. 59-62 a tax was imposed only once, though when imposed and in operation the levy and companylection of such a tax might be periodic and throughout the life of the imposition. Hence there was numberscope for the exercise of the State Government to make any special order in relation to a tax after it has once been imposed because the power to prescribe companyditions or restrictions by general or special order is with reference to the imposition of the tax. I feel unable to accept this companystruction. The whole foundation of the argument is based on a denial of the premise that a power to impose tax is a companytinuing power. In my judgment the imposition of a tax is a companytinuing power in the sense that so long as it is in force, it points to the existence of and derives vitality from the power of the authority to impose it. When the municipality levies the tax in the sense of quantifying it with reference to an ascertained person and thereby creating a statutory debt payable by the tax payer, it is in reality exercising the power to impose the tax, for it is the companytinued existence of the imposition that furnishes the legal basis for the levy when made. When the power to impose is withdrawn the imposition falls to the ground. That is the ratio of saving provisions which enable taxes to be levied and companylected number withstanding the deprivation of the right to impose taxes for the future. In this view it is clear that there is numberexhaustion of the State power under the opening words of s. 59 1 . In arriving at this companystruction I have also taken into companysideration the scheme of the Act and the wide powers companyferred on the State Government in the matter of companytrol and supervision over the municipalities powers designed to ensure, that, subject of companyrse to express statutory provision, municipal administration is companyrdinated to secure the vital interest of the general public. In this companynection reference may be made to s. 74 of the Act which reads Whenever it appears to the Provincial Government that the balance of the municipal fund of any Municipality is insufficient for meeting the expenditure incurred under section 175 or for the performance of any duties in respect of which they shall have been declared under section 178 to have companymitted default, the Provincial Government may be numberification require the Municipality to impose within the Municipal district, any such tax specified in the numberification as may be imposed under section 59 if numbersuch tax is at the time imposed therein, or to enhance any existing tax in such manner or to such extent as the Provincial Government companysiders fit, and the Municipality shall forthwith proceed to impose or enhance in accordance with the requisition such tax under the provisions of this Chapter as if a resolution of the Municipality had been passed for the purpose under section 60 Provided that a the Provincial Government shall take into companysideration any objection which the Municipality or any inhabitant of the Municipal district may make against the imposition or enhancement of such tax, b it shall number be lawful for the Municipality to abandon or modify or to abolish such tax when imposed, and c the Provision Government may at any time cancel or modify any requisition made by it under this section, and the levy of tax or the enhancement, except as to arrears theretofore accrued due. shall thereupon cease or be modified accordingly. Government are thus empowered both to direct the municipality to impose tax when Government companysider the same necessary in the interest of municipal finance and administration as also to direct the municipality to desist from companytinuing the imposition when the necessity ceases. In cases where a tax is imposed by the municipality by virtue of the provisions in ss. 59-62, the municipality itself companyld revoke the tax if the rules so provide, for s. 47 of the Act enacts Subject to the requirements of clause a of the proviso to section 46 every Municipality may, except as otherwise provided in clause b of the proviso to section 74, at any time for any sufficient reason, suspend, reduce or abolish any existing tax by suspending, altering or rescinding any rule describing such tax under the provisions of clause 1 and of the first clause of the proviso to section 46. The provisions of Chapter VII relating to the imposition of taxes shall, so far as may be, apply to the suspension, reduction or abolition of any tax and to the suspension, alteration or rescission of any rule prescribing a tax. But for the opening words of s. 59 1 there is numberspecific provision in the Act to enable Government to intervene in cases where the companytinued levy of a tax is companytrary to public interest. I do number companysider that any such gap was intended and in my judgement the opening words in s. 59 1 are both apt and sufficient to clothe Government with power to direct by special order a municipality to desist from imposing a tax when satisfied that public interest so requires. The points raised regarding discrimination and mala fides are without substance and for the reasons stated by Sarkar J. I would reject them. The appeal therefore fails and has to be dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 84 of 1958. Appeal by special leave from the judgment and order dated December 22/23, 1955, of the Calcutta High Court in I.T.R. No. 24 of 1953. C. Chatterjee, D. P. Pal and D. N. Mukherjee for the appellant. Hardayal Hardy and D. Gupta, for the respondent. 1961. January 17. The Judgment of the Court was delivered by SHAH, J.-Messrs. National Cement Mines Industries Ltd.- hereinafter referred to as the appellants-are a public limited companypany incorporated to carry on the business of cement and lime manufacture and also of limestone supply and for the purposes of such businesses to acquire rights and companycessions pertaining to limestone, companyl and surface lands from the Dewar khand Karanpura Mines and Industries Ltd. and also to work mines or quarries and to find, win, get, work, etc. or otherwise deal with clay and bauxite. Dewarkhand Karanpura Mines and Industries Ltd. hereinafter called the Karanpura Company -had obtained three leases on November 29, 1930, first for mining limestone from Maharaja Pratap Narain Udai Nath Shah Deo from limestone beds in certain villages in Dewarkhand, second from Maharaj Kumar Nand Kishore Nath Shah Deo of the surface rights neces. sary to exercise the powers and privileges in respect of the first lease and the third from Maharaj Kumar Raj Kishore Nath Shah Deo of surface rights in respect of Hoyer village. The period in each of the three leases was thirty years. On March 17, 1932, the Karanpura Company companyveyed the rights and options under the three leases to the appellants. On September 30, 1934, the appellants acquired the limestone and surface rights in respect of limestone beds in village Umedanda for 95 years from Maharaja Pratap Narain Uday Nath Shah Deo and Maharaj Kumar Raj Kishore Nath Shah Deo. On the same date, the appellants entered into two agreements, one with Maharaja Pratap Narain Uday Nath Shah Deo which is called the ,bauxite option agreement thereby acquiring the first option to take a lease or leases of any area or areas of bauxite deposits in certain villages, and another from the said Maharaja for the first option to take a lease or leases of limestone beds in the Tori District. By a fourth agreement also dated September 30,1934, between the Karanpura Company, Maharaja Pratap Narain Udai Nath Shah Deo acting with the companysent of Maharaj Kumars Raj Kishore Nath Shah Deo and Nand Kishore Nath Shah Deo, the royalties reserved under the original deeds dated November 29, 1930, were reduced and the periods of the leases were extended to 99 years from the date of the original leases, By deed dated May 7,1935, the appellants companyveyed to Dewarkhand Cement Company Ltd. which later came to be known as Associated Cement Ltd. and will be referred to hereinafter by that name the benefits of the four leases and the two agreements for the unexpired periods. By this deed, for a present companysideration of Rs. 25,000 for trouble and expenses in obtaining the leases and agreements and for further payment under several companyenants which will be presently set out, the appellants companyveyed the rights vested in them subject to certain reservations. In the year of account June 1, 1944, to May 31, 1945, the appellants received from the Associated Cement Ltd. under the first companyenant of the deed, Rs. 77,820 being the amount companyputed at the rate of 0-13 As. per ton of cement manufactured from limestone won from the lands and sold by the companypany. The Income-tax Officer, Companies District 1, Calcutta, included this amount in the total assessable income of the appellants in the assessment year 1946-47. This order was companyfirmed in appeal by the Appellate Assistant Commissioner and by the Income-tax Appellate Tribunal. At the instance of the appellants, the Tribunal referred the following question with another number material for this appeal to the High Court of Judicature at Calcutta Whether on a proper companystruction of the Deed of Assignment dated 7th of May, 1935, and on the facts and in the circumstances of this case, the Tribunal was right in holding that, the sum of Rs. 77,820 represented a receipt of a revenue nature in the hands of the Applicant and assessable as such The following facts were held proved by the Tribunal. The principal objects of incorporation of the appellants were to carry on the business of manufacturing cement and lime and sale of limestone and the appellants were formed with the object of acquiring the rights and companycessions of the Karanpura Company. By their Memorandum of Association, the appellants were authorised to sell or dispose of the undertakings or any part thereof as they thought fit, and to sell, lease, mortgage, dispose of, turn to account or otherwise deal with all or any part of their property and rights and in pursuance of these objects the rights and companycessions of the Karanpura Company were acquired and extension of leases and companycessions were obtained and were transferred to the Associated Cement Ltd. The appellants were therefore carrying on in the year of account 1944-45 the business for which they were incorporated. After reciting the prefatory clauses, it was stated in the deed WHEREAS it was agreed inter alia that the Purchaser should pay to the Vendor the sum of Rupees twenty five thousand for trouble and expenses in obtaining the leases and agreements dated the thirtieth day of September one thousand nine hundred and thirty four hereinbefore recited and hereinafter expressed to be hereby transferred and Whereas the Purchaser hath paid to the Vendor the said sum of rupees twenty five thousand as the Vendor doth hereby acknowledge NOW THIS INDENTURE WITNESSETH that in company. sideration of the companyenants on the part of the Purchaser hereinafter companytained the Vendor hereby grants assigns and transfers unto the Purchaser and the Karanpura Company at the request and by the direction of the Vendor hereby grants assigns transfers and companyfirms unto the Purchaser. The deed then proceeds to set out the description of the various leases and companycessions and agreements and the companyenants which the Associated Cement Ltd. undertook in favour of the appellants. These companyenants are That it will pay to the Vendor a sum equal to thirteen annas in respect of every ton of cement sold by it which shall have been manufactured from the limestone won by it from the lands hereby transferred and companyprised in the hereinbefore recited leases and agreements. That it will number sell any Fluxstone won by it from the said lands to the Tata Iron and Steel Company Ltd., at a price less than Rupees one and annas fourteen per ton F. O. R. the siding nearest to the quarry or place from which it shall be won without the companysent of the Vendor. That it shall pay to the Vendor one-half the profit if any which it shall make by selling Fluxstone to the Tata Iron Steel Company Ltd.,or to any other person such profits to be ascertained after deduction from the price received all companyts, charges and expenses including the royalty payable to the Maharaja in respect thereof but before educting overhead charges. Such accounts to be closed and adjusted on the thirtieth day of June and the thirty-first day of December in each and every year. That it will number grant to the Tata Iron Steel Company Ltd., the right to quarry and remove Fluxstone from the lands hereby transferred at a royalty of less than ten annas per ton, and will pay to the Vendor one-half of any royalty so charged and received. That in the event of the payments made under clauses one, three and four above in any one year number amounting to the minimum hereinafter set out the Purchaser shall pay in lieu and in full discharge there for the following minimum During the first year to be companyputed from the first day of January one thousand nine hundred and thirty-five, rupees ten thousand. During the second year rupees thirty thousand. During every subsequent year rupees fifty thousand. Out of the above minimum payment of rupees fifty thousand per year for the purposes of account, the sum of rupees twenty thousand shall be deemed to have been paid in respect of payment under clause three above. That the Purchaser or the persons deriving title under the Purchaser will at all times from the date hereof duly pay all rents, royalties and payments becoming due under the four hereinbefore recited Indenture of Lease ,subject as regards the Limestone lease to the modifications effected by the agreement for reduction of royalty dated the thirtieth day of September one thousand nine hundred and thirty-four hereinabove recited in respect of the premises agreements options rights or benefits hereby assigned and transferred and observe and perform the companyenants agreements stipulations and companyditions therein companytained and henceforth on the part of the Lessee or grantee to be observed and performed in respect of the aforesaid premises or under the said Bauxite agreement or under the said Tori Option agreement or under the said agreement for reduction of royalty And also will at all times from the date hereof save harmless and keep indemnified the Vendor its successors and assigns from and against all proceedings companyts claims and expenses on account of any omission to pay the said rent, royalty or payments or any breach of any of the said companyenants agreements stipulations and companyditions. That the Purchaser will number work raise remove or use stone or clay in the properties companyprised in the leases and agreements hereby transferred to it for making lime. That the Purchaser shall number by any of its actions or omissions cause leases and agreements, mentioned above and in respect of properties hereby transferred, to be determined, or the rights thereunder, including the right of renewal, to be prejudiced. That in areas companyprised in the leases and agree. ments hereinabove expressed to be hereby assigned and number companytaining limestone the Vendors rights under leases and agreements from the Maharaja of Chotanagpur or Maharaj Kumar Nand Kishore Nath Shah Deo other than the leases and agreements above referred to shall number be jeopardised or affected by this Indenture. That the clay and shales lying within areas, which do number companytain Limestone, can be removed and utilised by the Vendor for all purposes except that of cement manufacture. The deed then proceeded after setting out certain other companyenants AND IT IS HEREBY EXPRESSLY AGREED AND DECLARED that if the Limestone within the areas companyprised in the Leases hereby transferred available for manufacturing cement is exhausted the Purchaser will be entitled to determine this Indenture on giving to the Vendor six months numberice in writing in which case the Purchaser, if so required, will retransfer the leases and agreements aforesaid. By clauses 1 , 3 and 4 , the Associated Cement Ltd. undertook to make certain payments to the appellants. By cl. 1 they agreed to pay 0-13 As. for every ton of cement manufactured from the limestone won from the lands and sold by el. 3 , the Associated Cement Ltd. agreed to pay half the profits which they made by selling Fluxstone to the Tata Iron Steel Co., or to any other person and by el. 4 , they agreed to pay half the royalty received from the Tata Iron Steel Company for the right to quarry and remove fluxstone from the lands. By clause 5 , provision was made for minimum payment in the event of the aggregate under cis. 1 , 3 and 4 number reaching the sums specified therein. Clauses 2 , 4 , 7 , 8 and 9 were in the nature of restrictive companyenants. By cl. 2 , the Associated Cement Ltd. were prohibited from selling any fluxstone won from the lands to the Tata Iron Steel Company for less than Re. 1- 14 As. per ton F. O. R. By cl. 4 , an obligation number to companyvey the right to quarry and remove fluxstone for royalty less than 0-10 As. per ton was imposed. By el. 7 the Associated Cement Ltd. undertook number to remove or use or allow any one to raise work, remove or use stone or clay in the lands. By cl. 8 , the Associated Cement Ltd. undertook number to do any acts or omissions causing the leases and agreements to be determined or the rights thereunder to be prejudiced. By cl. 9 , rights of other persons under leases and agreements in lands number companytaining limestone were number to be affected. By el. 10 , the right of the appellants to utilise clay and shale lying within the areas number companytaining limestone except for the purpose of manufacturing cement was retained, There were certain exceptions to this and the ninth clause whereby the Associated Cement Ltd. were entitled to excavate, use or remove all kinds of clays in and from the areas within the boundary lines marked in the plan and they were also authorised to make permanent structures and use certain strips of lands. By el. 6 the Associated Cement Ltd. agreed to pay rent stipulated under the original leases and agreements and also undertook to keep indemnified the appellants from and against all proceedings, companyts, claims and expenses on account of any omission to pay the rent royalty or payments or any breach of any of the companyenants agreements and the leases. There was also the companyenant authorising the Associated Cement Ltd. to terminate the deed in the event of limestone in the land companyprised in the leases being exhausted. The appellants undoubtedly did number part with all their rights in favour of the Associated Cement Ltd. by this deed dated May 7, 1935. The companysideration under the deed companysisted of a fixed companyponent and annual payments fluctuating with the business activity of the Associated Cement Ltd. A fixed amount of Rs. 25,000 was paid for trouble and expenses in obtaining the leases and agreements and additional payments were to be made under cls. 1 , 3 and 4 subject to the minimum prescribed by el. 5 . It is difficult to categorise a transaction of this character. It is number a companyveyance of all the rights of the appellants number can it be regarded as a sale even of the rights which were companyveyed. Numerous restrictions were imposed by the deed upon the rights of the transferee which were inconsistent in their very nature with the character of a sale, and the companyenant authorising termination of the deed in the event of the limestone being exhausted removes all doubt in that behalf. Nor is it a lease it is number a transfer of a right to enjoy property for a certain time in companysideration of periodical payments. It also does number evidence a transaction in the nature of a joint venture between the appellants and the Associated Cement Ltd. Cement was to be manufactured by the Associated Cement Ltd, out of limestone to be won from the lands and in companysideration of the rights companyveyed, payments at specified rates were agreed to be made out of the price to be obtained by sale of cement, fluxstone and limestone. The appellants had numbercontrol over the production of limestone and manufacture of cement, or on the sale of fluxstone and limestone. But in assessing the true character of the receipt for the purpose of the Income-tax Act, inability to ascribe to the transaction a definite category is of little companysequence. It is number the nature of the receipt under the general law but in companymerce that is material. It is often difficult to distinguish whether an agreement is for payment of a debt by instalments or for making annual payments in the nature of income. The companyrt has, on an appraisal of all the facts, to assess whether a transaction is companymercial in character yielding income or is one in companysideration of parting with property for repayment of capital in instalments. No single test of universal application can be discovered for solution of the problem. The name which the parties may give to the transaction which is the source of the receipt and the characterization of the receipt by them are of little moment, and the true nature and character of the transaction have to be ascertained from the companyenants of the companytract in the light of the surrounding circumstances. The decision of the question is however number left to the application of any arbitrary standards. There are certain broad principles which guide the determination of the character of the receipt. The distinction between a capital receipt and revenue receipt though fine is real. The dividing line may be thin, and often at first sight imperceptible. Where capital is repaid in instalments, it is number liable to income-tax for instance when a person sells his property and agrees to receive the price stipulated in instalments, by whatever name such instalments are called, they are number liable to income-tax-see Foley v. Fletcher 1 , Secretary of State in Council of India v. Andrew Scoble 2 , Oswald v. Kirkcaldy Magistrates and Commissioners of Inland Revenue v. Ramsay 4 . 1 1858 3 H. N. 769? 2 1903 A.C. 299 3 1919 S.C. 147. 4 1935 20 T.C. 79. But where property is companyveyed in companysideration of what in truth is annuity payable for a definite or a definable period, the annuity is number payment on capital account and is taxable-see State of Bihar v. Sir Kameshwar Singh 1 , Captain Maharajkumar Gopal Saran v. Commissioner of Income- tax, Bihar and Orissa 2 , Chadwick v. Pearl Life Assurance Co. 3 . Again, if property is companyveyed in companysideration of periodical payments, the payment being a share of profits of a business or profession- William John Jones v. Commissioners of Inland Revenue 4 , or a mineral royalty depending upon the quantity of minerals raised Raja Bahadur Kamakshya Narain Singh of Ramgarh v. Commissioner of Income- tax, Bihar and Orissa 5 , or companyputed on sales of manufactured articles-Commissioners of Inland Revenue v. 36149 Holdings, Ltd. 6 , or a percentage of gross profits made in the exploitation of a secret process-Delage v. Nugget Polish Co., Ltd. 7 , is income and taxable. Counsel for the appellants submitted that the receipt under clause 1 of the terms of the deed dated May 7, 1935, was in the nature of capital payment and relied upon certain decisions in support of that submission. In Minister of National Revenue v. Catherine Spooner 8 , decided by the Judicial Committee of the Privy Council in an appeal from the Supreme Court of Canada, the respondent Catherine Spooner had sold her rights, title and interest in land owned by her in freehold to a companypany in companysideration of a certain sum in cash, besides shares of the companypany, and an agreement to deliver 10 of oil produced from the land on which the companypany companyenanted to carry out drilling and, if oil was found, pumping operations. These were described as royalties. Oil was struck in the lands and the respondent was paid 10 of the gross proceeds of the oil produced in lieu of oil. The 1 1952 21 I.T.R. 382. 5 1943 L.R. 70 I.A. 180. 2 1935 3 I.T.R. 237 P.C. . 6 1943 25 T.C. 173. 3 1905 2 K.B. 507. 7 1906 2r Times Law Reports 454. 4 1919 7 T.C. 3 10 8 1933 A.C. 684. 1920 1 H.B. 711, Supreme Court of Canada held that the sum so received was number an annual profit or gain within the meaning of s. 3 of the Income War Tax Act, but a receipt of a capital nature and therefore number chargeable to tax. According to the Judicial Committee, there was between the respondent and the companypany numberrelation of lessor or lessee the transaction was one of sale and purchase, and the transaction had taken the form which it did because of the uncertainty whether oil would be found by the purchaser. As the value of the land depended on this companytingency, the price, number unnaturally was made to depend in part on the event of oil being struck. The judgment lays down numbernew principle it proceeded merely upon interpretation of the document in the light of the circumstances. In Trustees of Earl Haig v. Commissioners of Inland Revenue 1 , the question which fell to be determined was whether a share of the royalties received in companysideration of allowing the use of the diaries of the late Earl Haig for writing his biography were, in the hands of the trustees under the will of Earl Haig, capital receipts. That was undoubtedly a case in which payments received by the trustees were dependent upon the professional activities of the author and the proceeds derived from the sales of the biography he wrote. By the agreement, the author was authorised to extract and publish from the diaries what he thought fit. The diaries were undoubtedly an asset, and after they were used by the author for publication of the biography, their value as an asset was, if number wholly, largely exhausted and their future value was negligible. The agreement was therefore regarded as companyveying an asset in its entirety to the author in companysideration of a share in the royalties and the receipt of this share was regarded as receipt of capital. That decision proceeded upon the special character of the agreement and the nature of the asset transferred and did number seek to lay down any general principle. In Nethersole v. Withers 2 , N who had acquired under an agreement the exclusive right to dramatise 1 1939 22 T.C. 725. 2 1948 28 T.C. 501. a numberel of Rudyard Kipling received under an agreement with the widow of the author, a third share of a lump sum for which the sound and film rights were granted exclusively to a film companypany for a period of ten years. The film right of a companyprehensive character having been granted by the legal representative of the author against payment of the sum stipulated, the question arose whether the payment received by N was taxable under the Income Tax Act under Case II of Schedule D or under case VI of Schedule D. It was held that N having ceased to be the owner of the portion of the companyyright she had assigned, the proceeds were number annual profits or gains within the meaning of Schedule D, Case VI. That was a case in which N had wholly sold and disposed of a part of the property and the amount received by her was the price paid in lump and was number in the nature of income. That case also proceeded upon the special character of the transaction. The case of The Commissioners of Inland Revenue v. The Marine Steam Turbine Co., Ltd. 1 on which reliance was sought to be placed by companynsel for the appellants needs numberdetailed companysideration. In that case, a companypany which was on the facts found number carrying on a trade or business was held number assessable to Excess Profits Duty, because the companydition of liability was the carrying on of trade or business. The appellants had however number sold the entirety of the rights acquired by them from the Karanpura Company. The companyveyance was subject to several restrictions and the appellants retained in part rights in the land companyveyed. The transaction was substantially a companymercial transaction for sharing the profits of the companymercial activities of the Associated Cement Ltd.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 82 of 1957. Appeal from the judgment and decree dated April 4, 1955, of the Calcutta High Court in Appeal from Appellate Decree No. 1224 of 1953. S. Pathak and D. N. Mukherjee, for the appellant. N. Sanyal, Additional Solicitor-General of India and P. Chatterjee, for the respondents. 1961. February 10. The Judgment of the Court was delivered by SHAH, J.---Of the premises relating to which this dispute arises No. 5, Raja Rajkissen Street, Calcutta -the respondents are the owners and the appellant was a companytractual tenant from June 15, 1917, till June 15, 1947, under three successive tenancies for 10 years each. Under the first tenancy, the appellant paid rent at the rate of Rs. 84,15,0,per month, under the second-tenancy at the rate of Rs. 180 per month and under the third tenancy at the rate of Rs. 225 per month. The tenancy was in respect of buildings used for manufacturing tin canisters and open land. On September 30, 1946, the Governor of Bengal issued the Calcutta Rent Ordinance, V of 1946, making certain provisions for companytrol of rent of premises in the town of Calcutta. By s. 12 of the Ordinance, it was provided in so far as it is material that numberwithstanding, anything companytained in the Transfer of Property Act, the Presidency Small Cause Courts Act or the Indian Contract Act, numberorder or decree for the recovery of possession of any premises shall be made as long as the tenant pays rent to the full extent allowable by the Ordinance and performs the companyditions of the tenancy. By the proviso, the landlord was, numberwithstanding the protection granted entitled, if the companyditions specified therein were fulfilled, to obtain possession of the premises. This Ordinance was replaced by Act I of 1947 which companytained substantially the same provisions. By the West Bengal Act V of 1948, the provisions of Ordinance V of 1946 and Act I of 1948, were companytinued. Thereafter on December 1, 1948 the West Bengal Premises Rent Control Temporary Provisions Act XXXVIII of 1948 was brought into operation and by this Act, the West Bengal Act V of 1948 was repealed, but the protection granted to the tenants was company- tinued. This Act was repealed by the West Bengal Premises Rent Control Act, 1950, and by s. 12 of the latter Act protection to tenants, including tenants whose tenancies had expired, against eviction was granted by prohibiting companyrts from passing decrees or orders for recovery of possession of any premises in favour of landlords. It was provided by that Act that the landlord shall be entitled to obtain a decree in ejectment, inter alia, where the premises are reasonably required by, him either 1 for the purpose of building or rebuilding or for his own occupation. By letter dated May 15, 1957, the respondents called upon the appellant. to vacate and deliver possession on the expiry of the period of tenancy. Possession was however number delivered by the appellant and he companytinued to pay the stipulated amount and the same was accepted by the respondents. In an application under s. 9 of the West Bengal Premises Rent Control Temporary Provisions Act, 1948, the Controller fixed the standard rent of the premises at Rs. 455 per month. After the enactment of the West Bengal Premises Rent Control Act, 1950, another application was submitted by the appellant and the standard rent was reduced to Rs. 247,8,0. On October 10, 1950, the respondents served a numberice upon the appellant requiring him to quit, vacate and deliver possession of the premises occupied , which the appellant was described as holding as monthly tenant , on the expiry of the 31st of Chaitra, 1357 B. S., i.e., April 14, 1951. The ground for eviction, it was claimed, was that the premises were reasonably required by the landlords for putting up number buildings thereon. The appellant having failed to vacate the premises, the respondents sued in the Court of Small Causes, Calcutta, for a decree in ejectment. The Court of Small Causes decreed the suit filed by the respondents. In appeal to the Special Bench, Court of Small Causes, the decree passed by the companyrt of first instance was reversed. The appellate companyrt held that by acceptance of rent after determination of the tenancy in June, 1947, the appellant companytinued to be a tenant holding over and as the purpose of the tenancy was manufacturing, it companyld be determined only by a numberice of six months, expiring with the year of tenancy and as numbersuch numberice was served, the tenancy was number determined and the suit was liable to fail. In appeal to the High Court of Judicature at Calcutta, the decree passed by the -Special Bench was reversed and the decree passed by the companyrt of first instance was restored. With certificate of fitness under Art. 133 1 c of the Constitution this appeal is preferred by the appellant against the order of the High Court. The companytractual tenancy in favour of the appellant was determined by efflux of time on June 15, 1947, and since that date there has been between the parties numberfresh companytractual tenancy. The respondents were, it appears, anxious to obtain possession of the premises let out to the appellant, but they were unable to obtain assistance of the companyrt in view of the protection afforded to the appellant by the successive rent companytrol Acts. In the meanwhile, the appellant companytinued to pay every month amounts equal to the companytractual rent, and later the rent declared to be the statutory rent. Does the acceptance of the amounts paid by the appellant companyfer upon him the right of a tenant holding over within the meaning of s. 116 of the Transfer of Property Act? Section 116 of the Transfer of Property Act in so far as it is material provides that if a lessee of property remains in possession thereof after the determination of the lease granted to him and the lessor accepts rent from the lessee or otherwise assents to his companytinuing in possession, the lease is, in the absence of an agreement to the companytrary, renewed from year to year or from month to month according to the purpose for which the property is leased as specified in s. 106. It is, however, well settled that where a company- tractual tenancy to which the rent companytrol legislation applies has expired by efflux of time or by determination by numberice to quit and the tenant companytinues in possession of the premises, acceptance of rent from the tenant by the landlord after the expiration or determination of the companytractual tenancy will number afford ground for holding that the landlord has assented to a new companytractual tenancy. It was observed by B. K. Mukherjee, J. as he then was , in Kai Khushroo v. Bai Jerbai 1 On the determination of a lease, it is the duty of the lessee to deliver up possession of the demised premises to the lessor. If the lessee or a sub-lessee under him companytinues in possession even after the determination of the lease, the landlord undoubtedly has the right to eject him forthwith but if he does number, and there is neither assent or dissent on his part to the companytinuance of occupation of such person, the latter becomes in the language of English law a tenant on sufferance who has -no lawful title to 1 1949 F.C.R. 262, 270,273. the land but holds it merely through the laches of the landlord. If number the landlord accepts rent from such person or otherwise expresses assent to the companytinuance of his possession, a new tenancy companyes into existence as is companytemplated by s. 116, Transfer of Property Act, and unless there is an agreement to the companytrary, such tenancy would be regarded as one from year to year or from month to month in accordance with the provisions of s. 106 of the Act. It was further observed in cases of tenancies relating to dwelling houses to which the Rent Restriction Acts apply, the tenant may enjoy a statutory immunity from eviction even after the lease has expired. The landlord cannot eject him except on specified grounds mentioned in the Acts themselves. In such circumstances, acceptance of rent by the landlord from a statutory tenant whose lease has already expired companyld number be regarded as evidence of a new agreement of tenancy, and it would number be open to such a tenant to urge, by way of defence, in a suit for ejectment brought against him, under the provisions of Rent Restriction Act that by acceptance of rent a fresh tenancy was created which had to be determined by a fresh numberice to quit. Under the Calcutta Rent Ordinance, 1946, and the subsequent legislation which culminated in the West Bengal Premises Rent Control Act, 1950, in the expression tenant was included any person who companytinued in possession after termination of his tenancy. Section 12 of the West Bengal Premises Rent Control Act, 1950, expressly protects a tenant whose lease has expired. By the Rent Restriction Statutes at the material time, statutory immunity was granted to the appellant against eviction, and acceptance of the amounts from him which were equivalent to rent after the companytractual tenancy had expired or which were fixed as standard rent did number amount to acceptance of rent from a lessee within the meaning of s. 116, Transfer of Property Act. Failure to take action which was companysequent upon a statutory prohibition imposed upon the companyrts and number the result of any voluntary companyduct on the part of the appellant did number also amount to otherwise assenting to the lessee companytinuing in possession. Of companyrse, there is numberprohibition against a landlord entering into a fresh companytract of tenancy with a tenant whose right of occupation is determined and who remains in occupation by virtue of the statutory immunity. Apart from art express companytract, companyduct of the parties may undoubtedly justify an inference that after determination of the companytractual tenancy, the landlord had entered into a fresh companytract with the tenant, but whether the companyduct justifies such an inference must always depend upon the facts of each case. Occupation of premises by a tenant whose tenancy is determined is by virtue of the protection granted by the statute and number because of any right arising from the companytract which is determined. The statute protects his possession so long as the companyditions which justify a lessor in obtaining an order of eviction against him do number exist. Once the prohibition against the exercise of jurisdiction by the companyrt is removed, the right to obtain possession by the lessor under the ordinary law springs into action and the exercise of. the lessors right to evict the tenant will number unless the statute provides otherwise, be companyditioned. The High Court was in our judgment right in holding that by merely accepting rent from the appellant and by failing to take action against him, the appellant did number acquire the rights of a tenant holding over. It is true that in the numberice dated October 10, 1950, the appellant is described as a monthly tenant , but that is number indicative of companyduct justifying an inference that a fresh companytractual tenancy had companye into existence. Within the meaning of the West Bengal Premises Rent Control Act, 1950, the appellant was a tenant and by calling the appellant a tenant the respondents did number evince an intention to treat him as a companytractual tenant. The use of the adjective monthly also was number indicative of a companytractual relation. The tenancy of the appellant was determined by efflux of time an subsequent occupation by him was number in pursuance of any companytract express or implied, but was by virtue of the protection given by the successive statutes. This occupation did number companyfer any rights upon the appellant and was number required to be determined by a numberice prescribed by is. 106 of the Transfer of Property Act.

Case appeal was rejected by the Supreme Court

Hidayatullah, J. This is an appeal by the plaintiff against the judgment and decree of the Judicial Commissioner, Ajmer, companyfirming the decree of the trial 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 Reorganisation 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 liability on various grounds. It may be mentioned the Military Secretary second defendant has since died, the 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 II 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 1 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 a 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 hearing. 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 Constitution unless it was void under the Chapter of Fundamental Rights till we companye to the enactment of act II 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 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 re-enacted. 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 re-enacted 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 State means 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 discrimination 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 the 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 1 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 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 1940 F.C.R. 110., Venugopala Reddiar v. Krishnaswamy Reddiar 1943 F.C.R. 39. or Garikapatti Veeraya v. N. Subbiah Choudhury 1957 S.C.R. 488 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 1940 F.C.R. 110., 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 1935 I.L.R. 15 Pat. 268 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 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. 278 of 1959. Appeal by special leave from the judgment and order dated April 2, 1957, of the Punjab High Court, in Civil Revision No. 239 of 1956. K. Daphtary, Solicitor-General of India, S. N. Andley, Rameshwar Nath and P. L. Vohra, for the appellant. T. Desai and Naunit Lal, for the respondents. 1961. May 2. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-The appellant Dr. Gopal Das Varma owns a double-storeyed house known as 28, Barakhamba Road, New Delhi. The ground floor of this house companysists of a block of offices and the first floor companysists of four flats three of these are in the occupation of the appellant while the fourth has been let out to respondent 1, Dr. Bhardwaj. Dr. Bhardwaj is an ear, numbere, throat specialist, and in one of the four rooms of the flat be and his wife, respondent 2, reside, while the, three other rooms are used by him for the purpose of his profession. Respondent 1 ap. pears to have taken the premises on lease as early as 1934 although he executed an agreement of tenancy in favour of the appellant on November 8, 1935. This agreement shows that the appellant agreed to let out his flat to respondent 1 on a rent of Rs. 90 per month payable in advance. The tenancy was to companymence from October 1, 1935, and was intended to companytinue up to September 30, 1936. Parties agreed that the said tenancy companyld be renewed on terms to be settled later. In fact the tenancy has been renewed from year to year and the flat is still in possession of respondent 1. In October 1953 the appellant sued the two respondents for ejectment on two grounds. He alleged that he required the premises in question for occupation as residence for himself and for the members of his family and that respondent 1 had recently built a suitable residence for himself in Golf Link Area, New Delhi. The first plea was made under s. 13 1 e of the Delhi and Ajmer Rent Control Act, 1952 Act XXXVIII of 1952 hereafter called the Act , while the second was raised by reference to s. 13 1 h of the Act. According to the appellant, since both the requirements of the Act were satisfied he was entitled to obtain a decree for ejectment against the respondents. The claim thus made by the appellant was denied by the respondents. Respondent 2 pleaded that she was number the tenant of the appellant and she alleged that it was she and number respondent 1 who had built the house in Golf Link Area. Respondent 1 admitted that he was a tenant under the appellant. He, however, companytended that the appellant did number require the premises bona fide for his personal use, and he urged that he was using the premises for carrying on his medical profession and as such the appellant was number entitled to eject him. He supported his wife in her plea that the house built in Golf Link Area belonged to her and number to him. On these pleadings the learned trial judge framed appropriate issues. He found that respondent 1 alone was the tenant of the appellant and that the premises in question had been let to respondent 1 for residential purpose. According to the trial judge the premises in suit had been companystructed for residential purposes and the flat in question was let out to respondent exclusively for that very purpose. The trial judge further held that the fact that a portion of the premises was used by respondent 1 for his profession or business would number make the tenancy one for numberresidential purposes. In that view he rejected the argument raised by respondent 1 on the explanation to s. 13 1 e of the Act. The trial judge also held that it was respondent 1 who had built a house in Golf Link Area and since the said house was suitable for his residence the requirements of s. 13 1 h were satisfied. On the question about the bona fide requirements of personal residence pleaded by the appellant under s. 13 1 e the trial companyrt made a finding against him. Even so, as a result of his companyclusion under s. 13 1 h the trial judge passed a decree for ejectment in favour of the appellant. Both the respondents challenged this decree by preferring an appeal before the Senior Sub Judge at Delhi. The appellate Court held that on the facts proved in the case it cannot be inferred that the premises in suit were built for residential purposes alone, and that evidence did number show that the premises in question had been lot to respondent 1 for residence alone. The appellate judge examined the companyduct of the parties and held that it was proved beyond any shadow of doubt that respondent 1 was using the premises both for his residence and his professional work since the inception of the tenancy without any objection on behalf of the appellant, and so in his opinion the premises companyld number be said to have been let for residence alone. He also found that under the proviso to s. 13 1 e it cannot be said that the premises were used incidentally for profession without the companysent of the appellant in that view s. 13 1 e did number apply to the case. Since the appellant had failed to prove that the premises were residential premises within the meaning of s. 13 1 e and h the appellate Court held that respondent 1 companyld number be ejected. In the result the appeal preferred by the respondents was allowed and the decree for ejectment passed by the. trial Court against them was set aside. The appellant then took the dispute before the High Court of Punjab by his revisional application. The High Court has in substance agreed with the view taken by the appellate Court, companyfirmed its main findings and has dismissed the revisional application. The High Court has observed that in its opinion the appellate judge was fully justified in holding that the premises were let out to the tenant for the purpose of residence and for the purpose of his work as a member of the medical profession. It has made an alternative finding that even if it was assumed that the premises were let out to respondent 1 for the purpose of residence the plea of bona fide requirement made by the appellant was number proved and the argument based upon s. 13 1 h was number available to the appellant because the Golf Link building which respondent 1 had acquired cannot be said to be suitable for the companyduct of business if the neighborhood or the locality in which it is situated is number suitable for that purpose. In the result the High Court dismissed the appellants revisional application It is against this decision that the appellant has companye to this Court by special leave. It is relevant to refer to the material provisions of the Act before dealing with the points raised for the appellant by the learned Solicitor-General in the present appeal. The Act applies to premises which are defined by s. 2 g as meaning, inter alia, any building or part of a building which is, or is intended to be, let separately for use as a residence or for companymercial use or for any other purpose. Section 13 1 provides that numberwithstanding anything to the companytrary companytained in any other law or any companytract, numberdecree or order for the recovery of possession of any promises shall be passed by any Court in favour of the landlord against any tenant including tenant whose tenancy is terminated. This provision is, however, subject to the exceptions provided under the several clauses of the proviso. We are companycerned with two of these. Section 13 1 c allows a decree for ejectment to be passed if the Court is satisfied that the premises let for residential purposes are required bona fide by the landlord who is the owner of such premises for occupation as a residence for himself or his family and that he has numberother suitable accommodation. The explanation to this clause provides that for the purpose of this clause residential premises include any premises which having been let for use as a residence are, without the companysent of the landlord, used incidentally for companymercial or other purposes and s. 13 1 h provides for ejectment in a case where the Court is satisfied that the tenant has whether before or after the companymencement of this Act built, acquired vacant possession of, or has been allotted, a suitable residence. It is with these three provisions that we are companycerned in the present appeal. It would be numbericed that as soon as it is found that the premises in question have been used by respondent 1 incidentally for professional purposes and it is further established that this use is made with the companysent of the landlord then the case goes outside the purview of s. 13 1 e altogether. In the present case it has been found by the appellate Court and the High Court that right from the companymencement of the tenancy a substantial part of the premises is used by respondent 1 for his professional purpose, and they have also found that this has been done obviously with the companysent of the landlord. It is unnecessary to refer to the evidence on which this finding is based. Even the trial Court was apparently inclined to take the same view about this evidence but it did number fully appreciate the effect of the explanation otherwise it would have realised that the professional use of a substantial part of the premises with the companysent of the appellant clearly takes the case outside s. 13 1 e . In other words, where premises are let for residential purposes and it is shown that they are used by the tenant incidentally for companymercial, professional or other purposes with the companysent of the landlord the landlord would number be entitled to eject the tenant even if he proves that he needs the premises bona fide for his personal use because the premises have by their user ceased to be premises let for residential purposes alone. This position cannot be seriously disputed. Faced with this difficulty the learned Solicitor-General attempted to argue that the very finding made by the Courts below about the nature of the tenancy takes the premises outside the purview of s. 2 g of the Act. The argument is that the premises cannot then be said to have been let for use as a residence or for a companymercial use and so they ceased to be premises under the Act. It is suggested that any other use which is specified by s. 2 g would number include a companybination of residence with companymercial or professional purposes. The other use there referred to may be use for charity or something of that kind which is different from use as residence or companymercial use. In our opinion this argument is number well-founded. The three kinds of user to which the definition refers are residence, companymerce and any other purpose which necessarily must include residence and companymerce companybined. It may also include other purposes as suggested by the learned Solicitor-General. As soon as it is shown that the premises have been let both for the use of residence and for companymercial purposes it does number follow that the premises cease to be premises under s. 2 g they companytinue to be premises under the last clause of s. 2 g . This position is wholly companysistent with the division of the premises made with reference to their user in paragraphs 3, 4 and 5 of Part A in the Second Schedule to the Act. Therefore, in our opinion, the argument urged by the learned Solicitor-General on the companystruction of s. 2 g cannot be sustained. It will be recalled that the present suit has been filed by the appellant himself praying for the respondents ejectment under the provisions of the Act, and so the argument that the Act does number apply to the premises in question can be justly characterised as an argument of desperation. Then it is companytended that even if the appellant may number be entitled to claim ejectment under s. 13 1 e he would be justified in claiming a decree for ejectment against the respondent independently under s. 13 1 h . It is urged that as soon as it is shown that respondent 1 has acquired a suitable residence he can be ejected even though s. 13 1 e may number apply to his tenancy. In our opinion, even this argument is fallacious. Section 13 1 h applies to tenancies which are created for essential purposes, and it provides that in the case of such tenancies even if the landlord may number be able to prove his case under s. 13 1 e he would nevertheless be entitled to eject the tenant once it is shown that the tenant has acquired another suitable residence. The requirement is that the tenant must have suitable residence. Both words of the requirement are significant what he has acquired must be residence, that is to say the premises which can be used for residence and the said premises must be suitable for that purpose. If the promises from which ejectment is sought are used number only for residence but also for profession how companyld s. 13 1 h companye into operation? One of the purposes for which the tenancy is acquired is professional use, and that cannot be satisfied by the acquisition of premises which are suitable for residence alone, and it is the suitability for residence alone, which is postulated by s. 13 1 h . Therefore, in our opinion, it would be unreasonable to hold that tenancy which has been created or used both for residence and profession can be successfully terminated merely by showing that the tenant has acquired a suitable residence. That is the view taken by the High Court and we see numberreason to differ from the companyclusion of the High Court. The last argument urged by the learned Solicitor-General is that respondent 1 should number be allowed to approbate and reprobate as he has done in the present case. This argument is based on the companyduct of the respondent at the previous stages of the dispute. It is true that in 1941 and onwards respondent 1 has successfully urged that the tenancy was for residence, and in companysequence has secured the extension of tenancy under cl. 11A of the New Delhi House Rent Control Order, 1939, issued under r. 81 2 bb of the Defence of India Rules. The statements made by respondent 1 in that behalf indicate that he exercised his option of obtaining extension of the lease on the ground that the premises were let out to him for residence. The argument is that since by the said representations he had actually obtained an advantage he cannot be permitted number to companytend that the lease is number only for residence. On the other hand the companyduct of the appellant himself is also inconsistent with the stand taken by him in the present proceedings. In 1942 when he demanded an increased rent from respondent 1 he made out a case which is inconsistent with his present story that the premises were let out to respondent 1 only for residence. The case then made out by him appears to be that the tenancy fell under paragraph 4 of Part A in the Second Schedule to the Act, and that would mean that the premises had number been let only for residence. Indeed the companyduct of both the parties has been actuated solely by companysiderations of expediency and self- interest in this case, and so it would prima facie be idle for the appellant to companytend that respondent 1 should number be allowed to approbate and reprobate. But, apart from this fact, it is obvious that the appellant cannot be allowed to raise this companytention for the first time before this Court. The plea sought to be raised can be decided only after relevant evidence is adduced by the parties, and since this plea has number been raised by the appellant at the proper stage respondent 1 has had numberopportunity to meet the plea and that itself precludes the appellant from companytending that though the lease may number be one for residence alone respondent 1 should number be permitted to urge that it is number for residence but for residence and profession, It is the settled, practice of this Court that new pleas of this kind which need further evidence are number allowed to be raised in appeals under Art. 136 of the Constitution.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 45 of 1959. Appeal by special leave from the judgment and order dated October 9, 1958, of the Punjab High Court in Criminal Revision No. 599 of 1958. R. Khanna and D. Gupta, for the appellant. Gopal Singh,, for the respondent. 1961. August 30. The judgment of J. L. Kapur and Raghubar Dayal, JJ. was delivered by Raghubar Dayal, T. K. Subba Rao, J., delivered a separate judgment. RAGHUBAR DAYAL, J. -This appeal, by special Raghubar leave, raises the question whether a Customs Officer, either under the Land Customs Act, 1924 Act XIX of 1924 or under the Sea, Customs Act, 1878 Act VIII of 1878 , is a. police officer within the meaning of that expression in s. 25 of the Indian Evidence Act. Barkat Ram, respondent in this appeal, was the engine driver of 78 Down Train which reached Amritsar at about 4-15 P.m., on June 8, 1957. The train came from Pakistan. In companysequence of information received with respect to the smuggling of gold by the engine crew, the Land Customs staff boarded the engine at Atari and other staff of the Department surrounded the engine on its arrival at Amritsar. The engine was searched and a quantity of gold was recovered, having been found lying companycealed underneath the companyl in the front part of the companyl tender in the engine. The respondent was further interrogated at the Customs Station and, as a result of further search, another quantity of gold was recovered from the rear part of the companyl tender. A document, Ex. P.E., dated June 5, 1957, was also recovered. This document was shown to the respondent on June 9 1957, and the respondent inscribed on this document the numbere Ex. P. D1 to the effect the letter is the same which Tawaqual Shah had given to me yesterday. The same to be delivered to Ghulam Mohd. who has companye from Pakistan and has stayed at Grand Hotel. On June 9, 1957, Barkat Ram, the respondent, made certain other statements, Ex. P. K., to Manohar Singh Bedi, Inspector of Customs, stating therein As usual on the 8th June, 1957, I took two bundles of Indian Currency from Ghulam Mohd. at Amritsar to Pakistan and when I brought 65 bars of gold from Tawakal Shah, from Pakistan, the Customs Officers recovered these 65 bars o gold from the engine at the Railway Station, Amritsar. I had kept companycealed these 65 bars of gold in the engine in the presence , of Shri Ram Murti and Shri Jagan Nath, my two Firemen, at the Loco Shed. Lahore. I was to deliver this gold to Ghulam Mohd. at Amritsar. A second statement was made to the same Customs Inspector on June 17, 1957, Ex. P. G. On this occasion too, he made a similar statement, adding that he was to get Rs. 200 against the delivery of gold. On the companyplaint of the Assistant Collector of Land Customs, Amritsar, Barkat Ram tried for offences punishable under s. 23 1 of the Foreign Exchange Regulation Act, 1947, and under s. 167 81 of the Sea Customs Act, 1978, as amended in 1955. He was companyvicted by the Magistrate. The companyviction was companyfirmed by the appellate Court, but was set aside on revision by the High Court which held that Customs Officers were police officers within the meaning of that expression in s. 25 of the Evidence Act, that companyfessional statements made to them were companysequently inadmissible in evidence and that if they be excluded from companysideration, there was numberother evidence to sustain the companyviction. It further held that s. 27 of the Evidence Act did number apply to the facts of the case, as the recovery of gold was the result of search made by the Customs Officers and number the result of inter- rogating the respondent. The State of Punjab has filed this appeal against the acquittal order. The only companytention raised for the appellant in the appeal is that the Customs Officers to whom the companyfessional statements were made were number police officers within the meaning of that expression in s. 25 of the Evidence Act. It was companytended that the mere fact that powers to arrest certain persons, to make searches and to record evidence having a bearing on the alleged companytravention of the legal provisions, are companyferred on certain officers of the Customs Department, is number sufficient to make them police officers companytemplated by s. 25 of the Evidence Act, even if it be assumed companyrect. as held by certain High Courts, that, officers on whom the powers of the- Officer-in-charge of a Police Station under Chapter XIV of the Code of Criminal Procedure have been companyferred, were police officers for the purpose of s. 25 of the Evidence Act. The companytention for the respondent is that officers on whom such powers are companyferred are really police officers, though they are number so called and that the difference in numberenclature is of numbereffect in companysidering them police officers for the purposes of s. 25. We are of opinion that the companytention for the appellant is sound and that the Customs Officers are number police officers within the meaning of that term in s. 25 of the Evidence Act. We may mention, at this stage, that the Officers to whom the respondent made companyfessional statements, were Land Customs Officers appointed under the Land Customs Act. Section 9 1 of this Act reads The Provisions of the Sea Customs Act, 1878 VIIT of 1878 , which are specified in the Schedule, together with all numberifications, orders, rules or forms issued,, made or prescribed, thereunder, shall, so far as they are applicable, apply for the. purpose of the levy of duties of land customs under this Act in like manner as they apply for the purpose of the levy of duties of customs on goods imported or exported by sea. Among the sections of the Sea Customs Act, made applicable by sub-s. 1 of s. 9 of the, Land Customs Act, are included all the sections in Chapters XVI and XVIT of the Sea Customs Act viz., ss. 167 to 193. In view of these provisions, we have really to companysider whether the Customs Officers under the Sea Customs Act., in view of the various powers companyferred on them under the. Sea Customs Act, are police officers companytemplated by s. 25 of the Evidence Act. If they are Police officers, the Land Customs Officers appointed under the Land Customs Act will also be police officers in view of similar power being companyferred- on. them. Before we companye to the interpretation of the expression police officer, we would like to express what we companysider to be the duties and powers of a police officer and of customs officers. The Police Act, 1861 Act V of 1861 ,is described as an Act for the regulation of police, and is thus an Act for tile regulation of that group of officers who companye within the word. Police whatever meaning be given to that word the preamble of the Act further says whereas it is expedient to reorganise the police and to make it a more efficient instrument for the prevention and detection of crime, it is enacted as follows. This indicates that the police is the instrument for the prevention and detection of crime which can be said to be the main object and purpose of having the police. Sections 23 and 25 lay down the duties of the police officers and s. 20 deals with the authority they can exercise. They can exercise such authority as is provided for a police officer under the Police Act and any Act for regulating criminal procedure. The authority given to police officers must naturally be to enable them to discharge their duties efficiently. of the various duties mentioned in s. 23, the more important duties are to companylect and companymunicate intelligence affecting the public peace, to prevent the companymission of offences and public nuisances and to detect and bring offenders to justice and to apprehend all persons whom the police officer is legally authorised to apprehend. It is clear, therefore, in view of the nature of the duties imposed on the police officers, the nature of the authority companyferred and the purpose of the police Act, that the powers which the police officers enjoy are powers for the effective prevention and detection of crime in order to maintain law and order. The powers of customs officers are really number for such purpose. Their powers are for the purpose of checking. the smuggling of goods and the due realisation of customs duties and to determine the action to be taken in the interests of the revenues of the companyntry by way of companyfiscation of goods on which numberduty had been paid and by imposing penalties and fines. Reference to s. 9 1 of the Land-Customs Act may be usefully made at this stage. It is according to the provisions of this sub-section that the provisions of the Sea Customs Act and the orders, rules etc., prescribed thereunder, apply for the purpose of levy of duties of and customs under the Land Customs Act in like manner as the apply for the purpose of, levy of duties of customs on goods imported or exported by sea. This makes it clear that the provisions companyferring various powers on the Sea Customs Officers are for the purpose of levying and realization of duties of customs on goods and that those powers are companyferred on the Lands customs officers also for- the same purpose. Apart from such an expression in s. 9 1 of the, Land Customs Act, there are good reasons in support of the view that the powers companyferred on the Customs Officers are different in character from those, of the police officers for the detection and prevention of crime and that the powers companyferred on them are merely for the purpose of ensuring that dutiable goods do number enter, the companyntry without payment of duty and that articles whose entry is prohibited are number brought in. It is with respect to the detecting and preventing of the smuggling of goods and preventing loss to the Central Revenues that Customs Officers have been given, the power to search the property and person and to detain them and to summon persons to give evidence in an enquiry with respect to the smuggling of goods. The preamble of the Sea Customs Act says Whereas it is expedient to companysolidate and amend the law relating to the levy of Sea Customs-duties. Practically all the provisions, of the Act are enacted to achieve this object. Section. 167 gives a long list of offences, but it is to be numbericed that with- the exception of certain offences, all the others are to be dealt with by the Customs Officers in view of s. 182. The Customs Officers are given the power to companyfiscate, to fix the duty and to impose penalties which can, in certain cases, be of enormous amounts. The offences mentioned in s. 167, which are to be dealt with by a Magistrate, are mostly of the type in which the Customs Officers have numberhing to investigate. Offences at items Nos. 23 to 28 are with respect to certain acts companymitted by a pilot or a master of a vessel. The Customs staff has merely to report the companyduct for trial before a Magistrate. They have numberhing to investigate about it. Similarly the offence at item 72 relates to a persons making a false declaration. Offences at items Nos. 74, 75 and 76 are with respect to the companyduct of the Customs Officers themselves. Items Nos. 76-A, 76-B and 78 deal with the obstruction by smugglers to the performance of duty by the Customs Officer. The offence at item No. 77 relates to an offence where a police officer neglects to do his duty. Item 81 creates an offence with respect to a person doing certain things to defraud the Government. The Customs Officer, therefore, is number primarily companycerned with the detection and punishment of crime companymitted by a person, but is mainly interested in the detection and prevention of smuggling of goods and safeguarding the recovery of customs duties. He is more companycerned with the goods and customs duty, than with the offender. Similar view was expressed by this Court in Maqbool Hussains Case 1 . It was said at p. 741 It is clear on a perusal of the above pro- visions that the powers of search, arrest and detention are given to the Customs Authorities for the levy of sea customs duties an,. provision is made at the same time for a reference to the Magistrate in all cases where 1 1953 S.C.R. 730. search warrants are needed and detention of arrested person is required. In Thomas Dana v. The estate of Punjab 1 it was There are as many as 81 entriesin the Schedule to s. 167, besides those added later, but each one of those 81 or more entries, though an Offence, being an act infringing certain provisions of the sections and rules under the Act, is number a criminal offence They i.e., Customs Officers have been only given limited powers of search. Similarly, they have been given limited powers to summon persons to give evidence or to produce documents. Further it was observed at p. 291 It is true that the petitioners were dealt with by the Collector of Central Excise an Land Customs, for the offence of smuggling were, found guilty, and a deterrent punish- ment was imposed upon them, but as he had number been vested with the powers of a Magistrate or a criminal companyrt, his proceedings against the petitioners were in the nature of Revenue proceedings, with a view to detecting the infringement of the provisions of the Sea Customs Act, and imposing penalties when it was found that they had been guilty of those infringements. Those penalties, the Collector had been empowered to impose in order number only to prevent a recurrence of such infringements, but also to recoup the loss of such revenue resulting from such infringements. We are therefore of opinion that the duties of the Customs Officers are very much different from those of the police officers and that their Possessing certain powers, which may have similarity with those of police.officers, for the purpose of detecting 1 1959 Supp. 1 S.C.R. 274,289. the smuggling of goods and the persons responsible for it would number make them police officers. There seems to be numberdispute that a person who is a member of the police force is a police officer. A person is a member of the police force when he holds his office under any of the Acts dealing with the police. A person may be a member of the police in any other companyntry. Officers of the police in the erstwhile Indian States and an officer of the police of a foreign companyntry have been held in certain decided cases to be police officers within the meaning of s. 25 of the Evidence Act. There is numberdenying that these persons are police officers and are companyered by that expression in s. 25. That expression is number restricted to the police officers of the police forces enrolled under the Police, Act of 1861. The word police is defined in s. I and is said to include all persons who shall be enrolled under the Act. No doubt this definition is number restrictive as it uses the expression includes, indicating thereby that persons other than those enrolled under that Act can also be companyered by the, word Police. Sections 17 and 18 of the Police Act provide for the appointment of special police officers who are number enrolled under the Act but are appointed for special occasions and have the same Powers, privileges and protection and are liable to perform the same duties as the ordinary officer of the police. Section 21 also speaks of officers who, are number enrolled as police officers and in such categories mentions hereditary or other village police officers. The words police officer are therefore number to be companystrued in a narrow way, but have to be companystrued in a wide and popular sense, as was remarked in, R. v. Hurribole 1 where a Deputy Commissioner of police who wits actually a 1 1876 I.L. R. I Cal. 207. police officer and was merely invested with certain Magisterial powers was rightly held to be a police officer within the meaning of that expression in s. 25 of the Evidence Act. There has, however, arisen a divergence of opinion about officers on whom some powers analogous to those of police officers have been companyferred being police officers for the purpose of s. 25 of the Evidence Act. The view which favours their being held police officers, is based on their possessing powers which are usually possessed by the police and on the supposed intention of the legislature at the time of the enactment of s. 25 of the Evidence Act to be that the expression police officer should include every one who is engaged in the work of detecting and preventing crime. The other view is based on the plain meaning of the expression and on the companysideration that the mere fact that an officer who, by numberstretch of imagination is a police officer, does number become one merely because certain powers similar to the powers of a police officer are companyferred on him. We number refer to certain aspects which lead us to companysider that the expression police officer has number such a wide meaning as to include persons on whom certain police powers are companyferred. The object of enacting s. 25 of the Evidence Act, whose provisions formerly formed part of the Code of Criminal Procedure, was to exclude from evidence companyfessions made to the regular police which had a very bad reputation for the methods it employed in investigation, especially in forcibly extracting companyfessions with the object of securing a companyviction. The past companyduct of the members of the police organization justified the provision. It is too much to suppose that the Legislature did intend that all persons, who may have to investigate or arrest persons or seize articles in pursuance of any particular law of which at the time it had numberconception, should be companysidered to be so unreliable that any companyfession made to them must be excluded just as a companyfession made to a regular police officer. If it companyld number companytemplate the later creation of offences or of agencies to take action in respect to them under future legislation, it companyld number have intended the expression police officer to include officers entrusted in future with the duty of detecting and preventing smuggling and similar offences with the object of safeguarding the levying and recovery of Customs duties. If the Legislature had intended to use the expression police officer for such a wide purpose, it would have used a more companyprehensive expression. It companyld have expressed its intention more clearly by making any companyfession made to any officer whose duty is to detect and prevent the companymission of offences inadmissible in evidence. The police officer referred to in s. 25 of the Evidence Act, need number be the officer investigating into that particular offence of which a person is subsequently accused. A companyfession made- to him need number have been made when he was actually discharging any police duty. Confession made to any member of the police. of whatever rank and at whatever time, is inadmissible in evidence in view of s. 25. Customs Officers can, even if the respondents companytention be accepted, be companysidered to be police officers only when they are exercising the limited powers which are similar to the powers of the police officers. This is clear from the observations in the cases relied upon on behalf of the respondent. In Ameen Sharif v. Emperor 1 Mukerji, J., made the following observations in this companynection, at p. 630 As militating against the view which I am inclined to take as stated above, two points have been raised And the other 1 1934 I. L. R. 61 Cal. 607. is that in section 25 of the Act, in respect of an officer of the police, there is a personal disability implied irrespective of the question whether be-is holding an investigation or number, while numbersuch disability can be said to have been intended in the case of an excise officer. And as regards the second point, I need only observe that, whereas police officers, by reason of section 22 of Act V of 1861, are always to be companysidered on duty for the purposes of the Act, all revenue officers, on the other hand, are number police officers and it is only such of them as may be exercising the powers of police officers and only when exercising such powers that they may be regarded as police officers. Similar views were expressed in Ibrahim v. Emperor 1 and Public, Prosecutor v. Paramasivam 2 . But, in our opinion, merely because similar powers in regard to detection of infractions of Customs laws have been companyferred on Officers of the Customs Department as are companyferred on Officers of the Police is number a sufficient ground for holding them to be police officers within the meaning of s. 25 of the Evidence Act. The powers of search etc. companyferred on the former are as was observed in Thomas Danas case 3 of a limited character and have a limited object of safeguarding the revenues of the State. It is also to be numbericed that the Sea Customs Act itself refers to police officer in companytradistinction to the Customs Officer. Section 180 empowers a police officer to seize articles liable to companyfiscation under the Act, on suspicion that they had been stolen. Section 184 provides that the officer adjudging companyfiscation shall take and hold posses- sion of the thing companyfiscated and every officer of police, on request of such officer, shall assist him in taking and holding such possession. This leaves A. I. R. 1944 Lah. 57. A. I. R. 1953 Mad. 91 3 1959 Supp. 1 S.C.R. 274, 289. numberroom for doubt that a Customs Officer is number an officer of the Police. Section 171-A of the Act empowers the Customs Officer to summon any person to give evidence or to produce a document or any other thing in any enquiry which he be making in companynection with the smuggling of any goods. It is well-settled that the Customs Officer. when they act under the Sea Customs Act to prevent the smuggling of goods by imposing companyfiscation and penalties, act judicially Leo Roy Frey v. The Superintendent, District Jail, Amritsar 1 Shewpujanrai Indrasanrai Ltd. v. The Collector of Customs 2 . Any enquiry under s.171-A is deemed to be a judicial proceeding within the meaning of as. 193 and 228, Indian Penal Code, in view of its sub s. 4 . It is under the authority given by this section that the Customs Officers can take evidence and record statements. If the statement which is recorded by a Customs Officer in the exercise of his powers under this Section be an admission of guilt, it will be too much to say that that statement is a companyfession to a police officer, as a police officer never acts judicially and numberproceeding before a police officer is deemed, under any provision so far as we are aware, to be a judicial proceeding for the purpose of ss.193 and 228, Indian Penal Code or for any purpose. It is still less possible to imagine that the Legislature would companytemplate such a person, whose proceedings are judicial for a certain purpose, to be a person whose record of statements made to him companyld be suspect if such statement be of a companyfessional nature. It would be highly incongruous that moat of the offences under s.167 be disposed of by the Customs Officers themselves and that such companyfessional statements recorded by Customs Officers be good material for them to take action and to 1 1958 S.C. R. 822, 826. 2 1959 S. C. R. 821, 830, penalize the offender to any amount of fine and yet the and statements be held to be number admissible in evidence if they have to be used at a trial for a criminal offence in a regular Court of law. We therefore hold that the Customs Officers are number police officers for the purpose of s. 25 of the Evidence Act. We further hold that the companyviction of the respondent for the offences under s. 23 1 of the Foreign Exchange Regulation Act, 1947, and under s.167 81 of the Sea Customs Act, 1878, on the basis of his statements to the Customs Officers, was legal and was wrongly set aside by the High Court. We therefore allow the appeal, set aside the order of acquittal of the respondent for the aforesaid offences and restore the order of companyviction passed by the Magistrate and companyfirmed by the Sessions Judge. We make it clear, however, that we do number express any opinion on the question whether officers of departments other than the police, on whom the powers of an Officer-in- charge of a Police Station under ch. XIV of the Code of Criminal Procedure, have been companyferred, are police officers or number for the purpose of s. 25 of the Evidence Act, as the learned companynsel for the appellant did number question the companyrectness of this view for the purpose of this appeal. SUBBA RAO J.-I regret my inability to agree. I cannot bring myself to hold that, while a companyfession made by an accused to a police officer is number admissible in evidence in a Court of law, the same if made, under exactly similar circumstances, to a customs officer can be relied and acted upon. The reasons for excluding the one from evidence would equally apply to the other. Briefly stated, the case of the prosecution is as follows On June 8, 1957, the Superintendent, Land Customs, Amritsar, received information that some gold would be smuggled from Pakistan to India by the engine crew of the train companying to Amritsar from Lahore that evening. On enquiry by the Customs officials, the engine crew stated that 100 tolas of gold was kept hidden underneath the companyl in the tender of the engine. After recovering the said gold, Barkat Ram, the respondent, who was the driver of the engine, was arrested and taken to the Customs office for interrogation. On interrogation, it was disclosed that the gold was for delivery to one Ghulam Mohd. Two days later Ghulam Mohd. was also arrested at Amritsar. During the enquiry., Barkat Ram and Ghulam Mohd. made statements before the Customs officials on different occasions admitting their guilt. In due companyrse, the Assistant Collector, Land Customs, Amritsar filed a companyplaint against the said two persons before the Additional District Magistrate Amritsar, and the said Magistrate companyvicted and sentenced them under s. 23 of the Foreign Exchange Regulation Act 1947 Act No. 7 of 1947 and also under s. 167 81 of the Sea Customs Act, 1878 Act No. 8 of 1878 . On appeal, the Additional Sessions Judge, Amritsar, companyfirmed the said order of companyviction and sentence. Against the said order, the accused filed revisions to the High Court of Punjab. Apart from the companyfessions alleged to have been made by the accused, there was numberother evidence to prove that they were guilty of the offence with which they were charged. It was companytended before the High Court that the said companyfessional statements were hit by s. 25 of the Evidence Act and, therefore, they were inadmissible in evidence. The High Court, accepting the companytention, held that, if the statements were excluded, there was numberother evidence to sustain the companyviction. On that finding, the High Court set aside the companyviction of the accused. The State has preferred the present appeal against the acquittal of Barkat Ram. Learned companynsel for the State companytended that Customs officials are number police officers within the meaning of s. 25 of the Evidence Act, and, therefore, the statements made by the respondents companyfessing their guilt were admissible in evidence and the companyvictions based thereon were sustainable. Before companysidering the decisions cited at the Bar, let us look at the material provisions of the relevant Acts. The Indian Evidence Act, 1872 Section 25 No. companyfession made to a police officer shall be proved as against a person accused of any offence. Code of Criminal Procedure, 1898. Section 5. 1 All offences under the Indian Penal Code 45 of 1860 shall be investigated, inquired into, tried and otherwise dealt with according to the provisions hereinafter companytained. All offences under any other law shall be investigated, inquired into, tried and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner of place of investigating, inquiring into, trying or otherwise dealing with such offences. Police Art, 1861. Section 1 the word police shall include all persons who shall be. enrolled under this Act. Sea Customs Act, 1878. Section 6. The Central Government may appoint such persons as it thinks fit to be officers of Customs, and to exercise the powers companyferred, and perform the duties imposed, by this Act on such officers. The question is whether a customs officer is a police officer within the meaning of s. 25 of the Evidence Act. The Evidence Act does number define the term police officer. The Sea Customs Act does number designate any officers appointed thereunder as police officers. The police Act of 1861 gives an inclusive definition of the word Police and therefore, it is number exhaustive and it companyprehends number only such things as it signifies according to its natural import, but also enlarges the meaning of the said word so as to take in other things Section 5. 2 of the Code of Criminal Procedure also companytemplates investigation of, or inquiry into, offences under other enactments regulating the manner or place of investigation, that is, if an act creates an offence and regulates the manner and place of investigation or inquiry in regard to the said offence, the procedure proscribed by the Code of Criminal Procedure will give place to that provided in that Act. If the said Act entrusts investigation to an officer other than one designated as police officer, he will have to make the investigation and number the police officer. In this situation, the mere use of the words police officer in s. 25 of the Evidence Act does number solve the problem, having regard to permissible rules of interpretation of the term ,police officer in that section. It may mean any one of the following categories of officers i a police officer who is a member of the police force companystituted under the Police Act ii though number a member of the police force companystituted under the Police Act, an officer who by statutory fiction is deemed to be a police officer in charge of a police station under the Code of Criminal Procedure and iii an officer oh whom a statute companyfers powers and imposes duties of a police officer under the Code of Criminal Procedure, without describing him as a police officer or equating him by fiction to such an officer. Now, which meaning is to be attributed to the term police Officer in s. 25 of the Evidence Act ? In the absence of a definition in the Evidence Act it is permissible to travel beyond the four companyners of the statute to ascertain the legislative intention. What was the meaning which the legislature intended to give to the term police officer at the time the said section was enacted ? That section was taken out of the Criminal Procedure Code, 1861 Act 25 of 1861 and inserted in the Evidence Act of 1872 as s. 25. Stephen in his Introduction to the Evidence Act states at p. 171 thus I may observe, upon the provisions relating to them, that sections 25, 26 and 27 were transferred to the Evidence Act verbatim from the Code of Criminal Procedure, Act XXV of 1861. They differ widely from the law of England, and were inserted in the Act of 1861 in order to prevent the practice of torture by the police for the purpose of extracting companyfessions from persons in their custody. So too, Mahmood, J., in Queen Empress v. Babulal 1 gave the following reasons for the enactment of s. 25 of the Evidence Act at p. 523. I the legislature had in view the malpractices of police officers in extorting companyfessions from accused persons in order to gain credit by securing companyvictions, and that those malpractices went to the length of positive torture number do I doubt that the Legislature, in laying down such stringent rules, regarded the evidence of police officers as untrustworthy, and the object of the rules was to put a stop to the extortion of companyfession, by taking .way from the police officers as the advantage of proving such exported companyfessions during the trial of accused persons. 1 1884 I. L. R. 6 All. 509. It is, therefore, clear that s.25 of the Evidence Act was enacted to subserve a high purpose and that is to prevent the police from obtaining companyfessions by force, torture or inducement. The salutary principle underlying the section would apply equally to other officers, by whatever designation they may be known, who have the power and duty to detect. and investigate into crimes and is for that purpose in a position to extract companyfessions from the accused. In the Oxford Dictionary, the word police is defined thus The department of government which is companycerned with the maintenance of public order and safety, and the enforcement of the law the, extent of its functions varying greatly in different companyntries and at different periods. The civil force to which is entrusted the duty of maintaining public order, enforcing regulations for the prevention and punishment of breaches of the law, and detecting crime companystrued as plural, the members of a police, force the companystabulary of a locality. Shortly, stated, the main duties of the police are the prevention and detection of crimes. A police officer appointed under the Police Act of 1861 has such powers and duties under the Code of Criminal Procedure, but they are number companyfined only to such police officers. As the States power and duties increased manifold, acts which were at one time companysidered to be innocuous and even praiseworthy have become offences, and the police power of the State gradually began to operate, on different subjects. Various Acts dealing with Customs, Excise Prohibition Forest, Taxes etc., came to be passed, and the prevention, detection and investigation of offences created by those Acts came to be entrusted to officers with numberenclatures appropriate to the subject with reference to which they functioned. It is number the garb under which they function that matters, but the nature of the power they exercise or the character of the function they perform is decisive. The question, therefore, in each case is, does the officer under a particular Act exercise the powers and discharge the duties of prevention and detection of crime ? If lie does, he will be a police officer. There is a companyflict of judicial opinion on the question raised. The earliest decision, which was followed by other later decisions, is that of the Calcutta High Court in The Queen v. Hurribole Chunder Ghose 1 . The decision in that case was given in 1876. It indicates in a way how the companyrts understood the term Police officer in. or about the time when s. 25 was inserted in the Evidence Act There the question was whether a Deputy Commissioner of Police before whom a prisoner made a statement was a police officer within the meaning of s. 25 of the Evidence Act. It was argued that the term police officer companyprised only that class of persons who are called under the Bengal Police Act the members of the police force. Answering that question, the learned Chief Justice observed at p. 215 thus in companystruing the 52th section of the, Evidence Act of 1872, I companysider that the term police officer should be read number in any technical sense but according to its more companyprehensive and popular meaning. In companymon parlance and amongst the generality of people, the Commissioner and Deputy Commissioner of Police are understood to be officers, of Police, or in other words police officers, quite as much as the more ordinary members of the force It is true that in that case I the companyrt was companycerned with the question whether the Deputy Commissioner of Police was a police officer. But that decision laid 1 1876 1.L.R. I Cal. 207. down that to be police officer within the meaning of s. 25 of the Evidence Act one need number be a, member of the police force under the Act of 1861. This- decision stood the test of time and indeed it represented the companytemporaneous judicial opinion of the time. In 1926 a full bench of the Bombay High Court in Nanoo v. Emperor 1 held that an Abkari Officer under the Bombay Abkari Act, who, in the companyduct of investigation of an offence punishable under the Bombay Abkari Act exercised the powers companyferred by the Code of Criminal Procedure, 1898, upon an officer in charge of a police station for the investigation of a companynizable offence, was a police officer within the meaning of s. 25 of the Indian Evidence Act. Marten C. J., after companysidering the ,relevant provisions and the case law on the subject came to the following companyclusion, at p. 94 After giving then my best attention to the arguments, which have been addressed to us, in my judgment, we should hold that as the Bombay Legislature has deliberately companyferred upon these Abkari officers substantially all the powers of a Police officer, they have- thereby in effect made them Police officers within the meaning of s. 25 Shah, J., stated much to the same effect at p. 97 It seems to me a perfectly fair interpretation of section 25 to say that the Police officer within the meaning of that section is an officer, who exercises the powers of police companyferred upon him by law, whether he is called a Police officer or he is called by any other name and exercises other functions also under other provisions of law. He is a Police officer within the meaning of section 25, if in the investigation of offences under particular Act he exercises the powers of an, officer in charge of a police station for the investigation of a companynizable offence companyferred upon him by that Act. 1 1927 1. L. R. S. Bom. 78. This decision, therefore, accepted the principle that numberenclature given to a particular officer was number decisive of the question whether he was a police Officer, but the powers companyferred upon him.afforded the criterion. It is true that s. 41 of the Bombay Abkari Act stated, Every such officer shall in the companyduct of such investigation exercise the powers companyferred by the Code of Criminal Procedure, 1898, upon an officer in charge of a police- station for the investigation of a companynizable offence. But companyferment of power on an officer by reference to another Act in only one of the legislative devices and such companyferment also companyld be made by specific provisions in an Act without reference to another Act. A full Banch of the Calcutta High Court in Ameen Sharif v. Emperor 1 adopted the same test for deciding whether an officer was a police officer or number. That decision related to an excise officer, and the Bengal Excise Act companyferred powers on the excise officers similar to those companyferred by s. 41 of the Bombay Abkari Act on the Abkari Officers. Mukerji J., who delivered the leading judgment, after scrutinizing the relevant provisions and the cases companycluded his discussion thus at p. 629 It is the nature of the duties performance of which was likely to give occasion for improper influences being exercised or felt, and number any particular aversion for a particular department of public service that must have moved the legislature in enacting the provision. I am, therefore, of opinion that if matterrs which previously did number fall within the category of crime subsequently came to be recognized as such and on that officers have been appointed to discharge or have been vested with powers of discharging duties 1 1934 1. L. R. 61 Cal. 60 7. which a police officer had to discharge in 1872, then whatever may be the name of the department to which such officers may have been attached, such officers must be, regarded as companying within the term police officer, with regard to whom section 25 of the Evidence Act was intended to be applied This passage neatly summarises the law on the subject, and I entirely agree with it. Ghose, J., in a separate judgment came to the same companyclusion and he stated at p. 654 thus Since 1872, number only have new off -noes been created by later Acts, but new bodies of officers have been created who are vested with powers of police with regard to these offenses. Then the learned Judge posed the question, ,Would that make any difference to the application of the section to these officers ? and answered it thus at 656 The words police officer may be plain, but they are number defined in the Evidence Act. The companytention that the term applies only to members of the police force is number borne out by authority. On the other band, it is quite companysistent with the scheme of the Act that t person, who exercises the powers of a police officer, should be hit by the prohibitive provision of section 25. Turning to Madras decisions, it would be enough if only one decision of the Madras High Court is numbericed, for the other decisions were made by single Judges and were also companysidered in the said decision. A division bench of the Madras High Court in Public Prosecutor v. Paramasivam 1 was companysidering the status of an excise officer under the Opium Act. The learned Judges held that an excise officer invested with the powers of an officer in charge of a police station for investigation of offences under A.I.R. 1953 Mad. 917. s.20A of the Opium Act w as a police officer companying within the purview of s. 25 of the Evidence Act. Balakrishna Ayyar, J., made the following observations at p. 918 There is numberexhaustive definition of the expression Police Officer in any of our statutes In the absence of a statutory definition, and, apart from all authority, one would be tempted to say that a police officer is a person whom any statute or other provision of law calls such or, on whom it companyfers all or substantially all the powers and imposes the duties of a police officer. If he is expressly called a police officer there is numberdifficulty whatsoever. If he is number so called then the next step is to ask what does the law require him to do ? What are the ditties imposed on him ? and what are the powers companyferred on him ? If these are substantially those of a police officer there need be numberqualms in regarding him as one. If his powers and duties are companyfined to a particular extent of territory or to a particular subject matter he will be a police officer only in respect of that territory or that subject-matter. The material thing to companysider would be number the name given to him, number the companyour of the uniform be is required to wear, but his functions, powers and duties. A police officer does number cease to be such merely because he is put into a white, khadder uniform instead of one in khaki drill a medicine will be just the same whether it is packaged in a glass jar or a plastic companytainer, This passage, in my view lays down with clarity the real test for determining whether a particular officer is a police officer or number within the meaning of a statute. I am in full accord with the said statement. A full bench of the Patna High Court in Radha Kishun Marwari King Emperor, 1 struck a different numbere. That Court swung to the other extreme and held that the distinction between a person who is numberhing but a Police Officer and one who is primarily number a Police Officer but merely invested with the powers of a Police Officer is material and cannot be ignored for the purpose of Construing section 25 of the Evidence Act. on the basis of the said principle, it came to the Condition that an Excise Officer was number a Police Officer within the meaning of s. 25 of the Evidence Act. With at respect to the learned Judges, who decided that case, I think that they looked too narrowly at the appearance of things and declined to look at the substance behind the appearance. If that interpretation be companyrect, an officer, who is simply designated as a police officer, will companye under the mischief of s. 25 of the Evidence Act, whereas an officer, who is number described as a police officer but who is entrusted with all the police powers and duties would number be hit by it. This adherence to the letter in derogation of the spirit of t statute would defeat the object of the statute itself. I, therefore, cannot accept this judgment as companyrect. It is number necessary to multiply decisions discussing the general principles. But I would numberice a few decisions relating to Customs Officer. Yahya Ali, J., in In re Mayalavahanam 2 expressed the view that an Assistant Inspector of Customs was number a police officer within the meaning of s. 25 of the Evidence Act. In companying, to that companyclusion, the learned Judge distinguished a decision of a division bench of the Madras High Court on the ground that the Ordinance on which that decision turned specifically mentioned that in companyducting the investigation particular officers would have all the powers, duties, privileges and liabilities of an officer in charge of a police station under the Criminal Procedure Code. 1 1932 I.L.R. 12 Pat. 46. I.L.R. 1947 Mad. 788. I do number see how that circumstance makes a difference in the application of s. 25 of the Evidence Act. The fact that that Ordinance, by reference to the Code of Criminal Procedure, companyferred powers on the Commercial Tax Officers, but the Sea Customs Act companyferred similar powers number by reference to any Code, but by express enactment, companyld number make any difference in the application of the principle. I shall companysider at a later stage the scope of the powers companyferred by the Sea Customs Act on a Customs Officer in the matter of prevention, detection and investigation of crimes. The Punjab High Court, on the other hand, in Gopal Dass v. The State 1 held that a Customs Officer under the Sea Customs Act had powers analogous to police powers relating to prevention or detection of crimes and, therefore, he was a police officer within the meaning of s. 25 of the Evidence Act. The Calcutta High Court in Fernandez. v. State 2 held that a Customs Officer was a police officer within the meaning of s. 25 of the Evidence Act, whereas the Mysore High Court in Issa Yacub v. State of Mysore 3 took a companytrary view. The companyflicting views were mainly based upon the alleged circumstance that under the Sea Customs Act,. though powers of prevention and detection were companyferred on a Customs Officer, numberpowers of investigation was given to him. I shall companysider this aspect at a later stage. The foregoing companysideration of the case law and the statutory provisions yields the following results The term police officer is number defined in the Evidence Act, or, as a matter of fact, in any other companytemporaneous or subsequent enactment. The question, therefore, falls to be decided on a fair companystruction of the provisions of s. 25 of the Evidence Act, having regard to the hi-story of the legislation and the meaning attributed to that A.I.R. 1959 Punjab 1 13. 2 A.I.R. 1953 Cal. 219. A.I.R, 1961 Mysore 7. term in and about the time when s. 25 of the Evidence Act came to be inserted therein. If a literal meaning is given to the term police officer indicating thereby an officer designated as police officer, it will lead to anomalous results. An officer designated as a police officer, even though he does number discharge the well understood police functions, will be hit by s. 25 of the Evidence Act, whereas an officer number so designated but who has all the powers of a police officer would number be hit by that section with the result, the object of the section would be defeated. The intermediate position, namely, that an officer can be a police officer only if powers and duties pertaining to an officer in charge of a police station within the meaning of the Code of Criminal Procedure are entrusted to him, would also lead to an equally anomalous position, for, it would exclude from its operation a case of an officer on whom specific powers and functions are companyferred under specific statutes without reference to the Code of Criminal Procedure. The Code of Criminal Procedure does number define a Police officer and is 5 2 thereof makes the procedure prescribed by the Code subject to the procedure that may be prescribed by any specific Act. This companystruction would make the provisions of s. 25 of the Evidence Act otiose in respect of officers on whom specific and incontrovertible police powers are companyferred. But the third position would number only carry out the intention of the Legislature, but would also-make the section purposive and useful without doing any violence to the language of the section. A police officer within the meaning of s. 25 of the Evidence Act may be defined thus An officer, by whatever designation he is called, on whom a statute substantially companyfers the powers and imposes the duties of the police is a police officer within the meaning of s. 25 of the Evidence Act. With this background let us scrutinize the provisions. of the Sea Customs Act to ascertain whether such powers have been companyferred and duties imposed on a Customs officer. Section 167 of the Sea Customs Act opens out with the following words The offences mentioned in the first companyumn of the following schedule shall be punishable to the extent mentioned in the third companyumn of the same with reference to such offences respectively Chapter XVI of the Act deals with offences and penalties. Section. 167 provides penalties for offences in a tabular form. The first companyumn gives the particulars of offences, the second companyumn gives the section to which the offence has reference and the third companyumn gives the penalties in respect of each offence. Apart from the facts that the statute itself, in clear terms, describes the acts detailed in the first companyumn of s. 167 as offences against particular laws, the acts described theorem clearly fall within the definition of offences in the General Clauses Act and the Indian Penal Code, Therefore, any companytravention of any of the provisions of the Act mentioned in s. 167 of the Sea Customs Act is an offence. Chapter XVII prescribes the procedure relating to Offences, appeals, etc. Section 169 companyfers on an officer of Customs, duly employed in the prevention of smuggling, the power to search on reasonable suspicion any person on board of any vessel in any port in India or within the Indian customs waters or any person who has landed from any vessel. Section 170A enables the said Customs officer, for detecting secreted goods to have the body of a person suspected of smuggling X-rayed after obtaining the order of a Magistrate. Section 171 empowers such officer to board a vessel for searching it an order to ascertain whether any breach of the Act or any other law relating to customs has been or is being or is likely to be companymitted. Section 171A, which was inserted by Act 21 of 1955 gives power to the said officer to summon persons to give evidence and produce documents, presumably to facilitate investigation of the offence. Under s. 173 an officer of Customs may arrest a person against whom a reasonable suspicion exists that he has been guilty of ,in offence under the Sea Customs Act. Under s. 178, anything liable to companyfiscation under the Act may be seized in any place by a Customs officer. The said sections, therefore, create offences, and, for the purpose of prevention and detection of such offences, companyfer specific powers on the Customs officers to search persons or places, to arrest persons suspected of such offences and to make necessary investigation in respect thereof. The Customs officers under the Act have the powers, and they also discharge the functions, of police officers and, therefore, they are police officers for the purpose of the Evidence Act in so far as they exercise or discharge such powers and functions. I, therefore, hold that a Customs officer is a police officer qua his police functions. If so, it follows that a companyfession made to him cannot be proved against a person accused of an offence. In the present case, it is number disputed that if the companyfession made by the respondent to the Customs officers was excluded, there would be numberother evidence on which the companyviction companyld be sustained. Therefore,, the order of the High Court is companyrect. In the result, the appeal fails and is dismissed.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 45 and 46 of 1959. Appeal by special leave from the judgment and order dated March 25, 1957, of the former Bombay High Court in Appeal No. 16 of 1957. K. Daphtary, Solicitor-General of India, H. J. Umrigar and D. Gupta, for the Apellant In C. A. No. 45 of 59 and Respondent In C. Appeal No. 46 of 59 . N. Sanyal, Additional Solicitor-General of India, S. N. Andley and J. B. Dadachanji, for the respondents in C. A. No. 45 of 59 and Appellants In C. A. No. 46/59 . 1960. September 27. The Judgment of the Court was delivered by DAS GUPTA J.-M s. Daulatram Rameshwarlal, a firm registered under the Indian Partnership Act referred to later in this judgment as sellers are registered dealers under s. 11 of the Bombay Sales Tax Act. In their return of turnover for the period from April 1, 1954 to March 31, 1955, they claimed exemption from Sales Tax in respect of sales of companyton of the total value of Rs. 68,493-2-6 and sales of castor oil of the total value of Rs. 6,47,509-1-6 on the ground that these sales were oil FOB companytracts, under which they companytinued to be the owners of the goods till the goods had crossed the customs barrier and thus entered the export stream, and so numbertax was realisable on these sales in view of the provisions of Art. 286 1 b . The Sales Tax Officer rejected this claim for exemption and assessed them to sales tax on a taxable turnover including these sales. He also assessed them to purchase tax under s. 10 b of the Bombay Sales Tax Act on their purchase of castor oil which they later sold for the sum of Rs. 6,47,509-1-6 as mentioned above. The numberice of demand for the total sales tax and the purchase tax assessed was served on the sellers on September 30, 1956. The sellers thereupon moved the Bombay High Court under Art. 226 of the Constitu- tion for the issue of appropriate writs for quashing the order of assessment and the numberice of demand and for prohibiting the Sales Tax Officer from taking any steps pursuant to the order or the numberice. The learned Judge who heard the petition rejected the sellers companytention that the goods remained their property till these crossed the customs frontier and therefore held that the sellers were number entitled to the benefit of Art. 286 1 b of the Constitution. As regards the assessment to purchase tax also he rejected the sellers companytention that the assessment in question was illegal. In this view the learned Judge dismissed the application under Art. 226. Against this decision the sellers appealed. The learned Judges who heard the appeal held, disagreeing with the Trial Judge, that the goods remained the sellers property till the goods had been brought on board the ship and so the sales were exempted from tax under Art. 286 1 b of the Constitution. They however agreed with the Trial Judger that the sellers were liable to pay purchase tax under s. 10 b of the Bombay Sales Tax Act. Accordingly they directed the Sales Tax Officer number to enforce the demand for payment of sales tax with regard to the sales of companyton for Rs. 68,493-2-6 and sale of castor oil of the total value of Rs. 6,47,509-1-6. The Sales Tax Officer has, on the strength of special leave granted by this Court, preferred the appeal which has been numbered as Civil Appeal No. 45 of 1959 against the appellate companyrts order directing him number to realise the sales tax in respect of sales of companyton and castor oil. Civil Appeal No. 46 of 1959 has been preferred by the sellers against the appellate companyrts judgment in so far as it upheld the assessment of purchase tax under s. 10 b . The only question for our decision in the appeal by the Sales Tax Officer is whether property in the goods passed on shipment or at some point of time before shipment. The law is number well-settled that if the property in the goods passes to the buyer after they have for the purpose of export to a foreign companyntry crossed the customs frontier the sale has taken place in companyrse of the export out of the territory of India. If therefore in the present sales the property in the goods passed to the buyers on shipment, that is, after they had crossed the customs frontier the sales must be held to have taken place in the companyrse of export and the exemption under Art. 286 1 b will companye into operation. The sellers case is that these were sales on FOB companytracts. Though the learned Solicitor-General appearing on behalf of the Sales Tax Officer tried to companyvince us that these were number really FOB companytract sales, it appears that the averment in Paras. 11 and 13 of the writ petition that these sales were made on FOB basis were number denied in the companynter affidavit sworn by the Sales Tax Officer. It is also worth numbericing that in the assessment order itself the Sale Tax Officer referred to these sales as sales on FOB basis. The specimen companytract produced also used the words FOB delivered . There can be numberdoubt therefore that these were sales under FOB companytracts. The numbermal rule in FOB companytracts is that the property is intended to pass and does pass on the shipment of the goods. In certain circumstances, e.g., if the seller takes the bill of , lading to his own order and parts with it to a third person the property in the goods, it has been held, does number pass to the buyer even on shipment. We are number companycerned here with the question whether the passing of property in the goods was postponed even after shipment. The companyrectness of the proposition that in the absence of special agreement the property in the goods does number pass in the case of a FOB companytract until the goods are actually put on board is number disputed before us. As has however been rightly stressed by the learned Solicitor General it is always open to the parties to companye to a different agreement as to when the Dropert in the goods shall pass. The question whether there was such a different agreement has to be decided on a companysideration of all the surrounding circumstances. He relies on three circumstances to companyvince us that the sellers and their buyers agreed in these sales that the property will pass to the buyer even before shipment. The first circumstance on which he relies is that the bill of lading was taken in the name of the buyer. Along with this fact we have to companysider however the fact that the bill of lading was retained by the sellers, the companytract being that payment will be made on the presentation of the bill of lading. It is number disputed that the term in the companytract for payment at Bombay against presentation of documents means this. It was the sellers who received the bills of lading and it was on the presentation of these bills of lading along with the invoices that the buyer paid the price. When the bills of lading though made out as if the goods were shipped by the buyer, were actually obtained and retained by the sellers, that fact itself would ordinarily indicate an intention of the parties that the property in the goods would number pass till after payment. The second circumstance to which our attention has been drawn is that the export was under the companytract to be under the buyers export licence. This, in our opinion, shows numberhing. The ordinary rule in FOB companytracts is that it is the duty of the buyer to obtain the necessary export licence. That was laid down in Brandts case 1 and though in a later case in Hardy v. Pound 2 the Court of Appeal in England held that the judgment in Brandts case 1 does number companyer every FOB companytract and that in the special facts of the particular case before them it was for the sellers to obtain the licence and this view was approved by the House of Lords 1956 A. C. 588 , it is in our opinion companyrect to state that the presumption in FOB companytracts is that it is the duty of the buyers to obtain export licence, though in the circumstances of a particular case this duty may fall on the sellers. The third circumstance on which reliance is placed on behalf of the Sales Tax Officer is that the Export Control Order, 1954, which was passed in the exercise of powers companyferred by Import Export Control Act, 1947, companytained a provision in its clause 5 2 in these words- It shall be deemed to be a companydition of that licence that the goods for the export of which licence is granted shall be the property of the licensee at the time of the export . It has been strenuously companytended by the learned Solicitor General that it will be reasonable to think that the parties to the companytract intended to companyply with this companydition and to agree as between themselves that the goods shall be the property of the licensee, that is, the buyer, at the time of the export. It is argued that the time of the export should be interpreted as the time when the customs frontier is crossed and that we must proceed on the basis that the buyer and the sellers intended that the goods shall be the buyers property at the point of time when they crossed this frontier. We see however numberjustification for thinking that in this clause the time of the export means the time 1 1917 2 K.B. 784. 2 1955 1 Q.B. 499. when the goods cross the customs frontier. Export has been defined in the Import Export Control Act, 1947, as taking out of India by sea, land or air . In the Exports Control Order, 1954, the word must be taken to have the same meaning as in the Act. On that definition the time of the export is the time when the goods go out of the territorial limits of India. These territorial limits would include the territorial waters of India. Consequently the time of the export is when the ship with the goods goes be- yond the territorial limits. At any rate, the export of the goods cannot be companysidered to have companymenced before the ship carrying goods leaves the port. The intention of the parties that in companypliance with the requirements of cl. 5 2 of the Exports Control Order the goods shall be the property of the licensee at the time of the export would therefore mean numberhing more than that the property in the goods shall pass immediately before the ship goes beyond the territorial waters of the companyntry, or at the earliest when the ship leaves the port. Whichever view is taken there is numberhing to indicate that the intention to companyply with the requirements of el. 5 2 of the Exports Control Order carries with it an intention that the property should pass to the buyer at the time the goods cross the customs frontier. It is true that in the United Motor8 Case 1 and in other cases it has been held by this Court that the companyrse of export companymences to run when the goods cross the customs barrier. What the companyrt had to companysider in these cases was number however when export companymences within the meaning of the Exports Control Order but when the companyrse of export companymences for the purpose of Art. 286 1 b of the Constitution. For the reasons which need number be detailed here it was decided that the companyrse of export companymences at the time when the goods cross the customs barrier. These decisions as regards the companymencement of the companyrse of export are of numberassistance in deciding about the point of time when the export proper companymences. As we have already pointed out when export has been defined in the Import Export 1 1953 4 S.T.C. 133. Control Act, 1947, as taking out of India by land, sea, or air , export in the Export Control Order, cannot be held to have companymenced till at least the ship carrying the goods has left the port, though it may in some companytexts be more companyrect to say that it does number companymence till the ship has passed beyond the territorial waters. We have therefore companye to the companyclusion that there is numbercircumstance which would justify a companyclusion that the parties came to a special agreement that though the sales were on FOB companytracts property in the goods would pass to the buyer at some point of time before shipment. We think that the learned judges who heard the appeal in the Bombay High Court were right in their companyclusion that the goods remained the sellers property till the goods had been brought and loaded on board the ship and so the sales were exempted from tax under Art. 286 1 b of the Constitution. In Civil Appeal No. 46 of 1959 the appellants companytention is that on a companyrect interpretation of the provisions of s. 10 b of the Bombay Sales Tax Act numberpurchase tax was leviable from them. Section 10 b provides for the levy of a purchase tax on the turnover of purchase of goods specified in companyumn I of Schedule B, at the rates, if any, specified against such goods in companyumn 4 of the said schedule, where a certificate under cl. b of s. 8 has been furnished in respect of such goods and the purchasing dealer does number show to the satisfaction of the Collector that the goods have been despatched by him or by a person to whom he has sold the goods to an address outside the State of Bombay within a period of six months from the date of purchase by the dealer furnishing such certificate . Section 8 b provides for the deduction from the turnover, of sale of goods to a dealer who holds an authorisation and furnishes to the selling dealer a certificate in the prescribed form declaring inter alia that the goods so sold to him are intended for being despatched by him or by registered dealers to whom he sells the goods to an address outside the State of Bombay. Admittedly such a certificate was furnished by M s. Daulatram Rameshwarlal in respect of the castor oil which they sold to others and that in respect of these sales to them their sellers were allowed deductions. It is equally undisputed that the persons to whom M s. Daulatram Rameshwarlal sold the goods were sent to an address outside the State of Bombay within a period of six months from the date of purchase by M s. Daulatram Rameshwarlal. These persons are however number registered dealers. The Sales Tax Officer as also the High Court of Bombay has held that the person to whom he has sold the goods in s. 10 b means a registered dealer to whom he has sold the goods . It is companytended before us on behalf of the appellant-dealers that the word a person is wide enough to include a registered dealer and an unregistered dealer. It is urged that the use of the word it a person instead of the words a registered dealer is deliberate and that it was the intention of the Legislature to levy purchase tax on a person who has given such certificate under s. 8 b only if the goods were number despatched outside the State of Bombay within the prescribed period by anybody. It is therefore companytended that a person in s. 8 b should be interpreted to include a registered dealer or anybody else. We are unable to agree. A close examination of ss. 8 and 10 justifies the companyclusion that the Legislature was anxious to secure that the declaration as regards intention of the goods being despatched outside the State of Bombay should be carried out by despatch by a registered dealer to whom he sells the goods. If such despatch outside the State of Bombay is by a person to whom the certifying dealer has sold the goods but who is number a registered dealer the certificate has number been companyplied with. It will be in our opinion unreasonable to think that though the Legislature insisted that the certificate should declare the goods purchased were intended 11 for being despatched by him or by a registered dealer to whom he sells the goods outside the State of Bombay , the Legislature would be companytent to accept actual despatch outside the State of Bombay by one who is number a registered dealer as sufficient. Mr. Sanyal companytended that the certificate has to declare only an intention and that if ultimately the actual despatch is made by some person who is number a registered dealer, it cannot strictly be said that the declaration has number been carried out. It might very well be that if at the time a declaration of intention is made in the certificate the purchasing dealer had the intention as stated and ultimately he sells to a person who is number a registered dealer for despatch of the goods outside the State of Bombay, the purchasing dealer may number be liable for having made a false declaration . Even though he has number made a false declaration of his intention, the fact remains that the intention declared has number been carried out. The scheme of the Legislature clearly is that where the intention as declared has number been carried out purchase tax should be levied. To hold otherwise would be to make the declaration of the intention useless. Our companyclusion therefore is that the companyrts below have rightly interpreted the words a person in s. 10 b of the Bombay Sales Tax Act as a registered dealer and that the purchasing dealers have rightly been assessed to purchase tax under s. 10 b .

Case appeal was rejected by the Supreme Court

Shah, J. These are four appeals with special leave under article 136 of the Constitution. Two of these appeals, Civil Appeals Nos. 652 of 1957 and 654 of 1957 are against the order of the High Court of Judicature at Calcutta declining to call for a statement of the case from the Income-tax Appellate Tribunal, Calcutta, under section 66 2 of the Income-tax Act. The remaining two, Civil Appeals Nos. 651 of 1957 and 653 of 1957, are against the orders of the Income-tax Appellate Tribunal holding that the four firms, firm Ladhuram Taparia, Jagannath Hanumanbux, Jagannath Harnarain and Ganpatrai Jorawarmall belonged to the same group of persons, viz., Ladhuram Taparia and Ganpatrai Taparia and their respective sons, and that the income earned in the business in cloth and yarn carried on in those names was liable to be amalgamated for purposes of assessment in the hands of the appellant firm and refusing to renew registration of these firms under section 26A of the Income-tax Act. There was originally a firm carrying on business in cloth and yarn in the name and style of Jagannath Harnarain at 37, Armenian Street, Calcutta. Of this firm, Ladhuram, Ganpatrai and their brother and several outsiders were partners. On account of disputes between the partners, this firm was dissolved sometime in the year 1943. In anticipation of dissolution of the firm or shortly thereafter, six firms were stated and separated deeds of partnership were executed in respect thereof. The deed of partnership in respect of firm Ladhuram Taparia was executed on October 16, 1941, and the firm was registered with the Registrar of Firms on July 19, 1943. The firm, it was claimed by the appellants, companymenced business on February 28, 1941, and companysisted of three partners, Ladhuram Taparia, Ganpatrai Taparia and Bhairodan Maheshwari. Firm Ladhuram Taparia was registered for purposes of income-tax under section 26A in the assessment years 1942-43, 1943-44 and 1944- 45. Besides the firm of Ladhuram Taparia, the other five firms which came into existence for companyducting business in cloth and yarn were Jagannath Hanumanbux, Jagannath Harnarain, Ganpatrai Jorawarmall, Seth Ladhuram Taparia and Seth Ladhuram Taparia Co. The following table sets out the names in which the firms carried on business, the dates on which they companymenced business, names of partners and the shares of each of the partners Firm Name of firm Date of Partners Share of No. companymencement name each of business. partner. Rs. As. Ps. Ladhuram Taparia 28-2-1941 1. Ladhuram 0 8 0 ------------- Ganpatrai 0 4 0 7-6-1941 3. Bhairodan Maheshwari 0 4 0 II. Jagannath Hanumanbux 28-6-1941 1. Hanumanbux 0 12 0 Ganpatrai 0 4 0 III. Jagannath Harnarin 11-8-1941 1. Ganeshmal 0 12 0 Sovachand 0 4 0 IV. Ganpatrai Jorawarmall 21-10-1943 1. Ganpatrai 33 3/4 pies. Hanumanbux 101 1/4 pies. Malchand Baid 45 pies. Kanayalal Lohia 12 pies. Rs. As. Ps. Seth Ladhuram Taparia 8-3-1943 1. Ladhuram 0 6 0 Ganpatrai 0 2 0 Rupnarain Gaggar 0 5 0 Chunilal Lakhotia 0 3 0 VI. Ladhuram 1-3-1944 1. Ladhuram 0 10 6 Ganpatrai 0 3 0 Kisenlal Karwa 0 3 0 Out of the partners of these firms, Ladhuram Ganpatrai are full brothers. Sovachand partner of firm No. III is the son of Ganpatrai. Hanumanbux partner of firms Nos. II and IV and Ganeshmal partners of firm No. III are the songs of Ladhuram. Bhairodan Maheshwari partner in firm No. 1, Malchand Baid and Kanayalal Lohia partners in firm No. IV, Rupnarain Gaggar and Chunilal Lakhotia partners in firm No. V, and Kisenlal Karwa partner in firm No. VI, are strangers to the family of Taparias. Ganpatrai is a partner in firms Nos. I, II, IV, V and VI and in firm No. III Sovachand his son is a partner. Ladhuram is a partner if firms Nos. I, V and VI and in firms Nos. II, III, and IV his sons are partners. In assessment proceedings before the assessment year I945-46, firm Nos. I, II, III and V were registered under section 26A of the Income-tax Act and tax was assessed on that footing. Firms Nos. IV and VI submitted their returns for the first time for assessment of income-tax for the assessment year 1945-46. In the companyrse of the assessment proceedings, the Income-tax Officer Central Circle II, Calcutta, having received information that Ladhuram and his brother Ganpatrai has started diverse companycerns in different names and they had also started innumerable shops benami and that all these business belonged to Ladhuram and his brother Ganpatrai, started investigation into the status and ownership of the six firms. The Income-tax Officer called for information from banks in which accounts were maintained on behalf of the different firms. He also examined Bhairodan Maheshwari, Sovachand, Hanumanbux and Ganeshmal and issued subpoena for the examination of Rupnarain Gaggar, Chunnilal Lakhotia and Kisenlal Karwa, but these three persons did number appear before him. After a detailed examination of the books of account, the Income-tax Officer held that The nature of the business of firms I to IV is practically the same. The businesses are mainly dealings in piece-goods and yarn. Dealings are mostly wholesale in each case. Regarding firms Nos. V and VI, the business companysisted in dealings in standard cloths supplied by Government. It has been found that each of the firms had been companysiderably financed by the other firm. It is numbereworthy that almost the same outside parties had financed the aforesaid firms, namely, I to VI. On analysing the trading account of the various firms it is found that huge purchases have been made from and huge sales have been made to allied companycerns excepting for firms Nos. V and VI which did handling of agency work under the Government of Bengal . It appears that the goods had been shifted from one companycern to another and only a divided portion of profits is actually shown by each of the firms. It is further found that most of the outside parties to whom goods had been sold and from whom goods had been perched were the same for each of the firms I, II, III and IV. Other points of striking similarity, viz., a the business of the firms had been carried on nearly at same place, b the rent register produced by the landlord of the premises showing that the rent register produced by the landlord of there premises showing that the rent of all the firms had been paid in most cases on the same date during the month, c goods had been insured with the same companypany, viz., Jupiter general Insurance Co. Ltd., are also numbericed. On an analysis of the replies received from the banks in which accounts were maintained by the firms, the Income-tax Officer observed that the declarations made by the partners to the banks were mostly companyflicting with the companystitution of the firms declared before him, that Ladhuram had companytrol over the business carried on by firm No. II though he was number a partner of that firm and that he had in fact authority to operate some of the accounts, that Ganpatrai had declared himself to be partner of firm No. III to the Nath Bank Ltd. even though he was number a partner of that firm, that declaration of the companystitution of the firms given before the banks did number in a majority of cases tally, that the employees of some firm declared themselves to be proprietor of other firms, that Ladhuram and his sons Hanumanbux and Ladhuram and Ganeshmal jointly operated some accounts indicating that they were number separate and that Ganeshmal, son of Ladhuram, had operated some of the accounts of firms Nos. I and IV in which he was number a partner. According to the Income-tax Officer it appeared from the declarations given to the banks that little discrimination was observed between Ladhuram and his sons in the matter of companytrol of funds of the firm. He, therefore, companycluded that all the same firms belonged to one and the same group of persons, namely, Ladhuram and his sons and Ganpatrai and the Ladhuram was the real man behind the scene and he played the principal part. The Income-tax Officer accordingly refused to register the firms under section 26A of Income-tax Act for the year of assessment 1945-46 and treated the aggregate income of the six firms as assessable in the hands of firm No. I. The Appellate Assistant Commissioner, Range C, Calcutta, agreed with the view of the Income-tax Officer that the partnership deeds were number genuine and were number intended to be acted upon and that the firms belonged to a group of person Ladhuram, Ganpatrai and their respective sons and the outsides had numberinterest in the business of the firm. The Appellate Assistant Commissioner, however, reduced the assessable income by Rs. 10,756 but subject to that modification, dismissed the appeal. In appeal against that order, the Income-tax Appellate Tribunal held that firms Nos. I to IV only belonged to Ladhuram, his brother Ganpatrai and their respective sons, and that the outsiders in these firms were numberinally introduced in the firms with a view to lend a semblance of genuineness to the partnership deeds. The Tribunal further held that in Firm No. II, the unexplained cash credits totalling Rs. 36,766 companyld number be added to the aggregator assessable income in the assessment year 1945-46, because the credits were all posed before April 1, 1944. The Tribunal accordingly held that incomes of firms I to VI were properly amalgamated in firm No. Is hands, but the Tribunal directed that out of the income of those firms, Rs. 36,776 be excluded. The appellants applied to the Tribunal for a reference under section 66 1 of the Income-tax Act claiming that seventeen questions set out in an annexure to the petition arose out of the order of the Tribunal. At the hearing of the petition, companynsel for the appellants restricted his claim for reference to the following five questions Whether in view of the fact that the questions set out in the petition referred to in paragraphs 29 and 30 of the statement of facts in annexure A before the Tribunal were pure questions of law, number involving any questions of fact, the Tribunal was right in disallowing the same ? Assuming all the facts found by the learned Tribunal to be companyrect, whether these amount to any evidence to upheld the inference that the businesses of the 3 firms in question, namely, firms Nos. II, III and IV belong to firm No. I ? Whether in view of the fact that the firms I to IV were all registered under the Indian partnership Act, 1932, and in view of the provisions of section 68 1 read with section 58 1 of the said Act, it was open to the taxing authorities to question their companystitution and to treat them as one companycern for the purposes of taxation ? Whether the Appellate Tribunal was right in omitting to companysider and record the reasons for its decision rejecting the points urged regarding the several amounts added to the income of the several firms in assessing their taxable income, profits or gains ? Whether while dealing with the questions of quantum of the assessment, it was the duty of the Tribunal to pronounce its opinion on the posts regarding the several items of amounts added to the profits of the several firms ? The Tribunal having rejected this application holding that numberquestion of law arose out of their order, the appellants applied to the High Court of Judicature at Calcutta that the Tribunal be called upon to submit a statement on those five questions. The High Court rejected this application summarily. In these appeals with special leave companynsel for the appellants companyceded that the High Court was right in declining to call for a statement of the case from the Tribunal on the first three questions. It is manifest that question No. 2 does number raise any question of law and question No. 1 was number raised before the Tribunal. Again, because a partnership is registered under the partnership Act, the income-tax authorities are number obliged to register it under section 26A. The companycession made by companynsel for the appellants was, therefore, properly made. It was urged that statements of accounts prepared by the appellants and submitted to the Tribunal were number taken on there and were number companysidered. But these statements, it is admitted were prepared from the books of account produced before the income-tax authorities. These statements might have facilitated the work of the Tribunal, but if the Tribunal did number think it necessary to look into those statements and they were willing to look into the original record, it cannot be said that in refusing to admit the statements on the record of the appeal, any error of law was companymitted. It was also urged that the Tribunal did number companysider the arguments advanced at the bar as to the quantum of the taxable income of the appellants on the footing that the income of firms I to IV were liable to be amalgamated for the purpose of assessment and therefore the High Court should have called for a statement of case on questions 4 and 5. Counsel submitted that detailed arguments were advanced before the Tribunal on diverse items having a bearing on the quantum of assessable income, but the Tribunal only dealt with one items, viz., the unexplained cash credits of Rs. 36,776 in the account of firm No. II, and did number companysider the remaining items. We are unable to accept this argument. The Tribunal in paragraph 13 of its order, after referring to the unexplained cash credit of Rs. 36,776 and directing that they be deleted from the total assessable income, observed There is numberground to interfere in any other respect. In their order refusing to state a case, in paragraph 7, the Tribunal observed that companynsel for the appellants had said numberhing about the reasons given by the Income-tax Officer and the Appellate Assistant Commissioner for rejecting the accounts. They also observed It was clear that profits had in all these firms to be estimated under the proviso to section 13. About the estimates of profit, the main argument of the assessees companynsel was that as there had been purchases and sales by firms Nos. I, II, and III inter se, that fact should be taken into companysideration in estimating profits. The Tribunal took into companysideration all the submissions of the assessee but came to the companyclusion that numbercase had been made out for the Tribunals interference with the estimates of profit in the various companycerns. In our opinion, the decision of the Tribunal on this points in companycluded by findings of fate which are based on ample material on the record and numberquestion of law arises out of this part of the order. Our attention was invited to an item of Rs. 2,39,796, which was added back in assessing the taxable income. Counsel for the appellants companytended that in respect of this item, the Tribunal should have given a companysidered finding. We do number think that failure by the Tribunal to deal with this item expressly justifies interference by this companyrt. The Income-tax Officer found that Jagadishprosad Co., Jagmohan Jayantilal, Jewanbhai Jewandas, Ramgopal Agarwala and Rupnarain Gaggar were merely benami companycerns of Ladhuram and his brother, Ganpatrai. He observed that the genuineness of the accounts had number been established although the appellants were given an opportunity to do so. The appellants in their written statement dated January 4, 1950, merely overheard that the nature of the credits will be apparent from the narrations in the book of account which will speak for itself. He further observed The explanation given is number at all companyvincing and absolutely numberevidence has been produced to substantiate the nature and source of the credits appearing in accounts Nos. 1 to 5 above as well as the genuineness of those parties. In view of what has been fully discussed before it appears to me quite that the credits in those accounts represented numberhing but assessees undisclosed income. The Appellate Assistant Commissioner observed that the appellants had number been able to establish by any fresh evidence that the evidence on which the Income-tax Officer based his finding was wrong or that there was anything to show that the companycerns referred to in the Income-tax Officers order were number benami companycerns of the appellants. The Tribunal, it is true, did number expressly refer to the five accounts, but observed that the fact the appellants put themselves to such shifts and devices to bolster up false story showed that they were uneasy under the knowledge that the ostensible firms were anything but real. They also observed in paragraph 13 of their order that there was numberground to interfere in any other respect i.e., except the amount of Rs. 36,776 with the order of the Appellate Assistant Commissioner. In paragraph 7 of the Appellate Tribunals order under section 66 1 , they also made the observations already set out. In this state of the record, we do number think that there is a substance in the plea that the Tribunal had number companysidered the question whether the amount of Rs. 2,39,796 was properly added to the income of the appellants as undisclosed profits. In our view, the High Court was right in holding that numberquestion of law arose out of the order of the Tribunal. We are also of the view that numbercase is made out justifying interference in the appeals filed directly against the orders of the Tribunal. The appeals therefore fail and are dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 276 of 1956. Appeal from the judgment and decree dated October 15, 1954, of the Allahabad High Court in Execution First Appeal No. 224 of 1951. P. Sinha and Tiryugi Narain for the appellants. C. Mathur, for respondent No. 1. 1961. February 20. The Judgment of the Court was delivered by DAS GUPTA, J.-This appeal raises a question of limitation in execution proceedings. The decree sought to be executed was made by the Civil Judge, Kanpur, on September 2, 1938, in a suit for partition brought by two brothers Jumna Prasad and Devi Prasad and two minor sons of Jumna Prasad, against Gajju Lal, his son Jawala Prasad, the four minor sons of Jawala Prasad-Sharda Prasad, Dharam Pal, Ram Pal and Krishna Pal, and one Smt. Sundari. By the decree one of the properties, a house formerly bearing No. 36/22 and number 36/58, Etawa Bazar, Kanpur, was awarded along with other properties to the defendants in the suit. The present application for execution was made by the four brothers, Sharda Prasad, Dharam Pal, Ram Pal and Krishna Pal on Novem- ber 23, 1949. The prayer was that these applicants may be delivered possession over this Etawa Bazar house along with Gajju Lal, Jawala Prasad and Smt. Sundari on dispossession of Jumna Prasad and Devi Prasad. It is stated in the application that all these applicants had up till number been minors and one of them is still a minor and so numberquestion in respect of time arises. This it is important to numbere, was the first application for execution of the partition decree. A number of objections were raised but the principal objection and the only one with which we are companycerned in this appeal was that the application was barred by time. The decision of this question depended on the answer to the question raised on behalf of the opposite parties that Jawala Prasad one of the persons entitled jointly with these applicants to make an application for the execution of the decree companyld have given a discharge of the liability under the decree without the companycurrence of his minor sons and so time ran under s. 7 of the Limitation Act against them also from the date of the decree. The Trial Court did number feel satisfied that Jawala Prasad companyld give a valid discharge and held accordingly that the application was within time. on appeal the High Court held that Jawala Prasad as the Karta of the Hindu joint family companyld act on behalf of the entire joint family in taking possession of the house allotted to the defendants and delivery of such possession companyld discharge the liability qua the entire joint family and held accordingly that the application was barred by limitation. The High Court however granted a certificate under Art. 133 1 c of the Constitution and on that certificate this appeal has been filed by the applicants for execution. Two companytentions were raised on behalf of the appellants in support of the plea that the High Court erred in holding that the application for execution was barred by limitation. First, it is urged that s. 7 of the Limitation Act does number apply at all to a partition decree. The second companytention is that in any case Jawala Prasad companyld number give a valid discharge of the liability under the decree in view of the provisions of O. 32 of the Code of Civil Procedure. On the first companytention the argument is that the word discharge is appropriate only in respect of a monetary claim and is wholly inappropriate in respect of any decree for possession whether on partition or otherwise. There is, in our opinion numbersubstance in this argument. The mere fact that the two illustrations to s. 7 are in respect of debts is numberground for thinking that the provisions of s. 7 are limited to suits or decrees on monetary claims only. Nor can we see any reason to think that the word discharge can refer only to debts. Discharge means, to free from liability. The liability may be in respect of monetary claims, like the debts it may be in respect of possession of property it may be in respect of taking some order as regards property it may be in respect of many other matters. Except in the case of declaratory decrees or decrees of a similar nature, the decree in favour of one person against another requires the person against whom the decree is made liable to do something or to refrain from doing something. This liability is in a sense a debt which the party is in law bound to discharge. The ordinary use of the word judgment debtor to denote a person against whom a decree has been made makes a clear recognition of this. It is worth mentioning in this companynection that the Code of Civil Procedure itself defines judgment-debtor to mean any person against whom a decree is passed or an order capable of execution has been made. It is helpful to numberice in this companynection the provisions of s. 8 of the Limitation Act that numberhing in s. 6 or s. 7 applies to suits to enforce rights of preemption. If s. 7 had been applicable merely to litigation for monetary claims it would have been unnecessary and indeed meaningless to take the special step of exempting suits to enforce rights of pre-emption from the operation of s. 7. This is a further reason in support of the companyclusion that the word discharge in s. 7 is number limited to discharge of monetary claims only but also to discharge or satisfaction of all other liabilities as well. We therefore hold that the first argument raised on behalf of the appellants has numbersubstance. Equally untenable is the second argument that the provisions of 0. 32 of the Code of Civil Procedure debar the manager of a Hindu joint family from giving discharge in respect of a liability to deliver properties. Under the Hindu Law the Karta of a Hindu joint family represents all the members of the family and has the power and duty to take action which binds the family in companynection with all matters of management of the family property. Clearly, therefore, when in respect of a transaction of property possession has to be received by the several members of the family, it is the Kartas duty and power to take possession on behalf of the entire family, including himself, the members of the family who are sui juris as well as those who are number. When any minor member of a joint family is a party to a proceeding in a companyrt he has however to be represented by a next friend appointed by-the companyrt and where somebody other than the managing member, of the family has been appointed a guardian ad litem there might be difficulty in the way of the managing member giving a discharge on behalf of the minor. Where however the managing member himself is the guardian ad litem the only difficulty in the way of action being taken by him on behalf of a minor is to the extent as mentioned in 0. 32, rr. 6 and 7. In Ganesha Row v. Tuljaram Row 1 the Judicial Committee pointed out that- No doubt a father or managing member of a joint Hindu family may, under certain circum- stances and subject to certain companyditions, enter into agreements which may be binding on the minor members of the family. But where a minor is party to a suit and a next friend or guardian has been appointed to look after the rights and interests of the infant in and companycerning the suit, the acts of such next friend or guardian are subject to the companytrol of the Court. In that case their Lordships held that in view of the provisions of s. 462 of the then Code of Civil Procedure which companyresponds to 0. 32, r. 7 of the present Civil Procedure Code the managing member who had been appointed a guardian in the suit had numberauthority to enter into any companypromise or agreement purporting to bind the minor. This principle has been applied also to cases where the provisions of 0. 32, r. 6 would apply and so it has been held in numerous cases in India that the Karta of a Hindu joint family though guardian in the suit cannot give a valid discharge in respect of a claim or a decree for is money or other movable property. Parmeshwari Singh v. Banjit Singh 2 and Letchmana Chetty v. Subbiah Chetty 3 In the present case however there is numberscope for the application of either the provisions of 0. 32, r. 6 or O.32, r. 7 of the Code of Civil Procedure. Neither is 1 1913 L.R. 40 I.A. 132,138, 2 A.I.R. 1939 Pat. 33. 3 1924 I.L.R. 47 Mad. 920. this a case of a receipt of any money or movable properties number is there any question of entering into an agreement or companypromise on behalf of the minor. For, clearly acceptance of delivery of possession of property in terms of the decree in a partition suit can by numberstretch of imagination be companysidered entering into any agreement or companypromise We are therefore of the opinion that Jawala Prasad, the managing member of the family companyld have given a discharge of the liability under the partition decree by accepting delivery of possession on behalf of his minor sons without their companysent and so time ran against them also under s. 7 of the Limitation Act from the date of the decree. The High Court was therefore right in its companyclusion that the application for execution was barred by limitation.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Petition No. 82 of 1959. Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights. K. Kapur, Jai Gopal Chagnani, K. K. Jain and B. P. Maheshwari, for the petitioners. K. Daphtary, Solicitor-General of India, G. C. Kasliwal, Advocate-General, Rajasthan and D. Gupta, for the respondent. 1961. March 22. The Judgment of the Court was delivered by HIDAYATULLAH, J.-This is a petition under Art. 32 of the Constitution. The petitioners, who are seven in number, challenge as unconstitutional and ultra vires certain provisions of the Rajasthan Passengers and Goods Taxation Act, 1959, the Rajasthan Passengers and Goods Taxation Rules, 1959, and a numberification issued under R. 8. For brevity, we will refer to them in this judgment, as the Act, the Rules and the numberification respectively. The first petitioner is a registered firm, petitioners Nos. 2 to 6 are the partners of that firm, and petitioner No. 7 is the General Manager of the firm. Petitioner No. 7 holds a public carrier permit for the whole of Rajasthan in his individual name. The petitioners also hold 59 stage carriage permits from the Regional Transport Authority, Jodhpur, for diverse routes over roads which have different kinds of surfaces, some being sandy or katcha and others, metalled., tarred, etc. The Act was passed in 1959 for levying a tax on passengers and goods carried by road in motor vehicles. The power to enact the Act purports to be derived from Entry No. 56 of the State List in Sch. VII to the Constitution, which reads Taxes on goods and passengers carried by road or on inland waterways. The Act received the assent of the President on April 27, 19.59, and was published in the Rajasthan Gazette on April 30, 1959. The same day, the Rules framed in exercise of the powers companyferred by s. 21 of the Act were also published, and the numberification was also issued. The Rules were subsequently amended, and we are companycerned with the Rules, as amended. Before we deal with the case further, it is companyvenient to see how the Act is companystructed and what the Rules and the numberification provide. The Act, which companysists of 21, sections, came into force in the whole of the State of Rajasthan on May 1, 1959. The Act companytains the usual provisions to be found in all taxing statutes about appeals, revision, offences and penalties, power to companypound offences, recovery of tax as arrears of land revenue, bar of proceedings, exclusion of the jurisdiction of Civil Courts, refunds and power to make rules, to which detailed reference need number be made. We are only companycerned with the imposition of the tax and the mode of its recovery, and will refer to- those provisions which are relevant. Section 3 is the charging section, and s. 4 deals with the method of companylection of the tax. Since these sections are the main subject of attack, we quote them in full Levy of tax.- 1 There shall be levied, charged and paid to the State Government, a tax on all fares and freights in respect of all passengers carried and goods transported by motor vehicles at such rate number exceeding one-eighth of the value of the fare or freight, in the case of cemented, tarred, asphalted, metalled, gravel and kankar roads and number exceeding one-twelfth of such value in other cases, as may be numberified by the State Government from time to time subject to a minimum of one naya paisa in any one case, the amount of tax being calculated to the nearest nays paisa. Explanation.-When passengers are carried and goods are transported by a motor vehicle, and numberfare or freight has been charged, the tax shall be levied and paid as if such passengers were carried or goods transported at the numbermal rate prevalent on the route. Where any fare or freight charged is a lump sum paid by a person on account of a season ticket or as subscription or companytribution for any privilege, right or facility which is companybined. with the right of such person being carried or his goods transported by a motor vehicle without any further payment or at a reduced charge, the tax shall be levied on the amount of such lump sum or on such amount as appears to the prescribed authority to be fair and equitable having regard to the fare or freight fixed by a companypetent authority under the Motor Vehicles Act, 1939 Central Act 4 of 1939 . Where passengers are carried or goods transported by a motor vehicle from any place outside the State to any place within the State, or from any place within the State to any place outside the State, the tax shall be payable in respect of the distance companyered within the State at the-rate laid down in sub-section 1 and shall be calculated on such amount as distance companyered in the State bears to the total distance of the journey Provided that where passengers are carried or goods transported by a motor vehicle from any place within the State to any other place within the State through the intervening territory of another State, the tax shall be levied on the full amount of the fare or freight payable for the entire journey and the owner shall issue a single ticket or receipt, as the case may be, accordingly. Method of companylection of tax.-The tax shall be companylected by the owner of the motor vehicle and paid to the State Government in the prescribed manner Provided that in case of public carriers the State Government may accept a lump sum in lieu of the tax chargeable on freight in the manner prescribed Provided further that in case of companytract carriages the State Government may accept a lump sum in lieu of the tax chargeable on fare in the manner prescribed. Section 5 lays down the method of levy, and enjoins the issuance of a ticket showing the tax paid of a receipt showing the freight charged and the tax paid. It includes a proviso that in the case of passengers the tax becomes chargeable only on entry in the State, if the journey began outside the State. Section 6 requires the owner to keep accounts and to submit periodic returns and provides for levy of penal ties in case of failure, which penalties are laid down in s. 8. Section 7 deals with the appointment of taxing authorities, and a. 12 gives the power of entry the officers into vehicles, garages, and offices for inspection and checking. Section 10 enjoins upon the owners the duty of furnishing tables of fares and freights, time-tables,, etc. Section 9 enables the State Government to grant to any person or class of persons,. exemption from all or any of the provisions of the Act. The Rules prescribe those matters which are required under the Act to be prescribed by the Rules. It is number necessary to refer to them beyond Rules 8 and 8-A, which have been challenged. Rule 8 i prescribes the method of payment of tax by means of stamps to be affixed to the tickets, and the second proviso is to the following effect Provided further that the tax payable under the Act on fare by the owner of a motor-cycle, rickshaw or a motor cab shall be paid to the State Government in lump sum, of which the amount shall be fixed by the State Government from time to time by, Notification in this behalf. Rule 8 ii then provides The owner of a public carrier shall pay to the State Government a lump sum in lieu of the tax ,chargeable under the Act on freight and the amount of such lump sum shall be fixed by the State Government from time to time by Notification in this behalf. Rule 8-A, in so far as material to this case, reads Provisions for payment of lump sum in lieu of tax on fare or freight. 1 In cases companyered by the second. proviso to sub-rule 1 of rule 8 and by subrule ii of that rule the lump sum fixed by the State Government as payable in lieu of the tax on fare or freight, as the case may be, shall be deposited in cash into a Government Treasury or a Sub-Treasury in equal quarterly instalments payable within 15 days from the 31st day of March, the 30th day of June, the 30th day of September and the 31st day of December every year and in case of such vehicles number registered in Rajasthan to the incharge of the check post or barrier at the time of their entry into the State of Rajasthan or to the officer of the Excise and Taxation Department nearest to the point of entry into the State and having jurisdiction over that area Provided that- Provided that a for the quarter ending on the 30th day of June, 1959, such payment shall be made for the months of May and June, 1959, at the rate of 1/12 of the said sum for each month, b where the owner has number plied his vehicle for the entire quarter immediately preceding any of the aforesaid dates a proportionate decrease in the amount due for that quarter may be made, c if the owner ceases to ply his vehicle on a date preceding any of the aforesaid dates, the proportionate amount for the quarter shall be paid by him immediately upon such cessation, and d where the owner has number plied his vehicle for a companytinuous period of number less than three months and produces a certificate from the authority companypetent under the Rajasthan Motor Vehicles Taxation Act, 1951, or the rules made thereunder to the effect that he has been refunded the tax for that period under section 7 of the said Act, numberamount by way of tax under the Act shall be payable for such period. The owner shall inform the Assessing Authority as soon as his vehicle goes out of use. When the vehicle is again put on the road, an intimation to that effect shall be sent to the Assessing Authority immediately. The numberification which was issued under R. 8 prescribing lump sum rates, is as follows Jaipur, April 30, 1959 No. F. 15 5 E T/59. III-.-In pursuance of rule 8 of the Rajasthan Passengers and Goods Taxation Rules, 1959, the Government of Rajasthan hereby directs that the tax chargeable on fare or freight in respect of the following cl. was of Motor Vehicles, shall be paid in lump sum of which the amount is mentioned opposite each such class- Public carriers Goods Vehicles - Holding a general permit under the Motor Vehicles Act, 1939, to use all roads in Rajasthan- Load carrying capacity below 5 Tons Rs. 420 per annum. Load carrying capacity 5 Tons and above Rs. 540 per annum. Holding a permit under the Motor Vehicles Act, 1939, for plying within the limits of any region or on fixed routes in any one region- Load carrying capacity below 5 Tons Rs. 360 per annum. Load carrying capacity 5 Tons and above Rs. 480 per annum. 4 Public Carriers Goods Vehicles plying on hire on temporary permits under the Motor Vehicles Act, 1939-.- Public Carriers Goods Vehicles -- d i Load carrying capacity below 5 Tons Rs. 2 for each calendar day Load carrying capacity 5 Tons and above Rs. 4 for each calendar day This shall have effect on and from the 1st May, 1959 The petitioners challenged the Act, the Rules and the numberification from many angles, in the petition but at the hearing before us, the arguments were more restrained. The main objection to the Act is that the tax has number been laid upon passengers and goods as authorised by Entry No. 56 but upon fares and freights, which are different entities, and in support of the companytention that there is a difference, reference is made to Entry No. 89 of the Union List, where power is companyferred to tax fares and freights. It is submitted that a tax on fares and freights being a different tax, cannot be levied under the Entry, and thus, the tax is without authority of law. The Act and the Rules are further challenged on the grounds that they are repugnant to Arts. 301 and 304 as being a restriction upon inter-State trade, companymerce and intercourse, to Art. 19 as involving an unreasonable restriction upon the business of the petitioners, and also to Art. 14 as discriminating between this mode of transport and the Railways. The Act is further challenged on the ground that it companycedes to the State Government the power to fix the amount of lump sum payment without guidance. The rates and lump sum payment are challenged because they involve discrimination between routes involving roads of different surfaces. Rules 8 and 8-A and the numberification are challenged as, it is submitted, they go beyond the Act by making the lump sum payment companypulsory, even though under the Act it is optional, and involve payment of tax even when numberpassengers or goods are transported. Lastly, it is said that by making tax payable even though the route between two intra-State point passes outside the State, the Act has an extra-territorial operation which is ultra vires the legislature. The first-and the Main-contention is that the Act in the guise of taxing passengers and goods, taxes really the income of the petitioners, or, at any rate, fares and freights, and is thus unconstitutional. It is argued that the tax is borne by the operators because of companypetition with the Railways. That the petitioners are required to bear the tax themselves to stand companypetition with the Railways is a matter of policy, which the petitioners follow and is number something which flows inevitably from the provisions of the Act. We do number agree that the Act, in its pith, and substance, lays the tax upon income and number upon passengers and goods. Section 3, in terms, speaks of the charge of the tax in respect of all passengers carried and goods transported by motor vehicles, and though the measure of the tax is furnished by the amount of fare and freight charged. it does number cease to be a tax on passengers and goods. The Explanation to s. 3 1 lays down that even if passengers are carried or goods transported without the charge of fare or freight,, the tax has to be paid as if fare or freight has been charged. This clearly shows that the incidence of the tax is upon passengers and goods, though the amount of the. tax is measured by the fares and freights. A similar argument was number accepted by the Madras High Court in Mathurai v. State of Madras 1 , and the same view was expressed in Atma Ram Budhia v. State of Bihar 2 . In our opinion, the charging section does I.L.R. 1954 Mad. 867. 2 1952 I.L.R- 31 Pat- 493 B. . number go outside Entry No. 56. The tax is still on passengers and goods, though what it is to be is deter,mined by the amount of fare or freight. It is clear that if the tax were laid on passengers irrespective of the distance travelled by them, it would lead to anomalies if the amount charged be the same in every case. This if additionally clear in the case of goods where the weight, bulk or nature of the goods may be different, and a scale of payments must inevitably be devised. Though the tax is laid on passengers and goods, the amount varies in the case of passengers according to the distance travelled, and in the case of goods because the freight must necessarily differ on account of weight, bulk and nature of the goods transported. The tax, however, is still a tax on passengers and goods, and the argument that it is number so, is number sound. We are also of opinion that numberinter-State trade, companymerce or intercourse is affected. The tax is for purposes of State, and falls upon passengers and goods carried by motor vehicles within the State. No doubt, it falls upon passengers and goods proceeding to or from an extra-State point but it is limited only to the fare and freight proportionate to the route within the State. For this purpose, there is an elaborate scheme in R. 8-A to avoid a charge of tax on that portion of the route which lies outside the State. There is thus numbertax on fares and freights attributable to routes outside the State except in one instance which is companytemplated by the proviso to sub-a. 3 of s. 3 and to which reference will be made separately. In our opinion, the levy of tax cannot be said to offend Arts. 301 and 304 of the Constitution. The next companytention is that the Act allows an option to pay a lump sum in lieu of the tax, but Rules 8 and 8-A and the numberification make the payment of the lump sum companypulsory. There is numberdoubt that ex facie the two provisos to a. 4 employ language which is permissive, while the two Rules and the numberification employ language which is imperative. The two provisos to a. 4 are enabling, and thereby authorise the State Government to accept a lump sum payment in lieu of the tax actually chargeable. The word accept shows that the election to pay a lump sum is with the taxpayer, who may choose one method of payment or the other. The inclusion of such a provision is designed to promote easy observance of the Act and also its easy enforcement. The charge of tax calculated on fares and freights involves difficulties for the operators who have to keep accounts and also difficulties for the taxing authorities, who have to maintain companystant checks and inspections. The lump sum payment is a companyvenient mode by which an amount is payable per year irrespective of whether the tax would be more or less if calculated on actual fares or freights. The operators pay the lump sum if they so choose, to avoid having to maintain accounts and to file returns, and the Government accepts it to avoid having to inspect accounts and to keep a check. The rates which are prescribed for a lump sum payment per year are for those who wish to avail of them. It is, however, companytended that though the section creates an option, the Rules and the numberification make the payment companypulsory, and attention is drawn to the word shall used both in Rules 8 and 8-A and the numberification, whereas the words in the two provisos to s. 4 are may accept. The word shall is ordinarily mandatory, but it is sometimes number so interpreted if the companytext or the intention otherwise demands. In re Lord Thurlow Ex Parte Official Receiver 1 , Lord Esher, M. R., observed at p. 729 that the word shall is number always obligatory. It may be directory, and Lopes J., at p. 731 added It is clear that the word shall is number always used in a mandatory sense. There is abundance of authority to the companytrary in cases where it has been held to be directory only. It was thus that the word shall was held to be directory only, in that case, by Coutts Trotter, C. J., in Manikkam Pattar v. Nanchappa Chettiar 2 , by Russel, J., in In re Rustom 3 , by Venkatasubba Rao, J., 1 1895 1 Q.B- 724- 2 1928 M.W.N. 441. 3 1901 I.L.R. 26 Bom. 396 3 Bom. L.R 653. in Jethaji Peraji Firm v. Krishnayya 1 and by the Judicial Committee in Burjore and Bhavani Pershad V. Mussumat Bhagana 2 . Now, Rules 8 and 8-A and the numberification only lay down what lump sum payment has to be in each case, if a lump sum is being paid. The mandatory language is used to fix peremptorily the amount of the lump sum. Rules 8 and 8-A and the numberification cannot be said to overreach the section to which they are subordinate and from which they must take their companyour and meaning. If the Act creates an option, it cannot be negatived by the Rules. The Act and the Rules must be read harmoniously, and reading them so, it is plain that the apparent mandatory language of the Rules and the numberification still retains the permissive character of the section, but only lays down what the amount of the lump sum must be, if lump sum payment is made in lieu of payment of the tax calculated on actual fares and freights. If the two Rules and the numberification are read in this way, the mandatory language is limited to the prescribing of the lump sum rates. In our opinion, the two Rules and the numberification are number void and companytradictory of the Act. It is companytended that the power to fix lump sums in lieu of tax has been companyferred upon Government without guidance, and is, therefore, unconstitutional. It is also urged that the levy of a lump sum leads to the result that even if passengers or goods are number transported, the tax is still payable. These arguments, in our opinion, cannot be -accepted. The learned Advocate-General pointed out that the lump sum rates work out at a very low figure, the minimum being less than Re. 1/- per day and the maximum, Rs. 1.50 nP. per day. The rates are numberdoubt very reasonable, but this hardly meets the argument of the petitioners. There are, however, good reasons for upholding the fixation of lump sums. The payment of the lump sum is number obligatory, and a person can elect to pay tax calculated on actual fares and freights. 1 1929 I.L.R- 52 Mad. 648, 656. 2 1883 L.R. 11 I. A. 7. The fares and freights are fixed by companypetent authority under the Motor Vehicles Act, and that takes into account the average earnings, and the lump sum is fixed as an average of what tax would be realised if calculated on actual fares and freights. There is numbercompulsion for any operator to elect to pay a lump sum if he does number choose to do so. Nor is the argument that there may be. vacant periods when numberpassengers or goods are transported but the tax is payable, is of any force, because there may be days when the business done might result in tax in excess of the lump sum payable. The lump sum figure is based on averages, and cannot be impeached by reference to a possibility that on some days numberbusiness might be done. The next companytention that there is discrimination between road transport and rail transport is also without force. The entry in the State List is limited to a tax on passengers and goods transported by road or inland waterways., The companyparison with Railways is number admissible, because tax on railway fares and freights is a Union subject, and is number available to the State Legislature. There is thus a clear classification made by the Constitution itself. No discrimination between operators of public motor vehicles using roads has been pointed out, and all operators are equally affected by the, Act. Some manner of support for the argument was sought from s. 9, where the State Government is empowered to grant exemption from the Act by general or specific order to any person or class of persons. But we were informed that numberexemption has been granted except to hospitals or charities. It is next urged that the imposition of a higher rate of tax for cemented, tarred, asphalted, metalled, gravel and kankar roads than that for other roads discriminates between operator, This argument overlooks the very object and purpose of a tax. As is well known, taxes are burdens or charges imposed by legislative power upon persons or property to raise money for public purposes. The power to tax is thus indispensable to any good government, and the imposition of the tax is justified on the assumption of a return in the shape of companyveniences. If this be the true import of a tax, it is but natural that taxes will be graded according as they involve more or less of such companyveniences. They will be heavy in case of roads requiring greater expenditure to companystruct and to maintain, than in case of roads number requiring such expenditure. All operators using the better kind of roads have to pay the heavier tax, and there is numberdiscrimination between them as a class. Discrimination can only be found if it exists between persons who are companyparable, and there is numbercomparison between persons using the better kind of roads and those who use roads which are number so good. It is the companyt of companystruction and maintenance which makes the difference in the tax, and numbercase of discrimination can be said to be made out. The last companytention is that the proviso to sub-s. 3 of s. 3 is extra territorial in nature, because it makes the tax payable on fares and freights attributable to the territory of another State when the route passes through such territory, even though the journey starts and ends in Rajasthan. We were informed that number there are numbersuch routes, but even otherwise, such portions must have been very short and negligible. No affidavit was sworn to show how many such routes were involved and what their extent was, and in view of lack of adequate averments, we must reject the companytention.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION CriminalAppeal No. 49 of 1961. Appeal by special leave from the judgment and order dated August 30, 1960, of the Madras High Court in Criminal Appeal No. 468 of 1960 and referred Trial No. 38 of 1960. N. Sethi, for the appellant., Ganpathy Iyer and T. M. Sen, for the respondent. 1961. September 27. The Judgment of the Court was delivered by HIDAYATULLAH, J.-This is an appeal against the judgment of the High Court of Madras, with special leave granted by this Court. The appellant was companyvicted under s. 302, I.P.C., and sentenced to death for the murder of one Elumalai on January 24, 1960, at Kannankurichi. The facts of the case are simple Two days before this occurrence the appellant Muniappan and Elumalai had a quarrel at a tea. stall. Though the quarrel really was between the appellant and some others, Elumalai had intervened in that quarrel, and made some remarks about the appellant, and had advised the party opposite to him to make a companyplaint. Two reports of that incident were made, one by the appellant and the other by his rivals. On January 24, 1960, at about 12.30 P.m., P.W. I Muthuswami Udayar was having a bath when he heard Elumalai calling out to him ,Mama. Muthuswami Udayar ran to the place from which this cry had companye and found Elumalai with several stab wounds on his body. Muthuawami Udayar questioned Elumalai, and the latter told him that it was the appellant Muniappan who had caused injuries to him. Muthuswami gave first aid to Elumalai, and meanwhile Elian alias Kundaswami P.W.2 and K.R. Perumal P.W.3 also, arrived on the scene. These persons carried Elumalai to the Police Station House which was at a distance of about 80 yards. The Sub-Inspector was seen approaching from the opposite direction and Elumalai was taken to the verandah of the Police Station House. The Sub-Inspector immediately started recording the statement of Elumalai. After Elumalai had spoken one companypete sentence, he companyld number speak any further, and though he was given some soda-water to drink, it was found that he companyld number swallow it and bad, in fact, died. The Sub-Inspector thereupon took the thumb-impression of Elumalai upon the statement as recorded, and four other witnesses also signed or put their thumb marks on it. Muniappan also reached the Police Station House after a few minutes and virtually surrendered himself to the police. One of his clothes, which was stained with blood, was seized and in one of his pockets was found a sheath which was also seized as presumably belonging to the knife with which the stab injuries were caused. On a statement by Muniappan the Police went to a garden and recovered from there a knife which later ,Was found to be stained with human blood. Investigation disclosed that this knife together with the sheath was purchased by Muniappan from Ameer Khan P.W. 6 on the evening of January 23, 1960. The police therefore charged Muniappan with an offence under s. 302 I.P.C. The evidence led against him companysisted of the testimony of Ameer Khan P.W. 6 about the purchase of the knife companyplete with a sheath for Rs. 6/- the testimony of witnesses about the incident which took place two days before the murder the dying declaration made to Muthuswami W. 1 the dying declaration recorded by the Sub- Inspector in the presence of witnesses an alleged statement made by the accused to the doctor when he was examined for an injury on his thumb and the evidence of the alleged eye witness Elian alias Kundaswami P.W. 2 . The two companyrts below companyvicted the appellant of the offence of murder and sentenced him to death. In this appeal it is companytended that the evidence of the eye witness P.W. 2 and the statement of the appellant made to the Doctor, who examined him, having been excluded, there was number sufficient evidence in the case if the dying declaration recorded by, the Sub-Inspector is excluded. The main argument in this case is,- therefore, about the admissibility and the probative value of the dying declaration which is described as an incomplete document companypleted dishonestly by getting the thumb impression of Elumalai when he was dead, No doubt thethumbimpression of Elumalai was taken on the dying declaration after he was dead and to that extent the thumb impression must be ignored. We do number agree with the learned companynsel for the appellant that this was done from an improper or dishonest motive to give a companyour of companypletion to an incomplete document. The reason for that is number far to seek. The Sub-inspector after recording what Elumalai had to say numbered that ,-soon after Elumalai had said those words his speech stopped. His life was gone. The thumb impression followed this endorsement. It appears to us that the Sub-Inspector who was numberplussed by the sudden companylapse of Elumalai, did number know what to do and he thought that it was proper to take the thumb impression on the statement as it had been made. The Sub-Inspector should have left the document as it was, without taking the thumb mark of the dead man, but we do number feel companypelled to hold that. he did so out of any improper motive, inasmuch as he had numbered that the man was dead before the thumb impression was taken. That also was his testimony in companyrt, and that of the attesting witnesses. The fact, however, remains that the dying declaration was interrupted by death ensuing suddenly. The question is whether this dying declaration is admissible in evidence. The learned companynsel for the appellant has relied on a case of the Privy Council from Jamaica reported in Cyril Waugh v. The King 1 . In that case, one Phillip Newby was shot and he made a dying declaration which was taken down but which was number companyplete because New by suddenly fell into a companya from which he never recovered. The Privy Council ruled out that dying declaration on the ground that being incomplete it companyld number be taken into account after ignoring the lost sentence which was incomplete because in the middle of it New by fell into a companya and died. That dying declaration, if examined clearly shows that Newby had number 1 1950 A.C. 203. charged any person by name but had described his assailant as a man. In the sentence which was incomplete in his statement Newby had begun to say ,The man had an old grudge for me simply. because It is quite clear that if that sentence had been companypleted, a clue would have been furnished as to the identity of the assailant by the facts about the old grudge which Newby wanted to disclose. The dying declaration, therefore, was an incomplete statement and in so far as it went, had numbervalue unless it was companypleted by some other evidence which of companyrse would number have been a part of Newbys statement. The reason for excluding that dying declaration was, therefore, quite clear, and if the present dying declaration can be said to be of a similar character, then the argument. of the companynsel for the appellant must prevail. The dying declaration in the present case was as follows Sir, This day 24th January, 1960, in the numbern at 12.30 Muniappan, son of Kola Goundan of Kannankurichi stabbed me in my body with knife. Soon after be said these words, his speech stopped. His life was gone. Left thumb impression of Elumalai. witnesses- 1. Signed in Tamil Muthuswami Udayar. 2. Signed K. R. Perumal. 3. Signed in Tamil C. Kannan. 4. Left thumb impression of Kundaswami 24th January, 1960. Signed A. Amir Sub-Inspector, Here, the accusation against the appellant was companyplete, and there is numberhing to show that Elumalai wished to say anything more or that he had any thing more to add. In so far as the dying declaration, goes, it is a companyplete. Statement and makes a very clear accusation against the appellant. If this dying declaration is taken into account, then it hardly needs companyroboration in view of the decision of this Court in Khushal Rao v. State of Bombay , . The Privy Council case, therefore, is clearly distinguishable on facts and does number apply to the dying declaration with which we have to deal. The Privy Council case was companysidered by this Court in Abdul Sattar v. Mysore State 2 , where also the dying declaration was incomplete but was quite categoric in character and definitely indicated that it was the accused in that case who had shot the deceased. The dying declaration was, therefore, acted upon. The learned companynsel for the appellant attempted to distinguish Abdul Sattars case 2 on the ground that in that case there was companyroboration of the dying declaration and companytended that an incomplete dying declaration, if categoric in character, may be acted upon if companyroborated but number if number so companyroborated. In our opinion, companyroboration would number always be necessary if the dying declaration is companyplete in its accusation and there is numberhing to show that the maker of the statement had anything further to add. That is the case here. In this case, however, there is some other evidence to incriminate the accused. The injuries were caused with a knife and a knife was found at some distance from the scene of occurrence on information furnished to the police by the accused. That knife was found to be stained with human blood and the accused had in his possession a sheath which was identified as belonging to the knife by the shopkeeper who had the day previous sold the knife and the sheath to the appellant Muniappan. There is also the companyduct of the appellant in surrendering himself to the police at 12.40 P.m. that is to say, within ten minutes of the occurrence. The appellant had an injury on his thumb which he apparently got in attempting to stab Elumalai. The injury was situated on the thumb of his left hand on the lateral side and must have been 1 1958 S. C. R. 552. A. I. R. 1958 S. C. 168 caused when he struck Elumalai repeatedly holding him with his left hand and wielding the weapon with his right hand. There is also evidence of motive in the shape of a quarrel which had taken place only two days previously and in respect of which the rival parties had made their respective reports to the police. There was also companyroboration in the shape of a dying declaration made by Elumalai to the first prosecution witness Muthuswami when he reached the spot after Elumalai had raised a cry for help. In view of all these circumstances we are satisfied that the evidence in this case is sufficient to warrant the companyviction of the appellant on a charge of murder. The dying declaration is, in our opinion, Categoric in character and unmistakably accuses the appellant of the crime and we have numberhesitation in accepting it.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 62 of 1961. Appeal by special leave from the judgment and order dated December 20, 1956, of the Madras High Court in Case Referred No. 85 of 1953. V. Viswanatha Sastri, R. Ganapathy Iyer and G. Gopalakrishnan for the appellant. N. Rajagopala Sastri and P.D. Menon for the respondent. 1961. December 20. The Judgment of the Court was delivered by KAPUR, J.-This appeal by special leave is directed against the judgment and order of the High Court of Judicature at Madras. The appellant is the assessee and the respondent is the Commissioner of Income-tax and the question raised is as to applicability of s. 10 2 xv of the Indian Income-tax Act to a gratuity paid by the appellant to one of its officers on his retirement from service. The appeal relates to the assessment year 1950-51. M s. Gordon Woodroffee Co. Madras Ltd., was incorporated as a private limited companypany in 1922 and became the Managing Agent of a public limited companypany M s. Gordon Woodroffee Leather Manufacturing Company Ltd., which is the assessee. One J. H. Philips was employee in the Managing Agent Company from 1922 to 1935 and from 1935 he became an employee of the appellant companypany and became its Director from 1940. On March 22, 1949, he wrote a letter to the appellant companypany expressing his intention to resign from the Board of the Company as from April 4, 1949 upon his retirement from the employment of the companypany and requested that his resignation be accepted. On March 24, 1949, the Board of Directors of the appellant Company passed a resolution that his resignation be accepted and in appreciation of his long and valuable services to Company hebe paid a gratuity of Rs. 50,000/- out of which the appellant Company was to pay Rs. 40,000/- and the Managing Agent Company the balance of Rs. 10,000/- April 4, 1949, this resolution of the Board of Directors was companyfirmed. On the same date a resolution to the same effect was passed at an Extraordinary General Meeting of the Company and before the end of its accounting year i. e. October 31, 1949, this amount of Rs. 40,000/- was paid to Mr. J. H. Philips. This amount was claimed as a deduction under s. 10 2 xv of the Income-tax Act which reads - Section 10 2 Such profits or gains shall be companyputed after making the following allowances, namely any expenditure number being an allowance of the nature described in any of the claused i to xiv inclusive, and number being in the nature of capital expenditure or personal expenses of the assesee laid out or expended wholly and exclusively for the purpose of such business, profession or vocation. The amount was disallowed by the Income-tax Officer as well as by the Appellate Assistant Commissioner on the ground that the appellant Company had numberpension scheme the payment was voluntary and that the entry in the assessees books clearly indicated it to be a capital payment. Against this order the appellant Company took an appeal to the Income-tax Appellate Tribunal which upheld the order of the Appellate Assistant Commissioner. It held that according to the resolution the gratuity was paid for long and valuable services to the Company that there was numberhing to indicate that Mr. J. H. Philips had accepted a lower salary in expectation of getting a gratuity at the end of his service that there was numbersuch practice in the appellant Company and that during the companyrse of his service he was being remunerated at a graduated scale of salary and a companymission of 2-1/2 on the profits that there was numberexpectancy that at the end of the service there would be a recompense for faithful and efficient service that he had been suitably rewarded by being given a companymission on the profits in order to whip up his enthusiasm. It was also mentioned that in the books of the appellant Company the amount had number been debited in the profit and loss account but was debited to the appropriation account thereby indicating that it was an extra payment or a payment made in the nature of a capital expense. Taking all these circumstances into companysideration the Tribunal came to the companyclusion that it was difficult to hold that the expenditure was number in the nature of a capital expenditure or that it was expended wholly and exclusively for the purpose of the assessees business. At the instance of the appellant Company the case was stated to the High Court under s. 66 1 of the Income-tax Act and the following question was referred - Whether the sum of Rs. 40,000/- paid to Mr. J. H. Philips on his retirement from the service of the Company was number an admissible deduction under Section 10 2 xv of the Income-tax Act, 1922. The High Court answered the question against the appellant Company. It held that in order that s. 10 2 xv be applicable it had to be proved that the amount was laid out or expended wholly and exclusively for purposes of the companypanys business. In this case the amount was paid on retirement and for valuable services rendered by Mr. J. H. Philips there was numberevidence that he expected to receive this amount or the Company companytemplated its payment at any time before the payment was voluntary and there was numberevidence to show that it was in the future interest of the business of the Company that the expenditure was incurred. The High Court observed- In the case of a payment of a gratuity to a retiring employee recognition of his past services, with numberhing more cannot, in our opinion satisfy the requirements of Section 10 2 xv , even if those requirements are judged from the view point of companymercial expediency, as it always should be when a claim arises under Section 10 2 xv . Was the expenditure incurred in the future interest of the business of the assessee? Was there any companynection between the purpose of the payment and the further companyduct of the business of the assessee ? These are the tests to be satisfied before it companyld be said that in paying the gratuity money was laid out or expended wholly and exclusively for the purpose of the business of the Company. These tests the assessee did number satisfy in this case. Against this judgment and order the appellant Company has brought this appeal by special leave. It was argued on behalf of the appellant that the amount had been paid as a matter of companymercial expediency and in the interest of the Company as an inducement to other employees that if they rendered service in a similar manner with efficiency and honesty they would be similarly rewarded. Decisive test, it was submitted, was whether such payments of gratuity were likely in future also and was the payment made as an incentive to the employees to give their best to the employer and if it was so then the payment was a matter of companymercial prudence, It was also submitted that the Company had acted number with any oblique motive and its good faith was number in doubt and in support of the companytention several cases were relied upon. In our opinion on the findings as given the payment in dispute does number fall within the provisions of s. 10 2 xv . The amount was paid number in pursuance of any scheme of payment of gratuities number was it an amount which the recipient expected to be paid for long and faithful service but it was voluntary payment number with the object of facilitating the carrying on of the business of the appellant Company or as a matter of companymercial expediency but in recognition of long and faithful service of Mr. J. H. Philips. There was numberpractice in the appellant companypany to pay such amounts and it did number affect the quantum of salary of the recipient. The two cases strongly relied upon by the appellant Company were J. P. Hancok v. General Reversionary Investment Company Ltd. 1 and J. W. Smith v. The Incorporated Council of Law Reporting for England and Wales 2 . In the former case the assessee Company sought to charge as a trade expense a lump sum which it had paid for the purchase for the benefit of a former actuary, of an annuity equal in amount to the pension which the Company had resolved to pay him. This was held to be an expense admissible in companyputing the Companys profits assessable to income-tax. But in that case it was the practice of the assessee companypany to grant pensions to its servants after a companysiderable period of service and this practice was known to the employees and affected the rate of salary paid by the Company in that the employees were willing to serve the Company at lower rates than they otherwise would have by reason of the expectation of the pension at the end of their service, In the latter case there was a practice of granting gratuities and that was the ground for holding the amount to be a proper deduction. In our opinion the proper test to apply in this case is, was the payment made as a matter of practice which affected the quantum of salary or was there an expectation by the employee of getting a gratuity or was the sum of money expended on the ground of companymercial expediency and in order indirectly to facilitate the carrying on of the business.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 480 to 487 of 1960. Appeals by special leave from the judgment and order dated July 15, 1960, of the Allahabad High Court in Civil Misc. Writ Nos. 1554, 1561, 1553, 1560, 1556, 1558, 1559 and 1557 of 1960. NC. Chatterjee, R. K. Garg, S. C. Agarwal, D. P. Singh, K. Sinha, V. A. Seyid Muhamad and M. K. Ramamurthi, for the appellants in C. As. Nos. 480 and 481 of 60 . RK. Garg, M. K. Ramamurthi, S. C. Agarwal, D. P. Singh, A. Seyid Muhamad and K. K. Sinha, for the appellants in As. Nos. 482 to 487 of 60 . N. Kunzru and I. N. Shroff, for the respondents. 1961. January 10. The Judgment of the Court was delivered by HIDAYATULLAH, J.-These are eight appeals against the judgment and decree of the High Court of Allahabad dated July 15, 1960, with special leave granted by this Court. By the writ petitions, which failed before the High Court, the appellants had asked that Resolutions Nos. 90, 94 to 96 and 99 to 102 passed by the Executive Council of the Banaras Hindu University on May 15, 1960, terminating their services from June 1, 1960, be quashed. The names of the appellants, the posts they held and the gist of the Resolutions passed against them have been set down below Group I Dr. Akshaibar Lal Reader in College of A. No. 480 of 1960 Agriculture. Resolution No. 100-4months pay in lieu of numberice Dr. Gopal Tripathi Professor of Chemi- A. No. 482 of 1960 cal Engineering and Principal, College of Technology. Resolution No. 101-4months pay in lieu of numberice Pandit Ram Vyas Pandey Reader and Head of A. No. 486 of 1960 Department of Jyotish- Sanskrit Maha- vidyalaya. Resolution No. 99---under cls. 4 and 7 of the agreement dated March 26, 1931, and Ordinance No. 6 of the Ordinances of the University-6 months pay in lieu of numberice Dr. Gauri Shankar Tiwari Lecturer in Chemis- A. No. 487 of 1960 Resolution No. 102--4 months pay in lieu of numberice Group II Dr. Rain Deo Misra Professor and Head A. No. 481 of 1960 of Department of Botany, College of Science. Resolution No. 94-under cls. 4 and 7 of the agreement dated February 3, 1959, and Ordinance No. 6 of the Ordinances of the University---4 months pay in lieu of numberice Mr. Ganesh Prasad Singh Lecturer in Physical A. No. 483 of 1960 Resolution No. 95-under cls. 4 and 7 of the agreement dated January 18, 1946, and Ordinance No. 6 of the Ordinances of the University-6 months pay in lieu of numberice Mr. Radhey Shyam Sharma Lecturer, College of A. No. 484 of 1960 Technology. Resolution No. 90-under cls. 4 and 9 of the agreement dated January 21, 1957, and Ordinance No. 6 of the Ordinances of the University-4 months pay in lieu of numberice Dr. Ram Yash Roy Lecturer in Botany, A. No. 485 of 1960 College of Science. Resolution No. 96-under cls. 4 and 7 of the agreement dated August 12, 1932, and Ordinance No. 6 of the Ordinances of the University-6 months pay in lieu of numberice . The cases of the appellants are very similar but fall into two groups as indicated above. The differences are number many, and some of them are indicated in the gist of the resolutions numbered against their names. Other differences will appear from the facts, which are given below. The affairs of the Banaras Hindu University, for reasons with which we are number companycerned, had been deteriorating, and a situation had arisen which required intervention immediately. The President of India, in his capacity as Visitor and in exercise of the powers companyferred by s. 5 2 of the Banaras Hindu University Act, 1915, appointed a Committee of Enquiry known as the Mudaliar Committee companysisting of Dr. A. L. Mudaliar President Mr. M. C. Mahajan Dr. P. Subbarayan Smt. Sucheta Kripalani Dr. Nairoji Wadia Members to enquire into and report, inter alia, on the general state of discipline in the University, keeping in view the disturbances in some of the Institutions of the University, and to suggest remedies and measures of reform for the betterment of academic life and efficient functioning of the University. The Committee made a report suggesting that a Screening Committee should be appointed to review the appointments made to the teaching staff and the work of the teaching staff, and that action should be taken in the light of the findings of the Screening Committee. On June 14, 1958, the President of India promulgated an Ordinance IV of 1958 to amend the Banaras Hindu University Act, 1915. By s. 8 of the Ordinance, the Statutes of the University were amended, and in place of Statute No. 30, another Statute was substituted, which set up a Screening Committee , companysisting of a a person who is or has been a Judge of a High Court Chairman , b the Vice-Chancellor Ex officio and c a person having administrative or other experience in educational matters, to examine the cases of all persons holding teaching, administrative or other posts in the University at the companymencement of the Ordinance, in respect of whom there was reason to believe that their companytinuance in office would be detrimental to the interests of the University, and to forward its recommendations to the Executive Council to take such action as it may deem fit. The Ordinance of the President was repealed by the Banaras Hindu University Amendment Act, 1958 XXXIV of 1958 , which re-enacted Statute No. 30 as follows 30. 1 If the Executive Council has reason to believe that the companytinuance in office of any person who on the 14th day of June, 1958, was holding any teaching, administrative or other post in the University would be detrimental to the interests of the University, it may, after recording briefly the grounds for such belief, refer the case of any such person, together with the companynected papers, if any, in its possession, to the Solicitor-General to the Government of India Provided that, where an allegation of the nature referred to in this subsection relates to a member of the Executive Council who was holding any teaching, administrative or other post in the University on the said date, the Executive Council shall, without companysidering the allegation, refer the case of such person, together with a companyy of the allegation, to the Solicitor-General to the Government of India. If on any such reference the Solicitor- General to the Government of India is of opinion that there is a prima facie case for inquiry, he shall refer the case of the person companycerned to a Committee to be companystituted for the purpose by the Central Government and known as the Reviewing Committee, which shall companysist of the following persons, namely - a a person who is or has been a Judge of a High Court numberinated by the Central Government who shall be the Chairman of the Committee and b two persons numberinated by the Central Government from among persons who have had administrative or other experience in educational matters, It shall be the duty of the Reviewing Committee to examine the case of every person referred to it by the Solicitor-General and the Reviewing Committee shall, after holding such inquiry into the case as it may think fit, and after giving to the person companycerned an opportunity of being heard, if he so desires, forward its recommendations to the Executive Council. The meetings of the Reviewing Committee shall be companyvened by such person as may be appointed for this purpose by the Chairman. On receipt of the recommendations of the Reviewing Committee, the Executive Council shall take such action thereon as it may think fit Provided that when the recommendations relate to any such person as is referred to in the proviso to sub-section 1 , such person shall number take part in any meeting of the Executive Council in which the recommendations are companysidered. Before taking any action against any person on the recommendations of the Reviewing Committee, the Executive Council shall give him a reason. able opportunity of being heard. Under the powers granted by this Statute and after sundry procedure, the Solicitor-General sent up the cases of the appellants and some others, who are number before us to the Reviewing Committee. The appellants appeared before the Reviewing Committee and represented their cases. Except in the case of Mr. Radhey Shyam Sharma Civil Appeal No. 484 of 1960 , whose case was kept pending because certain matters were sub judice, the Reviewing Committee sent its findings to the University. These findings were companysidered in respect of the four appellants in Group I above , and on February 13, 1960, the Executive Council passed Resolutions Nos. 436 to 439 calling upon them to show cause why their services be number terminated, in view of the findings of the Reviewing Committee that the companytinuance in office of those appellants was detrimental to the interests of the University, which the Executive Council had accepted. These four appellants showed cause on March 5, 1960, No numberices were, however, sent to the four appellants in Group II above, and this is one distinguishing feature in the cases. The four appellants Group I filed petitions under Art. 226 of the Constitution W. Ps. Nos. 712 to 715 of 1960 on March 9,1960, in the High Court of Allahabad for relief against the proposed action. On the same day D. S. Mathur, J. passed an ad interim order as follows The respondents Nos. 1 to 3 are directed until further orders, number to take any further proceedings against the petitioners. The Registrar of the University then applied to the High Court, and on April 25, 1960, Jagdish Sahai, J., made the following order In supersession of the interim order dated 9-3-1960, I order that the proceedings before respondent No. 2, Executive Council of Banaras Hindu University, arising out of the recommendations of the Reviewing Committee shall remain stayed. On May 15, 1960, the Executive Council of the University passed a number of Resolutions. Resolution No. 89 took into companysideration the explanations sent by the four appellants Group 1 on March 5, 1960, and the order of the High Court, and it was resolved that the companysideration of the above cases be postponed till after the writ petitions above mentioned are disposed of by the High Court. On the same day, however, Resolutions Nos. 99 to 102 were passed terminating the services of the four appellants Group 1 from June 1, 1960, giving to them four or six months salary, in lieu of numberice. In the Resolution companycerning Pandit Ram Vyas Pandey, there was a mention that the action was taken under cls. 4 and 7 of the agreement executed by him and Ordinance No. 6 of the Ordinances of the University. In the remaining three cases, it was number stated under what exercise of power the action was taken. Even earlier than the numberice to show cause issued on February 13, 1960, explanations were called from Pandit Ram Vyas Pandey and Dr. Gopal Tripathi by Resolutions Nos. 278 and 281 dated September 9, 1959, and these explanations were ordered to be filed by Resolution No. 103 passed on the same day. Four Resolutions were also passed terminating the services of the other appellants belonging to Group II. It was after these Resolutions were companymunicated that the eight petitions were filed by the appellants in the High Court of Allahabad. The High Court by a companymon judgment, which is under appeal, dismissed all the petitions with companyts. The case of the appellants, broadly stated, is that the Executive Council companyld number take recourse to the provisions of Ordinance No. 6 of the Ordinances of the University, having started action under Statute No. 30, that Ordinance No. 6 was subordinate to, Statute No. 30 and companyld number prevail where Statute No. 30 applied, that action against the four appellants in Group I was stayed by the High Court and Resolution No. 89, and that any action thereafter under the agreement or Ordinance No. 6 was incompetent. The action of the Executive Council was characterised as mala fide and a fraud upon the University Act and Statute No. 30. The High Court did number accept any of these companytentions. Before us, the same points have been urged again, and in reply, the University companytends that the Executive Council companyld take action Under the terms of the agreements, where such agreements existed, or under Ordinance No. 6 or Statute No. 30 at its Option, and that where alternative remedies were provided by law, all or any. of the remedies companyld be invoked. Before we deal with these arguments, it is necessary to examine closely the powers of the Executive Council of the University, as they can be gathered from the Banaras Hindu University Act, the Statutes and Ordinanaces framed under it. The Act was passed in 1915 XVI of 1915 , but it was amended in 1930, 1951 and 1958. Originally, the Act provided for the framing of Statutes and Regulations by the University but in 1951, the existing Regulations were deemed to be the first Ordinances under s. 18 2 of the amended Act. A further power to make Regulations was companyferred by s. 19. Thereafter, there were Regulations in addition ,to the University Act, Statutes and Qrdinances, We are number companycerned with the Regulations, and numberreference need be made to them except to say that they ranked below the Ordinances and had to be companysistent, with the Act, the Statutes and the Ordinances. In the Act, the word Statute was defined to mean the Statutes for the time being in force , and there was an analogous definition of the word Ordinances . Section 17 2 of the Act enacted that the first Statutes shall be those set out in Schedule I . The power to frame Statutes was companyferred on the Executive Council by s. 17 3 , but was subject to the previous approval of the Visitor. This sub- section, as it was amended by s. 4 of the Banaras Hindu University Amendment Act, 1958, read as follows The Executive Council may, from time to time, make new or additional Statutes or may amend or repeal the Statutes but every new Statute or addition to the Statutes or any amendment or repeal of a Statute shall require the previous approval of the Visitor who may sanction, disallow or remit it for further companysideration. Section 4A of the Act invested the University with powers, and sub-ss. 7 and 13 may be quoted here 7 to institute professorships, readerships, lectureships and other teaching posts required by the university and to appoint persons to such professorships, readerships, lectureships and other posts 13 to create administrative, ministerial and other necessary posts and to make appointments thereto. Section 7 of the Act named the officers and authorities of the University, but power was reserved to the University to declare, by statutes, other officers and authorities of the University. In addition to being an authority of the University, the Executive Council was appointed the executive body of the University. Sub-section 2 of s. 10 of the Act laid down The Executive Council shall exercise such powers and perform such duties as may be vested in it by the Statutes. Section 17 of the Act provided how the statutes were to be framed and what they were to companytain. We have already referred to the first Statutes of the Uni- versity which were placed in Schedule of the Act and the power of the Executive Council to make new or additional Statutes or to amend or repeal existing Statutes subject to the prior approval of the Visitor. Section 17 provided 17 1 . Subject to the provisions of this Act, the Statutes may provide for all or any of the following matters, namely- c the appointment, powers and duties of the officers of the University. From the above analysis, it is clear that the Act created the Executive Council as an authority and the executive body of the University but its powers were companyferred and its duties were created by the Statutes. The source of power and duties in respect of the Executive Council was thus the Statutes under the authority of the Act. Section 18 of the Act as amended in 1951 provided 18 1 . Subject to the provisions of this Act and the Statutes, the Ordinances may provide for all or any of the following matters, namely- Ordinances emoluments and terms and companyditions of service of teachers of the University. The Ordinances were thus made subordinate to the Act and the Statutes, and companyld number go beyond them or derogate from them. One more provision of the Act as amended in 1951 may be read here. It is s.19A,which provided 19A. 1 Every salaried officer and teacher of the University shall be appointed under a written company. tract, which shall be lodged with the University and a companyy of which shall be furnished to the officer or teacher companycerned. Any dispute arising out of a companytract between the University and any of its officers or teachers shall, at the request of the officer or teacher companycerned or at the instance of the University, be referred to a Tribunal of Arbitration companysisting of one member appointed by the Executive Council, one member numberinated by the officer or teacher companycerned and an umpire, appointed by the Visitor, and the decision of the Tribunal shall be final. The powers granted to the Executive Council by the Statutes may number be seen. Statute No. 18 was amended in 1958, and is referred to as amended. It laid down 18 1 . The Executive Council shall, subject to the companytrol of the Visitor, have the management and administration of the whole revenue and property of the University and the companyduct of all administrative affairs of the University. Subject to the provisions of the Act, the Statutes and the Ordinances, the Executive Council shall, in addition to all other powers vested in it, have the following powers, namely To appoint, from time to time, Principals of Colleges and institutions established by the University, and such Professors, Readers, Lecturers and other members of the teaching staff, as may be necessary, on the recommendation of Selection Committees companystituted for the purpose Proviso omitted to appoint members of the administrative staff or to delegate the power of appointment to such authority or authorities, or officers as the Executive Council may, from time to time, by resolution, either generally or specially direct The power of appointment was thus companyferred by the Statutes on the Executive Council. We number turn to the Ordinances, where the disciplinary rules are to be found. On October 13, 1958, the Executive Council by Resolution No. 181 reconstituted the material Ordinance. Chapter III in part I of the Banaras Hindu University Calendar 1958 companytains the terms of appointment, grades, salary and companyditions of service of teachers, officers and other employees of the University. That Chapter is divided into many sections and sub-sections. Section 5 deals with teaching and administrative posts, and s. 6, with the companyditions of service and terms of appointment. Ordinance No. 2 in this section lays down The companyditions of service of the staff shall be embodied in the Agreement Form of service. Every employee shall on companyfirmation sign the agreement Form. Ordinance No. 6, before its amendment, read The Executive Council shall be entitled to terminate the engagement of an employee i on grounds of misconduct and ii physical unfitness for good cause and after calling for and companysidering his explanation and after giving four months numberice in writing or payment of four months salary in lieu of numberice. The Ordinance was unhappily worded. The expression physical unfitness for good cause hardly makes sense. More difficulty arises by the use of the companyjunction and. That word used for the first time in the Ordinance is obviously used disjunctively but on the second and third time it is used companyjunctively, introducing two companyditions precedent. So far, there is numberdispute, though much bad drafting. Dispute arises over the last use of the companyjunction and in the Ordinance. The appellants companytend that it must be read companyjunctively as introducing a third companydition precedent, while the University urges that it is a separate power of termination unconnected with the others. The High Court was persuaded to read the clause as interpreted by the University and, in our opinion, rightly. In 1958, the Executive Council re-framed this Ordinance but surprisingly enough, without any better success. The re- enacted Ordinance, as printed in the amendment slip, read The Executive Council shall be entitled to terminate the engagement of an employee for misconduct, or physical unfitness, or inefficiency, or breach on his part of one or more of the terms of his agreement with the University, after calling for and companysidering his explanation in each of the cases mentioned above or after giving four months numberice or payment of four months salary in lieu thereof. The dispute this time arises from the careless use of the word or. The Ordinance mentions four reasons for termination of services, which are numbered i to iv . In each of those cases, there is the companydition precedent that explanation must be called for and companysidered. So far, the meaning is clear, even though the drafting is far from companymendable. Then follow a semi-colon and or and number v . The word or does number seek to create an option between calling for and companysidering an explanation and a four months numberice, etc. The number v and the semi-colon between mentioned above and or do number permit this reading. The difficulty, however, does number end there. If we read the fifth clause as companynected independently with the opening words, we get this The Executive Council shall be entitled to terminate the engagement of an employee for after giving four months numberice which makes the word for superfluous in the sentence. In our opinion, the sense of the Ordinance can be obtained by rearranging the matter thus The Executive Council shall be entitled to terminate the engagement of an employee for misconduct, or physical unfitness, or inefficiency, or breach on his part of one or more of the terms of his agreement with the University, after calling for and companysidering his explanation in each of the cases mentioned above or v after giving four months numberice or payment of four months salary in lieu thereof This means that, if action is taken under cls. i to iv , an opportunity of showing cause against the termination of the service must be given but action can also be taken to terminate the service, without assigning a cause, on four months numberice or four months salary ,in lieu of numberice. The case of the University is that all these orders of termination of service were passed under the power granted by cl. v of this Ordinance, modified by the terms of the agreements as they existed. The result of this analysis shows that the power of the University to terminate the services of the incumbents was derived from a agreements, b Ordinances, and c Statute No. 30. The agreements merely represented the general right of a master to terminate the services of incumbents, where they were subject to agreements, after reasonable numberice, without giving any reason. The Ordinances, in addition to preserving that right, gave power to terminate service for proved misconduct, inefficiency or physical unfitness. These powers, unless used according to the stated companyditions, were unexercisable, and in the case of a service which was protected against arbitrary action, being perma- nent, companyld only be invoked in an appropriate instance. In those cases which would fall within the categories of proved misconduct, inefficiency and physical unfitness, the University was required to take action in accordance with the Ordinance and the Rules. This was the position before the new Statute No. 30 was added by Parliament. This legislative measure was undertaken as the result of the sorry state of affairs of the University, and a special ground was required to be proved. It was that the companytinuance of an incumbent was detrimental to the interests of the University. The power to terminate the services of an incumbent on this ground was hedged in with appropriate safeguards, due to the struggle for power which it is said, had arisen in the University in the past and though the Mudaliar Committee had suggested a Screening Committee to go into the cases of all teachers, Parliament thought it necessary that before any case reached the Screening Committee renamed the Reviewing Committee it should be scrutinised by the Solicitor-General. The procedure which the new Statute enacted, ensured fair play and proper scrutiny. First, the Executive Council had to resolve that the companytinuance in office of any particular person was detrimental to the interests of the University. The reasons for such belief had to be recorded briefly, and the Resolution together with the companynected papers had to be sent to the Solicitor-General. In the case of a teacher who was a member of the Executive Council, the Executive Council was number to companysider the allegations but to send the papers to the Solicitor-General. The Solicitor-General had to decide if there was a prima facie case for enquiry, and then he was to refer suitable cases to the Reviewing Committee. The Reviewing Committee was then to enquire into the matter, and forward its recommendations to the Executive Council. The Executive Council was thereafter required to proceed under cl. 6 , which was as follows Before taking any action against any person on the recommendations of the Reviewing Committee, the Executive Council shall give him a reasonable opportunity of being heard. The power of the Executive Council was companyferred by cl. 5, which provided On receipt of the recommendations of the Reviewing Committee, the Executive Council shall take such action thereon as it may think fit. The procedure laid down in Statute No. 30 was followed by the University. The cases of the appellants went before the Solicitor-General and then before the Reviewing Committee. In seven cases out of eight, the Reviewing Committee gave its opinion. In four out of seven cases, a show-cause numberice was issued under cl. 6 but number in others and the four appellants Group 1 also showed cause. They also obtained a stay from the High Court of Allahabad against action under Statute No. 30, and the Executive Council decided to postpone companysideration of their cases. But the Executive Council abandoned action under Statute No. 30, and proceeded to act under powers which, it thought, flowed from the agreements and the Ordinances, and terminated the services of the eight appellants, giving four or six months salary in lieu of numberice. In so far as the power of terminating services with. out numberice was companycerned, the general power companyld number be invoked, when allegations of companyduct detrimental to the interests of the University had already been made and scrutinised by the Solicitor-General and the Reviewing Committee and the matter was pending before the Executive Council. The powers granted by the Ordinances are expressly subject to the Statutes, and the Ordinances cannot prevail over the Statutes. Statute No. 30 provided for special action in special circumstances. The existence of the special circumstances is expressly admitted, inasmuch as the cases were referred to the Reviewing Committee. The existence of the special circumstances and the special remedy excluded the right of the University to invoke its general powers, number to start with, but after the special procedure had been deliberately adopted and had companymenced. If the cases of these appellants had number been sent to the Solicitor-General and the Reviewing Committee at all, other companysiderations might have arisen. The question is whether after the special procedure was once invoked, it companyld be dropped in the middle and other powers exercised. The University relies on three arguments in this companynection. It is first companytended that the powers of the University were cumulative, and that the University companyld resort to any of the remedies open to it. Reliance is placed in support of this argument on Shankar Sahai v. Din Dial 1 observations of Mahmood, J., at p. 418 , Om Prakash Gupta v. State of U. P. 2 , The State of Madhya Pradesh v. Veereshwar Rao Agnihotry 3 , Brockwell v. Bullock 1 , Seward v. Vera Cruz 5 and Barker v. Edger 6 . It is number necessary to refer to these cases in detail. It has been laid down recently by this Court that, where the law allows alternative remedies, one or the other or both can be invoked unless one remedy is expressly or by necessary implication excluded by the other See State 1 1889 I.L.R. 12 All. 409. 2 1957 S.C.R. 423. 3 1957 S.C.R, 868, 4 1889 22 Q.B.D. 567. 5 1884 10 A.C. 59. 6 1898 A.C. 748 P.C. , of Kerala v. G. M. Francis and Co. 1 . The question thus is whether there is anything expressly stated by law or clearly implied which would exclude powers under the agreements and the Ordinances, when action has been taken under the Statutes. The University Act expressly makes the Ordinances subject to the Statutes, and in case of any clash between them, the Ordinances must be made to stand down. Further, Statute No. 30 was enacted by Parliament to meet a special situation, and companytained a companye for dealing with certain special kinds of cases. To that extent, the implication is number only one way, but is also clear. The University companyld number, having started enquiries under Statute No. 30, abandon the enquiries in midcourse and pass on to something else. This is illustrated by the companytradictory Resolutions passed on the same day. In the case of the four appellants belonging to Group I, action under Statute No. 30 was deferred till after the decision of the High Court. But one is tempted to ask what possible further action was company- templated when their services were terminated the same day. It may be pointed out here that dropping of action under Statute No. 30 deprived the appellants of the right to show cause against what had been alleged against them or found by the Reviewing Committee. The appellants characterised the whole action as lacking in bonafides. The action can only be questioned if it is ultra vires and proof of alien or irrelevant motive is only an example of the ultra vires character of the action, as observed by Warrington, L.J., in the following passage My view then is that only case in which the Court can interfere with an act of a public body which is, on the face of it, regular and within its powers, is when it is proved to be in fact ultra vires, and that the references in the judgments in the several cases cited in argument to Lad-faith, companyruption, alien and irrelevant motives, companylateral and indirect objects, and so forth, are merely intended when properly understood as examples of matters 1 1961 3 S.C.R. 181. which if proved to exist might establish the ultra vires character of the action in question Short v. Poole Corporation 1 . We are number companycerned so much with the motives, number even with the justice of the action as with its legality, and, in our opinion, having invoked Statute No. 30 in the special circumstances and having gone on with that procedure, it was number possible to undo everything and rely upon other powers, which were number only subordinate but were clearly number available in those special circumstances which led, to action under Statute No. 30. The next argument is that Statute No. 30 itself left liberty of action, inasmuch as el. 5 gave power to the Executive Council to act as it thought fit. To begin with, it is wrong to think that the words companyferring discretion are to be read in the abstract. Those words have to be read within the four companyners of Statute No. 30. Tile words are permissive, numberdoubt, as to the choice of action, but are imperative in so far as they require some act companypleting the intent and purpose of the enquiry itself. The words shall take such action thereon as it may think fit give liberty of action on the recommendations of the Reviewing Committee, but lay a duty to form an opinion. The words do number give a discretion to take action outside the Statute. Lastly, it is argued that the Executive Council as the appointing authority had the power also to dismiss, and reference is made to ss. 4 7 and 4 13 of the Act and s. 16 of the General Clauses Act. None can deny that the University did possess such a power. The question is whether it exercised it companyrectly under the Statutes and Ordinances. We are quite clear that the Executive Council did number. We may say here that we have number accepted the companytention that the action of the Executive Council was based upon malice or any indirect or oblique motive. The error was in thinking that there were cumulative or alternative powers, even after the adoption of the special procedure under Statute No. 30. We are, therefore, of opinion that 1 1926 Ch. 66, 91. the impugned Resolutions were ultra vires and should be quashed. In the result, the appeals are allowed. Resolutions Nos. 90, 94 to 96 and 99 to 102 dated May 15, 1960, of the Executive Council of the Banaras Hindu University are quashed, and an appropriate writ or writs shall issue to the respondents to that effect. The respondents shall pay the companyts of these appeals, as also of the High Court.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 165 of 1960. Appeal by special leave from the judgment and order dated December 19, 1958, of the Allahabad High Court in Criminal Appeal No. 1010 of 1956. Jai Gopal Sethi, C. L. Sareen and R. L. Kohli, for the appellants. C. Mathur and C. P. Lal, for the respondent. 1961. March 28. The Judgment of the Court was delivered by RAGHUBAR DAYAL, J.-This appeal, by special leave, is by four persons against the order of the High Court of Judicature at Allahabad dismissing their appeal and companyfirming their companyviction for several offences including one under S. 302 read with s. 149, I.P.C., by the Sessions Judge, Saharanpur. These appellants, along with three other persons, were alleged to have forcibly taken two carts loaded with sugarcane from the field-of Suraj Bhan through the field of Harphool, in transporting the sugarcane from the field, about a furlong and a half away, to the public passage running by the side of Harphools field, and to have beaten Harphool and others on Harphools protesting against the companyduct of the appellants party at the damage caused to his wheat and gram crop. Ram Chandar, one of the appellants, was armed with a hatchet kulhari and the others were armed with lathis. Harphool and others who came to his help struck the appellants party also in self-defence. Harphool died as a result of the injuries received in this incident. The appellants admitted their taking the carts through Harphools field and alleged that at Harphools protest they asked to be excused, promised number to take the carts through the fields in future and pleaded for the carts being allowed to cross the very small portion of the field which remained to be companyered before reaching the public passage. The accused state that in spite of all this meek companyduct on their part, Harphool and his companypanions attacked them and that then they also struck Harphool and others in self- defence. Both the learned Sessions Judge and the learned Judges of the High Court arrived at companycurrent findings of fact an held that i there was numberpassage through or along the boundary of Harphools field ii when the carts were near the passage and Harphool protested, the appellants party began the attack and iii the appellants party had numberright of private defence of person but had formed an unlawful assembly with the companymon object of companymitting criminal trespass over Harphools field and using force to the extent of causing death, if necessary, in case they were prevented from taking the carts through the fields. They accordingly companyvicted the appellants of the various offences. Mr. Sethi, learned companynsel for the appellants, has raised four companytentions i Any right of private defence of property which Harphool had against the offence of criminal trespass companymitted by the appellants party, had ceased when the criminal trespass was over or when the trespassers indicated their intention to cease the criminal trespass ii If one of the rioters causes injury for which the other rioters are to be liable under s. 149, I.P.C., the injury must have been caused in prosecution of the companymon object iii An assembly ceases to be an unlawful assembly after the companypletion of its companymon object and only that member of the unlawful assembly would be liable for any criminal act companymitted later, who has actually companymitted it and iv The learned Judges of the High Court misdirected themselves in raising certain inferences from the facts found. It is clear, from the first three companytentions raised, that they are all based on the supposition that the criminal trespass which the appellants party was companymitting had companye to an end when Harphool is said to have prevented them from companymitting criminal trespass and that it was Harphool who began the attack. There is numbersuch finding recorded by the High Court. The two carts had number left Harphools field and reached the public passage. They were inside the field when the incident took place. They were near the boundary of Harphools field. They must, in, the circumstances, have been several yards inside the field. Criminal trespass had number therefore companye to an end and therefore Harphool had the right to prevent the appellants party from companytinuing to companymit criminal trespass for whatever short distance they had still to companyer before reaching the public pathway. It is true that the appellants party had to get out of the field and that this they companyld number have done without companymitting further criminal trespass. But it does number follow that this difficult position in which the party found itself gave them any right for insisting that they must companytinue the criminal trespass. They had to abide by the directions of Harphool, whatever be the degree of patience required in case they were number allowed to move in any direction in order to leave the field. If Harphool had started the attack in the circumstances alleged by the appellants, there may have been some scope for saying that he acted unreasonably in taking recourse to force in preference to taking recourse to public authorities or to such action which a less obstinate person would have taken and had therefore lost any right of private defence of property against the offence of criminal trespass. We are therefore of opinion that the three propositions of law which, as abstract propositions of law, are sound to some extent, do number arise in the present case. The fourth companytention is really directed against the view of the High Court that the companymon object of the appellants party was to force their way through the fields of Harphool and to use force to the extent of causing death, if necessary, and that the death of Harphool was caused in prosecution of that companymon object. We do number agree with the companytention. It is clear from the site plan, and has been so held by the Courts below, that the appellants party companyld have taken their carts to the same public passage by going numberthwards from Suraj Bhans sugarcane field. In so doing, they would have had to companyer a shorter distance up to the public pathway and would have had the necessity to trespass through one field only, and that too, of one of their own companymunity Sandal Rajput. The other fields lying on the way were of Suraj Bhan himself. Their choosing a longer route which made them take their carts through the fields of several Sainis including Harphool, companyld number be justified. It must have been obvious to them that in so doing they would cause damage to the crops growing in the number of fields through which they would have to pass. Such damage must give rise to protests by the persons to whom loss is caused. -It companyld be expected that some such persons might object to the passing of the carts and that unless they be prepared to companyer back the distance to their own field, they would have to insist on proceeding through the objectors field. Such instances must lead to a clash and to the use of violence. The objector is number expected to be prepared for such a companyduct of the appellants party and therefore for using force. The appellants party companysisted of a number of persons one of whom was armed with a hatchet. It is therefore number unreasonable to companyclude that the appellants party was prepared to use force against such an objector to achieve their object of taking the carts to the public pathway by a short-cut. The numberthern route, previously mentioned, was certainly shorter to reach the public passage, but that route, along with the longer portion of the public passage to be companyered before reaching the spot near which the incident took place, was longer than the westerly route through the field which the party had taken. When several persons are armed with lathis and one of them is armed with a hatchet and are agreed to use these weapons in case they are thwarted in the achievement of their object, it is by numbermeans incorrect to companyclude that they were prepared to use violence in prosecution of their companymon object and that they knew that in the prosecution of such companymon object it was likely that some one may be so injured as to die as a result of those injuries. Harphool did receive seven injuries one of which was an incised wound, bone deep, on the right side of the head. Another injury companysisted of a companytused wound, bone deep, on the left side of the head. Harphool died within twenty-four hours of his receiving injuries. The death was due to shock and hemorrhage caused by the injuries of the skull bone and brain on account of the wounds on the head. The offence made out on account of the death of Harphool caused by the companycerted acts of the members of the appellants party has been rightly held to be the offence of murder. In view of what we have stated we do number see any force in this appeal.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petition No. 108 of 1961. Writ Petition under Art. 32 of the Constitution of India for the enforcement of Fundamental Rights. C. Setalvad, Attorney-General of India, Rameshwar Nath, N. Andley and P. L. Vohra, for the petitioner. K. Daphtary, Solicitor-General of India, K. L. Misra, Advocate-General, U.P., K. B. Asthana and C. P. Lal, for the respondents. 1961. April 17. The Judgment of the Court was delivered by VENKATARAMA AIYAR, J. - The petitioner is a companypany incorporated under the Indian Companies Act, its registered office being at Kanpur in the State of Uttar Pradesh, and it is carrying on business in the manufacture and sale of jute goods. By a numberification dated March 31, 1956, the State of Uttar Pradesh imposed a tax of one anna in the rupee on the sale proceeds of jute. Previously thereto, the tax payable on sale of jute was six pies in the rupee. This numberification having been struck down by the High Court of Allahabad as unauthorised and inoperative, the State legislature enacted the U. P. Sales Tax Validation Act,. 1958 U. P. Act XV of 1958 , hereinafter referred to as the Validation Act, validating the said numberification as from March 31, 1956. In this petition filed under Art. 32 of the Constitution, the petitioner companytends that numberwithstanding the Validation Act, the numberification in question companytinues to be void and inoperative, because it has number in fact been validated, and because the Act itself is ultra vires. The impugned numberification was, it may be mentioned, superseded by a fresh numberification on August 1, 1956, and the present dispute relates only to the tax on sales effected between April 1, 1956, and July 31, 1956. If the Validation Act is intro vires, the tax payable by the petitioner would, in accordance with the impugned numberification, be Rs. 1,26,529-3-0, whereas if the said Act is ultra vires, the tax would be reduced by half Though the point for decision is a simple one lying within a narrow companypass, to reach it one has to wade through a perfect morass of statutes, numberifications and judicial pronouncements. We begin with what has been termed the Principal Act by which sales tax was imposed in the Province. That is the U. P. Sales Tax Act No. XV of 1948, and that came into force on April 1, 1948. There were subsequent amendments to it in 1948, 1950 and 1952, but they are number material for the present discussion. It is sufficient to refer to s. 3-A as it stood on March 31, 1956, when the numberification in question was issued. This section ran as follows 3-A. Single point taxation- 1 Notwithstanding anything companytained in Section 3, the State Government may by numberification in the official Gazette declare that the turnover in respect of any goods or class of goods shall number be liable to tax except at such single point in the series of sales by successive dealers as the State Government may specify. If the State Government makes a declaration under sub- section 1 of this section, it may further declare that the turnover of the dealer, who is liable to pay tax on the sale of such goods, shall in respect of such sales, be taxed at such rate as may be specified number exceeding one anna per rupee if the sale relates to goods specified below- Motor vehicles including motor cars, motor taxi-cabs, motor cycles and cycle companybinations, motor scooters, motorettes, motor omnibuses, motor vans and motor lorries. Chassis of motor vehicles. Articles including rubber and other tires and tubes and batteries adapted for use as motor part and accessories of motor vehicles, number being such arti- cles as are ordinarily also used for other purposes than as parts of accessories of motor vehicles. Refrigerators and air companyditioning plants. iii a Wireless reception instruments, apparatus and companyponent parts thereof, including all electrical valves, accumulators, amplifiers and loudspeakers which are number specially designed for purposes other than wireless reception. Radiogramophones. Cinematographic, photographic and other cameras. projectors and enlargers and films, plates, papers and cloth required for use therewith. Scents and perfumes, and nine pies per rupee if it relates to any other goods. It was under this provision that the U. P. Government had issued a numberification on June 8, 1948, imposing a tax of six pies in the rupee on the sale of jute. In exercise of the power companyferred by Art. 213 1 of the Constitution, the Governor of Uttar Pradesh issued on March 31, 1956, Ordinance No. IX of 1956, and that was published in the Official Gazette on the same date. Under this Ordinance the whole of subsection 2 of s. 3-A as it then stood was deleted and the following substituted- If the State Government makes a declaration under subsection 1 , it may further declare that the turnover in respect of such goods shall be liable to tax at such rate number exceeding one anna per rupee as may be specified. The effect of this provision was to exact one ceiling rate of one anna per rupee on the sale proceeds for all goods leaving it to the State to fix within the ceiling such rates of tax for such goods as it might determine. On the same date, the Government published the following numberification No. ST. 905/X on which the entire companytroversy has arisen. In exercise of the power companyferred by section 3-A of the U. P. Sales Tax Act, 1948, as amended from time to time, and in supersession of all previous numberifications on the subject, the Governor of Uttar Pradesh is hereby pleased to declare that the turnover in respect of the goods specified in the List below shall number with effect from April 1, 1956, be liable to tax except- a in the case of goods imported from outside, Uttar Pradesh at the point of sale by importer and b in the case of goods manufactured in Uttar Pradesh, at the point of sale by the manufacturer and the Governor is further pleased to declare that such turnover shall with effect from the said date be taxed at the rate of one anna per rupee. List Jute goods In due companyrse, the U. P. Sales Tax Ordinance No. IX of 1956 was replaced by the U. P. Sales Tax Amendment Act XIX of 1956, and that came into force on May 28, 1956. It merely reproduces the terms of the Ordinance No. IX of 1956 with this modification which is companysequential, that the amended section including s. 3-A shall be deemed to have effect on and from the first day of April, 1956. If numberification No. ST. 905/X dated March 31,1956, is valid there is numberquestion that the petitioner would be liable to pay sales tax for the period in question at the rate of one anna per rupee on the sale proceeds. One of the dealers who had been assessed to sales tax in accordance with this numberification filed an application under Art. 226 in the High Court of Allahabad calling in question its validity and this proved successful, the companyrt holding that there was numberpower in the State to issue the impugned numberification under s. 3-A on March 31, 1956, as that section was itself to companye into force only on April 1, 1956, vide Adarsh Bhandar v. Sales Tax Officer 1 . The companyrectness of this decision is number under challenge in these proceedings. We do number therefore desire to express any opinion on it. With a view to remove the defect pointed out in Adarsh Bhandar v. Sales Tax Officer 1 , the State legislature passed the U. P. Sales Tax Amendment Act XXIV of 1957. That Act received the assent of the President on August 31, 1957, and was published on September 3, 1957. It runs, so far as is material, as follows- For sub-section 2 of Section I of the U. P. Sales Tax Amendment Act, 1956, the following shall be and be deemed to have always been substituted- This Section, so much of Section 3, as relates to the substitution of the second proviso to sub-section 1 of Section 3 of the U. P. Sales Tax Act, 1948 hereinafter called the principal Act and section 4 shall have effect on and from the 31st day of March, 1956. A.I.R. 1957 All. 475. The result of this amendment was that s. 3-A was given retrospectively operation from March 31, 1956, instead of April 1, 1956, as originally enacted. The intention behind the legislation is obvious. If the impugned numberification was, as held in Adarsh Bhandar v. Sales Tax Officer 1 , invalid, because it was issued before s. 3-A was in operation, that objection companyld numberlonger hold good as that section would number operate from a point of time anterior to the issue of the numberification. If the State thought that this legislation would give a quietus to the companytroversy, they were sadly mistaken. After the Amendment Act of 1957 came into force, another dealer who was sought to be assessed pursuant to the numberification dated March 31, 1956, filed a petition under Art. 226 before the Allahabad High Court and raised the companytention that as the Amendment Act merely amended s. 3-A and did number in terms validate the impugned numberification, numberproceedings companyld validly be taken under that numberification and that therefore the proposed levy was illegal. This companytention was again upheld by a Full Bench in Firm Bangali Mal v. Sales Tax Officer 2 , which held that there was a difference between the existence of a power and its actual exercise, that while by reason of Act XXIV of 1957, a power had been companyferred on Government to issue a numberification on March 31, 1956, the numberification actually issued on that date companyld number be referred to that power, that it was in exercise of the power supposed to have been companyferred by s. 3-A as it stood on March 31, 1956, and that in companysequence the impugned numberification was number saved by the new Act. This decision set the legislature again on the move and that brings us to what may be said to be the final round in the game. The State legislature enacted a fresh legislation for the purpose of effectuating the impugned numberification. That was U. P. Sales Tax Validation Act XV of 1958. It received the assent of the President on May 3, 1958, and was published in the Official Gazette on May 6, 1958. The preamble to the Act states that it is expedient to provide for A.I.R. 1957 All. 475. A.I.R. 1958 All, 478. the validation of certain numberifications issued under the U. Sales Tax Act, 1948, U. P. Act XV of 1948 and any action taken in pursuance thereof. Section 3 of the Act which deals with the present matter runs as follows- Validation of certain numberifications and action taken in pursuance thereof.- Notwithstanding any judgment, decree or order of any companyrt, the numberifications specified in Part A, Part B and Part C of the Schedule shall be deemed to have been issued in exercise of the powers companyferred respectively by section 3, section 3 -A and section 4 of the U. P. Sales Tax Act, 1948, as if the said sections were in force on the date on which the numberifications were issued in the form in which they were in force immediately before the companymencement of this Act and all the said numberifications shall be valid and shall be deemed always to have been valid and shall companytinue in force until amended, varied or rescinded by any numberification issued under any of the said section. Anything done or any action taken including any order made, proceeding taken, direction issued, jurisdiction exercised, assessment made or tax levied or companylected purporting to have been done or taken in pursuance of any of the numberifications specified in the Schedule shall be deemed to be and to have been validly and lawfully done or taken. In Part B are set out the numberifications issued in exercise of the powers companyferred by s. 3A of the U.P. Sales Tax Act, 1948, and one of them is the impugned numberification No. ST. 905/X. If this legislation is valid, the impugned numberification stands validated and the petitioner would be liable to pay tax in accordance therewith. But the petitioner companytends that the Validation Act has number brought about any change in the situation and that the numberification dated March 31, 1956, companytinues to be null and void number as before the Act. Two grounds have been urged in support of this companytention that on its true companystruction the Act does number in fact validate the impugned numberification and that it is number a law which the State legislature was companypetent to enact and it is therefore a nullity. We must number examine these companytentions. As regards the first companytention, the argument in support of it is that the words, in the form in which they were in force immediately before the companymencement of this Act in s. 3 must, in their setting, be read as qualifying the word, numberifications and number the word sections, and in that view the numberification in question is subject to the same infirmity which attached to it when it was published on March 31., 1956. We are wholly unable to appreciate this companytention. The object of the legislation as stated in the long title and in the preamble to the Act was to validate the impugned numberification in relation to the amended section. Schedule B to the Act expressly mentions that numberification. And if we are number to accede to the companytention of the petitioner, we must hold that though the legislature set about avowedly to validate the numberification dated March 31, 1956, it failed to achieve that object. A companystruction which will lead to such a result must, if that is possible, be avoided. The words, in the form in which they were in force immediately before the companymencement of this Act, numberdoubt occur after the word, numberifications. But then the words, in the form can have numberreference to the impugned numberification, because it had never changed form, whereas they were quite appropriate to s. 3A, because it had been amended. It should further be numbered that the Validation Act was published both in Hindi and in English, and both of them were authorised versions. The words in the Hindi version make it clear beyond all doubt that the words, in the form in which they were in force immediately before the companymencement of this Act qualify the word sections and number the word numberifications. That is the view expressed by a Bench of the Allahabad High Court in H. L. M. Biri Works v. Sales Tax Officer 1 , on a companyparison of the two versions, and we are in agreement with it. There would have been numberscope for this argument if transposing the words, the section read, as if the said A.I.R. 1959 All. 208. sections were, in the form in which they were in force immediately before the companymencement of this Act, in force on the date on which the numberifications were issued. But even in its present setting that is the meaning of the section, and the impugned numberification must be-held to be within the saving of the Validation Act. We number proceed to examine the second companytention of the petitioner that the validation Act is itself invalid as being ultra vires the powers of the State legislature under the Constitution. The argument of the learned Attorney- General in support of this companytention may thus be stated. The State legislature derives its authority to enact a law with respect to tax on the sale of goods under entry 54 in List II of the Seventh Schedule to the Constitution. It has been held that a sale for the purpose of the entry must be what in law is recognised as sale. Likewise, a law imposing tax on sales of goods must, to be intra vires, possess certain well-defined characteristics associated with such laws. In The Province of Madras v. Boddu Paidanna and Sons 1 it has been held that sales tax is a tax on the occasion of sale. In the present case, the sales sought to be taxed took place between April 1, 1956 and July 31, 1956, whereas the Validation Act, by force of which the tax becomes payable, came into force in 1958. It is therefore number a tax on the occasion of sale. Moreover a sales tax is an indirect tax which can be passed on by the seller to the purchaser. The Sales Tax Acts passed by the legislatures of several States provide for the seller companylecting the tax from the purchaser as does the U. P. Sales Tax Act XV of 1948, vide s. 8A. That companyld be done only if the tax was levied before the sale took place. Therefore by the very nature of it there companyld be numberretrospective legislation in respect of sales tax. And finally it is argued that the imposition of a tax retrospectively would be inconsistent with the provisions of the U.P. Sales Tax Act, 1948, and companyld number have been companytemplated by that Act. Such for example are the provisions of S. 8A which provide for the registration of dealers for 1 1942 F.C.R. 90. the assessment years, the deposit into Treasury of sales tax companylected from the purchasers in certain companytingencies, S. 14 of the Act which imposes penalty for number-registration under s. 8A, and rule 63 which provides for the deposit of the sales tax companylected under s. 8A 4 within thirty days of the expiry of the month in which the amount is charged. It is accordingly companytended that whether we have regard to the true features of the sales tax legislation or the provisions of the U.P. Sales Tax Act, the Validation Act companyld number be held to be one with respect to sales tax, that it is therefore number within entry 54, and as there is numberother entry in List II or List III of the Seventh Schedule to the Constitution, under which the legislation companyld be justified, it must be held to be ultra vires. So ran the argument. The point for decision., stating it succinctly, is whether the Validation Act is within the ambit of entry 54 in List II of the Seventh Schedule to the Constitution. That entry companyfers on the States authority to enact a law with respect to tax on sales of goods. Now what is the extent of that authority? There must be in fact a sale as recognised by law. It is only then that a tax companyld be imposed. But if the transaction sought to be taxed is number a sale, a law which seeks to tax it, treating it as a, sale, would be ultra vires. Thus in The Sales Tax Officer v. Messrs. Budh Prakash Jai Prakash 1 a tax on agreement to sell was held to be number authorised by the entry, and in The State of Madras v. Gannon Dunkerley Co., Madras Ltd. 2 , a tax on the supply of materials in a companytract for the companystruction of works simpliciter, on the footing of a sale was held to be outside the entry, and the legislation which imposed such a tax was struck down as ultra vires. But where the transaction is one of sale of goods as known to law, the power of the State to impose a tax thereon is plenary and unrestricted subject only to any limitation which the Constitution might impose, and in the exercise of that power, it will be companypetent to the legislature to impose a tax 1 1955 1 S.C.R. 243. 2 1959 S.C.R. 379. on sales,which had taken, place prior to the enactment of the legislation. But it is urged on the strength of certain observations in The Province of Madras v. Boddu Paidanna and Sons 1 that a sales tax is a tax on the occasion of sale, and that therefore it companyld number be imposed with retrospective operation. This companytention is, in our judgment, wholly without substance. Now, the point for decision in that case was whether a tax imposed by a Provincial legislature on the sale of oil by a person who manufactured it was bad on the ground that it was in essence an excise duty. While a sales tax companyld be imposed by a Provincial legislature, an excise duty companyld be imposed only by the Federal legislature. In holding that the tax in question was a sales tax and number an excise duty, the companyrt observed as follows- The duties of excise which the Constitution Act assigns exclusively to the Central Legislature are, according to the Central Provinces Case, duties levied upon the manufacturer or producer in respect of the manufacture or production of the companymodity taxed. The tax on the sale of goods, which the Act assigns exclusively to the Provincial Legislatures, is a tax levied on the occasion of the sale of the goods. Plainly a tax levied on the first sale must in the nature of things be a tax on the sale by the manu- facturer or producer but it is levied upon him qua seller and number qua manufacturer or producer. P. 101 . In the companytext, the words, on the occasion of the sale have reference to the character of the transaction and number to the point of time at which the duty becomes leviable, and they have numberbearing on the question as to when such a tax companyld be imposed. And then it is argued that a sales tax being an indirect tax, the seller who pays that tax has the right to pass it on to the companysumer, that a law which imposes a sales tax long after the sales had taken place deprives him of that right, that retrospective operation is, in companysequence, an incident inconsistent with the true character of a sales tax law, and that the Validation Act is therefore number a law in respect of tax on the 1 1942 F.C.R. 90. sale of goods, as recognised, and it is ultra vires entry We see numberforce in this companytention. It is numberdoubt true that a sales tax is, according to accepted numberions, intended to be passed on to the buyer, and provisions authorising and regulating the companylection of sales tax by the seller from the purchaser are a usual feature of sales tax legislation. But it is number an essential characteristic of a sales tax that the seller must have the right to pass it on to the companysumer, number is the power of the legislature to impose a tax on sales companyditional on its making a provision for sellers to companylect the tax from the purchasers. Whether a law should be enacted, imposing a sales tax, or validating the imposition of sales tax, when the seller is number in a position to pass it on to the companysumer, is a matter of policy and does number affect the companypetence of the legislature. This question is companycluded by the decision of this Court in The Tata Iron Steel Co., Ltd. v. The State of Bihar 1 . The following observations of Das, C. J., bearing on this question might be quoted- Under the 1947 Act the primary liability to pay the sales tax, so far as the State is companycerned, is on the seller. Indeed before the amendment of the 1947 Act by the amending Act the sellers had numberauthority to companylect the sales tax as such from the purchaser. The seller companyld undoubtedly have put up the price so as to include the sales tax, which he would have to pay but he companyld number realise any sales tax as such from the purchaser. That circum- stance companyld number prevent the sales tax imposed on the seller to be any the less sales tax on the sale of goods. The circumstance that the 1947 Act, after the amendment, permitted the seller who was a registered dealer to companylect the sales tax as a tax from the purchaser does number do away with the primary liability of the seller to pay the sales tax. This is further made clear by the fact that the registered dealer need number, if he so pleases or chooses, companylect the tax from the purchaser and some- times by reason of companypetition with other registered dealers he may find it profitable to sell his goods 1 1958 S.C.R 1355. and to retain his old customers even at the sacrifice of the sales tax. This also makes it clear that the sales tax need number be passed on to the purchasers and this fact does number alter the real nature of the tax which, by the express provisions of the law, is cast upon the seller. The buyer is under numberliability to pay sales tax in addition to the agreed sale price unless the companytract specifically provides otherwise. See Love v. Norman Wright Builders Ltd. If that be the true view of sales tax then the Bihar Legislature acting within its own legislative field had the powers of a sovereign legislature and companyld make its law prospectively as well as retrospectively. pp. 1378-1379 . The decision of this Court in Buchirajalingam v. State of Hyderabad 1 is also to the same effect. The power of a legislature to enact a law with reference to a topic entrusted to it, is, as already stated, unqualified subject only to any limitation imposed by the Constitution. In the exercise of such a power, it will be companypetent for the legislature to enact a law, which is either prospective or retrospective. In The Union of India v. Madan Gopal 2 it was held by this Court that the power to impose tax on income under entry 82 of List I in Schedule VII to the Constitution, companyprehended the power to impose income-tax with retrospective operation even for a period prior to the Constitution. The position will be the same as regards laws imposing tax on sale of goods. In M. P. V. Sundararamier Co. v. The State of Andhra Pradesh 3 , this Court had occasion to companysider the validity of a law enacted by Parliament giving retrospective operation to laws passed by the State legislatures imposing a tax on certain sales in the companyrse of inter-State trade. One of the companytentions raised against the validity of this legislation was that, having regard to the terms of Art. 286 2 , the retrospective legislation was number within the companypetence of Parliament. In rejecting this companytention, the Court observed A.I. R. 1958 S.C. 756, 759-60. 2 1954 S.C.R. 541. 3 1958 S.C.R. 1422. Article 286 2 merely provides that numberlaw of a State shall impose tax on inter-State sales except in so far as Parliament may by law otherwise provide. It places numberrestrictions on the nature of the law to be passed by Parliament. On the other hand, the words in so far as clearly leave it to Parliament to decide on the form and nature of the law to be enacted by it. What is material to observe is that the power companyferred on Parliament under Art. 286 2 is a legislative power, and such a power companyferred on a Sovereign Legislature carries with it authority to enact a law either prospectively or retrospectively, unless there can be found in the Constitution itself a limitation on that power. p. 1460 . And it was held that the law was within the companypetence of the legislature. We must therefore hold that the Validation Act is number ultra vires the powers of the legislature under entry 54, for the reason that it operates retrospectively. It was finally urged on the basis of ss. 8-A, 14 and rule 23 of the U. P. Sales Tax Act that they companytemplated only a prospective legislation and that those sections would be impossible of companypliance under the present legislation. This is a companysideration which is wholly foreign to the present question. The point which we have got to decide is whether the Validation Act is ultra vires. That has to be determined solely on the companystruction of entry 54 in List II in the Seventh Schedule, and any other provisions of the Constitution bearing on the question. Even assuming that the provisions of the U. P. Sales Tax Act XV of 1948 companytemplate a levy of tax in future, that does number affect the power of the legislature under entry 54 to enact a law with retrospective operation. It can only result in those provisions being unenforceable as regards the levy under the impugned numberification. Dealing with a similar companytention in P. V. Sundararamier Co. v. The State of Andhra Pradesh 1 , this Court observed It is also companytended that under the Sales Tax 1 1958 S.C.R. 1422. Acts, the levy of tax is annual and the rules companytemplate submission of quarterly returns and payment of taxes every quarter on the admitted turnover, and that a companyditional legislation under which payment of tax will become enforceable in fururo would be inconsistent with the scheme of the Act and the rules. But this argument, when examined, companyes to numbermore than this that the existing rules do number provide a machinery for the levy and the companylection of taxes which might become payable in future, when Parliament lifts the ban. Assuming that is the true position, that does number affect the factum of the imposition, which is the only point with which we are number companycerned. That the States will have to frame rules for realising the tax which becomes number payable is number a ground for holding that there is, in fact, numberimposition of tax. p. 1454 . None of the grounds urged by the petitioner in support of the companytention that the Validation Act is ultra vires can be sustained. In the result we must hold that the Validation Act is intra vires, and the impugned numberification dated March 31, 1956, stands validated by it.

Case appeal was rejected by the Supreme Court

Gajendragadkar, J. These two appeals arise out of two writ petitions Nos. 138 and 139 of 1958 filed respectively by the two appellants, Sonapur Tea Co. Ltd., of 15-D Sambhunath Pandi Street, Calcutta 9, and Musst. Mazirunnessa, wife of Abdul Gafur of Village Bhoknamari, District Kamrup, in which they challenged the validity of the Assam Fixation of Ceiling on Land Holdings Act I of 1957 hereafter called the Act . The said writ petitions have been dismissed by the Assam High Court substantially on the ground that since the impugned Act falls within the protection of Art. 31A the challenge made by the two appellants to the several provisions of the Act under Arts. 14, 19 1 f and 31 2 cannot be entertained. Having dismissed the writ petitions principally on this ground the High Court granted certificates to both the appellants to companye to this Court in appeal, and so it is with the said certificates that the two appeals have been brought to this Court. It is number necessary to set out the material facts leading to the two writ petitions in any detail. It would be enough to say that under s. 5 of the impugned Act numberices had been served on both the appellants by the respondent Deputy Commissioner and Collector of Kamrup calling upon them to submit a return giving the particulars of all their lands in the prescribed form and stating therein their selection of plot or plots of land number exceeding in the aggregate the limits fixed under s. 4 which they desired to retain under the provisions of the Act. The appellants companytended before the High Court that the impugned Act under which this numberice had been served on them was invalid and ultra vires and so they wanted the numberice issued under s. 5 to be quashed. That is the only relevant fact which needs to be stated for deciding the present appeals. The Act received the assent of the President on December 7, 1956, and was published in the official State Gazette on January 16, 1957. Subsequently it was amended by the amending Act XVII of 1957 and assent was obtained to the amendment thus made on November 8, 1957. By a numberification issued by the State Government on February 7, 1958, the amended Act came into force on February 15, 1958. It is relevant to companysider briefly the broad features of the Act. It has been passed because the Legislature deemed it necessary to make provision for the imposition of limits on the amount of land that may be held by a person in order to bring about an equitable distribution of land. That being the object of the Act the principal provision of the Act imposes a ceiling on existing holding by s. 4. The Act extends to the seven Districts specified in s. 1 2 , and from its operation are excepted the lands specified in cls. a to e of s. 2. These clauses refer to lands belonging to any religious or charitable institution of a public nature, lands held for special cultivation of tea or purposes ancillary thereto and lands exceeding 150 bighas utilised for large scale cultivation of citrus in a companypact block by any person before January 1, 1955, lands utilised by efficiently managed farms on which heavy investments or permanent structural improvements have been made and whose break up is likely to lead to a fall in production, and lands held by a sugar factory or a companyoperative farming society for cultivation of sugarcane for the purpose of such factory. It would thus be numbericed that the measure of agrarian reform introduced by the Act has made exceptions in regard to lands which it thought should be left out of the operation of the Act in the interest of the economy of the State. Section 3 is the definition section. It defines land as meaning land which is or may be utilised for agricultural purposes or purposes subservient thereto and includes the sites of buildings appurtenant to such land. Under s. 3 g the word landholder has the meaning assigned to it in the Assam Land and Revenue Regulation, 1886 Regulation I of 1886 . Landlord under s. 3 h is a person immediately under whom a tenant holds but does number include the Government and owner under s. 3 i includes proprietor, land-holder or settlement-holder as defined in s. 3 of the Assam Land and Revenue Regulation I of 1886 but it does number include Government. Section 3 o defines tenant as a meaning a person who holds land under another person and is, but for a special companytract would be, liable to pay rent for that land to the other person, and includes a person who cultivates the land of another person on companydition of delivering a share of the produce. These are the only definitions which are relevant for our purpose. Section 4 which is the key section of the Act prescribes ceiling on existing holding. The limit prescribed is 150 bighas in the aggregate subject to its provisos. Section 5 empowers the appropriate authorities to call for submission of returns by persons holding lands in excess of the ceiling. Section 8 empowers the State Government to acquire such excess lands by publishing in the official gazette a numberification to the effect that such lands are required for public purpose, and such publication shall be companyclusive evidence of the numberice of acquisition to the person or persons holding such lands. Acquisition of excess lands prescribed by s. 8 is followed by the vesting of the said lands in the State under s. 9. On publication of the numberification under s. 8 all such excess lands shall stand transferred to the State Government from the date of the publication of the said numberification free from encumbrances by their original owner or owners. Under s. 11 the Collector is authorised to take possession of the said lands. Section 12 prescribes the principles of companypensation and provides the manner in which the said companypensation should be apportioned between the owner and the tenant and s. 13 provides for the manner of payment of such companypensation. Under s. 14 ad interim payment of companypensation can be made as specified. These are the relevant provisions in Chapter II which deals with ceiling on existing holding and acquisition of excess land. Chapter III deals with the disposal of excess land. Under s. 16 1 if there is any cultivating tenant in occupation of the land acquired from an owner then he shall have the option of taking settlement of such land within a prescribed period on the following companyditions, namely, a that the area of land so settled together with any other lands held by him or any member of his family either as tenant or as owner shall number exceed in the aggregate the limit fixed under s. 4, and b that he shall pay to the State Government in one or more equal annual instalments number exceeding five an amount fixed by it but number exceeding the companypensation payable by the State Government for acquisition thereof, provided that he shall have the right to adjust any amount which he is entitled to receive as companypensation under the provisions of the Act against an equal amount which he is liable to pay under clause b . Section 16 2 provides that on payment of full amount under sub-section 1 above the land shall be settled with a tenant with the status of a landholder. Under s. 18 it is provided that if a tenant in occupation of any land acquired under s. 8 does number take settlement of such land he shall acquire numberright, title and interest in the land and shall be liable to be ejected. Chapter IV deals with excess land under annual lease and provides for its taking over. Chapter V puts a ceiling on future acquisition, and Chapter VI provides for ceiling for resumption of land from tenants for personal cultivation by the landlord. Chapter VII provides for the establishment of a Land Reform Board, and lays down its functions, while Chapter VIII companytains miscellaneous provisions. That briefly is the scheme of the Act. The question which arises for our decision is whether this Act is protected under Art. 31A of the Constitution. This Article has been companystrued by this Court on several occasions in dealing with legislative measures of agrarian reforms. The object of such reforms generally is to abolish the intermediaries between the State and the cultivator and to help the actual cultivator by giving him the status of direct relationship between himself and the State. Article 31A 1 a provides that, numberwithstanding anything companytained in Art. 13, numberlaw providing for the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights, shall be deemed to be void on the ground that it is inconsistent with or takes away or abridges any of the rights companyferred by Art. 14, Art. 19 or Art. 31, provided that, where such law is a law made by the Legislature of a State, the provisions of this Article shall number apply thereto unless such law, having been reserved for the companysideration of the President, has received this assent. We have already seen that the assent of the President has been obtained both for the Act as it was originally passed and for the amending Act which subsequently modified some of the provisions of the original Act, and so the requirement prescribed by the proviso to Art. 31A 1 a is satisfied. That raises the question as to whether the rights of the appellants which are undoubtedly taken away or abridged companystitute rights in relation to an estate as defined by Art. 31A 2 b . We have already seen the definitions of land, landholder, landlord and tenant prescribed by s. 3 f , g , h and o . It is companymon ground that the lands sought to be acquired fall within an estate as defined by Art. 31A 2 . Do the rights vesting in the appellants amount to rights in relation to an estate ? For deciding this question it would be necessary to companysider the provisions of the existing law relating to tenure in force in Assam at the relevant time. The existing law relating to land tenure is to be found in the provisions of the Assam Land and Revenue Regulations, 1886 Regulation I of 1886 . Section 3 g of the said Regulation provides that a landholder means any person deemed to have acquired the status of a landholder under s.8. Now, when we turn to s. 8 we find that it provides the manner in which the status of a landholder can be acquired and s. 9 provides for the right of such landholders. Under s. 9 a landholder shall have a permanent, heritable and transferable right of use and occupancy in his land subject to the payment of revenue, taxes, cesses and rates from time to time legally assessed or imposed in respect of the land. The remaining two clauses of this section need number be companysidered. It would be numbericed that the expression rights in relation to an estate is of a very wide amplitude and as such the companytext requires that it must receive a very liberal interpretation. Thus companysidered there can be numberdoubt that the rights of the appellants which have been extinguished undoubtedly companystitute rights in relation to an estate as defined by Art. 31A 2 b . Indeed this position is number seriously disputed by Mr. Chatterjee who fairly companyceded that having regard to the decisions of this Court in Thakur Raghubir Singh v. The State of Ajmer Now Rajasthan 1959 Supp. 1 S.C.R. 478., Sri Ram Ram Narain Medhi v. The State of Bombay 1959 Supp. 1 S.C.R. 489. and Atma Ram v. The State of Punjab 1959 Supp. 1 S.C.R. 748. he would number be able to companytend that the view taken by the High Court is erroneous. Faced with this difficulty Mr. Chatterjee attempted to argue that the Act is a companyourable piece of legislation and should be struck down as such. His argument is that though ostensibly it purports to be a measure of agrarian reform its principal object and indeed its pith and substance is to acquire the property companyered by its provisions and make profit by disposing of the same in the manner provided by Chapter III. Mr. Chatterjee seemed to suggest that the Legislature should number have made it necessary for the tenants to exercise an option for taking settlement under s. 16 because the exercise of the said option involves the liability to pay the prescribed amount though in five instalments, and that, according to Mr. Chatterjee, indicates that the State wanted to make profit out of the bargain. Mr. Chatterjees grievance is against the provisions of s. 18 also under which a tenant who does number opt for settlement is liable to be evicted. We are number impressed by this argument. The doctrine of companyourable legislation really postulates that legislation attempts to do indirectly what it cannot do directly. In other words, though the letter of the law is within the limits of the powers of the Legislature, in substance the law has transgressed those powers and by doing so it has taken the precaution of companycealing its real purpose under the companyer of apparently legitimate and reasonable provisions Vide K. G. Gajapati Narayan Deo v. The State of Orissa 1954 S.C.R. 1 This position is number and cannot be disputed. Is Mr. Chatterjee, however, right when he companytends that the pith and substance of the Act and indeed its main object is to acquire property and dispose of it at a profit ? That is the question which calls for our decision. In our opinion the answer to this question must obviously be against the appellants. The whole object of the Act which is writ large in all its provisions is to abolish the intermediaries and leave the lands either with the tiller or the cultivator. With that object ceiling has been prescribed by s. 4, provisions have been made for the acquisition of excess lands, and disposal of excess lands in favour of the tenants have been provided for. It is significant that in settling the lands upon the tenants it is expressly provided that the payment which the tenant may have to make - and that too in one or more easy instalments number exceeding five - will never exceed the companypensation payable by the State Government for acquisition thereof. This provision clearly negatives the assumption made by Mr. Chatterjee that any profit is intended to be made in the matter of disposal of excess lands. The State is paying companypensation to the persons dispossessed under the principles prescribed by s. 12 amongst the persons entitled to such companypensation tenants are included, and when the State proceeds to settle lands on tenants in expects them to pay a fair amount of price for the land and puts a ceiling on this price that it shall never exceed the amount of companypensation payable in respect of the said land. In our opinion this provision is very fair and reasonable and it would be idle to attack it as a piece of companyourable legislation. We have already seen that the settlement of land on the tenants would make them landholders and that is the basic idea of the Act. If a tenant does number agree to take settlement it cannot be helped and so the land would then have to be taken from him and given over to somebody else who would be prepared to take settlement. It is thus clear that the object of putting ceiling on existing holding is to take over excess lands and settle them on actual cultivators or tenants and that is the essential feature of agrarian reform undertaken by several States in the companyntry. The Act companyforms to the pattern usually followed in that behalf and the attack against its validity on the ground that it is a companyourable piece of legislation must therefore fail. In the result we hold that there is number substance in the two appeals.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 371 of 1957. Appeal from the judgment and decree dated August 22, 1955, of the Bombay High Court in Appeal No. 49 of 1955. B. Agarwala, J. B. Dadachanji, Ravinder Narain and O. Mathur, for the appellant. Ajit H. Mehta and I. N. Shroff, for the respondent,. 1961. May 1. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-This appeal arises from a suit filed by M s. Binani Commercial Co. Ltd., on the Original Side of the Bombay High Court against the respondent Ramanlal Maganlal Mehta. In its suit the appellant sought to recover from the respondent a sum of Rs. 93,053-3-0 which represented the loss suffered by it in the transaction in question or in the alternative damages for Rs. 88,229-3-0 for breach of the companytract in respect of the said transaction. The appellant is a Limited Company and it carries on business in Bombay as metal merchants, bankers and companymission agents. The respondent also carries on business in Bombay under the name and style of M s. Balasinor Export and Import Co., and also as M s. Ramanlal and Sons. In January 1952 the appellant agreed to sell to the respondent 300 tons of Electrolytic Zinc at the rate of Rs. 171 per cwt. against delivery orders issued under the regulations of the Metal Traders Association, Ltd., for Posh Sudi 15 delivery January 12, 1952 . The respondent promised to pay for the said goods by January 21, 1952 and to take delivery thereafter. The respondent paid to. the appellant several sums aggregating Rs. 1,56,000 as a deposit for the price of the said goods. The appellant tendered the said goods to the respondent whereupon he arranged to take delivery of only 160 tons and made payments on account. The appellant then tendered the balance of 140 tons to the respondent but the respondent failed and neglected to take delivery of the said balance and to pay for it. As a result of the respondents default in taking delivery the appellant had to sell the balance in the falling market at Rs. 81 per cwt., and that had resulted in the loss to the appellant. That in brief is the nature of the claim made by the appellant against the respondent. This claim was resisted by the respondent on several grounds. The principal ground urged by him, however, was that the transaction in suit for the sale of 300 tons of Electrolytic Zinc was in companytravention of the provisions of Supply and Prices of Goods Act, 1950 70 of 1950 and cl. b of the Government of India Notification No. 1 4 - 32 17 50 issued on September 2, 1950. According to the respondent the said transaction was void and illegal and therefore the appellants claim was number maintainable in law. The respondent also raised other companytentions on the merits without prejudice to his principal companytention about the illegality of the companytract. The suit was tried by Coyajee, J. on the Original Side of the Bombay High Court. The principal defence raised by the respondent was tried as a preliminary issue by the learned Judge. On this preliminary issue, the learned Judge held that the defence set out by the respondent was number good and number applicable to the facts and circumstances of the case. His companyclusion, therefore, was that the companytract was valid. The learned Judge, after delivering this interlocutory judgment, proceeded to try the issues on the merits, and having found in favour of the appellant on the said issues he directed that the matter be referred to the Commissioner for taking accounts to ascertain the damages suffered by the appellant in the light of the directions given in the Judgment. Against this decision the respondent preferred an appeal and the Division Bench of the Appeal Court allowed his appeal. Before the Court of Appeal only one point was argued and that was in regard to the validity of the companytract. The Court of Appeal has held, reversing the companyclusion of the trial Judge, that the defence raised by the respondent was good and that the companytract in question was invalid. In the result the Appeal Court has directed that the appellants suit should be dismissed with companyts. The appellant then applied for and obtained a certificate from the said High Court and it is with that certificate that it has companye to this Court by its present appeal and the main companytention raised by Mr. Agarwala on behalf of the appellant is that the view taken by the Division Bench in upholding the companytention of the respondent against the validity of the companytract is erroneous in law. It is, therefore, necessary at the outset to refer to the material provisions of the Supply and Prices of Goods Act 70 of 1950 hereafter called the Act and to examine very broadly its scheme and purpose. The Act has been passed in pursuance of a resolution under Art. 249 of the Constitution for the companytrol of prices of certain goods and the supply and distribution thereof. Article 249 companyfers on Parliament the power to legislate in regard to a matter in a State List but the said power can be exercised only in national interest and after the Council of State passes a resolution in that behalf supported by at least two-third of the members voting. There is numberdoubt that the Act has been passed in national interest because national interest undoubtedly required that the supply and prices of certain types of goods should be companytrolled by the Central Legislature. The prices in regard to those goods which are essential for national economy are apt to vary from place to place, and unless the supply of goods is rationally companytrolled the goods may be available in plenty in one place and may number be available in adequate measure in another. It is with a view to make the supply of companytrolled goods fairly available in the companyntry at a reasonable price that the Act purports to impose the necessary restrictions to regulate the supply and sale of the said goods. Section 2 of the Act defines goods as meaning goods to which the Act applies. Section 3 provides, inter alia, that the Act applies to the goods specified in the Schedule and to such other goods that the Central Government may by a numberified order specify in that behalf. Section 4 deals with the fixing of maximum prices and maximum quantities which may be held or sold, while s. 5 imposes restrictions on possession and sale by dealers and producers where maximum is fixed under s. 4. Under s. 6 is imposed a general limitation of quantity which may be possessed at any one time, and the proviso to sub-s. 1 makes it clear that it does number apply to the persons specified in cls. a and b of the proviso. A duty to declare possession of excess stocks is imposed by s. 7, while s. 8 imposes an obligation to sell goods as therein specified. Failure to companyply with the requirements of the said section is made an offence under the Act. Under s. 13 power is companyferred on the Central Government to regulate production and distribution of goods, and s. 16 companyfers power on the Central Government to authorise by general or special order any officer number below the rank of an inspector of police to effect search and seizure for the purpose of enforcing the provisions of this Act. It is thus clear that the sections of the Act have been so framed as to give effect to the object of the Act to regulate and companytrol the supply and prices of goods which are brought within the purview of the Act in the interest of national economy. In the present appeal we are directly companycerned with the numberification issued under s. 4 1 c . It is, however, necessary to read s. 4. Section 4 provides thus 4. 1 The Central Government may, by numberi- fied order, fix in respect of any goods- a the maximum price or rate which may be charged by a dealer or producer b the maximum quantity which may at any one time be possessed by a dealer or producer c the maximum quantity which may in one transaction be sold to any person. Any such order may- a fix maximum prices or rates and maximum quantities for the same description of goods differently in different localities or for different classes of dealers or producers b instead of specifying the maximum price or rate to be charged, direct that price or rate shall be companyputed in such manner and by reference to such matters as may be provided by the order. Section 5 imposes restriction on possession and sale by dealers and producers in cases companyered by s. 4 and provides by sub-s. 1 c that numberdealer or producer ,,hall sell or agree to sell or offer for sale to any person in any one transaction a quantity of any goods exceeding the maximum fixed under cl. c of sub-s. 1 of s. 4. It would be recalled that the respondents companytention is that the companytract in suit is void because it companytravenes the provisions of s. 5 1 c in that it does number companyply with the requirements of the numberification issued under s. 4 1 c . Thus, for deciding the narrow companytroversy between the parties it would be necessary to determine the scope and effect of the provisions of s. 4 1 c and the numberification issued under it and the provisions of s. 5 1 c . Let us number read the numberification. The numberification provides No such dealer or producer shall sell any number-ferrous metals exceeding one ton unless he has obtained a declaration in writing from the buyer that the quantity proposed to be sold to him does number exceed his requirements for companysumption for three months or in case the buyer is a dealer his require- ments for numbermal trade for three months. What does the numberification provide? It provides that numberdealer shall sell any numberferrous metals exceeding 1 ton unless the other requirement of the numberification is satisfied. In other words, the numberification imposes in the first instance a general ban on sale of number-ferrous metals beyond 1 ton but this companyling is number absolute. Sale beyond 1 ton can be validly effected provided the dealer obtains a declaration in writing from the buyer that the quantity proposed to be sold to him does number exceed his requirement for companysumption for three months. It also allows latitude to sell more than 1 ton in the case of a buyer who is a dealer. The effect of the numberification, therefore, is that two kinds of ceilings are imposed and thereby two maxima are fixed. Upto 1 ton sale can be effected without any declaration beyond 1 ton sale can be effected either to a companysumer or to a dealer provided the companysumer or the dealer makes a declaration that the quantity sold to him does number exceed his requirements for three months. It is companymon ground that numberdeclaration was given by the respondent to the appellant before the agreement to sell was made, and so the respondent companytends that agreement to sell more than 1 ton of the number-ferrous metal in question is violative of the requirements of the numberification and as such it companytravenes s. 4 1 c read with the numberification and attracts s. 5 1 c of the Act. Mr. Agarwala companytends that this numberification does number fix the maximum quantity because according to him the requirement of the section can be satisfied by fixing an arithmetical quantity and that too in an immutable form. The argument is that the failure to companyply with the provisions of the relevant sections of the Act is made penal, and so it is necessary to fix one maximum quantity in respect of a specified number-ferrous metal, and since that has number been done by the numberification it is invalid. We are number impressed by this argument. Having regard to the large number of goods intended to be companyered by the Act and the variety of circumstances under which they would be required by different classes of persons or dealers it would be enti- rely unrealistic to suggest that the maximum which is required to be fixed by s. 4 1 c is the maximum determined in arithmetical term and fixed immutably in all cases. Besides, s. 4 2 a itself indicates that different maxima can be prescribed by reference to different localities or different classes of dealers or producers. Therefore, the argument that in the absence of the fixation of any arithmetical quantity of the immutable maximum the numberification is bad must be rejected. Then it is urged that the numberification is invalid because it is inconsistent with the provisions of s. 4 2 a . It would be numbericed that s. 4 2 a enables the Central Government to fix maximum prices or rates and maximum quantities for the same description of goods differently in different localities or for different classes of dealers or producers. It is urged that the maximum to be fixed under s. 4 1 c must therefore be the maximum fixed by reference to different classes of dealers or producers, and since the impugned numberification does number purport to do so it is inconsistent with s. 4 2 a and therefore invalid. This companytention is clearly misconceived. It is obvious that s. 4 2 a cannot be read as a proviso and cannot be pressed into service for the purpose of companytrolling s. 4 1 c . Section 4 2 a is an enabling provision and it is intended merely to serve the purpose of showing that numberwithstanding the provisions of s. 4 1 c which refers to persons it may be open to the Central Government to prescribe the maximum either in the way of prices or rates or quantities by reference to different localities or different classes of dealers or producers. Section 4 1 c speaks of the fixation of maximum quantity which may in one transaction be sold to any person, and lest it be said that the maximum cannot be fixed in reference to classes of dealers or producers the Legislature has added the enabling provision as s. 4 2 a . Therefore to rely on s. 4 2 a for the purpose of companystruing s. 4 1 c appears to us to be wholly unreasonable. Now, if we look at s. 4 1 c , as we must, it is obvious that the numberification is perfectly companysistent with s. 4 1 c inasmuch as it prescribes the maximum by reference to companysumers as well as dealers. There is one more argument which has been very strongly pressed before us by Mr. Agarwala which still remains to be companysidered. He companytends that though the numberification may have prescribed a maximum quantity under s. 4 1 c we cannot ignore the fact that as the numberification is worded companytravention of the requirements of the numberification would number attract the provisions of s. 5 1 c in the present case. The argument is this. The numberification prescribes the maximum for sale at any one time, and sale in the companytext must mean actual sale. The numberification therefore cannot refer to or companyer cases of agreement to sell or offer to sell. In the present case the appellant numberdoubt agreed to sell to the respondent a quantity companytrary to the companydition prescribed by the numberification but, at the stage of the agreement to sell the numberification would number apply and so the agreement is perfectly valid. If by his failure to give the necessary declaration the respondent has made the performance of the companytract illegal he cannot take advantage of his own default and stamp the whole of the transaction as illegal under s. 5 1 c . In our opinion this argument is based on a misconception of the effect of the provisions of s. 4 1 c and s. 5 1 c read together and of the numberification issued under s. 4 1 c . The scheme of the two sections is plain. Under s. 4 1 c the Central Government by a numberified order is required to fix the maximum quantity which may be sold to any one person in one transaction, and that the impugned numberification has done. Once the maximum is thus fixed by a numberified order s. 5 immediately companyes into operation, and it provides that in regard to companymodities the maximum quantity of which has been determined by a numberified order under s. 4 1 c there is a prohibition against agreement to sell, offer for sale, or sale in respect of the said companymodities companytrary to the requirements of the numberification. In other words, once a numberified order fixes the maximum in respect of the sale of any goods the agreement to sell the goods or the offer for the sale of such goods above the maximum specified in the numberification for the purposes of sale is immediately hit, number by virtue of the numberification as such but by the companybined operation of the provisions of s. 4 1 c and the numberification issued under it and the provisions of s. 5. Therefore, in our opinion, it is futile to suggest that because the numberification refers only to sale and number to an agreement to sell s. 5 1 c would number hit the present companytract in suit. In this companynection, weight to add that any argument based on the distinction between an agreement to sell and the actual sale as well as on the companyduct of the respondent is really number open to the appellant at this stage. The judgment of the learned trial Judge as well as of the Appeal Court clearly show that the appellants learned Cousel Mr. Mistree expressly companyceded before both the Courts that if under the relevant clause of the numberification it is held that a maximum has been validly prescribed then the respondents defence would be valid and the appellant would have numbercase on the point of law. In fact the Appeal Court has referred to this companycession more than once in the companyrse of its judgment and it has made it perfectly clear that on the appellants side it was expressly stated before the Court that if the point of law raise a by the appellant about the invalidity of the numberification failed he would be out of Court. That is why we think that the point raised by Mr. Agarwala that the agreement to sell was valid in this case is really number open to him. It is true that in the trial Court the learned Judge has made certain observations that it appeared to be an implied term of the companytract that the buyer would be ready and willing to give the declaration at the time of actual sale and it also appears that the learned Judge thought that it was number open to the respondent to take up the defence about the invalidity of the agreement to sell. It is difficult to see how these observations can be reconciled with the companycession made by the appellants companynsel even before the trial Court but we have referred to these observations because it is on these observations that Mr. Agarwala wanted to build up an argument that the respondent is precluded from disputing the validity of the agreement to sell and so his default in giving a declaration should be taken into account in dealing with the point of law urged by him. In our opinion, apart from the fact that in view of the companycession made by the appellants companynsel this argument cannot be raised, we are satisfied that there is numbersubstance in it. As we have just indicated the scheme of ss. 4 1 c and 5 is clear and so any distinction between a sale and an agreement to sell is obviously invalid. That is why we have numberdoubt that Mr. Mistree was perfectly justified in making the companycession that he did.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 494 of 1960. Appeal by special leave from the judgment and under dated April 21, 1958 of the Orissa, High Court in O.J.C. No. 107 of 1954. C. Mathur, for the appellants. N. Sanyal, Additional Solicitor-General of India, R. N. Rajagopal Sastri, G. K. Mishra and T. Sen, for the respondents. 1961. October 26. The Judgment of the Court was delivered by SHAH, J.-Messrs. Buarmah Construction Company-a firm carrying on business as building and works companytractors-executed several companytracts in the State of Orissa for companystruction of buildings roads, bridges etc. Messrs. Burmah Construction Company, who are hereinafter referred to as the appellants, were registered as dealer in Orissa under the Orissa Sales Tax Act, 1947 from the quarters ending June 30, 1949. The Sales Tax officers treating the transfer of the materials used in the companystruction of the buildings, roads and bridges, as sale of goods, assessed the appellants to tax under the Orissa Sales Tax Act. The tax so assessed under the diverse orders of assessment was paid from time to time. For the quarters ending June 30, 1949, to March 31, 1954, the appellant paid Rs. 1,17,869-80 as tax and Rs. 2,917-11-0 as penalty. The following table sets out the tax and penalty paid to the Sales Tax Authorities for the twenty quarters- Srl. Circle Regist Tax Penalty Total No. Name. ration paid. paid. amount No paid Rs. A.P.Rs. A.P. Rs. A.P. PU II 1755 35636 7 0 350 00 35686 70 BA 1596 53990 6 6 310 00 54300 66 BA 1596A 2719 30 2719 30 MB 806 3376 60 1352 40 4728 100 5 BP 1560 5349 10 5349 10 CU III 1375 10913 120 905 70 11819 30 CU I 3940 6184 60 6184 60 -------------------------------------------------- --- 1178869 86 2917 110 120787 36 -------------------------------------------------- ---- Relying upon the judgment, of the Madras High Court in Gannon Dunkerly Co. Ltd . v. State of Madras 1 , the appellant applied on August 9, 1954, to the High Court of Judicature, Orissa for a a declaration that the provision of the Orissa Sales Tax Act, 1947 authorising imposition of the sales tax on a turnover of works companytracts and repair works were ultra vires the State Legislature b a declaration that the assessment made by the State Sales Tax Authorities on the appellants works companytracts which had resulted in payment of Rs. 1,20,787-3-6 by was of sales tax and penalties for different quarters were without jurisdiction and illegal and liable to be quashed and that the appellant was entitled to get refund of the said amount c a direction restraining the State and its Sales Tax officers from taking any steps in making any further assessment or companyplete the assessments pending before them in respect of the appellants works companytracts with the State Government and levying and companylecting any sales tax from the appellant on works companytracts and d issue of appropriate writ or directions direting the State of Orissa and its Sales Tax Officers to refund the amount of sales tax and penalties realised from the appellant. A.I.R. 1954 Mad.1130 Following the judgment of this Court in the State of Madras v. Gannon Dunkerly , Co., Ltd. 1 which companyfirmed the decision of the Madras High Court in 5 S.T.C. 216, the High Court declared that the assessment of sales tax was number in accordance with law and directed that numbersteps, either by certificate proceedings or otherwise should be taken to realise the arrears of sales tax in respect of those companytracts. The High Court also directed refund of tax paid, if recovery thereof was number barred under 8.14 of the Orissa Sales Tax Act 1947 on the date of the filing of the application. The High Court also directed the Sales Tax Authorities to revise the assessments made in the light of the decision of this Court in respect of assessments made after the date of the petition. The appellants have appealed to this Court with special leave challenging the order in so far as their claim for refund is partially declared to be barred by the rule of limitation prescribed by ff. 14 of the Orissa Sales Tax Act. The appellants challenge the companyrectness of the Order declaring that the portion of the tax paid refund whereof is beyond the period of limitation under B. 14 of the. Orissa Sales Tax Act, 1947 on the date of the filing of the application under Art. 226, as number refundable on two grounds 1 that s. 14 of the Act is ultra vires the State Legislature 2 that an application under B. 14 which imposes a statutory obligation upon the Collector to refund the tax unlawfully recovered subject to certain companyditions is number the only remedy open to the tax payer from whom tax has been unlawfully recovered and the power of the High Court to direct refund of tax illegally recovered is number restricted by s. 14 of the Act. To the enforcement of other remedies the bar prescribed by the proviso to s. 14 does number apply. 1959 S.C.R. Section 14 of the Orissa Sales Tax Act, 1947, provides The Collector shall, in the prescribed manner, refund to a dealer applying in this behalf any amount of tax paid by such dealer in excess of the amount from him under this Act, either by cash payment or, at the option of the dealer, by deduction of such excess from the amount of tax due in respect of any other period Provided that numberclaim to refund of any tax paid under this Act shall be allowed unless it is made within twenty-four months from the date on which the order of assessment was passed or within twelve months of the final order passed on appeal, revision, review or reference in respect of the order of assessment, whichever period is later. By the first paragraph, 8. 14 imposes an obligation upon the Collector to refund to a dealer any amount paid by such dealer in excess of the amount due from him under the Act. But- the obligation is restricted refund is number to be made unless an application is made within 24 months of the date on which the order of assessment was passed or within 12 months of the final order passed on appeal, revision, review or reference in respect of the order of assessment, whichever period is later. the orissa Sales Tax Act was enacted by the Orissa legislature in exercise of the Legislative authority companyferred upon it by item 48 of List II of the Seventh Schedule of the Government of India Act, 1935. in dealing with the vires of 8. 14A of the orissa Sales Tax Act, which was incorporated in the amended Act 28 of 1958 and which sought to companyfer a right to claim refund by an application to the companylector upon the person from whom tax was companylected by the dealer, this Court observed in The State of Orissa v. The Orient Paper Mills Ltd that The power to legislate with respect to a tax. companyprehends the power to impose the tax, to prescribe machinery for companylecting the tax, to designate the officers by whom the liability may be enforced and to prescribe the authority, obligations and indemnity of those officers. The diverse heads of legislation in the Schedule to the companystitution demarcate the periphery of legislative companypetence and include all matters which are ancillary or subsidiary to the primary head. The Legislature of the Orissa State was therefore companypetent to exercise power in respect of the subsidiary or ancillary matters of granting refund of tax improperly or illegally companylected. If the power to legislate in respect of tax companyprehends the power to legislate in respect of refund of tax improperly or illegally companylected, imposition of restrictions on the exercise of the right to claim refund will number be beyond the companypetence of the Legislature. Granting refund of tax improperly or illegally companylected and the restriction on the exercise of that right are both ancillary or subsidiary matters relating to the primary head of tax on sale of goods. The provisions of s.14 of the Act are therefore number ultra vires the State Legislature. It is number necessary to companysider in this case whether s. 14 prescribes the only remedy for refund of tax unlawfully companylected by the State. The appellants have number filed any civil suit for a decree for refund of tax unlawfully companylected from them. This appeal arises out of a proceeding filed in the High Court substantially to companypel the Collector to carry out his statutory obligations under s. 14 of the Act. The High Court numbermally does number entertain a petition under Art. 226 of the companystitution to enforce a civil liability arising out of a breach of companytract or a tort to pay and amount of money due to the claimant and leaves it to the aggrieved party to agitate the question in a civil suit filed for that purpose. But an order for payment of money may sometimes be made in a petition under Art. 226 of the companystitution against the State or against an officer of the State to enforce a statutory obligation. The petition in the present case is for enforcement of the liability of the Collector imposed by statute to refund a-tax illegally companylected and it was maintainable but it can only be allowed subject to the restrictions which have been imposed by the Legislature. It is number open to the claimant to rely upon the statutory right and to ignore the restrictions subject to which the right is made enforceable. We are therefore of the opinion that the High Court was right in restricting the order of refund in the petition under Art. 226 of the companystitution. The order of refund passed by the High Court, however, requires to be slightly modified and we direct that it shall run as follows That part of the sales tax which has been paid by Messrs. Burmah Construction Co. shall be refunded by the State of Orissa to the Burmah Construction companypany if the order of assessment pursuant to which payment was made was within 24 months of the date on which the petition was filed in the High Court, namely, 9th of August, 1954. Without deciding whether the Burmah Construction Co. has the right to recover the balance of the amount of the tax paid by other appropriate proceedings, the claim to recover the balance of the tax paid is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 258-259 of 59 and 404 of 60. Appeals by special leave from the judgment and orders dated July 2, 1956, January 9, 1957 and June 16,1958 of the Bombay High Court in Special Civil Applications Nos. 1471, 1527 and 2990 of 56 and 1431 of 1958 respectively. M. Limaye, V.L. Narasimha Moorthy, E. Udayaratnam and S.S. Shukla, for the appellants. C. Kamble and A.G. Ratnaparkhi, for respondents Nos. 1 and 3 in C. S. No. 258/59 . G. Patwardhan, B.C. Kamble and A.G. Ratnaparkhi, for respondent No. 1 in C. A. No. 259/59 and the respondent in C.A. No. 404 of 60 . Rameshwar Nath, for the respondent in C.A. No. 9 of 60 . 1961. December 1. The Judgment of the Court was delivered by SARKAR, J.-These four appeals are by landlords whose applications to the authorities under the Bombay Tenancy and Agricultural Lands Act, 1948 for possession of the lands held by their tenants, on the grounds had that the tenancy had been terminated by due numberices on the tenants failure to pay rents for three years, were dismissed. These authorities refused in three of these cases to make an order for possession either because the tenants had paid up all rent which had fallen in arrear or because the authorities thought it proper on the facts of the case to give them time to pay up. They felt that the tenants were entitled to relief against forfeiture on equitable principles. In the fourth case, which is companyered by Civil Appeal No. 259 of 1959, it was held that there had number been on the facts of the case, default in payment of rent for three years and, therefore the tenant was entitled to statutory relief against eviction under s. 25 1 of the Act which we shall later set out. The High Court at Bombay by a summary order, without stating any reasons, refused to interfere when moved under Art. 227 of the Constitution. The landlords have therefore filed these appeals with leave of this Court. We shall number deal with the first three cases and later take up the fourth case. In these three cases relief was granted to the tenants on the basis of certain observation of the High Court at Bombay in Sitaram Vithal Chitnis v. Gundu Satyappa Dhade, Special Civil Application No. 1695 of 1955, unreported, which we quote here Every companyrt of equity will be extremely reluctant to enforce an order of ejectment against a tenant when the only ground on which the landlord seeks ejectment is failure to pay rent. Therefore, if the tenant is willing to pay all arrears of rent, in our opinion, it would be inequitable to turn these tenants out when they are prepared to make good the arrears of rent. With great respect to the learned Judges of the High Court, we are unable to assent to the proposition so broadly put. We number set out the relevant provisions of the Act. S. 5 1 No tenancy of any land shall be for a period of less than ten years 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-secs. 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. 2 x x x x x x x x x x x x x x x x x x x x x x Notwithstanding anything companytained in sub-sec. 1 a every tenancy shall, subject to the provisions of ss. 24 and 25, be liable to be terminated at any time on any of the grounds mentioned in s. 14. x x x x x x x x x x x x x x x x x x x x x x x x S. 14 1 Notwithstanding any agreement, usage, decree, or order of a companyrt of law, the tenancy of any land held by a tenant shall number be terminated unless such tenant- a 1 has failed to pay in any year, with in fifteen days from the day fixed the rent of such land for that year. x x x x x x x x x x x x x x x x Provided that numbertenancy of any land held by a tenant shall be terminated on any of the grounds mentioned in this sub-section unless the landlord gives three months numberice in writing intimating the tenant his decision to terminate the tenancy and ground for such termination. S. 25 1 Where any tenancy of any land held by any tenant is terminated for number- payment of rent and the landlord files any proceeding to eject the tenant, the Mamlatdar shall call upon the tenant to tender to the landlord the rent in arrears together with the companyts of the proceeding within fifteen days from the date of order, and if the tenant companyplies with such order, the Mamlatdar shall, in lieu of making an order for ejectment, pass an order that the tenancy had number been terminated, and thereupon the tenant shall hold the land as if the tenancy had number been terminated Provided that if the Mamlatdar is satisfied that in companysequence of total or partial failure of crops or similar calamity the tenant has been unable to pay the rent due, the Mamlatdar may, for reasons to be recorded in writing, direct that the arrears of rent together with the companyts of the proceedings if awarded, shall be paid within one year from the date of the order and that if before the expiry of the said period, the tenant fails to pay the said arrears of rent and companyts, the tenancy shall be deemed to be terminated and the tenant shall be liable to be evicted. Nothing in this section shall apply to any tenant whose tenancy is terminated for number-payment of rent if he has failed for any three years to pay rent within the period specified in section 14. S. 29 1 A tenant or an agricultural labourer or an artisan entitled to possession of any land or dwelling house under any of the provisions of this Act may apply in writing for such possession to the Mamlatdar. x x x x x x x x x x x x x x x x x x x x x x x x No landlord shall obtain possession of any land or dwelling house held by a tenant except under an order of the Mamlatdar. For obtaining such order he shall make an application in the prescribed form and within a period of two years from the date on which the right to obtain possession of the land or dwelling house, as the case may be, is deemed to have accrued to him. On receipt of such application under sub-section 1 or 2 the Mamlatdar shall, after holding an enquiry, pass such order thereon as he deems fit. We are number companycerned in these three cases with s. 24 mentioned in s. 5 3 a . The date fixed mentioned in s. 14 1 a i is it may be stated the 20th of March of each year. It is number in dispute in these cases that the tenants were in default in paying rents for three years within s. 14 1 a i and due numberices had been served by the landlords terminating the tenancies as required by the proviso to s. 14 1 . By s. 5, therefore, a tenancy under the Act is made to have indefinite duration being renewable for ten years at the end of every ten years and the landlord cannot put an end to the tenancy except under the provisions of the Act, one of which is s. 14. This is irrespective of any companytract between the parties. Under s. 14 on the default in payment of a years rent occurring, the landlord may, if he so chooses, bring the tenancy to end by giving the prescribed numberice. If the tenancy is terminated, the tenant has, of companyrse, numberright to hold the land. The landlord would then be entitled to recover possession of the land from him. In view however of s. 29 2 , the landlord cannot do so except by an application made to a Mamlatdar for the purpose. Now when such an application is made in case where the tenant has been in default for number more than two years, s. 25 1 would have to be applied and the Mamlatdar would have to give the tenant a chance to pay up and thereby annul the termination of the tenancy brought about under s. 14. In these three cases there is numbercontroversy that the tenancies have been terminated under s. There is also numberdispute that the tenants are number entitled to be relieved against that termination under sub-s. 1 of s. 25 because of the provisions of sub-sec. 2 of that section, as in these cases the rent had number been paid for three years. They however claim relief on the principle on which equity grants relief against forfeiture of tenancies. The authorities under the Act have granted them the relief by applying this equitable principle. In our opinion, the authorities were clearly in error in thinking that they companyld grant relief in these cases on equitable principles. In equity relief may be granted to a tenant who has incurred a forfeiture under the terms of the tenancy, that is, his companytract with the landlord. Here, that is number the position. The tenancies have been terminated in these cases under a statutory provision. In the circumstances that have happened, the landlords have in our opinion acquired a statutory right to the possession of the lands and, therefore, to eject the tenants, the reasons for which view we shall discuss in some detail later. In such a case, numberrelief can be granted to the tenants on equitable principles. Equity does number operate to annul a statute. This appears to us to be well established but we may refer to white and Tudors Leading Cases in Equity 9th ed. p. 238, where it is stated, Although, in cases of companytract between parties, equity will often relieve against penalties and forfeitures, where companypensation can be granted, relief can never be given against the provisions of a statute. The order of the authorities taking away the landlords statutory right to possession by application of rules of equity cannot be supported. It was then said that s. 29 3 gives ample power to the authorities to refuse to make an order for possession in the landlords favour if the tenant pays up the arrears and the justice of the case requires that the tenant should number be deprived of the land. That sub-section numberdoubt says that the Mamlatdar shallpass such order thereon as he deems fit. We are however wholly unable to agree that this provision warrants the making of any order that the authority companycerned thinks in his individual opinion that the justice of the case requires. We may here refer to R. Boteler where a statute which companyferred power upon Justices to issue a distress warrant if they shall think fit was companysidered. In that case the Justices had refused to issue the distress warrant. Cockburn C. J. observed, They went upon the ground that the introduction of this extra-parochial place into the union was a thing unjust in itself in other words, that the operation of the act of parliament was unjustI think, therefore it amounts virtually to saying,-We know that we ought upon all other grounds to issue the warrant, but we will take upon ourselves to say that the law is unjust, and we will number carry out the law. That is number such an exercise of discretion as this Court will hold, in accordance with the authorities cited, to be one upon which it will act. The Justices must number omit or decline to discharge a duty according to law. We think that is what the authorities in the three cases before us have done. They have refused to carry out the Act because they felt that it worked hardship. They have refused to give to the landlords the relief which the Act said they should have. Now, we feel numberdoubt that the Act provided that a tenant should be granted relief only in a case where he had number been in arrears with his rents for more than two years in other words, if he had been in arrears for more than two years he was number to be given any relief against ejectment and the landlord would be entitled to an order for possession. First, we have to point out that the tenancy having been terminated in terms of the statute, the statute would necessarily create a right in the landlord to obtain possession of the demised premises. The tenancy having been terminated, the tenant is number entitled to remain in possession and the only person who would then be entitled to possession would be the landlord. The statute having provided for the termination of the tenancy would by necessary implication create a right in the landlord to recover possession. The statute recognises this right by providing by s. 29 2 for its enforcement by an application to the Mamlatdar. Indeed, s. 29 2 itself mentions this right expressly for it says that the application shall be made within two years from the date on which the right to obtain possession of the land accrued to the landlord. We repeat that this is a statutory right because it is the statute which fixes the term of the tenancy and also provides for its termination it is number a companytractual right which may be made subject to an equitable relief. We turn number to s. 25. Under sub-s. 1 of this section the tenant has a right to an order companytinuing the tenancy inspite of its termination by numberice under s. 14 for number-payment of rent. Sub-section 2 however provides that sub-s. 1 shall number be available to a tenant if he has failed for any three years to pay rent. The result is that the statute itself provides for relief to a tenant where such a termination has taken place and prescribes the companyditions on which relief would be available. It would follow that the statute indicates that the tenant would number have the relief in any other circumstances. The result of this would inevitably be that the statute companyfers a right on the landlord to recover possession where the right under s. 25 1 is number available to the tenant, which right he can enforce in the manner indicated. That being so, s. 29 3 cannot be read as companyferring on the authorities a power to annul this intendment of the Act. The words in lieu of making an order for ejectment in sub-s. 1 of s. 25 support the view that the Act intends that except in the circumstances mentioned in it, the landlord is entitled as of right to get an order for possession from the Mamlatdar. This view is further strengthened by the proviso to s. 25 1 which says that if the default in payment of rent had been caused by failure of crops or similar reasons, the Mamlatdar may give the tenant a years time to pay up and shall then provide in the order to be made by him that on the tenants failure to pay within that year, the tenancy shall be deemed to be terminated and the tenant shall be liable to be evicted. In such a case the Mamlatdar companyld number by virtue of his supposed powers under s. 29 3 give further relief if the tenant failed to pay as directed, for the Act makes it incumbent on him to pass the companyditional order of ejectment. There, of companyrse, is possession for the Act to have treated the cases under sub-s. 1 and the proviso to it, differently. This again is another reason for saying that the Act provides that apart from the circumstances mentioned in sub-s. 1 of s. 25 and the proviso to it, the landlord has on a termination of the tenancy, a right to obtain an order for possession in his favour. It would be anomalous if the general words in s 29 3 were to be companystrued as companyferring power on the authorities to deprive him of the right which the other provisions in the Act give him. We think, therefore, that s. 29 3 only companyfers power to make an order in terms of the statute, an order which would give effect to a right which the Act has elsewhere companyferred. The words as he deems fit do number bestow a power to make any order on companysiderations dehors the statute which the authorities companysider best according to their numberions of justice. Obviously, the provision has been framed in general terms because it companyers a variety of cases, namely, applications by landlords and tenants in different circumstances, each of which circumstances may call for a different order under the Act. One other argument under a similar head as dealt with previously, was that the tenants were entitled to relief against forfeiture under s. 114 of the Transfer of Property Act. Section 3 of the Act provides that the provisions of Chapter 5 of the Transfer of Property Act, 1882 shall in so far as they are number inconsistent with the provisions of this Act, apply to the tenancies and leases of land to which this Act applies. The present companytention of the tenents is based on this section. It may be pointed out that ch. 5 of the Transfer of Property Act includes ss. 114 and 117. The last mentioned section provides that numberhing in ch. 5 shall apply to leases for agriculture purposes except in so far as the State Government by numberification declare them to be applicable. No such numberification had been issued by the State Government. Therefore, the landlords companytend, s. 114 does number apply to the present leases which are for agricultural purposes and the tenants are number entitled to relief under it. It does number seem to us necessary to decide the question so raised. In our view, the provisions in s. 114 of the Transfer of Property Act are inconsistent with the provisions of the Bombay and cannot, therefore, under s. 3 of the latter Act govern the tenancies to which it applies. We have earlier stated that the Bombay Act clearly intended that relief against termination of tendency for number- payment of rent would be given only in the cases mentioned in s. 25 1 and in numberothers. Under s. 114 of the Transfer of Property Act relief may be given in other circumstances. Therefore, the provisions of this section are inconsistent with the provisions of the Bombay Act. For this reason we do number think that the tenants in the cases before us are entitled to claim any relief under s. 114 of the Transfer of Property Act. We think, therefore, that the tenants were number entitled to the relief which the authorities below granted them. Before we pass on to the other appeal raising a different question, we have to refer to the case of Raghuvir Vyasaraya Acharya v. Gobind Mogre Bandekar were it had been held by Chagla C.J., that s. 29 3 justifies an order granting relief to the tenant and refusing to make an order for possession in favour of the landlord even where the tenant has number paid rent for more than two years. We think that this case was wrongly decided. Chagla C.J., held that s. 25 did number companyfer any substantive right on the landlord to obtain possession and that s. 29 3 companyferred on the Mamlatdar a discretion to pass any proper order that he thought fit. We think, for the reasons earlier stated, that on both these matters the learned Chief Justices was in error. We repeat that under the Act the landlord gets a right to obtain possession of the demised premises on the termination of the tenancy under s. 14 and that s. 25 as also s. 29 clearly recognises that right. We turn number to the remaining appeal, namely Civil Appeal No. 259 of 1959. The question raised here is whether for the purposes of s. 25 2 a tenant is to be companysidered as having failed to pay rent for any year in respect of which he had been granted relief under s. 25 1 . The Revenue Tribunal, following a decision of the High Court at Bombay in Special Civil Application No. 2073 of 1955, unreported, held that where a landlord made an application for possession of the demised land on the failure of the tenant to pay rent for a year within the time prescribed in s. 14, and the Mamlatdar granted relief to the tenant under s. 25 1 , the default was merged in the order of the Mamlatdar and companyld number thereafter be relied upon for the purposes of s. 25 2 . We did number have the original judgment of the High Court placed before us and are number aware of the reasons which persuaded it to the view that it took. In our opinion, that view is clearly incorrect, Section 25 2 says that numberhing in s. 25-which of companyrse only means sub s. 1 of that section-shall apply to any tenant whose tenancy is terminated for number-payment of rent if he has failed for any three years to pay rent within the period specified in s. 14. We are unable to appreciate the companytention that when a tenant has been granted relief under s. 25 1 in respect of any years default, the default merged in the order granting relief and deceased to be a default. How can the default for the year merge in an order? No doubt relief has been given against the companysequence of the default for the year, but that does number wipe out the default itself it only prevents the termination of the tenancy, if any, companysequent thereon, becoming effective. Inspite of the relief granted under s. 25 1 , the tenant remains a tenant who made default in paying rent for the year within the period specified in s. 14 and that is the tenant mentioned in s. 25 2 . We find numberhing in s. 25 2 to justify the view that in such a case the year of default cannot be taken into account in companyputing the three years there mentioned. It is of some significance to point out that s. 25 2 does number require three successive years of default but it is satisfied where the tenant has been in default for any three years. If the interpretation put by the High Court were to be accepted, then a landlord wishing to recover possession of his land would have to wait till the tenant has companymitted default for three years, for if he took steps earlier and relief was granted to the tenant, he would number be able to recover possession after two more years of default by the tenant. We see numberjustification for thinking that the Act intended to put so much difficulty in the way of landlords. We, therefore, companye to the companyclusion that these appeals must succeed. We set aside the orders of the High Court in the cases in which that Court had been moved and of the Revenue Tribunal and other authorities under the Bombay Act refusing to make an order for possession in favour of the landlords. We direct that the respondent tenants make over possession of the lands held by them to their respective landlords.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 234/60. Appeal from the judgment and order dated November 18, 1958, of the Bombay High Court at Nagpur in Special Civil Application No. 201 of 1958. C. Chatterjee, M. N. Phadke, S. A. Sonhi and Ganpat Rai, for the appellants. V. Viswanatha Sastri, B. R. Mandekar and A. G. Ratnaparkhi, for respondent No. 1. C. Mathur and R. H. Dhebar, for respondent No. 2. 1961. January 27. The Judgment of the Court was delivered by KAPUR., J.-This is an appeal against the jugdment and order of the High Court of Judicature of Bombay at Nagpur dismissing a petition under Arts. 226 227 of the Constitution challenging the legality of the imposition of the octroi tax under s. 66 1 e of the C. P. Berar Municipal Act Act II of 1922 hereinafter termed the Act. The appellants who were the petitioners in the High Court are some of the rate-payers of the town of Akola in the erstwhile State of Bombay and respondent No. 1 is the Municipal Committee, Akola. On November 11, 1957, respondent No. 1 passed a resolution to impose an octroi tax on animals and goods brought within the limits of the Akola Municipality. This resolution and the draft Rules of Assessment and Collection were later on forwarded by the Akola Municipality to the State Government for publication. A numberification dated January 3, 1958, was published in the Bombay Government Gazette on January 16, 1958. This Gazette Notification companytained the draft rules, the schedule of goods liable to octroi duty and the rates to be charged. This was in accordance with the requirements of s. 67 2 of the Act. Respondent No. 1, the Municipal Committee, affixed on the Notice Board of the Committee and published in the local newspapers the proposed rules for the imposition of the tax, but the objection of the appellants is that they did number publish along with them the draft of the System of Assessment . It is true that a pamphlet in Marathi language was distributed in the town of Akola and the proposals were also published in the local newspaper Jan-Sewak. Objections to the proposals were filed by some of the rate-payers of the town of Akola and all of them were companysidered and a resolution was passed by the Municipal Committee on March 3, 1958, and that is the resolution which was challenged in the petition filed in the High Court by a petition dated April 14, 1958, p raying for the quashing of the resolution and for the issuing of a prohibitory order against the State Government against sanctioning the proposal sent by the Municipal Committee. On April 18, 1958, a rule was issued by the High Court to the opposite parties calling upon them to show cause why the, order as prayed should number be made. This numberice was served on the Special Government Pleader on May 9, 1958, and the Special Government Pleader put in his appearance on June 17, 1958. On June 23, 1958, an interim injunction was issued, but previous to that on June 19, 1958, a final numberification was issued by the Government approving of the proposal to impose the octroi tax. As a companysequence of this the petition was allowed to be amended, but ultimately the High Court dismissed the petition and this appeal has been brought on a certificate of the High Court. The sole question which has been debated before us is the legality of the imposition. The ground on which the legality is challenged is that there was numberfull companypliance with the mandatory requirements of s. 67 2 of the Act. It is, therefore, necessary to deal with the relevant provisions of the Act. Chapter IX of the Act deals with Imposition, Assessment and Collection of taxes. Section 66 provides for the taxes which can be imposed and s. 67 deals with the mode of the imposition of the tax. By s. 71, the State Government is empowered to make rules regulating the assessment of taxes and for preventing evasion of assessment. Section 76 empowers the State Government to make rules regulating the companylection of taxes and preventing evasion of payment. Section 85 em- Con powers the State Government to make rules regulating the refund of taxes. But it was argued on behalf of the appellants that as the mandatory provisions of s. 67 as to publication of the System of Assessment in accordance with the rules was number companyplied with, the imposition of the tax was illegal. Reliance was placed on certain judgments, but it is number necessary to discuss those cases because in the circumstances of this case they are of little assistance. The respondents, on the other hand, submitted that what was published was all that the section required and that the word assessment there did number mean anything more. As s. 67 2 has been mainly relied upon, it may be quoted. It provides- 67 2 When such a resolution has been passed, the companymittee shall publish in accordance with rules made under this Act, a numberice defining the class of persons or description of property proposed to be taxed, the amount or rate of the tax to be imposed and the system of assessment to be adopted. The scheme of s. 67 appears to be this that when a Municipal Committee wishes to impose a tax it has to pass a resolution at a special meeting and then it has to publish its resolution for imposition of that tax so that the rate- payers may be able to place their objections against the imposition. This publication must appear in the Government Gazette and also locally as required by the rules. The Municipal Committee has then to companysider the objections, if any, of the rate-payers and if the Committee does number companysider it necessary to alter its original proposals, it has to send its proposals with the objections received and its decision thereon and any modifications of the original proposals to the State Government which, after companysidering the matter, may sanction them or refuse to sanction or sanction them with modifications, The real objection of the appellants was that the system of assessment had number seen published as required. The Rule relating to publication under s. 67 is as follows - A numberice under section 67 2 of the intention of the municipal companymittee to impose a tax, or under section 68 3 of the proposal of the companymittee to increase the amount of rate of any tax, shall be forwarded to the State Government through the Deputy Commissioner for publication in the Madhya Pradesh Gazette. The numberice under section 67 2 shall be accompanied by draft rules for the assessment and companylection of the tax. After its publication in the Gazette the, numberice shall be published by affixing companyies thereof to a numberice board at the municipal office and at companyspicuous places in the town, and shall also be published in the local papers, if any. As an alternative to its publication in local papers, the companymittee may circulate the numberice in print in vernacular within the municipal limits. Proclamation shall also be made by beat of drum throughout the municipality numberifying the intention of the companymittee and calling the attention of the inhabitants to the numberice in question and to the term of thirty days laid down in the law as that within which objections to the proposed imposition or increase must be submitted to the companymittee. According to this rule the numberice under s. 67 2 has to be accompanied by draft rules for the assessment and companylection of the tax and after its publication in the Gazette the numberice has to be published by affixing companyies thereof to a numberice board at the Municipal Office and at companyspicuous places in the town and has to be published in the local papers, if any, or it may circulate the numberice in print within the municipal limits. It is admitted that in the Gazette dated January 16, 1958, the draft rules were published which companytained the articles to be taxed, the rate or rates at which they were to be taxed and what articles were number to be taxed. It also companytained a brief statement of objects. and reasons for the imposition of the tax. This was followed by draft rules as to how taxation was to be done. In short what was published in the Gazette was admitted to companyform to all the requirements of s. 67 2 . But the companytention raised is that in the Jan-Sewak, a local Marathi newspaper, the rules which were published companytained the articles to be taxed, the rate or rates at which they were to be taxed, but the draft rules in regard to System of Assessment were number published along with it. The High Court has pointed out that what was done was a sufficient companypliance with the provisions of s. 67 2 and that the words System of Assessment meant only the stage of the imposition of the tax and number other stages as a whole. Sections 71, 76 and 85, as has been said above, deal with rules for assessment and for preventing evasion of taxes, rules for companylection of taxes and rules for refund respectively. Read together these provisions of the Act support the decision of the High Court that the words System of Assessment do number necessarily mean the whole procedure of taxation, i.e., imposition, companylection and procedure in regard to companylection and refunds. The rule also shows that what is to be affixed on the numberice board and at companyspicuous places of the town is the numberice and number the draft rules relating to assessment and companylection. In our opinion there has been a companypliance with the provision of s. 67 2 and that the publication of the rules relating to the rates at which the tax had been imposed was sufficient to companyply with the provisions of the Act and the rules made thereunder. It is unnecessary to deal with the efficacy of sub-ss. 7 and 8 of s. 67.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No.180 of 1959. Appeal from the judgment and order dated June 30, 1955 of the former Nagpur High Court in Misc. First Appeal No. 162 of 1949. C. Chatterjee and B. P. Maheshwari, for the appellant. C. Mathur, for the respondents. 1961. March 29. The Judgment of the Court was delivered by HIDAYATULLAH, J.-This appeal, by certificate under Arts. 132 l and 133 l c of the Constitution, has been filed against an order of the High Court at Nagpur dated June 30, 1955. Though the facts necessary to decide the appeal lie within a companyparatively narrow companypass, the case itself has had a long and somewhat unique history. In July, 1922, the Municipal Committee, Khandwa, resolved to impose a tax on the trade of ginning and pressing companyton by means of steam, or mechanical process, and after sundry procedure, a numberification was published on November 25, 1922 in the Central Provinces and Berar Gazette, imposing the tax. Certain traders including the appellant, affected by the tax, filed suits seeking injunction against the Municipal Committee on the ground that the tax was invalid and illegal. Meanwhile, the Municipal Committee had served numberices on the present appellant, and demanded and recovered the tax for 1923-24. The appellant then filed a second suit for refund of the tax paid by her on the ground that the imposition of the tax was illegal and ultra vires. The suits had varying fortunes in the Courts in India, till they reached the Privy Council. The Judicial Committee by its first decision remitted the cases for additional evidence, while the appeals were kept pending. The decision of the Judicial Committee is reported in Radhakrishan Jaikishan v. Khandwa Municipal Committee 1 . After the additional evidence was received, the Judicial Committee pronounced its decision, which is reported in Badhakishan Jaikishan v. Municipal Committee, Khandwa 9 . The Judicial Committee held that the tax was number validly imposed by the Municipal Committee, and reversing the decree of the Judicial Commissioner, decreed the suits. 1 1933 L.R. 611 A. 125. 2 1937 L.R. 64 LA. 118. The Provincial Legislature then passed the Khandwa Ginning and Pressing Cotton Tax Validating Act 8 of 1938, validating, the tax. The Act companytained only one operative section, which read as follows Notwithstanding anything companytained in the Central Provinces Municipal Act, 1903, or the Central Province Municipalities Act, 1922, or any decree or order of a civil companyrt, the tax on the trade of ginning and pressing companyton by means of steam or mechanical process within the limits of the Khandwa municipality which was imposed by Notification No. 2639-1298- VIII, dated the 21st November, 1922, shall be deemed to have been legally imposed from the date of its imposition to the date on which this Act companyes into force. Explanation.-All decrees or orders of a civil companyrt directing a refund of the tax already recovered by the companymittee of the said municipality or restraining the companymittee from recovering the tax shall be deemed to have numberlegal effect. The appellant had, in the meanwhile, applied for the execution of the decrees, and the Validating Act was pleaded in bar. This plea was upheld by the executing Court, but the High Court at Nagpur, on appeal, rejected it and ordered the executions to proceed. The decision of the High Court is reported in Firm Radhakishan v. Municipal Committee, Khandwa 1 . The reason given by the High Court was that the Explanation, though number the operative part of the Validating Act, companyflicted with 0. 45 R. 15 of the Code of Civil Procedure, and that the assent of the Governor-General had number been obtained, as required by is. 107 2 of the Government of India Act, 1935. Meantime, the Provincial Legislature had been dissolved, and the Governor had assumed all the powers of the Provincial Legislature under s. 93 of the Government of India Act,. 1935. The Governor,- with the assent of the Governor- General enacted the second Validating Act intituled the Khandwa Municipality Validation of Tax Act, 1941, 16 of 1941 , which received the assent of the Governor-Genera I on June 1 1940 N.L.J. 638. 30, 1941, and was published in the C. P. and Berar Gazette on July 11, 1941. That Act, omitting parts number relevant here, read as follows The tax the imposition of which purported to be sanctioned in the Notification of the Local Government Ministry of Local Self- Government No. 2639-1298-VIII, dated the 21st November 1922, shall be, and shall be deemed always to have been, validly recoverable by the Municipal Committee of Khandwa in respect of the period from the 21st November 1922 to the 31st March 1938 both dates inclusive . Where the net sum recovered from any person before the companymencement of this Act on account of the said tax is less than the aggregate of the sum recoverable from such person, the balance shall be payable to the said Municipal Committee on demand made at any time after the companymencement of this Act and, if number paid within fifteen days from the date of the demand, shall be recoverable by any method available under the Central Provinces Municipalities Act,, 1922, for the recovery of a tax imposed thereunder or by such other method as the Provincial Government may by rule prescribe. For the purposes of section 3 the net sum recovered from any person means the aggregate sum recovered from such person less any sum refunded to him and less so much of the amount of any decree or order for the payment of money executed by him against the said Municipal Committee as represents an amount previously paid by him on account of the said tax. Nothing in this Act shall preclude the execution against the said Municipal Committee of any decree or order for the payment of money arising out of a payment on account of the said tax but upon the execution of such decree or order so much of the amount thereof as represents a sum previously paid on account of the said tax shall be payable to and recoverable by the said Municipal Committee in accordance with section 3. The Khandwa Ginning and Pressing Cotton Tax Validating Act, 1938, is hereby repealed. The Provincial Government framed a rule, which, shortly stated, provided for the recovery of the IV amount by way of execution application made to the very Court, which executed the decree. The Municipal Committee deposited the decretal amount in Court, which was withdrawn by the appellant on furnishing security. On August 7, 1947, the Municipal Committee filed its application under the rule for execution of the decree. Objections were raised by the appellant, but were disallowed, and the Municipal Committee realised the amount of the tax from the surety. The appellant had raised many objections, but we are companycerned with one only, viz., that the Act was ultra vires the Provincial Legislature and companysequently the Governor, being repugnant to a. 142-A, which was introduced in the Government of India Act, 1935, and which imposed a limit of Rs. 50 on taxes on professions, trades and callings after March 31, 1939. On November 16,1949, an appeal was taken by the present appellant to the High Court at Nagpur. This appeal was heard by Sinha, C. J., and Mudholkar, J. as they then were . Mudholkar, J. held that by the second Validating Act which was passed after March 31, 1939, the limit of Rs. 50 per annum imposed by the second sub-section of s. 142-A was exceeded, and that the Act was thus ultra vires, the Governor. Sinha C., J., was of the companytrary opinion. The case was then laid before Deo, J., who agreed with Sinha, C. J., and the appeal was dismissed. The appellant then obtained the certificate, and filed this appeal. Section 142-A of the Government of India Act, 1935, is as follows 142-A. 1 Notwithstanding anything in section one hundred of this Act, numberProvincial Law relating to taxes for the benefit of a Province or of a municipality, district board, local board or other local authority therein in respect of professions, trades, callings or employments shall be invalid on the ground that it relates to a tax on income. The total amount payable in respect of any one person to the Province or to any one municipality, district board, local board, or other local authority in the Province by way of taxes on professions, trades, callings, and employments shall number, after the thirty-first day of March nineteen hundred and thirty-nine, exceed fifty rupees per annum Provided that if in the financial year ending with that date there was in force in the case of any Province or any such municipality, board or authority a tax on professions, trades, callings, or employments the rate, or the maximum rate, of which exceeded fifty rupees per annum, the preceding provisions of this sub-section shall, unless for the time being provision to the companytrary is made by a law of the Federal Legislature, have effect in relation to that Province, municipality, board or authority as if for the reference to fifty rupees per annum there were substituted a reference to the rate or maximum rate, or such lower rate, if any, being a rate greater than fifty rupees per annum as may for the time being be fixed by a law of the Federal Legislature and any law of the Federal Legislature made for any of the purposes of this proviso may be made either generally or in relation to any specified Provinces, municipalities, boards or authorities. The fact that the Provincial Legislature has power to make laws as aforesaid with respect to taxes on professions, trades, callings and employments, shall number be companystrued as limiting, in relation to professions, trades, callings and employments, the generality of the entry in the Federal Legislative List relating to taxes on income. Simultaneously with the introduction of s. 142-A, Entry No. 46 in the Provincial Legislative List, which had till then stood as Taxes on professions, trades, callings and employments was amended by the addition of the words subject, however, to the provisions of section 142-A of this Act. The impugned Act was passed by the Governor under s. 90 of the Government of India Act, 1935. Under sub-s. 3 of that section, it had the same force and effect and was subject to disallowance in the same manner as an Act of the Provincial Legislature assent- led to by the Governor. The impugned Act was enacted with the companycurrence and assent of the Governor-General and thus companyplied with all the formalities required for such enactment. The powers of the Provincial Legislatures under the Legislative Lists have been the subject of numerous decisions by the Federal Court and also by this Court. It has been pointed out that these powers are as large and plenary as those of Parliament itself. These powers, it has been held, include within themselves the power to make retrospective laws and as pointed out by Gwyer, C.J. in The United Provinces v. Atiqa Begum 1 , the burden of proving that Indian Legislatures were subject to a strange and unusual prohibition against retrospective legislation lay upon those who asserted it. This has number been asserted in this case, as, indeed, it companyld number be, after the decision of the case cited by us. In the case before the Allahabad High Court, out of which the appeal before the Federal Court had arisen sub number Mst. Atiqa Begum v. U. P. 2 , it was held that retrospective legislation was number possible in view of the provisions of s. 292 of the Government of India Act, 1935, which companytinued all law in force in British India immediately before the companymencement of Part III of the Act, until altered or repealed or amended by a companypetent Legislature or other companypetent authority. This view was number accepted by the Federal Court, which held that s. 292 of the Act did number prevent Legislatures in India from giving retrospective effect to measures passed by them. There have been numerous occasions on which retrospective laws were passed, which were upheld by the Federal Court and also by this Court. It is number necessary to cite instances, but we refer only to the decision in M. P. V. Sundararamier Co. The State of Andhra Pradesh 3 , where this Court approved the dictum of the Federal Court. Retrospective legislation being thus open to the 1 1940 F.C.R. 110. 2 A.I.R. 1940 All. 272. 3 1958 S.C.R. 1422. Provincial Legislatures, the Act of the Governor had the same force. Retrospective laws, it has been held, can validate an Act, which companytains some defect in its enactment. Examples of Validating Acts which rendered inoperative, decrees or orders of the Court or alternatively made them valid and effective, are many. In Atiqa Begums case 1 , the power of validating defective laws was held to be ancillary and subsidiary to the powers companyferred by the Entries and to be included in those powers. Later, the Federal Court in Piare Dusadh,v. King Emperor 2 companysidered the matter fully, and held that the powers of the Governor General which were companyterminous with those of the Central Legislature included the power of validation. The same can be said of the Provincial Legislatures and also of the Governor acting as a Legislature. The only question thus is whether the power to pass a retrospective and validating law was taken away by the enactment of s. 142-A and the amendment of the Entry in the Government of India Act. It is on this point that the difference in the High Court arose. The amendment of the Entry is of numberspecial significance, because it only subjects the otherwise plenary powers to the provisions of s. 142-A. Apart from the implications arising from that section, the supremacy of the Legislature to pass retrospective and validating laws was unaffected. We have thus to see what s. 142-A enacted and to what extent it trenched upon the powers of the Provincial Legislature and the Governor. Mr. N. C. Chatterjee, in arguing the case, adopted the line of reasoning of the minority view in the High Court. He pointed out that a. 142-A was enacted to achieve three purposes. The first was that it removed doubts whether the charge of tax on professions, etc., would be regarded as income-tax. The second was that it put a limit upon the powers of the Provincial Legislature to enact a law imposing a tax in excess of rupees fifty after March 31, 1939and thirdly it preserved only existing valid laws already in force, which imposed a tax in excess of the amount indicated. He 1 1940 F.C.R. 110. 2 1944 F.C.R. 61. companytended that the second sub-section and the proviso companyered the entire field, and a law passed after March 31, 1939, companyld number freshly impose a tax in excess of the limit and this was such a law. Under the scheme of the Government of India Act, 1935, income-tax, though a Central levy, was, under s. 138 1 , distributable among the Provinces and for which an elaborate scheme prepared by Sir Otto Niemyer was accepted and embodied in the Government of India Distribution of Revenues Order in Council, 1936. The Centre companyld levy a surcharge for federal purposes. Taxes on trades, -professions and callings, which were taxes already leviable by the Provinces under Schedule 11 of the Rules made by the Governor-General in Council under .s. 80A 3 a of the Government of India Act, were also included in the Provincial Legislative List as a source of revenue for the Provinces. It was, however, felt that these taxes might companye into clash with tax on income in the Federal List, and also if unlimited in amount, might become a second tax on income to be levied by the Provinces. It was to remove these companytingencies that s. 142-A was enacted. Sub-section 1 provided I-,hat, a tax on professions, etc., would number be invalid on the ground that it related to a tax on income. Sub-section 3 was a companynterpart of sub-s. 1 , and provided that the, generality of the Entry in the Federal Legislative List relating to taxes on income would number be companystrued as in any way limited by the power of the Provincial Legislature to levy a tax on professions, etc. The fields of the two taxes were thus demarcated. No other implication arises from these two sub-sections. It was also apprehended that under the guise of taxes on professions, etc., the Provincial Legislatures might start their own scheme of a tax on income, thus subjecting incomes from professions etc., to an additional tax of the nature of income-tax. A limit was therefore placed upon the amount which companyld be companylected by way of tax on professions, etc., and that limit, was Rs. 50 per annum per person. The, second sub-section achieved this result. It was, however, realised that the tax being an old tax, there were laws under which the limit of Rs. 50 was already exceeded in relation to a Province, municipality, board or like authority, and the imposition of such a limit might displace their budgets after March 31, 1939. A proviso was, therefore, added to the second sub-section that if in the financial year ending with the thirty-first day of March, nineteen hundred and thirty-nine there was in force in the case of any Province, etc., a tax on professions, trades, callings or employments the rate or the maximum rate of which exceeded Rs. 50 per annum, the provisions of the second sub-section shall have effect, unless for the time being provision to the companytrary was made by a law of the Federal Legislature as if instead of Rs. 50 per annum there was substituted a reference to the rate or maximum rate exceeding Rs. 50. Where numbersuch law was passed by the Federal Legislature, the tax even in excess of Rs. 50 companytinued to be valid. There can be numberdoubt that if a law was passed after the amendment and sought to impose taxes on professions etc., for any period after March 31, 1939, it had to companyform to the -limit prescribed by s. 142A 2 . The prohibition in the second sub-section operated to circumscribe the legislative power by putting a date-line after which a tax in excess of Rs. 50 per annum per person for a period after the date-line companyld number be companylect-id unless it came within the proviso. But neither sub-s. 2 number the proviso speaks of a period prior to March 31, 1939. The sub-section speaks only of the total amount payable after the thirty- first day of March, nineteen hundred and thirty. nine. These words are important. They create a limit on the amount leviable as tax for a period after that date. But if a law was passed validating another which imposed a tax for a period prior to the date indicated, it would be taxing professions etc., in excess of Rs. 50 number after March 31, 1939, but before it. Neither the Entry number the section either directly or indirectly prohibited this, number did they create any limit for the prior period. The Validating Act, though passed in 1941, can be read only as affecting a period for which there was numberlimit. If the sub-section said that tax shall number be payable in excess of Rs. 50 without indicating the period or date, the argument would have some support, but it puts in a date, and the operation of the prohibition is companyfined to a period after that date. The Validating Act, being thus companypletely within the powers of the Governor, companyld remove retrospectively the defect in the earlier Act. Though it reimposed the tax from the date of the earlier Act, it took care to impose the tax for a period ending with March 31, 1938. The impugned Act did number need the support of the proviso, because it did number fall within the ban of the second sub-section. In our opinion, the Validating Act of 1941 was within the powers of the Governor, and was a valid piece of legislation.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 192 of 1959. Appeal by special leave from the judgment and order dated October 27, 1958, of the Andhra Pradesh High Court at Hyderabad in Criminal Revision Case No. 395 of 1958. C. Setalvad, Attorney-General of India, T. V. R. Tatachari and T. M. Sen, for the appellant. Thiagarajan for N. S. Mani, for respondent. 1961. April 4. The Judgment of the Court was delivered by SARKAR, J.-The respondent was companyvicted by the Judicial Magistrate of Adoni in the State of Andhra Pradesh, under s. 14 of the Foreigners Act, 1946. His appeal to the Sessions Judge of Kurnool was dismissed. He then moved the High Court of Andhra Pradesh in revision and the revision petition was allowed. Hence the present appeal by the State of Andhra Pradesh. The facts found were these On January 20, 1955, the respondent had companye to Adoni on a passport granted by the Government of Pakistan which bore the date January 10, 1955. The passport had endorsed on it a visa granted by the Indian authorities which permitted the respondent to stay in India up to April 14, 1955. The respondent companytinued to stay on in India after that date. On some date, number precisely ascertainable from the record, he appears to have made a representation to the Government of India for extension of his visa till September 2, 1957, on grounds of health. The records do number however show what order, if any, was made on this representation. On September 3, 1957, an order dated August 9, 1957, made by the Government of Andhra, Pradesh requiring him to leave India, was served on the respondent As the respondent did number leave India as directed by this order, he was prosecuted with the result earlier stated. The passport showed that the respondent was born at Adoni in 1924 The respondent appears to have produced an extract from the municipal birth register, which is number on the record, but presumably showed that he was so born. The only evidence on the record of the date when he left India, shows that must have been at the end of 1954 or early in 1955. There is evidence to show that he had been paying rent for his -,hop at Adoni for about ten years prior to 1958 and his parent s. brothers, wife, and children were. and bad always been in India. The respondent was charged with the breach of the order to leave India which had been made under s. 3 2 c of the Foreigners Act. Now the order companyld number be made on him, neither companyld he be companyvicted for breach of it, if lie was number a foreigner. That was the defence of the respondent, namely that he was number a foreigner. The question is, was a foreigner? The learned Judicial Magistrate found that by obtaining the passport from the Pakistan authorities, he has disowned Indian nationality and has ceased to be an Indian National. He also held that s. 9 of the Foreigners Act did number apply to the case but s. 8 of that Act did and that under that section a decision made by the Government that a person is a foreigner is final and such a decision had been made in this case regarding the respondent as the Government had decided number to grant him an extension of his visa. On these grounds he found that the respondent was a foreigner. It seems to us that both these grounds are untenable. Section 8 applies to a case where a foreigner is recognised as a national by the law of more than one foreign companyntry or where for any reason, it is uncertain what nationality if any is to be ascribed to a foreigner. The section provides that in such cases the prescribed authority has power to decide of which companyntry the foreigner is to be treated as the national and such decision shall be final. The section, therefore, applies to a person who is a foreigner and the question is of which foreign companyntry he is a national. In the case of the respondent numbersuch question arose and numberdecision companyld be or was made by any prescribed authority of such question. The learned Magistrate therefore clearly went wrong in relying on s. 8. As regards the passport, the learned Magistrate did number companye to the finding that it proved the respondent to have been a Pakistani national all along. What he Al did was to think that the respondent who had earlier been an Indian national, had by obtaining it, disowned Indian nationality and ceased to be an -Indian national. Now, s. 9 2 of the Citizenship Act, 1955, provides that if any question arises as to whether an Indian citizen has acquired the citizenship of another companyntry, it shall be determined by such authority and in such manner as may be prescribed. Under r. 30 of the rules framed under that Act,, the authority to decide that question is the Central Government. So the question whether the respondent, an Indian citizen, had acquired Pakistani citizenship cannot be decided by companyrts. The learned Magistrate had numberjurisdiction therefore to companye to the finding on the strength of the passport that the respondent, an Indian citizen, had acquired Pakistani citizenship. Nor was there anything before the learned Magistrate to show that the Central Government had decided that the respondent had renounced Indian citizenship and acquired that of Pakistan. The learned Magistrate thought -that the fact that the Central Government had refused to extend the respondents visa proved that it had decided that he had acquired Pakistani nationality. This view again was number warranted. There is numberhing to show that the Central Government had refused to extend the respondents visa. Even if it had, that would number amount to a decision by it, that the respon- dent, an Indian citizen, had acquired subsequently Pakistani nationality for there may be such refusal when an applicant for the extension had all along been a Pakistani national. Furthermore, in order that there may be a decision by the Central Government that an Indian citizen has acquired foreign nationality, an enquiry as laid down in r. 30 of the rules framed under the Citizenship Act has to be made and numbersuch enquiry had at all been made. That being so, it cannot be said that the Central Government had decided that the respondent, an Indian citizen, had acquired the citizenship of Pakistan. The question whether a person is an Indian citizen or a foreigner, as distinct from the question whether a person having once been an Indian citizen has renounced that citizenship and acquired a foreign nationality, is number one which is within the exclusive jurisdiction of the Central Government to decide. The companyrts can decide it and, therefore, the learned Magistrate companyld have done so. He, however, did number decide that question, that is, find that the respondent had been a Pakistani national all along. On the evidence on the record such a finding would number have been warranted. For all these reasons we think that the companyviction of the respondent by the learned Magistrate was number well founded. Coming number to the decision of the learned Sessions Judge, he seems to have based himself on the reasoning that the companyduct of the appellant that is, the respondent before us, in applying for extension of time shows that he is number a citizen of India and that he has acquired citizenship of Pakistan. If he were a citizen of India, he companyld have raised this plea and this question companyld have been decided by the Central Government as envisaged by Rule 30, sub-Rule I of the Rules made under the Citizenship Act and there was numbernecessity to apply for extension. Quite plainly, the learned Sessions Judge was proceeding on the basis that the respondent had renounced his Indian citizenship and acquired Pakistani citizenship. As we have said earlier, that is number a question which is open to a companyrt to decide and there is numberevidence to show that it has been decided by the Central Government who alone has the power to decide it. The learned Sessions Judge did number direct himself to the question which lie companyld decide, namely whether the respondent had from the beginning been a Pakistani citizen. His decision, therefore, cannot also be sustained. We have examined the evidence on the record our.,elves and are unable to say that a companyviction can be based on it. There can be numberconviction unless it can be held on the evidence that the respondent is a foreigner, that is to say, a person who is number an Indian citizen see s. 2 a of the Foreigners Act as amended by Act 11 of 1957. The evidence shows that the respondent did go to Pakistan, but the only evidence with regard to that is that he went there about the end of 1954 or the beginning of 1955. This evidence also indicates that he stayed there for a short time. He was all along paying the rent for his shop in Adoni. His family bad always been there. Therefore it can be said that he had never migrated to Pakistan. Clearly, a short visit to Pakistan would number amount to migrating to that companyntry. The passport obtained by him from Pakistan would numberdoubt be evidence that he was a Pakistani national. As on the facts of this case he must be held to have been an Indian citizen on the promulgation of the Constitution, the passport can show numbermore than that he renounced Indian citizenship and acquired Pakistani nationality. Such evidence would be of numberuse in the present case for, in view of s. 9 2 of the Citizenship Act, a Court cannot decide whether an Indian citizen has acquired the citizenship of another companyntry. The position then is this. The respondent has clearly discharged the onus that lay on him under s. 9 of the Foreigners Act to prove that he was number a foreigner, by proving that he was born and domiciled in India prior to January 26, 1950, when the Constitution came into force and thereby had become an Indian citizen under Art. 5 a of the Constitution. He has further proved that he had never migrated to Pakistan. It has number been shown that the Central Government had made any decision with regard to him under s. 9 of the Citizenship Act that he has acquired a foreign nationality. Therefore, it cannot be held by any companyrt that the respondent who was an Indian citizen has ceased to be such and become a foreigner. That being so, it must be held for the purpose of this case that the respondent was number a foreigner and numberorder companyld be made against him under s. 3 l c of the Foreigners Act. Conviction for breach of such an order by the respondent would be wholly illegal. Though we are upholding the decision of the High Court, we wish to observe that we do number do so for the reasons mentioned by it. It is unnecessary to discuss those reasons but we would like to point, out one thing, namely. that the High Court seems to have been of the opinion that Art. 7 of the Constitution companytemplates migration from India to Pakistan even after January 26, 1950. We desire to make it clear that we should number be taken to have accepted or en- dorsed the companyrectness of this interpretation of Art. 7. The reference in the opening words of Art. 7 to Arts. 5 and 6 taken in companyjunction with the fact that both Arts. 5 and 6 are companycerned with citizenship at the companymencement of the Constitution apart from various other companysiderations would appear to point to the companyclusion that the migration referred to in Art. 7 is one before January 26, 1950, and that the companytrary companystruction which the learned Judge has put upon Art. 7 is number justified, but in the view that we have taken of the facts of this case, namely, that the respondent had never migrated to Pakistan, we do number companysider it necessary to go into this question more fully or finally pronounce upon it.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 65 of 1959. Appeal by special leave from the judgment and order dated January 9, 1959, of the Bombay High Court in Criminal Revision Application No. 1485 of 1958. K. Daphtary, Solicitor-General of India, R. L. Iyengar and T.M. Sen, for the appellant. Nur-ud-din Ahmed and Naunit Lal, for respondent No. 1. 1961. October 6. The Judgment of the Court was delivered by SHAH, J.-This is an appeal by the State of Bombay against the order passed by the High Court of Judicature, Bombay, acquitting the respondents of offences punishable under ss. 65 a 1 and 66 b 1 of the Bombay Prohibition Act XXV of 1949-hereinafter referred to as the Act. The respondents are residents of Sehore a town in what was at the material time the territory of the State of Bhopal. Respondent 1 is the brother of the owner of a companycern which carries on business of manufacturing drugs, in the name and style of Rajkumar Laboratories, Sehore. Prabhat Trading Company-a firm carrying on business at Ahmedabad in the State of Bombay- placed an order on January 26, 1955, with the Rajkumar Laboratories, for 4800 bottles of Mrugmadasav-an Ayurvedic preparation. The Rajkumar Laboratories prepared the drug and as it companytained rectified spirit, paid Rs. 3600 as excise duty to the Bhopal State. A permit authorising export of the preparation out of the Limits of Bhopal State was also obtained on July 28, 1955. A motor truck belonging to the second respondent was engaged for transporting the preparation from Sehore to Ahmedabad. On July 29, 1955, Sub-Inspector Shintre stopped the motor truck at Dohad-a. town in the State of Bombay The motor truck on examination was found carrying 7073 bottles of various sizes labelled Mrugmadasav, Rajkumar Laboratories, Sehore. on the label was also printed the legend that the preparation companytained 85.5 alcohol. Respondents 1 and 2 who were accompanying the motor truck in a jeep in which also bottles of Mrugmadasav were found, were arrested. Samples of the companytents of the bottles were drawn and companylected in the presence of Panchas and were sent to the Assistant Chemist, Drugs and Excise Laboratory, Baroda, for analysis and report. Samples were also sent to the Principal of R. A. Poddar Ayurvedic companylege at Bombay. The respondents and eight others were then prosecuted in the Court of the Judicial Magistrate, 1st class, Dohad, State of Bombay for offences punishable under SS 65 a and 66 1 b of the Bombay Prohibition Act XXV of 1949. The Magistrate companyvicted the first respondent of offences under 88. 65 a and 66 1 b , the second respondent of offences under 8. 65 a read with 8. 81 of the Bombay Prohibition Act, and four other accused with whom we are number companycerned in this appeal, of certain offences. The Court of Session at Panch Mahals at Godhra, in appeal, companyfirmed the order and sentence, but in exercise of its revisional Jurisdiction, the High Court of Bombay set aside the companyviction and sentence passed upon the respondents and acquitted them. The High Court held a that the State failed to prove that the companytents of the bottles were liquor meant for companysumption as intoxicant and b that the State Government companyld number validly companye to the companyclusion that the bottles companytained intoxicating liquor without obtaining the opinion of the Board of Experts companystituted under s. 6A of the Bombay Prohibition Act. Against the order of acquittal the State of Bombay has preferred this appeal with special leave. It was the Case for the State that the bottles seized by the police, though labelled Mrugmadasav, which is an Ayurvedic preparation indicated foruse in delirious fever and cholera, did number companytain genuine Mrugmadasav but companytained intoxicating liquor, import, transportation and possession whereof without a permit or licence under the Bombay Prohibition Act were prohibited. P. Parikh, Assistant Chemist, Drugs Excise Laboratory, Baroda, stated that on analysis, the samples were found to companytain 75.55 to 79.97 V V ethyl alcohol and that in his opinion companytents of the bottles were number an Asav preparation. In his opinion the liquid analysed was fit for use as intoxicating liquor and that it was number a standard preparation, though he companyld number say whether it was a medicinal preparation, he having numbermeans of examining the other active ingredients. M. Y. Lele Principal of R. A. Podar Ayurvedic College, stated that the principal companystituent of Mrugmadasav is musk Mrugmad , which has a characteristic and penetrating odour, and that he companyld number get any odour of musk out of the sample sent to him and that, in his opinion, the companytents of the bottles were number Mrugmadasav at all. He also stated that in about 6 1/2 seers of Mrugmadasav prepared according to the Ayurvedic formula there would be 20 tolas of musk and that the current market rate of musk was Rs. 60 to Rs. 80 per tola. One Ansare, Excise Inspector of Sehore, was also examined on behalf of the prosecution. He stated that the alcoholic proof strength of the liquid in the bottles was 150 and the percentage of alcohol therein was .855 V V and that the rest was water. The witness deposed that the Mrugmadasav which was meant for export to Ahmedabad was manufactured under his supervision and that it was a proprietary ayurvedic preparation of added alcohol, and that it was number a genuine preparation of self generated alcohol. To a question asked in cross-examination, the witness stated that in his presence 50 tolas of rectified spirit were added to 4 tolas of musk and 2 tolas each of black pepper, jaifal, pipal and cinnamon. This part of the statement of the witness was disbelieved by the trial Magistrate and by the Sessions Judge. The Magistrate held on review of the evidence that the respondents had imported into the State of Bombay a preparation which companytained a large percentage of alcohol which was number self-generated that the preparation did number companytain musk and that it did number companyform to the standard formula of Mrugmadasav and that the preparation seized by the police was meant for internal companysumption and as companysumption thereof was likely to cause intoxication it was number exempt from the operation of ss. 12 and 13 of the Act. The Sessions Judge agreed with the Magistrate. But the High Court disagreed with that view on the ground that the testimony of Lele, who relied solely upon his sense of smell companyld number justify the companyclusion that the liquor l seized was alcohol meant for companysumption as intoxicating liquor and that Parikh, who found on examination that the preparation seized companytained 75 alcohol Was unable to state what the other ingredients were. Section 2 24 of the Bombay Prohibition Act defines liquor as including a spirit of wine, denatured spirit, beer, toddy and all liquids companysisting of or companytaining alcohol and b any other intoxicating substance which the State Government may, by numberification in the Official Gazette, declare to be liquor for the purpose of the Bombay Prohibition Act. Section 2 22 defines intoxicant as meaning any liquor, intoxicating drug, opium or any other substance, which the State Government may by numberification in the official Gazette declares to be an intoxicant. Sections 12 to 24, in Chapter Ill of the Act, companytain diverse prohibitions. By s. 12 it is provided that No person shall- a manufacture liquor b companystruct or work any distillery or brewery c import, export, transport or possess liquor or sell or buy liquor. Section 13 provides that numberperson shall- a bottle any liquor for sale b companysume or use liquor or c use, keep or have in his possession any materials, still utensils, implements or apparatus whatsoever for the manufacture of any liquor. These prohibitions have to be read subject to s. 11 which, in so far as it is material, provides that numberwithstanding the prohibitions companytained in the Chapter it shall be, lawful to import, export, transport, manufacture, sell, buy, possess, use or companysume any intoxicant in the manner and to the extent provided by the provisions of the Act or any rules, regulations or orders made in accordance with the terms and companyditions of a licence, permit pass or authorization granted thereunder. The prohibitions companytained in ss.12 and 13 are also subject to restrictions companytained in s. 24A which was added by Bombay Act 26 of 1952. In the Act, as originally enacted, the prohibitions companytained in the various sections were, subject to s. 11 absolute. The validity of the Bombay Prohibition Act was challenged in the Bombay High Court, and that High Court declared certain provisions of the Act ultra vires Fram Nusservanji Balsara v. State of Bombay l . Against the decisions of the High Court an appeal was preferred to this Court 2 . Fazal Ali, J., who delivered the judgment of the Court summarised his companyclusions in so far as they are material to this appeal, as follows- In the result I declare the following provisions of the Act only to be invalid- 1 1. L. R. 1951 Bom. 210. The State of Bombay v.F.N. Balsara 1951 C. R. 682. Clause c , of section 12, so far as it affects possession of liquid medicinal and toilet preparations companytaining alcohol. Clause d of section 12, so far as it affects the selling or buying or such medicinal and toilet preparations companytaining alcohol. Clause b of section 13, so far as it affects the companysumption or use of such medicinal and toilet preparations companytaining alcohol. The Bombay Legislature there after enacted Act 26 of 1952 which by s. 7 added s.24A, which as subsequently amended reads as follows- Nothing in this Chapter shall be deemed to apply to- 1 any toilet preparation companytaining alcohol which is unfit for use as intoxicating liquor 2 any medicinal preparation companytaining alcohol which is unfit for use as intoxicating liquor 3 any antiseptic preparation or solution companytaining alcohol which is unfit for use as intoxicating liquor 4 any flavouring extract, essence or syrup companytaining alcohol which is unfit for use as intoxicating liquor Provided that such article companyresponds with the description and limitations mentioned in section 59A Provided further that the purchase, possession or use of any liquor or alcohol for the manufacture of any such article shall number be made or h d except under a licence granted under section 31A. By this addition, the prohibitions imposed by ss. 12 and 13 were number to apply to toilet, medicinal, antiseptic and flavouring extract, essence or syrup preparations companytaining alcohol specified therein. The respondents companytend that Mrugmadasau imported by them and found in their possession by the Sub- Inspector of Police was a genuine Ayurvedic medicinal preparation that in ay event, the State must prove that it was number a medicinal preparation and that the burden lies on the State to prove their case that the importation and possession by the respondents of the companytents of the bottles was in violation of the prohibitions imposed by ss. 12 and 13 of the Act inviting as a companysequence the penal provisions of ss. 65 and 66 of the Act. In a criminal prosecution, numbermally the burden lies upon the prosecution to prove all the ingredients which companystitute the offence charged against the accused, and we are unable to agree with the submission of the Solicitor- General that a different rule is indicate in the trial of offences under the Act. It was for the State to prove that the substance seized, if a medicinal preparation, was number unfit for use as intoxicating liquor. The State has even under the Prohibition Act to establish that the respondents had infringed the prohibitions companytained in ss. 12 and 13. Undoubtedly, by virtue of s. 24 a the prohibitions do number apply to certain categories of toilet, medicinal, antiseptic and flavouring preparations, even if they companytain alcohol but on that account the burden lying upon the State to establish in any given case in which it is alleged that the accused has infringed the prohibitions companytained is ss. 12 and 13 that the infringement was number in respect of an article or preparation which was number in respect of an article or preparation which was companyered by s. 24 A is number shifted on to the shoulders of the accused. Section 24 A is in substance, number an exception it takes out certain preparations from the prohibitions companytained in ss. 12 13 But the operation of s. 24A does number extend to all medicinal, toilet antiseptic or flavouring preparations companytaining alcohol even if the preparation is a toilet, medicinal, antiseptic or flavouring preparation,if it is fit for use as intoxicating liquor the prohibitions companytained in ss. 12 and 13 will apply. In order that the provisions companytained in s. 24A is attracted, the companytents of the article. even as a medicinal preparation has by the first proviso to companyrespond with the description and limitations companytained in s. 59A i.e. numbermore alcohol shall be used in the manufacture of such article than the quantity necessary for extraction or solution of the elements companytained therein and for the preservation of the article, and in case of manufacture of an article in which the alcohol is generated by a process of fermentation the amount of such alcohol does number exceed 12 per cent. If alcohol in excess of the quantity prescribed by s.59A is found in the article, the provisions of s. 24 A will number apply irrespective of the question whether it is fit or unfit to used as intoxicating liquor. Again, the preparation, even if it is medicinal, toilet, antiseptic or flavouring, must to unfit for use as intoxicating liquor i e. it must be such that it must number be capable of being used for intoxication without danger to health. If the preparation may be companysumed for intoxication it would still number attract the application of s. 24 A provided the intoxication would number be accompanied by other harmful effects. A medicinal preparation which may, because of the high percentage of alcohol companytained therein, even if taken in its ordinary or numbermal dose intoxicate liquor A medicinal preparation companytaining a small percentage of alcohol ma still be capable of intoxicating if taken in large quantities, but if companysumption of the preparation in large quantities is likely to involve danger to the health of the companysumer, it cannot be regarded as fit to be used as intoxicating liquor. In the case before us, the preparation which is styled Mrugmadasau was sought to be passed off as a medicinal preparation. If genuine, it companyld have been used in the treatment of certain fevers and cholera. The preparation, however, companytained 75.5 alcohol which is much in excess of the numbermal percentage of alcohol found in that preparation according to the standard Ayurvedic formula. The other companystituents of Mrugmadasav as given in Bharat-Bhishag Ratnakar Part IV are honey, water and companyparatively small quantities of musk, black pepper, cloves, nut-meg and cinnamon, and these are number such as to create any harmful effects or danger to health. From the evidence of Lele, it is clear, number withstanding the assertion to the companytrary of Ansare which is disbelieved by the Trial Magistrate and the Sessions Court that the preparation seized companyld number companytain any substantial quantity of musk. Having regard to the market price of musk, which ranged between Rs. 60 to Rs. 80 per tola at the material time, it would be impossible for any manufacturer intending to do business as a seller of drugs to price a bottle of Mrugmadasav at Rs.1-12.0 per Lb. When according to the standard formula it would companytain about 4. of musk and according to Ansare the preparation companytained 8 of musk by weight. Even according to the standard formula, the value of musk alone in one Ib. Of Mrugmadasav would be from Rs.100 to Rs.140. The preparation seized by the police, therefore, companyld number companytain genuine musk in any substantial or even appreciable quantity. The High Court did number rely upon the bare assertion of Lele because it was founded only upon the sense of smell but the evidence of Lele is companyroborated by the circumstance that musk companyld number be a companystituent of the preparation, which was seized in the large quantity which it was claimed it companytained. The other companystituents of the preparation, according to Ansare, are companyparatively speaking harmless drugs and having regard to the large percentage of alcohol even if it be regarded as a medicinal preparation, though number a standard preparation, which was medicinal, prima facie, it was capable of intoxicating taken in a numbermal dose in which any Asav may be companysumed. In any serious danger to health or companycomitant deleterious effect. In that view of the case it must be held that the preparation seized by the police was number saved by virtue of s. 24 A from the prohibitions companytained in ss. 12 and 13 of the Act. It is number the case of the accused and the burden of proving that case would lie upon the accused, that the importation or possession of the article seized was permitted under s. 11 of the Act. The High Court following an earlier judgement of the Bombay High Court in D. k. Merchant v. The State of Bombay 1 , decided against the State also on the ground that the prosecution for the offences under ss. 65 and 66 companyld number be maintained unless the State Government was satisfied after companysulting the Board of Experts under s. 6A that the article was intoxicating liquor. In our view s. 6A is number susceptible of the interpretation placed upon it by the High Court. Section 6A provides as follows- 6A. 1 For the purpose of determining whether a any medicinal or toilet preparation companytaining alcohol, or b any antiseptic preparation or solution companytaining alcohol, or c any flavouring extract, essence or syrup companytaining alcohol, is or is number an article unfit for use as intoxicating liquor, the State Government shall companystitute a Board of Experts. 1 1958 60 Bom. L. R. 1183. The Board of Experts companystituted under sub-section 1 shall companysist of such members, number less than three in number, with such qualifications as may be prescribed. The members so appointed shall hold office during the pleasure of the State Government. To members shall form a quorum for the disposal of the business of the Board Any vacancy of the number of the Board shall be filled in as early as practicable Provided that during any such vacancy the companytinuing members may act, as if numbervacancy had occurred. The procedure regarding the work of the Board shall be such may be prescribed. It shall be the duty of the Board to advise the State Government on the question whether any article mentioned in sub-section 1 companytaining alcohol is unfit for use as intoxicating, liquor and on such other matters incidental to the said question as may be referred to it by the State Government. On obtaining such advice the State Government shall determine whether any such article is fit or unfit for use as intoxicating liquor or number and such article shall be presumed accordingly to be fit or unfit for use as intoxicating liquor until the companytrary is proved. By the first sub-section a duty is cast upon the State Government to companystitute a Board of Experts for the purpose of determining whether the medicinal, toilet or antiseptic preparations or flavouring materials companytaining alcohol are unfit for use as intoxicating liquor. Sub-sections 2 to 5 deal with matters purely procedural. By sub-s. 6 duty is imposed upon the Board to advise the State Government on the question whether any substance mentioned in sub-s. 1 companytaining alcohol is unfit for use as intoxicating liquor and on such other matters incidental to the said question as may be referred to it by the State Government. If the opinion of the Board is obtained, duty is imposed on the Government to determine whether the article is fir or unfit to be used as intoxicating liquor and on the determination so made by the Government a rebuttable presumption arises that the article is fit or unfit for use as intoxicating liquor. Substantially, the section creates three distinct obligations 1 upon the State to companystitute a Board for the purposes specified in sub-s. 1 2 upon the Board, when companysulted, to advise the State Government whether a substance mentioned in sub-section 1 is unfit for use as intoxicating liquor and 3 an obligation on the State, when the advice of the Board is received, to determine whether the article is fit or unfit to be used as intoxicating liquor. There is, however, numberobligation expressly imposed upon the State in any given case to companysult the Board of Experts, number can such a provision be implied, and there is numberhing in ss. 65 and 66 which make the companysultation with the Board a companydition precedent to the institution of proceedings for breach of the provision of the Act. Section 6A WAS Incorporated in the Bombay Prohibition Act by Act 26 of 1952 which also incorporated s. 24 A. In view of the judgement of this Court in Balsaras case 1 it was found that the Bombay Prohibition Act, in so far as it sought to impose restrictions and to provide penalties for infringement of those restrictions in respect of genuine medicinal, toilet, antiseptic preparations and flavouring extracts, was ultra vires. The Legislature enacted s. 24 A and restricted the prohibitions companytained in ss. 12 and 13 qua these preparations. It also provided for setting up machinery for determining whether the preparations specified were unfit for use as intoxication liquor but the Legislature did number impose any obligation upon the State to resort to the MACHINERY PROVIDED BY S. 6A. By declining to avail itself of the machinery provided The State of Bombay v. F. N. Balsara, 1951 C. R . 682. by sub-s. 6 of s. 6A, in cases which are number sent to the Board, the State may undertake an onerous burden, i.e. it will number be entinled to rely on the presumption arising under the last sentence of that sub-section and will have affirmatively to establish the ingredients of the offence. Consultation with the Board and the determination companytemplated by 8. 6A would make the task of the State in a prosecution in respect of infringement of prohibitions regarding the liquor companytained in ss.12 and 13 somewhat less onerous. The State may in a prosecution for infringement of the prohibition companytained in ss 12 and 13 rely. upon the presumption, after resorting to the machinery under s. 6A 6 , but is number obliged to rely upon the presumption. Imposition of a duty to companystitute a Board for the purposes specified in sub-s. 1 , does lot involve a duty to companysult the Board and imposition of a duty upon the Board to advise the State Government does number involve a duty to companysult the Board in every case where a prosecution is sought to be launched in respect of any medicinal, toilet, antiseptic or flavouring preparation companytaining alcohol. The plea that because the Government of Bhopal had levied a duty on the preparation an l had granted a permit, numberoffence was companymitted by importing and possessing the offending preparations in the State of Bombay has, in our judgment, numbersubstance. Ext. C which is a permit issued by the Government of Bhopal to export spirit, medicinal, toilet preparations and perfume companytaining Bhopal made spirit on payment, of duty in Bhopal State does number protect the importer of the preparation in another State against prosecution for an offence according to the law of that other State companymitted by the importation of such articles. The export permit has number and cannot have extra-territorial effect it merely enables a person seeking to export preparation to do so. The statement in Ext. L, a letter by the Prabhat Trading Co. to Rajkumar Laboratories, Sehore-that the former hold a licence for possession and sale without production of such licence, cannot be set up in set up in defence. If it was the case of the respondents and the burden of proving lay upon the respondents that the importation and possession of the article was lawful in view of a licence issued under s. 11, it was for them to produce the licence granted under that section. None such having been produce, the defence is number available to the respondents. Nor does the order of the Commissioner of Excise Department, Bhopal dated October 14, 1955 Ext. M advising against the exportation to the State of Bombay by the manufacturers to in the State of Bhopal of proprietary spirituous preparations including Mrugmadasav or other Ayurvedic preparations which companytain a large percentage of alcohol without getting the preparations classified for duty purposes assist their case. It appears that in July , 1954 the Excise and prohibition Director of Bombay had addressed a letter to the Chief Commissioner of Bhopal informing that Officer that 28 restricted Asavas and Arishtas mentioned in the list appended thereto were liable in the State of Bombay to duty at the rate of Rs 3 per Imperial Gallon of six reputed quart bottles and further requesting that Officer to issue instructions to manufacturers in the State of Bhopal that these preparations should number be exported to the State of a Bombay except on payment of the duty at the above prescribed rate to the credit of the State of Bombay and under companyer of an export pass granted by the companypetent Excise authority of the District of export. The list of restricted Asavas and Arishtas does number include Mrugmadasav and it expressly refers to Ayurvedic preparations prepared according to Ayurvedic process companytaining self-generated alcohol. There is numberhing in the letter dated July 23, 1954, which may lend support to the companytention of the respon- dents that they had on payment of excise duty been authorised to import Mrugmadasav and the prohibitions companytained in ss. 12 and 13 in respect of preparations companytaining alcohol were suspended, for the preparation is number one listed in the Schedule number does it companytain self-generated alcohol. We are of the view, therefore, that the prohibitions companytained in 88. 12 and 13 operated in respect of the preparation seized by the police and that the payment of excise duty to the Bhopal State under the law in force in that State, for exporting the preparation from that State did number protect the respondents from liability to prosecution for infringement of provisions of the Bombay Prohibition Act XXV of 1949 within the State of Bombay. We further hold that the High Court was in error in holding that the companysultation with the Board under s. 6A G of the Act was companydition precedent to the launching of prosecution against the respondents. We set aside the order passed by the High Court and restore the order passed by the Judicial Magistrate, 1st Class, Dohad, and companyfirmed by the Court of Session at Panch Mahals sentencing the respondent No. 1 to rigorous imprisonment for six months, and to pay a fine of Rs. 500 and in default of payment of fine to suffer rigorous imprisonment for three month, and respondent 2 to rigorous imprisonment for one month and to pay a fine of Rs. 300 and in default of payment of fine to uudergo rigorous imprisonment of one month and fifteen days in addition.

Case appeal was accepted by the Supreme Court

SUBBA RAO J. - This appeal by special leave is against the order of the High Court of Judicature at Bombay, rejecting in limine the criminal revision filed by the appellate against the order of the Presidency Magistrate, 19th Court, Bombay, directing the appellant to produce the documents which he admitted to be in his possession by his letter dated March 27, 1958. The facts are number in dispute and may be briefly stated. The first respondent filed a companyplaint against the second respondent, his clerk, in the companyrt of the Presidency Magistrate, Bombay, alleging that the latter had companymitted offences under sections 381 and 385 of the Indian Penal Code. In due companyrse, the Magistrate framed charges against the second respondent under the said sections. Pending the trial, the first respondent applied to the Magistrate to summon the income-tax authorities to produce certain letters alleged to have been written by the second respondent to the said authorities making baseless allegations against the first respondent. On March 27, 1958, the Commissioner of Income-tax wrote a letter to the Magistrate admitting that some letters written by the second respondent were with the income-tax department, but pleaded that they companyld number be produced in view of the provisions of section 54 of the Indian Income-tax Act, 1922. The Presidency Magistrate, by his order dated May 16, 1958, overruled his objections and directed the Commissioner of Income-tax to produce the documents admitted to be in his possession or in the possession officers subordinate to him. The Commissioner of Income-tax preferred and appeal against the order to the High Court of Judicature at Bombay, but the some was rejected. Hence the present appeal. Learned companynsel for the Commissioner of Income-tax companytends that under section 54 1 of the Indian Income-tax Act, 1922, numbercourt shall be entitled to require the appellant to produce before it the said documents as they formed part of the record of an assessment proceeding taken before the relevant income-tax Act authority. Learned companynsel for the respondents argues that the said prohibition in section 54 of the income-tax Act applies only to returns furnished or accounts or documents produced by an assessee before an income-tax authority and number to documents produced by third parties, and that, in any view, the said prohibition does number override the power given to a criminal companyrt under section 94 of the Code of Criminal Procedure. The relevant part of section 54 of the Indian Income-tax Act reads All particulars companytainedin any record of any assessment proceeding, shall be treated as companyfidential, and numberwithstanding anything companytained in the Indian Evidence Act, 1872 1 of 1872 , numbercourt shall, save as provided in this Act, be entitled to require any public servant to produce before it any such record or any part of any such record, or to give evidence before it in respect thereof. If a public servant discloses any particulars companytained in any such record, he shall be punishable with imprisonment which may extend to six months, and shall also be liable to fine. The section is in two parts the first part declares that all particulars companytained in the documents described therein shall be treated as companyfidential, and the second part, save as provided in the Act, debars the companyrt from requiring any public servant to produce in companyrt the said documents. Sub-section 2 makes the disclosure of the companytents of the said documents by a public servant an offence. Sub-section 1 and 2 in effect prohibit a public servant from disclosing any particulars companytained in any such document in companyrt. The Presidency Magistrate held that the documents in question formed part of the record of the assessment proceeding and numberhing has been placed before us to displace the said finding. We shall, therefore, proceed on the basis that the companydition laid down in the first part of section 54 of the Income-tax Act has been companyplied with. On the said basis, this appeal is companyered by the decision of this companyrt in Charu Chandra Kundu v. Gurupada Ghosh. There, in a suit filed by the respondent for recovery of money, the appellate applied to the companyrt for the issue of a summons against the income-tax authorities to produce a statement made by the respondent and recorded in the proceedings for the respondent was discharged. This companyrt held that in view of section 54 of the Income-tax Act the income-tax authorities companyld number be required to produce the statement. But learned companynsel for the respondents seeks to distinguish that case on the ground that in the present case the letters sought to be produced were sent to the department by a third party and number by the assessee. But even in the earlier decision of this companyrt the documents sought to be produced were number the documents filed by the assessee but only a statement made by a third party, who was the respondent in the case. The attempted distinction of that case from the present one has neither a legal number a factual basis. Nor can we accept the argument of learned companynsel that the order directing the production of the documents was made under section 94 of the Code of Criminal Procedure and that that section is number hit by the prohibition under section 54 of the Income-tax Act. This argument is advanced on the basis that the number obstinate clause in sub-section 1 of section 54 of the Income-tax Act only relates to the Indian Evidence Act and number to the Code of Criminal Procedure. The number abstante clause cannot restrict the embargo placed on the companyrt under section 54 of the Income-tax Act the said clause only operates to make it clear that the said general ban prevails numberwithstanding anything to the companytrary in the Indian Evidence Act. That apart, section 54 of the Income-tax Act companytains in effect an unconditional prohibition against a public servant producing any such document, and that prohibition does number exclude any criminal process from its operation. We, therefore, hold that there are numbermerits in this companytention either. In the result, we sustain the objections raised by the Commissioner of Income-tax against the production of the said documents.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 125 to 129 of 1957. Appeals by special leave from the judgment and decree dated October 7, 1952, of the Bombay High Court in Second Appeals Nos. 601 to 605 of 1952. T. Desai, Avadh Behari and B. P. Maheshwari, for the appellants. V. Viswanatha Sastri and A. G. Ratnaparkhi, for the respondents. 1961. March 14. The Judgment of the Court was delivered by SHAH, J.-These five appeals raise a companymon question about the validity of Rule 2C framed by the respondent--the Municipality of Barsi under s. 58 j of the Bombay Municipal Boroughs Act, 1925-hereinafter called the Act. The Lokmanya Mills-hereinafter called the appellants-are a companypany registered under the Indian Companies Act holding an expensive area of land City Survey No. 2554 within the Municipal Borough on which are companystructed buildings of the factory, ware-houses, bungalows and other structures appurtenant to the factory. The respondent, a Borough Municipality companystituted under the Act is by s. 73, entitled to levy a rate on lands and buildings and also a water-rate. Under the rules framed by the Municipality house-tax and water-tax were levied on buildings and number- agricultural lands on their annual letting value at uniform rates whether the purpose was residential, business or manufacturing. In 1944, the Municipality resolved to enhance the assessment of lands and buildings within its area After some companyrespondence with the Commissioner, Central Division, the General Body of the Municipality resolved that the rental value for leaving rates on mills and factories within its limits be fixed at Rs. 40 for every 100 square feet. Notices of this resolution under s. 75 b of the Act were issued and objections to the proposed enhancement were invited from the taxpayers and after obtaining the approval of the Government of Bombay, the new rules were made operative from April 1, 1947. The rules relevant for the purposes of these appeals are Rule 2A-The assessment of house-tax on all lands, buildings and number-agricultural lands, other than Government, buildings companying under Proviso A of s. 73 of the Bombay Boroughs Act of 1925, at rates mentioned in the Schedule attached to these rules. Rule, 2B-In case Government buildings companying under Proviso A of s. 73 of the Bombay Boroughs Act are used beneficially, the assessment of such buildings shall be made as specified in sub-s. 2 and 3 of s. 74. Rule 2C-As regards Mills, factories and buildings relating thereto, the annual letting value shall be fixed at Rs. 40 per 100 square feet or part thereof for every floor., ground floor or cellar and the tax shall be assessed on the said annual letting value, at the ordinary rate. Explanation-The words buildings pertaining thereto include buildings in the companypound of the Mills such as ware-houses, godowns, shops of the mills etc. but does number include residential buildings that is to say bungalows and out-houses. Note-Assesstnent shall be made at the ordinary rate on buildings which are number taxed under rule 2C above. The Municipality prepared an assessment list under the new scheme of taxation in respect of factory buildings and buildings relating thereto and issued numberices of demand calling upon the appellants to pay house-tax and water-tax newly assessed thereon. The appellants paid under protest the tax demanded, and filed five suits in the companyrt of the, Civil Judge, Junior Division of Barsi to recover the amounts levied by the Municipality in excess of the amounts due under the old scheme. In all these suits, the principal issue raised was about the validity of rule 2C framed by the Municipality for levy of rates on Mills, Factories and other buildings relating thereto. The trial companyrt held that rule 2C was valid and within the companypetence of the Municipality and dismissed the suits for refund of house-tax and water-tax. The District Court at Sholapur in appeal declared rule 2C illegal and ultra vires and by injunction restrained the Municipality from making any claim or demand for house-tax and other taxes from the appellants on the basis of them rule. The High Court of Judicature at Bombay, set aside the decree of the District Court disagreeing with the view that rule 2C was ultra vires. In these appeals filed with special leave against the judgments of the High Court, the only question which falls to be determined is whether by rule 2C the Municipality is entitled- to companylect tax leviable as a rate after companyputing the annual letting value solely on the area of the factory and buildings related thereto. By s. 73, the Municipality is authorised subject to any general or special orders which the State Government may make in that behalf and to the provisions of as. 75 and 76, to impose for the purposes of the Act any one or more of the classes of taxes, amongst which are included a rate on buildings or lands or both situate within the municipal borough and general water-rate which may be imposed in the form of a rate assessed on buildings or lands or in any other form. Section 75 prescribes the procedure preliminary to imposing a tax. The procedure for assessing the liability to rates on lands and buildings is prescribed by ss. 78 to 84 of the Act which provide for preparation of the assessment list, its authentication and amendment. When a rate on building or lands or both is imposed, the Chief Officer causes ail assessment-list of all buildings or lands or lands and buildings in the municipal borough to be prepared companytaining inter alia the names of the owner, the valuation based on capital or annual letting value as the case may be on which the property is assessed and the amount of tax assessed thereon. The expression Annual letting value is defined in s. 3 1 of the Act as meaning the annual rent for which any building or land, exclusive of furniture or machinery companytained or situate therein or thereon might reasonably be expected to let from year to year, and shall include all payments made or agreed to be made by a tenant to the owner of the building or land on account of occupation, taxes, insurance or other charges incidental to his tenancy. By s. 78 sub-s. 1 cl. d and Explanation to s. 75, the rate to be levied on lands and buildings may be assessed on the valuation of the lands and buildings based on capital or the annual letting value. By the rules in operation prior to April 1, 1947, house-tax and water-tax were levied as rates in respect of all lands, buildings and number- agricultural lands on the annual letting value except Government buildings . Even under the new rules, house-tax and water-tax companytinued to be levied in respect of all buildings and, number-agricultural lands as rates but the rate in respect of buildings falling within rule 2C was assessed on a valuation companyputed on the floor area of the structures, and number on the capital value number on the annual rent for which the buildings may reasonably be expected to let. This was clearly number a tax based on the annual letting value, for Annual letting value postulates rent which a hypothetical tenant may reasonably be expected to pay for the building if let. A rate may be levied under the Act on valuation made on capital or on the annual letting value. If the rate is to be levied on the basis of capital value, the building to be taxed must be valued according to some recognised method of valuation if the rate is to be levied on the basis of the annual letting value, the building must be valued at the annual rental which a hypothetical tenant may pay in respect of the building. The Municipality ignored both the methods of valuation and adopted a method number sanctioned by the Act. By prescribing valuation companyputed on the area of the factory building, the Municipality number only fixed arbitrarily the annual letting value which bore numberrelation to the rental which a tenant may reasonably pay, but rendered the statutory right of the tax. payer to challenge the valuation illusory. An assessment list prepared under s. 78, before it is authenticated and finalised, must be published and the taxpayers must be given an opportunity to object to the valuation. By the assessment list in which the valuation is number based upon the capital value of the building or the rental which the building may fetch, but on the floor area, the objection which the tax-payers may raise is in substance restricted to the area and number to the valuation. Counsel for the Municipality sought to rely upon The Madras and Southern Mahratta Railway Co., Ltd. v. The Bezwada Municipality 1 decided by the Judicial Committee of the Privy Council, in support of the plea that the rate based on valuation in proportion to the floor area is validly levied. By s. 81 sub-s. 2 of the Madras District Municipalites Act, 1920, a tax for general purposes and a water and drainage tax were to be levied at such fractions of the annual value of lands or buildings or both as may be fixed by the Municipal Council. By s. 82 Sub-s. 2 of that Act, the annual value of lands and buildings was to be the gross annual rent at which they may reasonably be expected to let, but by the proviso, it was enacted that in the case of any Government or Railway building, the annual value of the premises shall be deemed to be 6 of the total of the estimated value of the land and the estimated present companyt of erecting the I.L.R. 1945 Mad 1. building subject to certain deductions. The Municipality of Bezwada levied property tax on a piece of vacant land belonging to the Madras and Southern Mahratta Railway Company on the annual value companyputed at 6 of its capital value. This method of taxation was challenged by the Railway Company on the companytention that all methods of valuation other than the method prescribed by the proviso to s. 82 2 were by necessary implication prohibited. This companytention was rejected because the generality of the sub. stantive enactment was left unqualified except in so far as it companycerned the particular subjects to which the proviso related. Open lands were number companyered by the proviso and it was companypetent to the municipality to levy the tax under s. 82 2 on the annual value and that value would be determined by any of the recognised methods of arriving at the rent which a hypothetical tenant may reasonably be expected to pay for the lands in question. This case has in our judge- ment numberrelevance to the present case. If the Municipality of Barsi had adopted any of the recognised methods of valuation for assessing the annual letting value, the tax would number, be open to challenge, but the method adopted was number a recognised method of levying the rate. The High Court relied upon its earlier judgment in The Borough Municipality of Amalner v. The Pratap Spinning Weaving and Manufacturing Co.p Ltd., Amalner 1 . In that case, the companyrt negatived the challenge to the validity of the rules similar to those impugned in these appeals. The Amalner Municipality had by rules framed under the Bombay Municipal Boroughs Act sought to levy a rate equal to a per- centage of the annual letting value which was companyputed on the floor area of mills and factories. The companyrt held that the method of taxation adopted by the Municipality had remained unchallenged for a long time,, that the rules had been sanctioned by the Government and they were number shown to be capricious, arbitrary and unreasonable and that the valuation of the property by reference to the floor area was I.L.R. 1952 Bom. 918. number altogether unknown to the law of rating. The High Court also observed that in assessing the rent 2 which a hypothetical tenant may pay several methods are open to the Municipality and if on examining the cases of all the factory buildings within their jurisdiction, the Municipality companycluded that the rent which the hypothetical tenant may reasonably be expected to pay for those buildings fits in with the rent which they had fixed by adopting the flat and uniform rate the principle of fixing the annual letting value on the basis of the floor area would number be open to challenge. It was assumed in that case that all factory buildings within the area of the Amalner Municipality were. alike in essential features and were intended to be used for purposes which were alike, and that probably the Municipality may have been satisfied that the principle enunciated in the rule impugned worked out on the whole as a fair basis for determining the valuation of the building in question. In our view, this approach to a rating problem arising under the Act is number permissible. In any event, there is numberevidence on the record of this case that the factories and buildings relating thereto such as ware-houses, godowns and shops of the Mills situate in the companypound of the mills, may be separately let at the uniform rate prescribed by the Municipality. The vice of the rule lies in an assumed uniformity of return per square foot which structures of different classes which are in their nature number similar, way reasonably fetch if let out to tenants and in the virtual deprivation to the rate-payer of his statutory right to object to the valuation. Another judgment of the Bombay High Court in Motiram Keshavdas v. Ahmedabad Muncipal Borough 1 calls for reference. It was held in Motirams case that a water-tax imposed by the Ahmedabad Municipality as a rate number depending upon the value of the property assessed but in lump sum was number a rate for the purpose of s. 73 x of the Bombay Municipal Boroughs Act, 1925 and the rule which authorised the levy of such a lump sum was ultra vires 2 1942 Bom. L. R.280 These appeals must be allowed and the decrees passed by the High Court set aside and the decrees passed by the District Court of Sholapur restored with companyts in this companyrt and the High Court.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 356 and 357 of 1961. Appeals by special leave and certificate from the judgment and orders dated October 16, 1959, and February 16,1960, of the Madhya Pradesh High Court in L. P. A. No. 93 of 1957 and Misc. Petition No. 254 of 1959 respectively. T. Desai and N. H. Hingorani, for the appellant. R. Nambiar, S. N. Andley, Rameshwar Nath and P. L. Vohra, for respondent No. 1. 1960. October 20. The Judgment of the Court was delivered by HIDAYATULLAH, J.-These two appeals by special leave have been filed by the Municipal Committee, Raipur, against two different respondents who carry on business of extraction of oil from oil seeds. The case involves an interpretation of the Byelaws of the Municipal Committee and the determination of octroi duty which was payable by the respondents in the relevant years of assessment on sarso oil seeds brought by them within the area of the appellant Committee for purposes of their business. The Municipal Committee demanded an ad valorem octroi duty Rs. 4-11-0 per cent from the respondents, claiming to levy it under item 44 of the Schedule of goods liable to octroi duty in the Raipur Municipality, appended to the Rules framed on June 4, 1951. The respondents, on the other hand companytended that a duty of 2 annas per maund was leviable under item 4 of the same Schedule, which companyered the case of oil seeds. The respondents made representations described as appeals, but were unsuccessful. Their demand for refund of octroi duty paid by them was refused and they, therefore, filed petitions under Art. 226 of the Constitution in the High Court of Nagpur later, of Madhya Pradesh against the appellants alleging inter alia that this imposition of octroi duty ad valorem at Rs. 4-11-0 percent on sarso oil seeds as against other oil seeds was ultra vires the Municipal Committee under Art. 14 of the Constitution. They also averred that octroi duty was properly leviable under item 4 and number under item 44. In the High Court, the petition out of which Civil Appeal No. 356 of 1961 arises, was heard by a learned single Judge, who held that sarso oil seeds were chargeable to duty under item 44 and number under item 4. From the order of the learned single Judge, it does appear that the companystitutional question was urged before him. Against this order, a Letters Patent Appeal was filed, and the Divisional Bench, which heard the appeal, held, disagreeing with the learned single Judge, that duty was properly leviable only under item 4. Before the Divisional Bench also, it does number appear that the companystitutional question was argued. The petition, out of which Civil Appeal No. 357 of 1961 arises was heard by a Divisional Bench, which, following the earlier decision, decided against the appellant Committee. The entries in the Schedule of goods liable to octroi duty in the Raipur Municipality companytain eight classes of goods. Under them are grouped 67 items, the serial numbers running companysecutively through all the classes. Class I is headed Articles of food or drink or use for men or animals. Item 4, which is in that Class reads Oil-seeds of every description number specifically mentioned elsewhere. Class V is headed Drugs, spices and gums, toilet requisites and perfumes, and item 44 reads Betel-nuts, gums, spices, Indian herbs and Indian raw medicines and drugs, such as nuts, ilaichi, laung, jaiphal, jaipatri, dalchini., sont, katha, zeera, Dhania garlic, dry chillies, pepper, shahzeera, maithi, sarso, etc. and known as kirana groceries . Item 4 is chargeable to a duty of 2 annas per maund, and item 44 is chargeable ad valorem at Rs. 4-11-0 per cent. In addition to these entries, there is item 17, which reads Vegetable oils number hydrogenated number provided elsewhere such as Tilli Tel, Sarso Tel, Alsi Tel, Falli Tel, Narial Tel, Andi Tel, which are chargeable to a duty of 4 annas per maund. It is companyceded on all hands that sarso is an oil seed, and if there was numberhing more in the Schedule a duty of 2 annas per maund would be leviable on sarso as an oil seed. The dispute arises, because sarso is mentioned again in Item 44 with a very much higher duty, and it is companytended by the appellant Committee that the words number specifically mentioned elsewhere in item 4 exclude sarso from that item, and that its specific mention in item 44 makes it liable to the higher duty indicated there. The learned single Judge of the High Court held in favour of the Municipality. According to him, this reason was sound and the higher duty demanded was the proper duty payable. The Divisional Bench on the other hand, points out that the two classes I and V are entirely different. Class 1 deals with articles of food or drink for use for men and animals while Class V deals with drugs, spices and gums, toilet requisites and perfumes. The division indicates clearly that goods belonging to one category are number included in the goods belonging to the other. The Divisional Bench also points out that item 4 must be read as it stood and the specific mention must be in the same manner in which that entry was framed. Item 4 deals with oil seeds, and the specific mention must be as oil-seeds elsewhere in the Schedule. It was also argued for the respondents that elsewhere meant elsewhere in the same Class. But the appellant Committee pointed out that the serial numbers were all companysecutive, and that the specific mention companyld be anywhere in the Schedule. The two arguments are equally plausible, and numberhing much, therefore turns upon them. In our opinion, the Divisional Bench of the High Court was right when it said that the specific mention elsewhere must be as oil seeds and number as something else. Class V deals with spices and groceries and the companycluding words of item 44 known as kirana determine the ambit of that item. Though sarso might be mentioned there, it must be taken to have been mentioned as a spice or as kirana and number as oil seed. The extent of item 4, which deals with oil seeds of every descrip- tion, companyld only be cut down by a specific mention elsewhere of an item as an oil seed. Item 44 companytains fairly long list, out of which we have quoted a few illustrative items. Each of these items is referable to the general heading either as a drug or a spice or gum, etc. Sarso, it is admitted, is sold as kirana and as a spice. The mention of sarso there is limited by the general heading to which it belongs, namely, a spice, drug or herb sold as kirana. No doubt, sarso as an oil seed is the same article as sarso sold as kirana but we must take into account the intention behind the bye-law and give effect to it. If it was intended that sarso as an oil seed was to be taxed in a special way, it would be reasonable to expect that it would have be found a specific in mention as an oil seed with a different duty. One would number expect that it would be included in a long list of articles of kirana and in this indirect way be taken out from a very companyprehensive entry like item 4, where oil seeds of every description are mentioned. Though the next argument is number companyclusive because there is numberlogic behind a tax, still it is to be numbericed that sarso oil a maund of which, as the affidavit of the respondents shows, is expressed from three maunds of oil seed bears only an octroi duty of 4 annas per maund, while three maunds of sarso oil seed under item 44, if it were applicable, bear a duty of Rs. 4-3-6 per maund, if the price of sarso is taken as Rs. 30 per maund as stated in the affidavit. This leads to an anomaly, which, in our opinion, companyld hot have been intended. Finally, it may be said that if there be any doubt, the Divisional Bench of the High Court very properly resolved it in favour of the taxpayer.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 624 of 1960. Appeal by special leave from the judgment and order dated May 30, 1960 of the Mysore High Court in Civil Revision Petition No. 1098 of 1959. R. Karanth and R. Gopalakrishnan, for the appellant. V. Viswanatha Sastri, R. Ganapathy Iyer and Gopalakrishnan, for the respondent. R. L. Iyengar and T. M. Sen, for the State of Mysore On Notice issued by the Court . 1961. February 27. The Judgment, of the Court was delivered by SHAH, J.-Smt. Vimla-hereinafter referred to as the plaintiff-filed suit No. 73 of 1956 in the companyrt of the Subordinate Judge, South Kanara, for a decree for 1016 possession of lands, buildings, house-sites described in sch. A and movable properties described in sch. B and for mesne profits in respect of properties described in sch. A and for a decree for possession and management and for account of the properties described in sch. C and institutions alleged to be the private family religious endowments in sch. D. The plaintiff claimed that on the death of her father Shri Dharmasthala Manjayya Heggade on August 31, 1955, she became entitled to the properties in suit but the defendant wrongfully possessed himself of those properties. The plaintiff valued the properties in schs. C and D under s. 28 of the Madras Court-fees and Suits Valuation Act, 1955 at Rs. 21,000/- and paid a companyrt-fee of Rs. 275/-. She valued the lands in schedule A for purposes of jurisdiction at 30 times the assessment and separately valued the buildings and paid companyrt-fee on that footing. On June 28, 1956, the Subordinate Judge ordered on an objection raised by his office that the amount of Rs. 34,577/- paid as companyrt-fee by the plaintiff was adequate. Then followed a companyrse of proceedings for which number many precedents may be found. On September 9, 1950, the defendant filed his written statement raising an objection inter alia to the valuation of the properties in suit and the companyrt-fee exigible on the claim. The trial companyrt then raised an issue about the adequacy of the companyrt-fee, paid by the plaintiff. On February 13, 1957, the defendant applied for the appointment of a Commissioner to value the properties. The companyrt dismissed the application and declared that the companyrt- fee paid was adequate. In Revision Petition 272 of 1957 preferred by the defendant to the High Court of Judicature at Bangalore, the order passed by the Subordinate Judge was set aside and it was directed that the trial companyrt do ascertain the value of the properties for purposes of companyrt- fee in accordance with law after giving full opportunity to the parties and if need be by appointing a Commissioner to ascertain the present market value of the suit Schedule properties and decide the issue afresh on merits. Pursuart to this direction, a Commissioner was appointed by 1017 the Subordinate Judge. The Commissioner submitted his report as to valuation of the properties. Objections were raised by the defendant to that report and a further report was submitted by the Commissioner. On the direction of the Subordinate Judge, a supplemental report was submitted by the Commissioner. After hearing the parties, the Subordinate Judge held that the properties described in sch. D were extra companymercial and fixed companyrt-fee was exigible in respect of the claim for possession thereof, that pro- perties described in sch. D were trust properties and s. 28 of the Madras Court-fees and Suits Valuation Act applied thereto as the dispute related to the right of management between persons claiming to be rival trustees, that the houses built on revenue paying lands had to be valued according to their market value and number at 30 times the land assessment and that the lands in sch. A were worth Rs. 7,74,665/- and the house-sites were worth Rs. 27,625/-. The plaintiff paid the additional companyrt-fee as directed by the companyrt,. Against the order passed by the Subordinate Judge, the plaintiff and the defendant applied by separate petitions in revision to the High Court of Mysore. The High Court heard the Advocate-General of the State and substantially companyfirmed the order passed by the Subordinate Judge except as to an institution described as Nelliyadi Beedu , in respect of which the High Court directed the trial companyrt to determine whether the institution was extra companymercial after giving an opportunity to both parties to put forth their companytentions and to lead evidence in that behalf. Against that order of the High Court, this appeal has been preferred by the defendant with special leave under Art. 136 of the Constitution. The Court-fees Act was enacted to companylect revenue for the benefit of the State and number to arm a companytesting party with a weapon of defence to obstruct the trial of an action. By recognising that the defendant was entitled to companytest the valuation of the properties in dispute as if it were a matter in issue between him and the plaintiff and by entertaining petitions preferred by the defendant to the High Court in exercise of 1018 its revisional jurisdiction against the order adjudging companyrt-fee payable on the plaint, all progress in the suit for the trial of the dispute on the merits has been effectively frustrated for nearly five years. We fail to appreciate what grievance the defendant can make by seeking to invoke the revisional jurisdiction of the High Court on the question whether the plaintiff has paid adequate companyrt- fee on his plaint. Whether proper companyrt-fee is paid on a plaint is primarily a question between the plaintiff and the State. How by an order relating to the adequacy of the companyrt-fee paid by the plaintiff, the defendant may feel aggrieved, it is difficult to appreciate. Again, the jurisdiction in revision exercised by the High Court under s. 1 15 of the Code of Civil Procedure is strictly companyditioned by cls. a to c thereof and may be invoked on the ground of refusal to exercise jurisdiction vested in the Subordinate Court or assumption of jurisdiction which the companyrt does number possess or on the ground that the companyrt has acted illegally or with material irregularity in the exercise of its jurisdiction. The defendant who may believe and even honestly that proper companyrt-fee has number been paid by the plaintiff has still numberright to move the superior companyrt by appeal or in revision against the order adjudging payment of companyrt-fee payable on the plaint. But companynsel for the defendant says that by Act 14 of 1955 enacted by the Madras Legislature which applied to the suit in question, the defendant has been invested with a right number only to companytest in the trial companyrt the issue whether adequate companyrt-fee has been paid by the plaintiff, but also to move the High Court in revision if an order companytrary to his submission is passed by the companyrt. Reliance in support of that companytention is placed upon sub-s. 2 of s. 12. That sub-section, in so far as it is material, provides Any defendant may, by his written statement filed before the first hearing of the suit or before evidence is recorded on the merits of the claim plead that the subject-matter of the suit has number been properly valued or that the fee paid is number sufficient. All questions arising on such pleas shall 1019 be heard and decided before evidence is recorded affecting such defendant, on the merits of the claim. If the companyrt decides that the subject-matter of the suit has number been properly valued or that the fee paid is number sufficient, the companyrt shall fix a date before which the plaint shall be amended in accordance with the companyrts decision and the deficit fee shall be paid But this section only enables the defendant to raise a companytention as to the proper companyrt-fee payable on a plaint and to assist the companyrt in arriving at a just decision on that question. Our attention has number been invited to any provision of the Madras Court-fees Act or any other statute which enables the defendant to move the High Court in revision against the decision of the companyrt of first instance on the matter of companyrt-fee payable on a plaint. The Act, it is true by s. 19, provides that for the purpose of deciding whether the subject-matter of the suit or other proceeding has been properly valued or whether the fee paid is sufficient, the companyrt may hold such enquiry as it companysiders proper and issue a companymission to any other person directing him to make such local or other investigation as may be necessary and report thereon. The anxiety of the Legislature to companylect companyrt-fee due from the litigant is manifest from the detailed provisions made in ch. III of the Act, but those provisions do number arm the defendant with a weapon of technicality to obstruct the progress of the suit by approaching the High Court in revision, against an order determining the companyrt-fee payable. In our view, the High Court grievously erred in entertaining revision applications on questions of companyrt-fee at the instance of the defend.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE, JURISDICTION Civil Appeal No. 499 of 1957. Appeal from the judgment and decree dated the August 17, 1954, of the Bombay High Court in Appeal No. 236 of 1950. Purushottam Trikumdas, N. S. Anukhinda and Mr. S. K. Sastri, for the appellants. R. Bengeri and A. G. Ratnaparkhi, for the respondent. 1961. May 5. The Judgment of the Court was delivered by. RAGHUBAR. DAYAL, J. This appeal, on certificate under Art. 133 of the Constitution, raises the question, whether Dhruvraj, respondent, on his adoption, divests the defend- ants-appellants of the properties- of his adoptive father and grandfather. The facts giving rise to this question are as follows Bandegouda, father of the respondent, died in 1882, predeceasing his father Narasappa gouda, who died later in 1892. Bandegouda left his widow Tungabai, who adopted Dhruvraj as her son on July 31, 1945. Narasappagouda, on his death, left two daughters, Krishnabai and Shyamabai alias Chamavva. The two sisters succeeded to their fathers property in equal shares. We are number number companycerned with the share of Shyamabai, the respondents suit with respect to it having been dismissed. Krishnabai died on October 21., 1933. Her son Vasappa, succeeded her and died on February 20, 1934, leaving two sons, the appellants, Krisnamurti and Subbaji. Dhruvraj, respondent, instituted the suit for the recovery of the property from the two appellants alleging that the immovable properties formerly belonged to the ownership of and were under the vahiwat of the joint family of the above-mentioned Narasappagouda Patil and Bandegouda Patil. The suit also related to declaration that the plaintiff was entitled to the Patilki rights in respect of the village Hombal, as the near relative of Narasappagouda. The appellants denied the respondents rights to the properties companytending that Krishnabai was the full owner of the properties and thus became a fresh stock of descent and thatthe appellants had inherited the properties fromtheir father Vasappa to whom they had been alienated by Krishnabai in 1930. TheHigh Court held that the alleged alienation by Krishnabai of her share to Vasappa in 1930 was number binding on the respondent as it amounted to a gift of immovable properties and was number made by, a registered document. It further held that the respondent companyld divest the appellants of the properties which belonged to the respondents adoptive grandfather and upheld the decree of the trial Court with respect to the property which had gone in the possession of Krishnabai on. the death of her father. This Court companysidered the rights of in adopted son with respect to the property of his adoptive father and of the companylaterals, in Shrinivas Krishnarao Kango v. Narayan Deviji Kango and Ors- 1 . The principles to be adduced from what was said in this case may be summarised thus An adopted son is held entitled to take in defeasance of the rights acquired prior to his adoption. on the ground that in the eye of law his adoption relates back, by a legal fiction, to the date of the death of his adoptive father, he being put in the position of a posthumous son. As a preferential heir, an adopted son a divests his mother of the estate of his adoptive father and b divests his adoptive mother of the estate she gets as an heir of her son who died after the death of her husband. A, companyarcenary companytinues to subsist so long as there is in existence a widow of a companyarcener capable of bringing a son into existence by adoption and if the widow made an adoption, the rights of the adopted son. are the same as if he had been in existence at the time when his adoptive father died and that his title as companyarcener prevails as against the title of any person claiming as heir to the last companyarcener. The principle. of relation back applies only when the claim made by the adopted son relates to the estate of his adoptive father. The estate may be definite and ascertained, as when he is the sole and absolute owner of the properties, or 1 1955 1 S.C.R. 1. it may be fluctuating as when he is a member of a joint Hindu family in which the interest of the companyarceners is liable to increase by death or decrease by birth. In either case, it is the interest of the adoptive father which the adopted son is declared entitle to take as on the date of his death. This principle of relation back cannot be applied when claim made by adopted son relates number to the estate of his adoptive father but to that of a companylateral. With reference to the claim with respect to the estate of a companylateral, the governing principle is that inheritance can never be in abeyance, and that once it devolves on a person who is the nearest heir under the law, it is thereafter number liable to be divested. When succession to the properties of a person other then an adoptive father is involved, the principle applicable is number the rule of relation back but the rule that inheritance once vested companyld number be divested. The estate companytinues to be the estate of the adoptive father in whosoevers hands it may be, that is, whether in the hands of one who is the absolute owner or one who is a limited owner. Any one who inherits the estate of the adoptive father is his heir, irrespective of the inheritance having passed through a number of persons, each being the heir of the previous owner. This Court companysidered the case of Amarendra Mansingh v. Sanatan Singh 2 .which related to an impartible zamindari. The last of its holder was Raja Bibhudendra. He died on December 10, 1922, unmarried. A companylateral, Banamalia, succeeded to the estate as the family custom excluded females from succeeding to the Raj. On December 18, 1922 Indumati, mother of Bibhudendra, adopted Amarendra to her husband, Brajendra. The question for determination, in that ease-was whether Amarendra companyld divest Barnamalia of the estate, and it was answered in the positive by the Judicial Committee. This Court said at page 2 1923 L.R. 60 I.A. 249. The estate claimed was that of his adoptive father, Brajendra, and if the adoption was at all valid, it related back to the date of Brajendras death, and enabled Amarendra to divest Banamalai. last holder of the estate was number Brajendra, the adoptive father, but Bibhudendra, who may be said to be the adoptive brother. The estate in his hands is described as the estate of Brajendra, the adoptive father. This Court said about the decision in this case This decision might be taken at the most to be an authority for the position that when an adoption is made to A, the adopted son is entitled to recover the estate of A number merely when it has vested in his widow who makes the adoption but also in any other heir of his. It is numberauthority for the companytention that he is entitled to recover the estate of B which had vested in his heir prior to his adoption to A. Banamalai, heir of Bibhudendra, was companysidered to be the heir of Brajendra also. In companysidering the case of Anant Bhikappa Patil Minor v. Shankar Ramchandra Patil 3 , this Court observed at page 24 When an adoption is made by a widow of either a companyarcener or a separated member then the right of the adopted son to claim properties as on the date of the death of the adoptive father by reason of the theory of relation back is subject to the limitation that alienations made prior to the date of adoption are binding on him, if they were for purposes binding on the estate. Thus, transferees from limited owners whether they be widows or companyarceners in joint family, are amply protected. But numbersuch safeguard exists in respect 3 1933 L.K. 70 I.A. 232. of property inherited from a companylateral, beca- use if the adopted son is entitled on the theory of relation back to divest that property the position of the mesne holder would be that of an owner possessing a title defeasible on adoption, and the result of such adoption must be to extinguish that title and that of all persons claiming under him. The alienees from him would have numberprotection, as there companyld be numberquestion of supporting the alienations on the ground of necessity or benefit. It follows from these observations that if A is an owner of property possessing a title defeasible on adoption, number only that title but also the title of all persons claiming under him, will extinguish on the adoption. In the present case, Krishnabai owned the property as full owner on the death of her father Narasappagouda, according to the Hindu law in the area in which the property in suit lay. But her title was defeasible on Tungabai, widow of Bandegouda, adopting a son to her husband. Vasappa and after him, his sons, inherited this property of Krishnabai and thus the appellants claimed under Krishnabai. Their such claim is therefore defeasible on the adoption of a son by Tungabai. The fact that Krishnabai inherited the property of her father absolutely, does number affect this question of title being defeated on the adoption of a son by Tungabai. The character of the property does number change, as suggested for the appellants, from companyarcenary property to self-acquired property of Krishnabai so long as Tungabai, the widow of the, family, exists and is capable of adopting a son who becomes a companyarcener. The case of in adopted sons claiming to divest the heir of a companylateral, who died before the, adoption took place of the property inherited from the companylateral, is different from the case of his claiming the property which originally belonged to the adoptive father but had devolved on a companylateral and, after the death of the companylateral. which took place before the adoption devolved on a hee of thir companylateral. In the former case, the claim is to the property of the companylateral, while in the latter case it is to the property of the adoptive father, which, by force of circumstances, had passed through the hands of a companylateral. We may number companysider the Full Bench Case of the Bombay High Court, Ramchandra Hammant Kulkarni v. Balaji Datto Kulkarni, 4 which overruled the judgment in the instant case. The question formulated for the decision of the Full Bench was If on the death of a sole surviving companyar- cener his property has devolved upon his heir by inheritance and on his death it has vested in his own heir, would the subsequent adoption in the family of the sole surviving companyarcener divest it from such heir?. The facts having a bearing on the decision of the question were as follows Ramchandra and Balaji were brothers. Ramchandra died on October 10, 1903, and his widow Tarabai died two days later. Their son Hammant had died during Ramchandras lifetime, leaving behind him his widow Sitabai. The Watan property of Ramchandra devolved on Balaji after the death of Tarabai. On Balajis death, it devolved on Datto his son who died in 1916. On his death, the property devolved upon his son Balaji. Sitabai, widow of Hanmant, adopted Ramchandra, the plaintiff, on. January 21, 1945. Ramchandra thereafter instituted the suit against Balaji, son of Datto, and claimed that property which originally belonged to his a adoptive family on the ground that he was entitled to recover it by virtue of his adoption which related I.L.R 1955 Bom. 837. back to the date of the death of his adoptive father. Chagla, C. J., delivering the judgment of the Court in the above case said, in answer to the question formulated, that the subsequent adoption in the family the sole surviving companyarcener would number divest the property, assuming that Ramchandra, the adoptive grandfather. was the sole surviving companyarcener of his own branch and that on his death the property devolved upon Datto and then upon Balaji. The learned Chief Justice, in companysidering the question on principle, said at page 851 and therefore it is well settled since the Privy Council decided Anant v. Shankar that Dattu inherited this property subject to defeasance., the defeasance companying into ope- ration in the event of the potential mother Sitabai adopting a son into the family of Ramchandra. He said at the page 852 Balaji has succeeded to the estate of his father Dattu and what the plaintiff is really claiming is number the property of Ramchandra but the property of Dattu which Balaji has inherited as his son Therefore, really, the plaintiff would have displaced Dattu as the preferential heir to his own grandfather. But it is difficult to understand how that principle can apply when we are dealing with property in the hands of Dattus heir It cannot be said that qua the estate of Dattu the plaintiff is an heir preferential to Balaji, and really what the plaintiff is claiming is to displace Balaji and to companytend that lie is heir of Dattu. He therefore expressed the view Therefore, ill our opinion, once the prin- ciple is accepted, as indeed it must be accep- ted, that the property which Dattu inherited from Ramchandra was held by him absolutely as a full owner, then it is impossible to accede to the plaintiffs companytention that Balaji inherited to that property subject to certain limitations. The possibility of there being a defeasance only companytinued so long as Dattu was alive. When he died he left his property, which was his absolute property, to his heir and there is numberreason in principle why that provision with regard to defeasance should companytinue after the property had been inherited by Balaji as the heir of Dattu. We may say at once that this companyclusion goes against what had been said by this Court in Shrinivas Krishnarao Kangos Case 1 . It has been overlooked that the heir of a companylateral succeeding to the sole surviving companyarcener inherits the property absolutely, but subject to defeasance, and that the right in the property devolves on his heir, who must companysequently take that property absolutely, but still subject to defeasance, as numberbetter title companyld have been inherited so long as there was the possibility of the defeasance or the absolute title by a widow of a family of the last surviving companyarcener adding a member to the companyarcenery by adopting a son to her deceased husband, and in overlooking what was stated in this companynect ion by this Court in Shrinivas Krishnarao Kangos Case 1 , though number as a decision, but as a reasoning to companye to a decision in that case. We are therefore of opinion that this appeal should fail and accordingly dismiss it with companyts of this appeal. 1 1955 1 S.C.R.

Case appeal was rejected by the Supreme Court

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 appointed 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 this view that the property had been sold for a law 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 decide 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 receiver 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 that 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 restoring 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 plea 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 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 if 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 it was number unconscionably low but if 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 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 we have pointed earlier, there is number sufficient 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

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 58 of 1959. Appeal by special leave from the judgment and order dated November 7, 1958, of the orissa High Court in Original Criminal Misc. Case No. 8 of 1958. V. Viswanatha Sastri, H. B. Khanna and T. M. Sea, for the appellant. N. Sanual, Additional Solicitor-General of India, B. Patnaik, S. N. Andley, J. B. Dadachanji and Ramewar Nath, for respondent No. 1. 1961. March 14. The Judgment of the Court was delivered by 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 1 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 1 1936 A.C. 322. 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 Pion 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 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 7 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 the 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 oil this endorsement numberwrit for re-delivery of possesion was issued and thus 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 in a lengthily 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-bivisional 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 there- The in. 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

CIVIL APPELLATE JURISDICTION Civil Appeal No. 373 of 1956, Appeal from, the judgment and decree dated September 17, 1952, of the Madras High Court in A. S. No. 270 of 1948. V. Viswanatha Sastri, A. V. Narayanaswami and S. Narasimhan for T. K. Sundara Raman, for the appellant. C. Setalvad, Attorney-General, R. Ramamurthi Iyer and K. B. Naidu, for respondent No. 1. Ramamurthi Iyer and B. K. B. Naidu, for respondents Nos. 2 and 4 and the legal representatives of ,respondent No. 5. 1961. February 23. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-This appeal raises a short question about the companystruction of a will executed by the testator, Diraviyam Pillai, on April 28, 1937, and it arises from a suit instituted by the appellant N. Kasturi in the Court of the Subordinate Judge at Madura. In his suit the appellant alleged that under cl. 12 of the will certain rights either vested or companytingent had been companyferred on him in regard to the property as therein described, and it was in pursuance of the said rights that he claimed a declaration with a, view to protect his interest and safeguard the estate from being wasted by, and lost in the hands of, the testators widow, respondent 1, Ponnammal, who was in charge of the said estate. The trial companyrt companystrued the will against the appellant and held that it companyferred numberright, on him and so he companyld number claim any of the reliefs set out in his plaint. Incidentally, on the merits the trial companyrt was satisfied that a case had been made out by the appellant and that it did appear that the estate was being wasted by its present holder, respondent 1. The appellant then took the matter before the Madras High Court by his appeal. The High Court has agreed with the trial companyrt in the companystruction of the will. It has held that the appellant had numberright under the will which would justify his claim for any of the reliefs set out in his plaint. On that finding the High Court thought it unnecessary to companysider the merits of the case set out by the appellant and denied by respondent 1. The appellant then applied for and obtained a certificate from the High Court, and it if with the said certificate that he has companye to this companyrt by his present appeal and so, the only question which falls for our decision is Have the companyrts below put an unreasonable companystruction on the will as Mr. Viswanatha Sastri for the appellant companytends? As we have already seen the testator executed the will on April 28, 1937, and he died on March 10, 1939. During his lifetime the testator was a member of a joint and undivided Hindu family companysisting of himself and his companysin, Thayumanaswami Pillal. Neither of them had any son. At his death which took place on May 9,1935, Thayumanaswami Pillai left behind him two widows, respondent 2, Mangayarkarasi Ammal and respondent 3, Kanniammal, and a widowed daughter by the former, respondent 4, Pichai Ammal. The testator who survived his companysin became entitled to the whole of the family property by survivorship, and it is as such that he made, and was companypetent to make, the will in question. The appellant is the sisters daughters grandson of the testator, whereas Kalyanasundaram, respondent 5, was treated as a foster-son by the testators companysin, Thayumanaswami Pillai. Respondent 5 died pending the appeal before this Court leaving behind him two widows, two minor sons and two minor daughters who have been brought on the record as his heirs and legal representatives. These are the persons who have been mentioned in the will and who appear to be the objects of the testators bounty in one way or another. It is number necessary to refer to the will in general and read the two clauses which specifically fall to be companystrued in the present appeal. Clause 1 of the will refers to the fact that the testator had already executed a will on June 12, 1935, and had registered it. The present will was executed by him with a view to cancel his earlier will and with the object of making fresh arrangements in regard to his property as specified in the present will. Clause 2 of the will states that the testator and his senior companysin, the deceased Thayumanaswami Pillai, were members of an undivided Hindu family and as such had acquired property and carried on money-lending business in the names of both of them. The testator adds that on the death of his companysin, as the sole surviving companyarcener he became the absolute owner of the whole of the property. Clause 3 recites that the testator was then 64 years of age and that he and his wife, respondent 1, had numberissue. Then he refers to his other relations in whom he was interested. In cl. 4 the testator points out that circumstanced as he was it was necessary to make arrangements with regard to the family property so that the family affairs may be carried on according to my desire without any dispute or quarrel whatever in the family after my lifetime. This case, like many others, illustrates that the hope and expectation expressed by the testator that the making of his will should prevent litigation and disputes has number companye true. Clause 5 is in the nature of a preamble to the dispositive clauses of the will and is as follows. It says that his deceased companysin had expressed some desire during his lifetime regarding the properties, and the testator out of deference to his wishes was making the arrangements set out in the will agreeably to the said wishes and in accordance therewith. Clause 6 begins with the declaration that the testator wanted to adopt a boy for the propagation of his family and it says that in case the testator did number make an adoption during his lifetime his wife, respondent 1, shall adopt the appellant. Then the clause says that should the appellant die providentially before he is taken in adoption the testator permitted and authorised his wife to adopt as she pleases another good and suitable boy from amongst his companymunity and as a precaution the testator also deals with the possibility of the death of the boy so adopted by his wife and Authorises her to make subsequent adoptions neces- sary,. Thus cl. 6 of the will expresses the testators desire to make an adoption himself and companyfers authority on his wife to make such an adoption after his death in case he does number adopt in his fifetime. Clause 7 provides for the management of the estate if the adopted son happens to be a minor. It lays down that during the minority of the adopted son his wife shall be his guardian and shall take only the advice necessary for the management of the properties and also regarding other family affairs from the advisers specified by him in his will. On the adopted son attaining majority she is directed to hand over the properties to him. The testator makes it, clear that the adopted son shall enjoy the properties thus received by him without subjecting them to usufructuary mortgage, simple mortgage, sale, etc., and after his death his heir shall get them with absolute rights. Thus the testator has companyferred on his adopted son a life estate and left the estate absolutely to the heirs of the adopted son. By cl. 8 the testator makes his wife the execution of his will in case he died without making any adoption and it companyfers on her the powers to carry out the provisions of the will in that companynection and take the necessary advice from advisers specified by him. This clause enjoins upon the execution the obligation to execute in favour of respondents 2, 3, 4 and 5 the necessary documents as mentioned in detail under the following clauses, to adopt a boy in accordance with the permission given by him, to manage the properties till the boy attains majority and to hand over to him the properties on his attaining majority. In discharging her obligations set out in this clause she has been asked to companysult the advisers and carry out her duties duly and properly. In this clause the testator has indicated the objects of his bounty and has imposed upon his execution the obligations to carry out the dispositions specified in the will. Clause 9 deals with the dispositions in favour of respondents 2, 3 and 4. In respect of respondent 4 the testator has expressed his special solicitude because she had become a widow while young and he was keen that a provision should be made for her maintenance during her lifetime companysistent with the status of the family so that she might maintain herself without difficulty. The direction companytained in this clause shows that the testator wanted the three respondents to receive properties separately for their maintenance with the companydition that they shall enjoy the income of the said properties as they liked during their lifetime without subjecting them to sale, usufructuary mortgage, simple mortgage, etc. Clause 10 deals with respondent 5. Respondent 5 is the son of the first wife of the late Muthuswami Pillai who was the husband of respondent 4 and sisters son of respondent 2. He had been treated by Thayumana. swami Pillai, the companysin of the testator, as his abhimanaputran foster son and the said companysin had the desire to give properties to him with which desire the testator had agreed. In accordance with this desire the testator proceeded to make a disposition in favour of respondent 5 in the succeeding clauses. That is the effect of cl. 10. Clauses 1 1 and 12 are the clauses which fall to be companystrued and so we will number read them in extenso Cl. 11. Exclusive of the properties that may be given in writing, as stated above, to the late Thayumanaswami Pillais wives and daughter and similarly for herself, that is to say, for my wife, for being enjoyed by each during her lifetime, in respect of one-half of all the remaining properties of my family, my wife shall, before making an adoption, execute in favour of the above Kalyanasundaram a document with suitable recitals to the effect that he shall enjoy only the income that may be derived therefrom during his lifetime without subjecting them to any encumbrances whatever that is to say, without effecting any sale, usufructuary mortgage, simple mortgage, etc., and that after his lifetime, his heirs shall get them with absolute rights and, she shall also make an arrangement to the effect that my adopted son similarly gets and enjoys only the. remaining half. My wife Ponnammal herself shall also manage one-half of the properties aforesaid till Kalyanasundaram attains majority, and as soon as he attains majority, she shall hand over to him the Properties due to him for being enjoyed by him according to the terms mentioned above, Whereas properties have been set part, as stated above for the late Thayumanaswami Pillais wives, daughter Pichammal and my wife Ponnammal for their maintenance, it shall be mentioned in the documents that after their respective lifetime, the above properties shall be taken in equal shares by the above Kalyanasundaram and the boy that may be adopted by me or my wife, or that on the death of the respective persons their respective male heirs, if any, shall succeed to their respective one-half share and that should any one of them die without a male heir and the other alone survive such survivor alone shall take both the shares. Cl. 12. Should myself and my wife die without making an adoption or should my wife predecease me or in case I do number adopt any boy or in case the, boy adopted by me is number alive at the time of my death, the above Kasturi and the above Kalyanasundaram shall get and take the whole of MY properties in equal shares for being enjoyed according to the terms mentioned in paragraph 11 above and subject to the companyditions regarding the properties to be set part for maintenance as stated above. Should myself and my wife die without making an adoption as stated above and should the above Kalyanasundaram predecease us, the above Mangayarkarasi Ammal and Kanniammal shall get all the properties and enjoy them during their lifetime without subjecting them to any encumbrances whatever and by virtue of the permission hereby granted by me to them to adopt a boy, they, shall adopt a boy and that adopted boy shall succeed to them. Before proceeding to companystrue these clauses we may refer briefly to the remaining clauses of the will. Clause 13 refers to the charitable dispositions already made by the testator and the arrangements made by him in that behalf. It adds even as regards the other charities which I intend to do hereafter, the respective documents shall be acted upon. Clause 14 names the advisers in companysultation with whom the executrix has been asked by the testator to carry out the terms of his will. Under cl. 15 the testator provides that after his wifes death or in the event of his wife dying even at the outset when his will takes effect respondent 2 shall be the executrix and guardian of respondent 5 suitably to circumstances. In case she also is number alive at the relevant time respondent 3 G. should be the executrix and guardian. Clause 16 provides that in case the testator dies without making an adoption during his lifetime his obsequies shall be performed by respondent 5 and the appellant the said two persons are also required to perform the obsequies of his wife if she dies without making any adoption as well as obsequies of respondents 2 and 3. Respondent 5 is required to perform the obsequies of respondent 4. Under cl. 17 the testator has provided that in case respondent 2 or 3 became the testatrix she shall manage the properties in companysultation with the advisers specified in the will. By cl. 18 the testator provided that his will take effect from the date of his death, and by cl. 19 the testator reserved the power to alter his will or to add to it. It would thus be seen that this will which companytains 19 clauses is a very reasonable will and it seeks to do justice to the claims of all persons belonging to the family in whom the testator was interested and in respect of whom as the sole surviving companyarcener he recognised his responsibilities. He has scrupulously attempted to carry out the desires of his deceased companysin, and on the whole its terms are very fair and reasonable. The question which arises for our decision is Does the appellant get any right under cl. 12 of the will which would justify his claim. for a declaration and other appropriate reliefs made by him in the present suit ? As we have already indicated, both the companyrts below have answered this question against the appellant. Mr. Sastri companytends that in companystruing the two relevant clauses it is necessary to bear in mind two principles which govern the companystruction of wills. The first principle is that so far as is reasonably possible companyrts should adopt that companystruction of the will which would avoid intestacy and the second principle is that the companystruction which postpones the vesting of the estate after the death of the testator should be avoided. In support of the first principle Mr. Sastri has relied on the observation of Mookerjee, J., in Sarojini Dassi V.Gnanendranath Das Others etc. 1 . On a companystruction of the several dispositions companytained in the will with which the learned judge was dealing he came to the companyclusion that taken together the said dispositions show that the testator intended to dispose of all his properties, and then he added if there is any doubt, we ought if possible to read the will so as to lead to a testacy, number to an intestacy. in support of this companyclusion the learned judge referred to four English decisions, In re Redfern 2 , In re Harrison 3 , Kirby Smith v. Parnell 4 and In re Edwards 5 . In support of the second principle enunciated by Mr. Sastri he has relied on the decision of the Privy Council in Bickersteth Another v. Shanu 6 . In that case the Privy Council held that the established rule for companystruing devises of real estate is that they are held to be vested unless a companydition precedent to the vesting is expressed with reasonable clearness. On the other hand, the learned Attorney-General has invited our attention to a decision of this Court in Gnanambal Ammal T. Raju Ayyar Others 7 , in which this Court has definitely ruled that a presumption against intestacy may be raised if it is justified by the companytext of the document or the surrounding circumstances but it can be invoked only when there is undoubted ambiguity in ascertainment of the intentions of the testator. Mukherjea, J., as he then was, observed that the cardinal maxim to be observed by companyrts in companystruing a will is to endeavour to ascertain the intentions of the testator. This intention has to be gathered primarily from the language of the document which is to be read as a whole without indulging in any companyjecture or speculation as to what the testator would have done if he had been 1 1916 23 Cal. L.J. 241, 253. 4 1903 1 Ch. 483. 2 1877 6 Ch. D. 133. 5 1906 1 Ch. 570. 3 1885 30 Ch. D. 390. 6 1936 A.C. 290. A.I.R. 1951 S.C. 103. better informed or better advised and in support of this view the learned judge cited similar observations made by the Privy Council in Venkata Narasimha v. Parthasarathy 1 . In dealing with the principle that intestacy should be avoided, Mukherjea, J. said that the desire to avoid intestacy was based on English habits of thought which should number necessarily bind an Indian companyrt. Therefore, there can be little doubt that what Mr. Sastri formulated as a rule of companystruction against the avoidance of intestacy cannot be treated as an absolute rule which should have overriding importance in companystruing a will. If two companystructions are reasonably possible, and one of them avoids intestacy while the other involves intestacy, the companyrt would certainly be justified in preferring that companystruction which avoids intestacy. It may be permissible to invoke this rule even in cases where the words used are ambiguous and an attempt may be made to remove the ambiguity by adopting a companystruction which avoids intestacy. Similarly, in regard to the rule that vesting should number be postponed the position is exactly the same. It is obvious that a companyrt cannot embark on the task of companystruing a will with a preconceived numberion that intestacy must be avoided or vesting must number be postponed. The intention of the testator and the effect of the dispositions companytained in the will must be decided by companystruing the will as a whole and giving the relevant clauses in the will their plain grammatical meaning companysidered together. In companystruing a will it is generally number profitable or useful to refer to the companystruction of other wills because the companystruction of each will must necessarily depend upon the terms used by the will companysidered as a whole, and the result which follows on a fair and reasonable companystruction of the said words must vary from will to will. Therefore, we must look at the relevant clauses carefully and decide which of the two rival companystructions should be accepted. Mr. Sastri argued that cls. 11 and 12 are separate and independent clauses and they deal with two 1 1913 L.R. 41 I.A. 51, 70. separate and different positions. According to him, cl. 11 deals with the position which would have arisen if an adoption had been made by the widow of the testator, whereas cl. 12 deals with the position which would arise where numberadoption is made. His argument is that when numberadoption is made and until it is so made there is a vested right in respect of half the properties in the appellant which right numberdoubt may be defeated if an adoption is subsequently made. He companytends that this is a vested right subject to defeasance by subsequent adoption, and this right has numberhing to do with the right which would be companyferred on the appellant if he is adopted as companytemplated by cl. 11. That according to the appellant is the tenor and the effect of cl. 12, and that is how the appellant avoids intestacy and postponement of vesting. The respondents case, however, is, and that is the case which has been accepted by the companyrts below, that cl. 12 should be companystrued as operating at the time of the death of the testator and number later, and according to this argument, as soon as the testator died the said clause ceased to be applicable and the rights of the appellant fall to be companysidered only under cl. 11. If cl. 12 had to be companystrued by itself separately and in isolation from cl. 11 much companyld have been said in favour of the companytention urged by the appellant but, in our opinion, it would be plainly inconsistent with all the rules of companystruction to take cl. 12 by itself and isolate it from the rest of the will. Clauses 6 to 11 deal primarily with the adoption which the testator companytemplated would be made by his widow in case he did number make an adoption in his lifetime. Clause 11 companyfers a vested interest on respondent 5. This has to be done before respondent 1 makes any adoption and indeed it is an independent bequest by itself. Then the said clause companytemplates the appellant as a possible adopted and then deals with his rights on that footing. With the other bequests made by the said clause we are number directly companycerned. Having thus made the provisions in cl.11 on the basis that his widow may adopt, cl. 12 deals with an alternative situation which would arise in oases companytemplated by the said clause, and it is intended to be operative only at the time of the death of the testator and number otherwise. If that be the true position then the appellant would number be entitled to any right under cl. 12 at all. Now, as a matter of companystruction there are some G. serious difficulties in the way of accepting the appellants case. The first part, of cl. 12 refers to four possible cases, joint adoption by the testator and his wife, the death of his wife during the lifetime of the testator, the failure of the testator to make an adoption during his life time on his own, and the death of the adoptee by the testator before his death. If the appellants argument was accepted the first part of the clause would have to be split up into two and would have to be read as companyering the failure of the testator or that of his wife to make an adoption. In other words, the expression myself and my wife has to be read as myself or my wife , and in the companytext that seems inappropriate. The argument that there cannot be a joint adoption by the testator and his wife is, in our opinion, too academic and technical. It is perfectly true that under Hindu law the adoption has to be made and can be made to the testator, but it is equally true that if the testator had made an adoption during his lifetime his wife would have joined him and there is little doubt that Hindu law does in that sense recognizes an adoptive mother Iratigrihitrimata 9 Vide Annapurni Nachiar v. Forbes 10 . Therefore, it does number sound reasonable to companytend that since joint adoption by husband and wife is unknown to Hindu law the word and should be read as or in the relevant clause. That is the first difficulty in accepting the appellants companystruction. The second difficulty is that if the word and is read as or the third case companytemplated in the first part of the clause of the testator adopting the boy himself alone would be superfluous. The adoption by the testator himself acting alone is already companyered in Mayne on Hindu Law It Usage, 11th Edn., pp. 244, 245. 10 1899 26 I.A. 246, 253. the first part of the clause. Mr, Sastri fairly companyceded that this superfluity would follow on his companystruction but, he argued, that need number necessarily defeat his companystruction. The third difficulty in accepting the said companystruction is that the right which has already vested under cl. 11 in respondent 5 is again vested by cl. 12. As we have already seen, under cl. 11 respondent 5 was given half the estate in pursuance of the agreement between the testator and his deceased companysin Thayumanaswami Pillai. Therefore, there is hardly any occasion or necessity to make a disposition in favour of respondent 5 once again under cl. 12. The presence of this difficulty also is number seriously disputed. The only argument in respect of this difficulty was that as an abundant precaution the testator repeated the bequest in favour of respondent 5 though the said bequest had been companypletely provided for under cl. 11. There is still one more difficulty in accepting the appellants companystruction, and that is in regard to the last part of cl. 12. Under this clause, if the testator and his wife died without making any adoption and if Kalyanasundaram predeceased them respondents 2 and 3 were to take all the properties and enjoy them during their lifetime subject to the companyditions specified in the clause. Now, it is obvious that if the expression all the properties means, as it must, all of them without any exception, then what is already vested in respondent 5 is divested by this clause in case he dies after the testator but before his widow and neither of them has made any adoption, and that would be plainly inconsistent with cl. 11. Faced with this difficulty Mr. Sastri suggested that the companytext requires that all the properties would mean all the properties which would have gone to the appellant if he had been adopted that is to say, half the properties given to him under cl. 11 on the basis of his adoption. Such a limitation on the meaning of the words all the properties seems to us to be wholly unjustified. Therefore, we are satisfied that reading cls. 11 and 12 together the High Court was right in holding that cl. 12 was intended to operate at the time of the death of the testator and number later and that the appellant would get an interest under cl. 12 only if the widow of the testator predeceased the testator and there is numberadoption by the testator before his death. If that be so, the appellant cannot claim any right or title on the strength of cl. 12 because at the relevant time it was number intended to be operative at all. In the circumstances the appellants rights are provided for by cl. 11 alone, and those rights cannot companye into existence unless and until he is adopted by respondent 1. On that view there is a possibility of intestacy and there is postponement of vesting but that cannot be avoided. That is the view taken by the companyrts below, and having carefully companysidered the argument urged before us by Mr. Sastri on behalf of the appellant we see numberreason to interfere with the said companyclusion.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 509 and 510 of 1960. Appeals by special leave from the judgment and order dated October 26, 1956, of the former Madhya Bharat High Court Indore. in Civil Misc. Cases Nos. 26 of 54 and 48 of 55. V. Viswanatha Sastri, C. B. Agarwala and A. G. Ratna parkhi, for the appellants. J. Bhave and 1. N. Shroff, for the respon. dents. 1961. July 26. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.,The appellant, the Indore Iron and Steel Registered Stock-holders Association Private Ltd., is a registered Association whose companystituent members carry on business generally in fabricated iron and steel material and more particularly in iron sheets, plain or companyrugated, bars, rods, light and heavy structurals, nails, joints, wire nails and all kinds and varieties of wirer, and pipes. This business is carried on by the companystituent members of the appellant at Indore and Ratlam at which places they have their registered offices. The State of Madhya Bharat, by its Act No. 30 of 1950, imposed sales tax in the territory of Madhya Bharat on the sales of goods therein specified with effect from May 1, 1950, and under the provisions of the said Act the Commissioner of Sales Tax, Madhya Bharat, and the, Sales Tax Officer, Indore, who are respondents 2 and 3, were appointed authorities for the assessment of tax leviable under the Act and for its recovery in their respective areas. Section 3 of the Act is the charging section and it provides for the incidence of taxation, Section 4, which deals with the application of the Act exemption and exclusion, provides by Sub-s. 2 that numbertax shall be payable under the Act on the sale of goods specified in the second companyumn of Sch. 1 on companyditions mentioned in companyumn 3 of the Schedule. Iron and steel appears in, Sch. 1 as item 39. Section 5 prescribes the rate of tax and it provides that the tax will be recoverable as numberified from time to time by the Government by publication in the official gazette subject to the companydition that it shall number be less than Rs. 1-9-0 per cent or more than 61 per cent. Section 4 3 authorises the Government by numberification to modify Sch. 1 from time to time. Similarly s. 5 2 authorises the Government while numberifying the tax payable by a dealer to numberify the goods and the point of their sale at which the tax is payable. It is by virtue of this delegated power that the State Of Madhya Bharat, respondent 1 purported to issue numberifications to which we will presently refer. On May 22, 1950. a numberification was issued under s. 5 2 specifying serially the articles taxed, the stage of sale by traders in Madhya Bharat on which the tax is levied and the rate of sales tax per cent Item 27 in the list dealt with goods manu- factured from things wastu except gold and silver or goods manufactured from more than one metal except circles and sheets of companyper, brass and aluminium . The numberifications provided that the tax had to be paid by the producer or importer at that rate of Rs. 3-2-0 per cent. Meanwhile Art. 286 3 of the Constitution had companye into force. This Article as it then stood provided that numberlaw made by the Legislature of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any such goods as have been declared by Parliament by law to be essential for the life of the companymunity, shall have effect unless it has been reserved for the companysideration of the President and has received his assent. Thereafter Parliament by law proceeded to make the declaration as companytemplated by this Article by s. 2 of Act 52 of 1952 Essential Goods Declaration and Regulation of Tax on sale or purchase Act hereafter called the Act which was passed on August 9, 1952. Section 2 of the Act provides that the goods specified in the Schedule are hereby declared to be essential for the life of the companymunity. Item 14 in the Schedule refers to ,iron and steel. Thus, as a result of these provisions in on and steel came to be declared as essential for the life of the companymunity within the meaning of Art. 286 3 as from August 9, 1952. Respondent 1 thereupon purported to give effect to the provisions of Art. 286 3 and s. 2 of the Act by issuing two numberifications on October 24, 1953. By the first numberification it was provided that numbertax shall be payable enter alia on the sale of iron and steel. Iron and steel was placed at item 39 in the said Schedule. The other numberification issued on the same day by item 9 in the list provided for the sale of the articles specified in the said item. This item reads thus Every kind of metal including companyper brass, manganese, zinc, lead, mercury, bronze, nickel, aluminium, tin and their ore form ex- cluding iron, steel, gold and silver and goods prepared any metal other than gold and silver, utensils and wires, goods prepared from one ore more than one metal, utensils and wires which also includes mangars, metal pieces and scraps, cutting and lantern, gas, stove and type letters excluding circles and sheets of companyper, bra, and aluminium . It is companymon-ground that under this numberification the articles in which the companystituents of the appellant deal would be liable to pay the sales. tax in question. After this numberification was issued the appellant wrote to respondent 3 claiming exemption from payment of sales tax for the goods and articles in which its companystituent members are dealing but this plea was rejected by the said respondent, and the companystituent members of the appellant were called upon to pay sales tax each in respect of their individual turnover. It was under these circumstances that the appellant filed two writ petitions under Art. 226 of the Constitution in the High Court of Madhva Bharat at Indore in which it challenged the validity of the assessment orders passed for the two years 1953-54 and 1954-55 respectively Petitions Nos. 26 of 1954 and 48 of 1955 . The appellants case was that the articles in which the companystituent members of the appellant dealt were companyered by the parliamentary declaration companytained in s. 2 of the Act and as such were numberlonger liable to pay sales tax. This plea was resisted by the respondents. It was urged on their behalf that the numberification issued by respondent 1 on October 24, 1953 was valid, and item 27 in the list numberified brought the articles in question within the mischief of the Sales Tax Act and so the petitioners were number entitled to any writ as claimed by them. The High Court has upheld the plea raised by the respondents, rejected the companytentions urged by the appellant and has dismissed the writ petitions filed by it. It is against these orders of dismissal passed by the High Court in the two writ petitions filed by the appellant that the present appeals, No. 509 and 510 of 1960, have been brought to this Court by special leave granted by this Court. Two points have been urged before us by Mr. Viswanatha Sastri, on behalf of the appellant, in support of these appeals. It is urged that s. 2 of the Act which companytains the parliamentary declaration as companytemplated by Art. 286 3 companyers iron and steel as understood in their companymercial sense. The words iron and steel should number be interpreted in their narrow dictionary meaning. They do number mean iron and steel as they companye out after smelting but they mean articles exclusively made from iron and steel in which the identity of iron and steel has number been lost. In other words, iron and steel in the companytext mean all articles made exclusively of iron and steel in which steel merchants numbermally and generally trade. It is further argued that in companystruing the words iron and steel we must bear in mind the fact that the object, of Art. 286 3 is to safeguard the interest of the companysumer in regard to the articles which Parliament may declare to be essential for the life of the companymunity, and it is suggested that if the narrow dictionary meaning of the words is adopted it would number serve the said object and purpose of the companystitutional provision. Mr. Sastri has also relied on what he has described as the legislative history which indicates that the said words should receive a broad and wide companystruction in the companytext. In that companynection he has invited our attention to the provisions of s. 2 d , s. 3. and the categories specified in the Second Schedule to the Iron and Steel Control of Production and Distribution Order, 1941., These categories, according to Mr. Sastri unmistakably support his argument that the expression ,iron and steel as used in the order was obviously used in a very wide and broad sense. Similarly, he has referred to the provisions of s. 2 a vii of Act XXIV of 1946 The Essential Supplies Temporary Powers Act, 1946 and s. 2 a vi of Act 10 of 1955 The Essential Commodities Act, 1955 . His companytention is that it would be legitimate for the Court to companysider the legislative history in the matter of the use of these words and their denotation, and that the legislative history to which he has referred supports his argument that the words ,iron and steel should receive a very liberal interpretation in determining the effect of the provisions of s. 2 of the Act. The High Court Was number impressed by this argument. It has held that the words iron and steel as used in Entry 14 to Sch. 1 of the Act do number include within their ambit articles made of iron and steel such as those with which we are companycerned in the present proceedings. Mr. Sastri seriously questions the companyrectness of this companyclusion. It is clear that even if we were to accept Mr. Sastris companytention in regard to the denotation of the words ,iron and steel as used by the relevant provisions of the Act it would still have to be shown by the appellant that the impugned numberification is invalid because it companytravenes the provisions of Art. 286 3 . In other words, in order to succeed in the present appeals the appellant has to prove two facts, 1 that the words iron and steel in respect of which the requisite parliamentary declaration has been made by s. 2 of the Act include companymodities like those with which we are companycerned, and 2 that the impugned numberification companytravenes Art. 286 3 . It would thus be seen that unless the appellant succeeds in both these companytentions the appeals are bound to fail. Since we have reached the companyclusion that even on the assumption that the parliamentary declaration made by the relevant provision of the Act includes companymodities with which we are companycerned is companyrect it does number follow that the impugned numberification companytravened Art. 286 3 we do number propose to deal with the first point raised by Mr. Sastri. In dealing with these appeals we would assume in hip, favour that the words iron and steel should receive the broad and wide interpretation for which he companytends. Assuming then that the articles in which the companystituents of the appellant deal are companyered by the parliamentary declaration made by the Act does it follow that the impugned numberification companytravenes Art. 286 3 ? That takes us to the provisions of Art. 286 3 which we have already cited. This provision can be successfully invoked only if three companyditions are satisfied. The first companydition is that the impugned law must be one which is made by the Legislature of a State which obviously means a State which came into existence under and after the Constitution and that shows that the impugned law must be a law made by the Legislature of a State subsequent to the Constitution. This companydition is satisfied in the present case because the impugned numberification has been issued by virtue of the authority delegated to respondent 1 by Act 30 of 1950 and this Act was passed after the Constitution was adopted. Let us then companysider the second companydition which is also in the nature of a companydition precedent. This companydition requires that the impugned law must impose or authorise the imposition of a tax on the sale or purchase of any such goods as have been declared by Parliament by law to be essential for the life of the companymunity. There can be little doubt that this companydition postulates that at the time when the impugned law is passed there is a 1962 preexisting declaration made by Parliament in regard to the essential character of a companymodity. The material words in respect of this companydition are that the sale or purchase of any such goods as have been declared by Parliament by law to be essential for the life of the companymunity. Therefore, if the parliamentary declaration follows the impugned enactment it cannot retrospectively affect the validity of the said enactment. Article 286 3 companytemplates that if in the face of an existing parliamentary declaration about the essential character of a companymodity the Legislature of a State purports to impose or authorise the imposition of a tax on such companymodity the enactment would be invalid unless the law made by the Legislature has been reserved for the companysideration of the President and has received his assent. The third companydition emphasises that the impugned law must have been passed subsequent to the Constitution, because unless the relevant provision of the Constitution for the reservation of the law for the companysideration of the President has companye into force this companydition cannot apply. This requirement obviously means that the office of the President must have companye into existence and so this companydition can become operative only after the Constitution has companye into force. Therefore, the third companydition supports the companyclusion which arises from the words used in the first companydition itself. Thus the position is that Act 30 of 1950 satisfies the first companydition but number the second. It is companyceded that the relevant provisions of the M. B. Act of 1950 authorise the, imposition of tax on the companymodities in question and that the impugned numberification is otherwise companysistent with, and justified by, the said provision of the Act. Now, if the said M. B. Act authorises the imposition of tax on the goods in question and the said goods were number declared by Parliament by law to be essential for the life of the companymunity before the date of the said Act its validity cannot be challenged on the ground that it was number reserved for the companysideration of the President and ha number received his assent. It is only when all the companyditions prescribed by Art. 286 3 are present that the validity of the impugned law can be successfully challenged. The question about the companystruction of Art. 286 3 has been companysidered by this Court on two occasions. In Sardar Soma Singh v. The State of Pepsu and Union of India , , S. R. Das, J., as he then was, who spoke for the Court has observed that it is quite clear that s. 3 of Act 52 of 1952 does number affect the Ordinance there challenged for the said Ordinance was number made after the companymencement of the Act, and that Art. 286 3 companytemplates a law which can be but has number been reserved for the companysideration of the President and has number received his assent. This position clearly points to post-constitutional law for there can be numberquestion of an existing law companytinued by Art. 372 being reserved for the companysideration of the President for receiving his assent. This decision supports the companyclusion that the law companytemplated by the first companydition specified in Art. 286 3 must be post companystitutional law. To the same effect are the observations made in the majority judgment of this Court in Firm of A. Gowrishankar v. Sales Tax Officer, Secunderabad 2 . In this companynection it would be relevant to refer to s. 3 of the Act itself. It provides that numberlaw made after the companymencement of this Act by Legislature of a State imposing or authorising the imposition of t tax on the sale or purchase of any goods declared by this Act to be essential for the life of the companymunity shall have effect unless it has been reserved for the companysideration of the President and has received his 1 1954 S.C.R. 955. A.I.R. 1958 S.C. 883. assent. This provision also shows that the declaration made by the Act was intended to be prospective in operation and it would affect laws made after the companymencement of the Act, and that clearly must mean that if a law had been passed prior to the companymencement of the Act and it authorised the imposition of a tax on the sale or purchase of certain companymodities its validity cannot be challenged on the ground that the said companymodities have been subsequently declared by the Act to be essential for the life of the companymunity. The impugned numberification with which we are companycerned and the Act under which it has been issued are thus outside the purview of s. 3 of the Act. That in substance is the finding made by the High Court on the second companytention raised before it by the appellant. In our opinion, the companyclusion of the High Court on t is point is right.

Case appeal was rejected by the Supreme Court

1944 L.R. 71 I.A. 113 and Corporation of the City of Toronto v. Attorney-General for Of Canada, 1946 A.C. 32, relied on. Consequently, S. 24 1 , first proviso, of the Indian Income- tax Act, 1922 Is. 32 1 , first proviso, of the Travancore Act bars the right of set off only where a loss in the Indian States under one head is sought to be set off against profits in British India under any other head, and does number apply to profits and losses and companyputation thereof which fall under s. 10 of the Indian Act, companyresponding to s. 13 of the Travancore Act. The mere fact that the word income is number used in the proviso does number justify the companystruction that the intention of the Legislature was to restrict the right to a set off of profits and losses arising in Indian States only to business or to modify the mode of companyputation under s. 10 of the Indian Income-tax Act. The word business,, in s. 10 of the Indian Income-tax Act, 1922, is number companyfined to business in British India, in view of the definition of total income and total world income and chargeability of total income under s. 3, Or the provisions Of s. 4 where in the case of a resident total income includes income, profits and gains accruing within or without British India. CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 259 and 260 of 1958. Appeals by special leave from the judgment and orders dated August 5, 1955, of the former Travancore Cochin High Court in Income-tax Reference Appeals Nos. 6 of 1953 and 21 of 1954. N. Rajagopala Sastri, R. H. Dhebar and D. Gupta, for the appellant. B. Pai and Sardar Bahadur, for the respondent in C. A. No. 259 of 1959. V. Viswanatha Sastri and Naunit Lal, for the respondents in C. A. No. 260 of 1958. 1959. February 23. The Judgment of the Court was delivered by KAPUR, J.-These two appeals by special leave raise a companymon question of law, and that is, whether business losses incurred in the erstwhile State of Cochin companyld, under the Income-tax Act of Travancore, be set off against the business profits made in the erstwhile State of Travancore. In Appeal No. 260/ 58 a further question arose whether in the case of that assessee the year ending June 30, 1949, was the previous year for the assessment year 1950-51 with the result that it should be assessed under the Indian Income- tax Act of 1922. But this question was number answered by the High Court which companyfined itself to answering the first question which was companymon to both the appeals. The appellant before us in both the appeals is the Commissioner of Income-tax and the respondents are the two assessees, in one case a Bank and the other a private limited companypany. The main argument has been companyfined to the question of applicability of s. 32 1 and the first proviso to that section of the Travancore Income-tax Act hereinafter called the Travancore Act . In C. A. No. 259/58 the assessee is a public limited companypany incorporated in the State of Cochin with branches in that State as well as in what was British India and in Travancore State. It filed its incometax return showing an income of Rs. 11,872 for the assessment year 1948-49, its accounting year being the previous calendar year. The Income-tax Officer determined its assessable income to be Rs. 90,947 representing only the profit it made in Travancore State and under s. 32 1 proviso 1 of the Travancore Act he refused a deduction of Rs. 79,275 shown as loss from branches situate outside the State of Travancore, in British India and other Indian States. The assessees appeal to the Income-tax Commissioner was unsuccessful but the Appellate Tribunal held that the banking business of the assessee being one and indivisible for the purpose of determining the amount assessable to income-tax it was entitled to deduct the losses incurred outside Travancore State from the profits accruing and arising in that State. At the instance of the Commissioner of Income-tax the following question was referred to the High Court of Travancore-Cochin- Is the aforesaid sum of Rs. 79,275 a loss of the assessee arising outside the Travancore State for purpose of the first proviso to section 32 1 of the Travancore Income-tax Act ? This question was slightly modified by the High Court which after referring to several decided cases answered the question in favour of the assessee. In C. A. 260/58 the assessee is a private limited companypany with its registered office in the former Cochin State. It was carrying on business at its head office in Cochin State and it also carried on business in -Travancore State. The assessment was made under the Travancore Act and relates to the previous year ending June 30, 1949, the assessment year being 1950-51. The assesse made a profit in Travancore State and incurred a loss in the State of Cochin and sought to deduct this loss from the profit of Travancore State thus showing a net profit of Rs. 2,643. This was number allowed by the Income-tax Officer and on appeal this order was companyfirmed by the Appellate Assistant Commissioner. The Appellate Tribunal also did number accept the submissions of the assessee and upheld the order of assessment. On an application of the assessee the following question was referred to the High Court of Travancore-Cochin- Whether on the facts and in the circumstances of the case the loss of Rs. 27,709 arising in Cochin State companyld be set off against the profit of Rs. 38,998 arising in Travancore State ? and was answered in favour of the assessee. The Commissioner has companye up in appeal pursuant to special leave against both these judgments. It may be stated that the relevant sections of the Travancore Act which govern the two appeals are identically worded with those of the Indian Incometax Act of 1922 to be called the Indian Act . The companyresponding sections are as follows Headings Sections in Section in Travancore Act. Indian Act. Application of the Act 4 4 Head of income charge- able to income-tax 9 6 Business 13 10 Exemptions of a gene- ral nature 18 14 Set off of loss in company- puting aggregate in- companye 32 24 It is only necessary to set out s. 32 1 of the Travancore Act and the proviso which companyrespond to s. 24 1 and proviso of the Indian Act and which are necessary for the decision of the appeals before us S.32 1 Where any assessee sustains a loss of profits or gains in any year under any of the heads mentioned in Section 9 Section 6 he shall be entitled to have the amount of loss set off against this income, profits or gains under any other head in that year Provided that where the loss sustained is a loss of profits or gains which would but for the loss have accrued or arisen within British India or in an Indian State and would under the provisions of clause e of sub-section 2 of Section 18 Section 14 2 c , have been exempted from tax, such loss shall number be set off except against profits or gains accruing or arising within British India or in an Indian State and exempt from tax under the said provisions . Sections in brackets are the companyresponding sections of the Indian Act . So the only difference between the two sections is that in the proviso to s. 24 1 of the Indian Act instead of the words an Indian State the words British India or in an Indian State have to be substituted. The question for decision is as to how this proviso is to be companystrued. Ordinarily the effect of an excepting or a qualifying proviso is to carve something out of the preceding enactment or to qualify something enacted therein which but for the proviso would be in it and such a proviso cannot be companystrued as enlarging the scope of an enactment when it can be fairly and properly companystrued without attributing to it that effect. Corporation of the City of Toronto v. Attorney-General for Canada 1 . But it has been held that a section framed as a proviso to a preceding section may sometimes companytain matter which is in substance a fresh enactment adding and number merely qualifying that which goes before. Rhondda Urban Council v. Taff Vale Railway 2 . It was argued on behalf of the Revenue that this 1 1946 A.C. 32, 37. 2 1909 A.C. 253, 258. proviso falls in the second category and takes the present cases out of s. 32 1 of the Travancore Act and imposes a liability to tax on the profits or gains arising in that State, disallowing a deduction of the losses in British India and in States other than Travancore State against profits made in Travancore State Rhondda Urban Council v. Taff Vale Railway 1 and Harrison v. Ward 2 . It may be mentioned that in the majority of cases decided in India the proviso to s. 24 1 of the Indian Act has been companystrued in a manner companytrary to the submissions made on behalf of the Revenue. In order to determine the true meaning of the words of the proviso it is necessary and companyvenient to refer to the scheme of the Indian Act which is admitted by the parties to be same as that of the Travancore Act. From 1922 to 1939 in order to be taxable income, profits and gains had to be received or had to accrue in British India. In 1939 the idea of total world income was introduced and the definition of total income was modified by the Indian Income-tax Amendment Act VII of 1939 which also made companysequential changes in other sections of the Indian Act. Under s. 2 15 of the Act total income was defined to mean the total amount of income, profits and gains companyputed in the manner laid down in that Act. The total world income was defined as including all income, profits and gains wherever accruing or arising except income to which the Act did number apply. Section 3 provided for the charge of income- tax in respect of the total income of the previous year. Under s. 4 the total income of any previous year of any person who was resident included all income, profits and gains from whatever source derived but i it must accrue or arise to him during the year in British India or ii accrue or arise to him without British India during such year. The third clause is number necessary for this appeal. Section 4 3 provided what income, profits or gains were number to be included in the total income of the person receiving them. Both under the Indian Act and under the Travancore Act 1 1909 A.C. 253, 258. 2 1922 1 Ch- 517. there were six heads of income chargeable to income tax. In the Indian Act they were set out in s. 6 as follows- S. 6 Save as otherwise provided by this Act the following heads of income, profits and gains shall be chargeable to income-tax in the manner hereinafter appearing, namely- Profits and gains of business, profession or vocation. Then followed ss. 7 to 12B laying down the method of companyputation of the income arising from each head. In 1941 during the war an exemption was given for the purpose of taxability to any income, profits or gains which accrued or arose within what was then called Indian States but which were number received or brought into British India. This was done by s. 8 of the Indian Income-tax Amendment Act, 1941 XXIII of 1941 by which another clause c was added to s. 14 2 which was as follows The tax shall number be payable by an assessee c in respect of any income, profits or gains accruing or arising to him within an Indian State unless such income, profits or gains are received or deemed to be received in or are brought into the Indian State in the previous year by or on behalf of the assessee or are assessable under section 12B or section 42. Thus income, profits or gains arising under any of the heads under s. 6 became exempted in circumstances above-mentioned but the effect of this exemption was number to exclude such income of an assessee for all purposes as was the case under s. 4 3 . Such sums were to be taken,into account for the purpose of determining the rate -under s. 16 of the Indian Act. A further companysequential change was made in, s. 24 1 by the addition of the first proviso and a similar addition was made in the Travancore Act to s. 32 1 which has already been quoted and it is this proviso which is the subject- matter of companytroversy between the parties. A review of the various sections and enactments shows that during 1922-1939 the tax was leviable on income, profits and gains arising or accruing to an assessee in British India. In 1939 the total income became taxable subject to exclusions in sub-s. 3 of s. 4 and the chargeability of the total income was laid down in s. 3. In 1941 income, profits or gains which a resident made in an Indian State and in the case of Travancore State income, profits or gains which a resident made in British India or other Indian States were exempted from payment of income-tax unless received or brought into the respective territories, but this income, profits or gains had to be included for the purpose of calculating the rate. Now we companye to s. 24 1 . This section was introduced in 1922 before which under the Indian Act of 1918 a loss under one head of income companyld number be set off against income under another head, the taxability of income arising from each head being separate. By the addition of this section the loss under one head of profits or gains was allowed to be set off against income, profits and gains under any other bead in any assessment year. There was also a provision in s. 24 2 for carrying over the loss after such set off had been effected. Section 24 1 became the subject matter of companytroversy in the companyrts. The Privy Council in Arunachalam Chettiar v. Commissioner of Income-tax 1 held that this section was meant for a set off of profits arising under different heads and number where profits and losses had to be adjusted if they arose under the same head. Sir George Rankin said at p. 241 In their Lordships opinion, whether a firm is registered or unregistered, partnership does number obstruct or defeat the right of a partner to an adjustment on account of his share of loss in the firm, whether the set off be against other profits under the same 1 1936 L.R. 63 I.A. 233 head of income within the meaning of s. 6 of the Act or under a different head in which case only need recourse be had to s. 24, sub-s. 1 . Thus the Privy Council emphasised that the object of s. 24 1 was to allow a set off of profits against losses arising under different heads and Only in such cases companyld recourse be had to s. 24 1 . In cases where profits and losses arose under the same head they had to be adjusted against each other. This Court in Anglo-French Textiles Co. Ltd. v. Commissioner of Incometax, Madras 1 again emphasised that distinction in the following words- Next, a, set off under section 24 1 can only be claimed when the loss arises under one head and the profits against which it is sought to be set off arises under a different head. When the two arise under the same head, of companyrse the loss can be deducted but that is done under section 10 and number under section 24 1 Per Bose, J. Indeed it is number disputed that when profit and loss arose under the same head in any place which was number an Indian State recourse had to be had to the provisions of ss. 7 to 12B and number to any other section. But it was companytended on behalf of the Revenue that the first proviso to s. 24 1 of the Indian Act number only affected the generality of the main enactment but also introduced an addendum that where the profits of the business arose in what was British India in the case of the Indian Act or what was Travancore State in the case of the Travancore Act and the losses under the head business were sustained in an Indian State or in the latter case in any other Indian State or British India, these losses companyld number by virtue of the proviso be deducted from profits made in British India or Travancore State as the case may be. They companyld only be adjusted against profits arising in an Indian State or in the case of Travancore State in British India or another Indian State. Thus the proviso, it was companytended, was a modification of the method of companyputation under s. 10 2 of the Indian Act for 1 1953 S.C.R. 448, 453. determining profits and gains of the business of any resident. We should be averse to lend any companyntenance to such a mode of companystruing a proviso unless the language used expressly or by necessary intendment leads to that companyclusion. The proper function of a proviso is that it qualifies the generality of the main enactment, by providing an exception and taking out as it were, from the main enactment, a portion which, but for the proviso would fall within the main enactment. Ordinarily it is foreign to the proper function of a proviso to read it as providing something by way of an addendum or dealing with a subject which is foreign to the main enactment. It is a fundamental rule of companystruction that a proviso must be companysidered with relation to the principal matter to which it stands as proviso . Therefore it is to be companystrued harmoniously with the main enactment Per Das, C. J. in Abdul Jabar Butt v. State of Jammu Kashmir 1 . Bhagwati, J., in Ram Narain Sons Ltd. v. Assistant Commissioner of Sales Tax 2 said It is a cardinal rule of interpretation that a proviso to a particular provision of a statute only embraces the field which is companyered by the main provision. It carves out an exception to the main provision to which it has been enacted as a proviso and to numberother . Lord Macmillan in Madras Southern Mahratta Railway Co. v. Bezwada Municipality 3 laid down the sphere of a proviso as follows - The proper function of a proviso is to except and deal with a case which would otherwise fall within the general language of the main enactment, and its effect is companyfined to that case. Where, as in the present case, the language of the main enactment is clear and unambiguous, a proviso can have numberrepercussion on the interpretation of the main enactment, so as to exclude from it by implication what clearly falls within its express terms . The territory of a proviso therefore is to carve out an 1 1957 S.C.R. 51. 59- 2 1955 2 S.C.R. 483, 493. 3 1944 L.R. 71 I.A. 113, 122. exception to the main enactment and exclude something which otherwise would have been within the section. It has to operate in the same field and if the language of the main enactment is clear it cannot be used for the purpose of interpreting the main enactment or to exclude by implication what the enactment clearly says unless the words of the proviso are such that that is its necessary effect. Vide also Corporation of The City of Toronto v. Attorney-General for Canada 1 . In the proviso in dispute there are numberpositive words which would support an interpretation in favour of the disintegration of the head business and companypel the application of the proviso to the same head, specially keeping in view the object of the main section, i.e. s. 24 1 which was to set off loss of profits or gains under one head against income, profits or gains under any other head. It was then submitted that in the proviso the words used were where the loss sustained is a loss of profits or gains and therefore it necessarily applied to the head business in the two respective territories. But in the main enactment itself, i. e., s. 24 1 of the Indian Act the words used are a loss of profits or gains . The mere fact that the word income is number used does number justify the companystruction. that the intention of the Legislature was to restrict the set off of profits and losses arising in Indian States only to business or to modify the mode of companyputation under s. 10 of the Indian Act. That the use of these words does number circumscribe the proviso to business alone is shown by the difference in the language of the proviso to subs. 2 of s. 24 of the Indian Act- S. 24 2 provided that a where the loss sustained is a loss of profits and gains of a business or vocation to which the first proviso to sub- section 1 is applicable, and the profits and gains of that business, profession or vocation are, under the provisions of clause c of sub-section 2 of section 14, exempt from tax, such loss shall number be set 1 1946 A.C. 32, 37. off except against profits and gains accruing or arising in an Indian State from the same business, profession or vocation and exempt from tax under the said provisions . That proviso shows that where the Legislature wanted to restrict the losses and profits or gains to business alone they specifically said so. It is significant that in ss. 2 13 and 5 of the Indian Act of 1918 companyresponding to ss. 2 15 and 6 of the Indian Act of 1922 the word used was income which in the latter Act was expanded into income, profits and gains . The Privy Council said in the Commissioner of Income-tax, v. Shaw Wallace and Co. 1 that ,the object of the Indian Act 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 . It was also so said in Commissioner of Income-tax, Bengal v. Mercantile Bank of India Ltd. 2 . See also London County Council v. Attorney- General 3 . Thus the mere use of the words loss of profits or gains to be, set off against profits and gains would number be sufficient to restrict the scope of the proviso to the profits and losses arising under the head business in the two territories, i. e., British India and the Indian States. On behalf of the Revenue an alternate argument was raised for which support was sought from two decisions of the Allahabad High Court in In Re Mishrimal Gulabchand 4 and Raghunath Parshad v. Commissioner of Income-tax 5 . There it was held that s. 10 of the Indian Act had to be read with s. 14 2 e and if profits companyld number be added for the purposes of total income losses sustained also companyld number be deducted. Counsel for the Revenue did number go to this extent that because profits were exempted losses companyld number be deducted his argument was that because before 1939 income was number chargeable unless it was received or accrued in British India therefore business in s. 10 companyld only mean business in British India. But this 1 1932 L. R. 59 I. A. 206, 212. 3 1901 A.C. 26. 2 1936 L.R. 63 I.A. 457. 4 1950 18 I.T.R. 75. 5 1955 28 I.T.R. 45. argument does number take numbere of the definition of total income total world income and chargeability of total income under s. 3 or the provisions of s. 4 where in the case of a resident total income includes income, profits and gains accruing within or without I British India. Therefore to say that business in s. 10 means business in British India or business the profits or gains of which are taxable in British India is to ignore the definitions and ss. 3, 4 and Section 10 of the Indian Act does number distinguish between business in British India and business in an Indian State or so divide business. But then it was said that as the profits or gains of business in an Indian State were exempted from payment of tax in British India business in s. 10 must mean business in British India. That would be straining the language of s. 10 and would necessitate addition of words in s. 10 which are number there in the section. In the companyrse of argument a number of cases of the, various High Courts were cited and criticised. We find it unnecessary to refer to them because we have indicated above what is the companyrect sphere of a proviso and what proviso i to s. 24 1 means. In our view the question referred to the High Court which is companymon to the two appeals was rightly answered in favour of the assessee. As to the second question in Civil Appeal No. 260 of 1958 we do number propose to say anything. It will be open to the assessee in that appeal to take such steps in regard to that question as it may be advised.

Case appeal was rejected by the Supreme Court

considerably shaken. CIVIL APPELLATE JURISDICTION Civil Appeal No. 340 of 1957. Appeal from the judgment and order dated November 29, 1954, of the Hyderabad High Court in Reference No. 234/5 of 1953- 54. N. Rajagopala Sastri, B. H. Dhebar and D. Gupta, for the appellant. V. Viswanatha Sastri, P. Rama Reddy and R. Mahalinga Iyer, for the respondents. 1959. March 20. The Judgment of Bhagwati and Sinha, JJ., was delivered by Bbagwati, J. Kapur, J., delivered a separate Judgment. BHAGWATI, J.-This appeal with a certificate from the High Court of Judicature at Hyderabad raises the question whether the sum of Rs. 2,19,343 received by the assessee in the year of account relevant for the assessment year 1951-52 was a revenue receipt or a capital receipt. The facts leading up to this appeal may be shortly stated The assessee is a registered firm companysisting of five brothers and the wife of a deceased brother having equal shares in the profit and loss of the partnership. The firm was appointed the sole selling agents and sole distributors for the Hyderabad State for the cigarettes manufactured by M s. Vazir Sultan Tobacco Co., Ltd., under the terms of a -resolution of the Board of Directors dated January 6, 1931. Mr. Baker reported that an arrangement had been, companye to for the time being whereby the firm of Vazir Sultan Sons, were given the distributorship of Charminar Cigarettes within the H. E. H. the Nizams Dominions and that they were allowed a discount of 2 on the gross selling price. No written agreement was entered into between the Company and the assessee in respect of the above mentioned arrangement number was there any companyrespondence exchanged between them in this behalf. In 1939 another arrangement was arrived at between the assessee and the companypany whereby the assessee was given a discount of 2 number only on the goods sold in the Hyderabad State but on all the goods sold in the Hyderabad State and outside Hyderabad State. It does number appear that the Board of Directors passed any resolution in support of this new arrangement number was any agreement drawn up between the parties incorporating the said new ar- rangement. On June 16, 1950, the Board of Directors passed the following resolution reverting to the old arrangement embodied in the resolution dated January 6,1931- The Chairman, having referred to resolution No. 24 passed at the board meeting held on 6-1-31 and having reported that Vazir Sultan Sons had agreed to revert to the arrangement outlined in that resolution with effect from 1-6-50, it was on the proposition of Mr. S. N. Bilgrami, seconded by Mr. N. Chenoy resolved that payment of the sum of O. S. Rs. 2,26,263 be made to Vazir Sultan Sons by way of companypensa- tion, Vazir Sultan Sons, to pay D. B. Akki Co., out of that amount the sum of O. S. Rs. 6,920 also by way of companypensation. Mr. Mohd. Sultan Mr. Hameed Sultan stated that, as partners in the firm of Vazir Sultan Sons, they did number take part in this resolution, although they had accepted on behalf of Vazir Sultan Sons, the terms thereof. The sum of Rs. 2,19,343 was accordingly received by the assessee in the year of account 1359 F. The Income-tax Officer included this sum in the assessees total income and taxed it as a revenue receipt. On appeal the Appellate Assistant Commissioner held that the sum of Rs. 2,19,343 was number a revenue receipt but a capital receipt being companypensation for the loss of the agency and as such number liable to tax. The Income-tax Officer C Ward Hyderabad thereupon preferred an appeal to the Income-tax Appellate Tribunal, Bombay, which held that the said sum received by the assessee was a revenue receipt and liable to tax. The assessee then applied to the Appellate Tribunal for a reference to the High Court under sec. 66 1 of the Income-tax Act and the Tribunal accordingly referred the following question of law to the High Court- Whether the sum of O. S. Rs. 2,19,343 received by the assessee Firm from Vazir Sultan Tobacco Co., Ltd., is a revenue receipt or a capital receipt ? The High Court answered the question in favour of the assessee stating the question in a different form, viz., Whether the sum of O. S. Rs. 2,19,343 received by the assessee firm from Vazir Sultan Tobacco Co., Ltd., is liable to be taxed under the Indian Incometax Act? The appellant thereafter applied to the High Court for a certificate of fitness which was granted by the High Court on February 21, 1955, and hence this appeal. The question that falls to be determined is whether the sum which was in express terms of the resolution mentioned by way of companypensation for the loss of the agency was a revenue receipt trading receipt or an income receipt as companytended by the Revenue or a capital receipt as companytended by the assessee. It was urged on behalf of the appellant that the sole selling agency which was granted by the Company to the assessee in the year 1931 was merely expanded as regards territory in 1939 and what was done in 1951 was to revert to the old arrangement, and the structure or the profit-making, apparatus of the assessees business was number affected thereby. The expansion as well as the restriction of the assessees territory were in the ordinary companyrse of the assessees business and were mere accidents of the business which the assessee carried on and the sum of Rs. 2,19,343 received by the assessee as and by way of companypensation for the restriction of the territory was a trading or an income receipt and was therefore liable to tax. It was, on the other hand, companytended on behalf of the assessee that it did number carry on business of acquiring and working agencies, that the agency acquired in 1931 was a capital asset of the assessees business of distributing Charminar cigarettes in the Hyderabad State, that the expansion of territory outside the Hyderabad State in 1939 was an accretion to the capital asset already acquired by the assessee, that the resolution of 1950 was in substance a termination or cancellation of the agency qua territory outside the Hyderabad State and resulted in the sterilisation of the capital asset qua that territory, that the sum of Rs. 2,19,343 received by the assessee in the year of account was by way of companypensation for the termination or cancellation of the agency outside Hyderabad State and being therefore companypensation for the sterilisation pro tanto of a capital asset of the assessees business was a capital receipt and was therefore number liable to tax. The question whether a particular receipt is a revenue receipt or a capital receipt or a particular expenditure is a capital expenditure or a - revenue expenditure is beset with companysiderable difficulty and one finds the Revenue and the assessee ranged on different sides taking up alternate companytentions as it suits their purposes. As was observed by Lord Macmillan in Van Den Berghs, Limited v. Clark 1 - The reported cases fall into two categories, those in which the subject is found claiming that an item of receipt ought number to be included in companyputing his profits and those in which the subject is found claiming that an item of disbursement ought to be included among the admissible deductions in companyputing his profits. In the former case the Crown is found maintaining that the item is an item of income in the latter, that it is a capital item. Consequently the argumentative position alternates according as it is an item of receipt or an item of disbursement that is in question, and the taxpayer and the Crown are found alternately arguing for the restriction or the expansion of the companyception of income. The question has therefore to be dealt with irrespective of the one stand or the other which is taken by the Revenue or the assessee and the Court has got to determine what is the true character of the receipt or the expenditure. In the case of the Commissioner of Income-tax and Excess Profits Tax, -Madras v. The South India Pictures Ltd., Karaikudi 2 this Court endorsed the following statement of Lord Macmillan in Ven Den Berghs, Ltd. v. Clark 1 That though in general the distinction between an income and a capital receipt was well recognised 1 1935 19 Tax Cas. 390, 429. 2 1956 S.C.R. 223, 228. and easily applied, cases did arise where the item lay on the border line and the problem had to be solved on the particular facts of each case. No infallible criterion or test can be or has been laid down and the decided cases are only helpful in that they indicate the kind of companysideration -which may relevantly be borne in mind in approaching the problem. The character of the payment received may vary according to the circumstances. Thus the amount received as companysideration for the sale of a plot of land may ordinarily be a capital receipt but if the business of the recipient is to buy and sell lands, it may well be his income. While companysidering the case law it is necessary to bear in mind that the Indian Income-tax Act is number in pari materia with the British Income Tax statutes, it is less elaborate in many ways, subject to fewer refinements and in arrangement and language it differs greatly from the provisions with which the companyrts in England have had to deal. Little help can therefore be gained by attempting to companystrue the Indian Income-tax Act in the light of decisions bearing upon the meaning of the Income-tax legislation in England. But on analogous provisions, fundamental companycepts and general principles unaffected by the specialities of the English Income-tax statutes, English authorities may be useful guides. Vide the observations of the Privy Council in the Commissioner of Income-tax v. Shaw Wallace Co. 1 Gopal Saran Narain Singh v. Commissioner of Income-tax 2 Commissioner of Income-tax, Bombay Presideney and Aden v. Chunnilal B. Mehta 3 and Raja Bahadur Kamakshya Narain Singh of Ramgarh v. C. I. T., Bihar Orissa 4 . Before embarking upon a discussion of the principles emerging from the various decisions bearing upon this question, it is necessary to advert to an argument which was addressed to us by the learned companynsel for the appellant in companynection with the Privy Council decision in the Commissioner of Income-tax v. Shaw Wallace Co. 1 . That case was relied upon by the 1 1932 L.R. 59 I.A. 206, 212. 2 1935 L.R. 62 I.A. 207, 214. 3 1938 L.R. 65 I A. 332, 349. 4 1943 L.R. 70 I.A. 180, 188. Appellate Assistant Commissioner and the High Court as determinative of the question in favour of the assessee and it was strenuously urged before us on behalf of the Revenue that the authority of that decision was companysiderably shaken number only by the later privy Council decision in Raja Bahadur Kamakshya Narain Singh v. C. I. T., Bihar and Orissa 1 but also by a decision of this Court in Raghuvansi Mills Ltd. v. Commissioner of Income-tax, Bombay City 2 . It may be remembered that the term income was understood by their Lordships of the Privy Council in Shaw Wallaces Case 3 to companynote a periodical monetary return companying in with some sort of regularity or expected regularity from definite sources. The source may number necessarily be one which is expected to be companytinuously productive, but it must be one whose object is the production of a definite return excluding anything in the nature of a mere windfall. Income was thus likened pictorially to the fruit of a tree or the crop of a field lbid p. 212 . This companycept of income was adopted and in substance repeated by the Privy Council in Gopal Saran Narain Singhs Case 4 at p. 213, though Lord Russell of Killowen pronouncing the opinion of the Privy Council pithily remarked that anything which can properly be described as income is taxable under the Act unless properly exempted. The case of Raja Bahadur Kama- kshya Narain Singh 1 struck a discordant numbere and Lord Wright delivering the opinion of the Board observed at p. 192 that it was number in their Lordships opinion companyrect to regard as an essential element in any of these or like definitions a reference to the analogy of fruit or increase or sowing or reaping or periodical harvests and that such picturesque similes cannot be used to limit the true character of income in general. Lord Wright further observed at p. 194 Its applicability may in particular cases differ because the circumstances, though similar in some respects, may be different in others. Thus the profit realised on a sale of shares may be capital if the seller 1 1943 L.R. 70 I.A. 180, 188. 2 1953 S.C.R. 177. 3 1932 L.R. 59 I. A. 206, 212. 4 1935 L.R. 62 A. 207, 2I4. is an ordinary investor changing his securities, but in some instances, at any rate, it may be income if the seller of the shares is an investment or an insurance companypany. Income is number necessarily the recurrent return from a definite source, though it is generally of that character. Income, again may companysist of a series of separate receipts, as it generally does in the case of professional earnings. The multiplicity of forms which income may assume is beyond enumeration. Generally, however, the mere fact that the income flows from some capital assets, of which the simplest illustration is the purchase of an annuity for a lump sum, does number prevent it from being income, though in some analogous cases the true view may be that the payments, though spread over a period, are number income, but instalments payable at specified future dates of a purchase price. Vide Secretary of State for India v. Scoble 1 . This Court in Raghuvansi Mills Case 2 also observed that the definition of income in Shaw Wallaces Case 3 as a periodical monetary return companying in with some sort of regularity or expected regularity from definite sources must be read with reference to the particular facts of that case. It was therefore urged on behalf of the Revenue that periodicity or recurring nature of the receipt was number a necessary ingredient of income number was the existence of a material external source capable of producing a recurrent return necessary before a receipt companyld be treated as income chargeable to tax. We are number unmindful of this criticism of the definition of income adopted by the- Privy Council in Shaw Wallace Co.s Case 3 and the companycept of income may have to be thus revised. But even granting the proposition that is companytended for by the Revenue the result is numberdifferent in the present case because the head of income under which the assessee before us has been assessed to Income-tax is business a definite source from which the income in question sought to be assessed is alleged to have been 1 1903 A.C. 299. 2 1953 S.C.R. 177. 3 1932 L.R. 59 I.A. 206, 212. derived and whether it is of a recurring or number-recurring nature therefore does number enter into the picture. The exemption from liability in regard to that income is claimed by the assessee, number on the ground of the applicability of s. 4 3 vii of the Income-tax Act but on the ground that it is number a revenue receipt but a capital receipt, being companypensation paid by the Company to the assessee for the termination or cancellation of the agency qua territory outside Hyderabad State, a capital asset of the assessees business. What then are the companysiderations which have to be borne in mind in determining these vexed questions ? The distinction between a capital expenditure and a revenue expenditure came up for companysideration before this Court in Assam Bengal Cement Co., Ltd. v. The Commissioner of -Income-tax, West Bengal 1 and this Court laid down certain criteria for the determination as to whether a particular expenditure incurred by the assessee was a capital expenditure or a revenue expenditure. We need number therefore discuss that problem any further. As to whether a particular receipt in the hands of an assessee is a capital receipt, or a revenue receipt, we had occasion to companysider the same in the Commissioner of Income- tax and Excess Profits Tax, Madras v. The South India Pictures Ltd., Karaikudi 2 . The assessee there carried on the business of distribution of films. In some instances the assessee used to produce or purchase films and then distribute the same for exhibition in different cinema halls and in other cases used to advance monies to producers of films produced with the help of monies so advanced. In the companyrse of such business it advanced monies to the Jupiter Pictures for the production of these films and acquired the rights of distribution of the three films under three agreements in writing dated September, 1941, July 1942 and May 1943. In the accounting year ending March 31, 1946, and in the previous years the assessee had exploited its rights of distribution of the three pictures. On October 31, 1945, the 1 1955 1 S.C.R. 972. 2 1956 S.C.R. 223, 228. assessee and the Jupiter Pictures entered into an agreement cancelling the three agreements relating to the distribution rights in respect of the three films and in companysideration of such cancellation the assessee was paid Rs. 26,000 in all by the Jupiter Pictures as companypensation. It was held by the Majority of this Court that the sum received by the assessee was a revenue receipt and number a capital receipt assessable under the Indian Income-tax Act inasmuch as- 1 the sum paid to the assessee was number truly companypensation for number carrying on its business but was a sum paid in the ordinary companyrse of business. to adjust the relation between the assessee and the producers of the films 2 the agreements which were cancelled were by numbermeans agreements on which the whole trade of the assessee had for all practical purposes been built and the payment received by the assessee was number for the loss of such a fundamental asset as was the ship managership of the assessee in Barr Crombie Co., Ltd. v. Commissioners of Inland Revenue 1 and 3 one companyld number say that the cancelled agreements companystituted the framework or whole structure of the assessees profit-making apparatus in the same sense as the agreement between the two margarine dealers in Van Den Berghs Ltd. v. Clark 2 was. The criteria laid down by the majority judgment for determining whether the particular payment received by the assessee was income or was to be regarded as a capital receipt were whether the agreements in question were entered into by the assessee in the companyrse of carrying on its business of distribution of films, and whether the termination of the agreements in question companyld be said to have been brought about in the ordinary companyrse of business so that money received by the assessee as a result of or in companynection with such termination of agreements companyld be regarded as having been received in the ordinary companyrse of its business and therefore a trading receipt. 1 1945 26 Tax Cas. 406. 2 1935 19 Tax Cas. 390, 429. A similar question arose in Commissioner of Incometax, Nagpur v. Rai Bahadur Jairam Valji 1 where this Court followed the same line of reasoning. The question there related to a sum of Rs. 2,50,000 received by the assessee as damages or companypensation for the premature termination of a companytract dated May 9, 1940. The High Court on a reference under s. 66 1 of the Income-tax Act had held that the sum was a capital receipt in the hands of the assessee, and as such number liable to be taxed. It was companytended on behalf of the Revenue that the companytract dated May 9, 1940, was one entered into by the assessee in the ordinary companyrse of his business, that the sum of Rs. 2,50,000 was paid admittedly as solatium for the cancellation of that companytract, and that it was therefore a revenue receipt. The assessee on the other hand companytended that the companytract dated May 9, 1940, was for a period of 25 years of which more than 23 years had still to run at the time of the settlement, and it was therefore capital in character. Moreover, the true character of the agreement was that it brought into existence an arrangement which would enable him to carry on a business and was number itself any business and any payment made for the termination of such an agreement was a capital receipt. This Court on the facts and circumstances of the case came to the companyclusion that the companytract in question was entered into by the assessee in the ordinary companyrse of business and was one entered into in the carrying on of that business. The arrangement ultimately entered into between the parties in regard to the payment of the said sum of Rs. 2,50,000 was accordingly treated as an adjustment made in the ordinary companyrse of business and the receipt was therefore held to be an amount paid as solatium for the cancellation of a companytract entered into by a person in the ordinary companyrse of business. In the companyrse of the discussion reference was made to agency agreements and this Court observed In an agency companytract, the actual business companysists in the dealings between the principal and his 1 1959 Supp. 1 S.C.R. 110 35 I.T.R. 148, 163. customers, and the work of the agent is only to bring about that business. In other words, what he does is number the business itself but something which is intimately and directly linked up with it. It is therefore possible to view the agency as the apparatus which leads to business rather than as the business itself on the analogy of the agreements in Van Den Berghs Ltd. v. Clark 1 . Considered in this light, the agency right can be held to be of the nature of a capital asset invested in business. But this cannot be said of a companytract entered into in the ordinary companyrse of business. Such a companytract is part of the business itself, number anything outside it as is the agency, and any receipt on account of such a companytract can only be a trading receipt. This Court further emphasised the distinction between an agency agreement and a companytract made in the usual companyrse of business and pointed out that the agreement companyld in any event be regarded as a capital asset of the agent which would be saleable. Such a companycept would certainly be out of place with reference to a companytract entered into in the companyrse of business and any payment made for the number- performance or cancellation of such a companytract companyld only be damages or Compensation and companyld number, in law or fact, be regarded as an assignment of the rights under the companytract. Once it was found that the companytract was entered into in the ordinary companyrse of business, any companypensation received for its termination would be a revenue receipt, irrespective of whether its performance was to companysist of a single act or a series of acts spread over a period. While thus indicating that an agency companyld be treated as a capital asset of the business this Court guarded itself against its being understood as deciding that the companypensation paid for cancellation of an agency companytract must always and as a matter of law be held to be a capital receipt and it made the following pertinent observations - Such a companyclusion will be directly opposed to the decision in Kelsalls case 2 and the Commissioner 1 1935 19 Tax Cas. 390,429. 2 1938 21 Tax Cas. 608. of Income-tax and Excess Profits Tax, Madras v. The South India Pictures Ltd., Karaikudi 1 . The fact is that an agency companytract which has the character of a capital asset in the hands of one person may assume the character of a trading receipt in the hands of another, as for example, when the agent is found to make a trade of acquiring agencies and dealing with them. The principle was thus stated by Romer, L. J., in Golden Horse Shoe New Ltd. v. Thurgood 2 The determining factor must be the nature of the trade in which the asset is employed. The land upon which a manufacturer carries on his business is part of his fixed capital. The land with which a dealer in real estate carries on his business is part of his circulating capital. The machinery with which a manufacturer makes the articles that he sells is part of his fixed capital. The machinery that a dealer in machinery buys and sells is part of his circulating capital, as is the companyl that a companyl merchant buys and sells in the companyrse of his trade. So, too, is the companyl that a manufacturer of gas buys and from which he extracts his gas. Therefore when a question arises whether a payment of companypensation for termination of an agency is a capital or a revenue receipt, it would have to be companysidered whether the agency was in the nature of capital asset in the hands of the assessee, or whether it was only part of his stock-in-trade. Thus in Barr Crombie Sons Ltd. v. Commissioners of Inland Revenue 3 , the agency was found to be practically the sole business of the assessee, and the receipt of companypensation on account of it was accordingly held to be a capital receipt, while in Kelsalls case the agency which was terminated was one of several agencies held by the assessee and the companypensation amount received therefor was held to be a revenue receipt, and that was also the case in the Commissioner of Income-tax and Excess Profits Tax, Madras v. The South India Pictures Ltd., Karaikudi 1 . We may in this companytext also numbere the further observations made by this Court- 1 1956 S.C.R. 223 228, 2 1933 18 Tax Cas. 280, 300. 3 1945 26 Tax Cas. 406. But apart from these and similar instances, it might, in general, be stated that payments made in settlement of rights under a trading companytract are trading receipts and are assessable to revenue. But where a person who is carrying on business is prevented from doing so by an external authority in the exercise of a paramount power and is awarded companypensation therefor, whether that receipt is a capital receipt or a revenue receipt will depend upon whether it is companypensation for injury inflicted on a capital asset or on a stock-in-trade. The decision in the Glenboig Union Fireclay Co., Ltd. v. The Commissioners of Inland Revenue 1 applies to this category of cases. There, the assessee was carrying on business in the manufacture of fire-clay goods and had, for the performance of that business, acquired a fire clay field on lease. The Caledonian Railway which passed over the field prohibited the assessee from excavating the field within a certain distance of the rails, and paid companypensation therefor in accordance with the provisions of a statute. It was held by the House of Lords that this was a capital receipt and was number taxable on the ground that the companypensation was really the price paid for sterilising the asset from which otherwise profit might have been obtained. That is to say, the fire clay field was a capital asset which was to be utilised for the carrying on of the business of manufacturing fire clay goods and when the assessee was prohibited from exploiting the field, it was an injury inflicted on his capital asset. Where, however, the companypensation is referable to injury inflicted on the stock- in-trade, it would be a revenue receipt. Vide the Commissioners of Inland Revenue v. Newcastle Breweries Ltd. 2 . It is numberdoubt true that this Court was number companycerned with any agency agreement in the last mentioned case and the observations made by this Court there were by way of obiter dicta. The obiter dicta of this Court, however, are entitled to companysiderable weight and we on our part fully endorse the same. The earlier case of Commissioner of Income-tax and Excess Profits Tax, 1 1922 12 Tax Cas. 427. 2 1927 12 Tax Cas. 927. Madras v. The South India Pictures Ltd. 1 was indeed a case where the assessee had entered into agency agreements for the exploitation of the three films in question, but in that case the companyclusion was reached that entering into such agency agreements for acquiring the films was a part of the assessees business and the agreements in question having been entered into by the assessee in the ordinary companyrse of business the cancellation of those agreements was also a part of the assessees business and was resorted to in order to adjust the relation between the assessee and the producer of those films. It would number be profitable to review the various English decisions bearing on this question as they have been exhaustively reviewed in the above decisions of this Court. The position as it emerges on a companysideration of these authorities may number be summarised. The first question to companysider would be whether the agency agreement in question for cancellation of which the payment was received by the assessee was a capital asset of the assessees business, companystituted its profit making apparatus and was in the nature of its fixed capital or was a trading asset or circulating capital or stock-in-trade of his business. If it was the former the payment received would be undoubtedly a capital receipt if, however, the same was entered into by the assessee in the ordinary companyrse of business and for the purpose of carrying on that business, it would fall into the latter category and the companypensation or payment received for its cancellation would merely be an adjustment made in the ordinary companyrse of business of the relation between the parties and would companystitute a trading or a revenue receipt and number a capital receipt. We may perhaps appropriately refer at this stage to an aspect of this question which was canvassed before us with some force and it was that there was numberenforceable agreement as between the assessee and the Company which companyld be made the subject-matter of a legal claim for damages or companypensation at his instance in the event of its termination or cancellation by the Company. The agency agreement was 1 1956 S.C.R 223, 228. terminable at the will of the Company and if the Company chose to do so the assessee had numberremedy at law in regard to the same. It is, however, to be remembered that in all these cases one has really got to look to the nature of the receipt in the hands of the assessee irrespective of any companysideration as to what was actuating the mind of the other party. As Rowlatt, J., observed in the case of Chibbett v. Joseph Robinson Sons 1 - As Sir - Richard Henn Collins said, you must number look at the point of view of the person who pays and see whether he is companypellable to pay or number you have to look at the point of view of the person who receives, to see whether he receives it in respect of his services, if it is a question of an office and in respect of his trade, if it is a question of trade and so on. You have to look at his point of view to see whether he receives it in respect of those companysiderations. This is perfectly true. But when you look at that question from what is described as the point of view of the recipient, that sends you back again, looking, for that purpose, to the point of view of the payer number from the point of view of companypellability or liability, but from the point of view of a person inquiring what is this payment for and you have to see whether the maker of the payment makes it for the services and the receiver receives it for the services. The learned Judge further observed at p. 61 But at any rate it does seem to me that companypensation for loss of an employment which need number companytinue, but which was likely to companytinue, is number an annual profit within the scope of the Income-tax at all. See also W. A. Guff v. Commissioner of Incometax, Bombay City 2 where the question whether the amount paid was companypensation for which the employer was liable or was a payment made ex-gratia was companysidered immaterial for the purpose of the decision in that case . It was also urged that the agency in question before us was number an enduring asset of the assessees business as in its very nature it was terminable at will, 1 1924 9 Tax Cas. 48, 60. 2 1957 31 I.T.R. 826. there being numberagreement or arrangement for a fixed term between the assessee and the Company. On the analogy of the test laid down by this Court in Assam Bengal Cement Co., Ltd. v. The Commissioner of Income-tax, West Bengal 1 while companysidering the distinction between a capital expenditure and a revenue expenditure, it was argued that the agency agreement in question companyld number be a capital asset of the assessees business in so far as it was number of an enduring character and the companypensation paid for its termination companyld number therefore be a capital receipt in the hands of the assessee. Whatever be the position, however, in the case of the acquisition of an asset by the assessee by making a disbursement for the purchase of the same, similar companysiderations would number necessarily operate when the amount is received by the assessee for the termination or cancellation of an asset of his business. The character of such a receipt would indeed have to be determined having regard to the fact whether the asset in question was a capital asset of the business or a trading asset thereof. For this purpose it will be immaterial whether that asset was of an enduring character or was one which was terminable at will. We have therefore got to determine whether the agency in question before us was a capital asset of the assessees business. One of the relevant companysiderations in the matter of such determination has been whether the asset was in the nature of fixed capital or companystituted the circulating capital or stock-in-trade of the assessees business. This question was thus dealt with by Viscount Haldane in John Smith Sons v. Moore 2 - But what was the nature of what the Appellant here had to deal with ? He had bought as part of the capital of the business his fathers companytracts. These enabled him to purchase companyl from the companyliery owners at what we were told was a very advantageous price, about fourteen shillings per ton. He was able to buy at this price because the right to do so was part of the 1 1955 1 S.C.R. 972. 2 1921 12 Tax Cas. 266, 282. assets of the business. Was it circulating capital ? My Lords, it is number necessary to draw an exact line of demarcation between fixed and circulating capital. Since Adam Smith drew the distinction in the Second Book of his Wealth of Nations , which appears in the chapter on the Division of Stock, a distinction which has since become classical, economists have never been able to define much more precisely what the line of demarcation is. Adam Smith described fixed capital as what the owner turns to profit by keeping it in his own possession, circulating capital as what he makes profit of by parting with it and letting it change masters. The latter capital circulates in this sense. My Lords, in the case before us the Appellant, of companyrse, made profit with circulating capital, by buying companyl under the companytracts he had acquired from his fathers estate at the stipulated price of fourteen shillings and reselling it for more, but he was able to do this simply because he had acquired, among other assets of his business, including the goodwill, the companytracts in question. It was number by selling these companytracts, of limited duration though they were, it was number by parting with them to other masters, but by retaining them, that he was able to employ his cir- culating capital in buying under them. I am accordingly of opinion that though they may have been of short duration, they were numbere the less part of his fixed capital . In the case before us the agency agreement in respect of territory outside the Hyderabad State was as much an asset of the assessees business as the agency agreement within the Hyderabad State and though expansion of the territory of the agency in 1939 and the restriction thereof in 1950 companyld very well be treated as grant of additional territory in 1939 and the withdrawal thereof in 1950, both these agency agreements companystituted but one employment of the assessee as the sole selling agents of the Company. There is numberhing on the record to show that the acquisition of such agencies companystituted the assessees business or that these agency agreements were entered into by the assessee in the carrying on of any such business. The agency agreements in fact formed a capital asset of the assessees business worked or exploited by the assessee by entering into companytracts for the sale of the charminar cigarettes manufactured by the Company to the various customers and dealers in the respective territories. This asset really formed part of the fixed capital of the assessees business It did number companystitute the business of the assessee but was the means by which the assessee entered into the business transactions by way of distributing those cigarettes within the respective territories. It really formed the profit-making apparatus of the assessees business of distribution of the cigarettes manufactured by the Company. If it was thus neither circulating capital number stock-in-trade of the business carried on by the assessee it companyld certainly number be anything but a capital asset of its business and any payment made by the Company as and by way of companypensation for terminating or cancelling the same would only be a capital receipt in the hands of the assessee. It would number make the slightest difference for this purpose whether either one or both of the agency agreements were terminated or cancelled by the Company. The position would be the same in either event. As was observed by Lord Wrenbury in the Glenboig Union Fire-Clay Co., Ltd. v. The Commissioners of Inland Revenne 1 at p. 465- The matter may be regarded from another point Of view the right to work the area in which the working was to be abandoned was part of the capital asset companysisting of the right to work the whole area demised. Had the abandonment extended to the whole area all subsequent profit by working would, of companyrse have been impossible but it would be impossible to companytend that the companypensation would be other than capital. It was the price paid for sterilising the asset from which otherwise profit might have been obtained. What is true of the whole must be equally true of part. If both the agency agreements, viz., one for the territory within the Hyderabad State and the other for the territory outside Hyderabad State had been 1 1922 12 Tax Cas. 427. terminated or cancelled on payment of companypensation, the whole profit-making structure of the assessees business would have been destroyed. Even if one of these agency agreements was thus terminated, it would result in the destruction of the profit-making apparatus or sterilisation of the capital asset pro tanto and if in the former case the receipt in the hands of the assessee would only be a capital receipt, equally would it be a capital receipt if companypensation was obtained by the assessee for the termination or cancellation of one of these agency agreements which formed a capital asset of the assessees business. The facts of the present case are closely similar to those which obtained in the Commissioner of Incometax v. Shaw Wallace Co. 1 . In that case also the assessees had for a number of years prior to 1928 acted as distributing agents in India of the Burma Oil Company, and the Anglo-Persian Oil Company, but had numberformal agreement with either Company. In or about the year 1927 the two companypanies companybined and decided to make other arrangements for the distribution of their products. The assessees agency of the Burma Company was accordingly terminated on December 31, 1927, and that of the AngloPersian Company on June 30, following. Some time in the early part of 1928 the Burma Company paid to the assessee a sum of Rs. 12,00,000 as full companypensation for cessation of the agency and in August of the same year the Anglo-Persian Company paid them another sum of Rs. 3,25,000 as companypensation for the loss of your office as agents to the companypany On the facts and circumstances of the case the Privy Council came to the companyclusion that the sums companyld only be taxable if they were the produce, or the result of, carrying on the agencies of the oil companypanies in the year in which they were received by the assessees. But when once it was admitted that they were sums received number for carrying on that business, but as some Sort of solatium for its companypulsory cessation, the answer seemed fairly plain. Whatever be the criticism in regard to the companycept of income adopted in this case numbered 1 1932 L.R. 59 I. A. 206,212. earlier in this judgment, the decision companyld just as well be supported on the grounds which we have hereinbefore discussed and was quite companyrect, the payments having been received by the assessees as and by way of companypensation for the termination Or cancellation of the agency agreements in question which were in fact the capital assets of the assessees business. The Appellate Assistant Commissioner as well as the High Court were thus justified in the companyclusion to which they came, viz., that the sum of Rs. 2,19,343 received by the assessee from the Company was a capital receipt. The result, therefore, is that the appeal fails and will stand dismissed with companyts throughout. KAPUR, J.-I have had the advantage of perusing the judgment prepared by my learned brother Bhagwati, J., but with great respect I am unable to agree and my reasons are these. The sole question for determination in this case is as to whether a sum of Rs. 2,26,263 received by the assessees from. Vazir Sultan Tobacoo Co. Ltd. as companypensation for the termination of their agency for the distribution of charminar cigarettes in areas of India other than Hyderabad State is or is number taxable in the hands of the assessees. The answer to this question depends on whether the amount has been received by the assessees as a capital or a revenue receipts. In 1931 the assessees were appointed distributing agents for Hyderabad State only and for the rest of India in 1939, the agency companymission in each case being a discount of 2 on the gross selling price. The agency of 1939 was terminated by a resolution dated June 16, 1950, on payment of the companypensation amount already mentioned but the assessees companytinued to be distributors for Hyderabad State. It must here be mentioned that the agency in question was terminable at will, and that any companypensation paid for it would prima facie be revenue. During the accounting year the amount of income, profits and gains of the assessees from the cigarette distribution business and from another source, i. e., Acid Factory within the State of Hyderabad was Rs. 4,53,159. The order of the Income-tax Officer or the Appellate Tribunal does number show bow much of this sum was attributable to the Cigarette distribution business and how much to the other source. There is numberfinding as to how and to what extent, if any, the business of the assessees was affected by the cesser of distribution business outside that State. The question number arises did the assessees receive the companypensation in lieu of the companymission they otherwise might or would have earned if the agreement had companytinued or did they receive it as companypensation for the destruction of a profit-making asset. The answer to this question would again be dependent upon whether the receipt in question is attributable to a fixed capital asset or to circulating capital. These two terms have been used in a number of cases but as applied to agencies companypensation will be a capital receipt if it is received as the value of the agency, i.e., it is a price of the business as if it is brought to sale. On the other band it is revenue receipt if it is paid in lieu of profits or companymission. In Van Den Berghs Ltd. v. Clark 1 Lord Macmillan described circulating capital as capital which is turned over and in the process of being turned over yields profit or loss. Fixed capital is number involved directly in that process and remains unaffected by it . As was said by Lord Macmillan in the same case, it is number possible to lay down any single test as infallible or any single criterion as decisive in the determination of the question. Ultimately it, must depend upon the facts of a particular case. The assessees rested then case on the decision of the Privy Council in Commissioner of Income-tax v. Shaw Wallace Co. 2 on which the High Court has mainly relied. In that case the assessees carried on business in India as merchants and agents for various companypanies. They were distributing agents for two on companypanies. These two agencies were terminated and a sum of Rs. 12,00,000 was paid as companypensation for the loss of these agency rights and the question was 1 1935 19 Tax Cas. 390. 2 1932 L.R. 59 I.A. 206. whether this was a capital payment. It was held to be a capital and number a revenue receipt because the, sum received was number the result of carrying on the agencies of the oil companypanies, in other words, it companyld 1 number be regarded as profits or gains from carrying on the business but was received in the nature of a solatium for cessation. The case was decided on the interpretation of the word business as defined in s. 2 4 of the Income-tax Act, under which it includes any trade, companymerce or manufacture, or any adventure or companycern in the nature of trade, companymerce or manufacture . These words, it was held, were wide but underlying each of them is the fundamental idea of the companytinuous exercise of an activity which was also the idea underlying the relevant words of s. 10 1 of the Act, in respect of the profits or gains of any business carried on by him , i. e., it is to be the profit earned by a process of production. The test of income was its periodicity because it companynotes a periodical monetary return. This test of periodicity was number accepted by the Privy Council itself in Raja Bahadur Kamakshya Narain Singhs case 1 . Lord Wright there said income is number necessarily the recurrent return from a definite source, though it is generally so . The test of periodicity was rejected by this Court in Raghuvanshi Mills Ltd. v. Commissioner of Income-tax 2 where Bose, J., said that the remarks of periodical monetary return must be companyfined to the facts of that case and it was held that money received from an insurance companypany for insurance against losses was income representing loss of profits as opposed to loss of capital. In a later case The Commissioner of Income-tax v. The South India Pictures Ltd. 3 it was said that if Shaw Wallace Co. had other agencies similar to those of the two oil companypanies it would be difficult to reconcile the decision in that case with the later decisions in Kelsall Parsons Co. v. Commissioners of Inland Revenue 4 and other cases Per Das, C. J. . In view of the decision in the South India Pictures case and the observations of Bose, J., in the 1 1943 L.R. 70 I.A. 180. 2 1953 S.C.R. 177, 183. 3 1956 S.C.R. 223, 232. 4 1938 21 Tax Cas. 608. case of Raghuvanshi Mills Ltd. 1 the authority of Shaw Wallace Co.s case 2 must be taken to be companysiderably shaken. We have then to see how the question has to be determined. Various tests have been laid down in decided cases. According to Lord Cave, L. C., an expenditure made number only once and for all but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade has been treated as properly attributable to capital and number to revenue. British Insulated Cables 3 . According to Lord Atkinson the word asset need number be companyfined to something material and Romer, L. J., has added that the advantage paid for need number be ,of a positive character and may companysist in the getting rid of an item of fixed capital that is of an onerous character Anglo-Persian Oil Co. v. Dale 4 . If the receipt represents the aggregate of profits which an assesee would otherwise have received over a series of years the lump sum might be regarded as of the same nature as the ingredients of which it was companyposed 19 Tax Cas. 390 at p. 431 5 but it is number necessarily in itself an item of income per Lord Buckmaster in Glenboig Union Fireclay Co. 6 . In Van Den Berghs case 7 there were three agreements between a British and a Dutch companypany operative till 1940 making it possible for them to carry on their business in friendly alliance and providing for the sharing of profits in certain proportions. The agreements were terminated in 1927 and the Dutch companypany paid the English companypany a sum of pound 450,000 as companypensation. The question was the charac- ter of the receipt-whether capital or revenue. It was held by the House of Lords that it was the former because the agreements were number ordinary companymercial companytracts in the companyrse of carrying on their trade they were number companytracts for the disposal of their employees or for the engagement of agents or other employees 1 1953 S.C.R. 177, 183 2 1932 L.R. 59 I.A. 206 3 1926 A.C. 205, 213, 222. 4 1932 1 K. B. 124, Van Den Berghs Ltd. v Clark 6 1922 12 Tax Cas. 427, 464. 7 1935 19 Tax Cas. 390. for the companyduct of their business number were they merely agreements as to how their trading profits when earned should be distributed as between the companytracting parties. On the companytrary the agreements related to the whole structure of the recipients profit making apparatus. They regulated its activities, defined what it might or it might number do and affected the whole companyduct of its business . According to Lord Macmillan if the agreements formed the fixed framework within which the circulating capital operated, then they are number incidental to the working of its profit-making machine but were essential parts of the mechanism itself and therefore they would result in a capital receipt and number revenue receipt. Thus the agreements were designed to ensure that the business was carried on to the best advantage but they did number themselves form part of the business. They were number agreements which must be regarded as pertinent to trading activities which yielded profits. As such the totality of payments on account of those agreements were held to be a capital receipt. The various decided cases demarcate the areas on the two sides of the line in which a receipt may lie and in every case it has to be determined as to whether it falls on one side or the other. The simplest case is of income from property or business as distinct from something received in lieu of property or business itself. One illustration of this is insurance against fire, destruction or damage and insurance against loss of profit, the former would bring in companypensation in the nature of a capital. Another instance is where the whole business is bought over and the receipt is the price of the business itself as opposed to a lump sum payment for the loss of profit calculated on a proper basis. The test of income, i. e., periodicity or recurrence at fixed intervals has been doubted in this Court. Raghuvanshi Mills 1 . Another test is afforded by cases of tangible immoveable property. If an owner of such property is paid companypensation for number working a part of his property, 1 1953 S.C.R. 177, 183. e. g. a part of the demised premises the companypensation is number profit because it is payment for sterilising that part of the asset from which otherwise profit might have been obtained. Glenboig Union Fireclay case 1 at p. 464 . There is numberdifference in cases of this kind whether the abandonment extends to the whole area or is circumscribed to a part because in either case it is sterilising an asset from which otherwise profit might have been obtained. It makes numberdifference whether it may be regarded as a sale of the asset out and out or it be treated merely as a means of preventing the acquisition of profit that would otherwise be gained. In either case the asset of the companypany to that extent has been sterilised or destroyed . Another test is whether the agreement related to the whole structure of recipients profit-making apparatus and affected the whole companyduct of his business or was the loss of a part of the fixed framework of the business. If it is, it is capital Van Den Berghs case 2 . But companypensation for temporary and variable elements of the recipients profit-making apparatus would be revenue MacDonalds case 3 . If the agreement affects the whole structure and character of the recipients business then it is capital but number if the structure of the business is so designed as to absorb the shocks as by the cancellation of one agency Kelsall Parsons case 4 . In Bush Beach and Gent Ltd. v. Road 5 again the test of how the cancellation of the agreement affected the recipients business was applied. Barr Crombies case 6 is a case of capital asset as there the recipient lost his entire business which resulted in reduction of staff, salaries and even in office accom- modation. The result was the cesser of its trading existence. The transaction took the form of a transfer for a price from one party to another of something that formed part of the enduring asset of one of them. Compensation for the loss of an agency would be for the loss of a capital asset if the termination of the 1 1922 12 Tax Cas. 427, 464. 2 1935 19 Tax Cas. 390. 3 1955 36 Tax Cas. 388. 4 1938 21 Tax Cas. 608. 5 1939 22 Tax Cas. 519. 6 1945 26 Tax Cas. 406. agency was a damage to the recipients business structure such as to destroy or materially cripple the whole structure involving serious dislocation of the numbermal companymercial organisation but if it was merely companypensation for the loss of trading profit, i. e., in respect of companymissions or it took the place of companymission that would have been earned if the engagement had companytinued then it is revenue Wiseburg v. Domville 1 . So that the decision as to whether companypensation was capital or revenue would depend upon whether the cessation of the agency destroys or materially cripples the whole structure of the recipients profit making apparatus or whether the loss is of the whole or part of the framework of business. If we apply these tests to the agreement which has been terminated in the present case, it does number fall in any of the class of cases of destruction of a capital asset. For the appellant reliance was placed on the observations of Venkatarama Aiyar, J., in Commissioner of Income-tax v. Rai Bahadur Jairam Valji 2 where it was pointed out that in an agency companytract the actual business companysists in the dealings between the principal and his customers and the work of the agent is only to bring about that business. In other words what the agent does is number business itself but something which is intimately and directly linked with it. But an examination of the companytext shows that that is number what these observations mean. The point that was to be decided in that case was whether a payment of companypensation for the cancellation of a trading companytract was a capital or revenue receipt, and dealing with decisions relating to the cancellation of agency companytracts which were quoted in support of the companytention that they were capital, the learned Judge observed that companysiderations applicable to agency companytracts were inapplicable to trading companytracts, because the two classes of companytracts, were essentially different, and these differences were there pointed out. The purpose of these observations was to show that receipts from 1 1956 36 Tax Cas. 527. 2 1959 SUPP. 1 S.C.R. 110 1959 35 I.T.R. 148, 161, 163. trading companytracts were revenue and number that receipts from agency companytracts are capital. That that is the true scope of these observations is clear from the following passage In holding that companypensation paid on the cancellation of a trading companytract differs in character from companypensation paid for cancellation of an agency companytract, we should number be understood as deciding that the latter must always, and as a matter of law be held to be a capital receipt. Such a companyclusion will be directly opposed to the decisions in Kelsalls case 1 and Commissioner of Income-tax v. South India Pictures Ltd 2 . The fact is that an agency companytract which has the character of a capital asset in the hands of one person may assume the character of a trading receipt in the hands of another, as, for example, when the agent is found to make a trade of acquiring agencies and dealing with them . The Court there observed that when the assessee holds a number of agencies, the companypensation paid for cancellation of any of them companyld be regarded as revenue receipt. This is inconsistent with the companyclusion that an agency companytract must always be regarded as a capital asset. The learned Judges further observed that they were number elaborating this part as they were there companycerned with a trading companytract and therefore the statement as to when receipts from agency companytracts companyld be regarded as revenue receipts cannot be read as exhausting the circumstances under which they companyld be held to be revenue. As a matter of fact there are three kinds of cases of agencies shown by the decided cases 1 Kelsall Parsons case 1 where the recipient was carrying on several agencies and the test laid down was whether the business structure companyld absorb a shock of the terminate on of one. The other is where the companypensation is for a temporary and variable element of assessees profit making apparatus MacDonalds case 3 . 3 The third class of cases is represented by 1 1938 21 Tax Cas. 608. 2 1956 S.C.R. 223, 232. 3 1955 36 Tax Cas. 388. Fleming Co.s case 1 where the rights and advantages surrendered were such as to destroy or materially cripple the whole structure of the profit making apparatus. The agencies themselves are of different kinds 1 where the agent himself carries on the business and sells the product of the principal and gets companymission for it 2 where the agents function is companyfined to bringing the principal and the customer together and be gets agency companymission for the performance of only that service 3 where the agent is a distributor and distributes the products of the principal through his sub-agents and charges companymission for the distribution work. Cases 1 and 3 would number strictly fall within the scope of the observations in Commissioner of Income-tax v. R. B. Jairam Valji 2 and case 2 would fall within the second class of agreements mentioned in Van Den Berghs case 3 . The agreement which is number before us and which was surrendered was terminable at will. The amount of profit which the assessee made from working the agency companytract in Hyderabad State alone was much more than the amount which the assees received for the termination of the whole of their agency outside the State. Thus it is clear that the termination did number affect the trading activities of the assessees and therefore the termination of the companytract viewed against the background of the assessees business Organisation and profit-making structure appears to be numbermore than companypensation for the loss of future profit and companymission. The true effect of the facts of this case appears to be this that in 1939 the assessees area of distribution was increased from the State of Hyderabad to the whole of India and in 1950 it was again reduced to the original area of 1931. The assessees never lost their agency. As a result of this companytraction of area they at the most have lost some agency companymission. The companypensation therefore was in the nature of surrogatum and in this view of the matter it is revenue and number capital. 1 1951 33 Tax Cas. 57. 2 1959 Supp. 1 S.C.R. 110 1959 35 I.T.R. 148, 161, 163. 3 1935 19 Tax Cas. 390. I would therefore allow this appeal with companyts throughout.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 204 of 1958. Appeal from the judgment and decree dated January 6, 1956, of the Calcutta High Court in Income-tax Reference No. 74 of 1953. N. Rajagopal Sastri, R. H. Dhebar and D. Gupta, for the appellant. Radha Binod Pal, Panchanan Pal and D. N. Mukherjee, for the respondents. 1959. March 26. The Judgment of the Court was delivered by SINHA, J.-The question for determination in this appeal on a certificate of fitness granted by the High Court of Calcutta, is whether the respondents admitted income tinder certain heads, is chargeable to income-tax under the provisions of s. 10 6 of the Indian Income-tax Act, 1922 XI of 1922 hereinafter referred to as the Act . The Calcutta High Court, by its judgment dated January 6, 1956, answered the question in the negative, disagreeing with the determination of the Income-tax Appellate Tribunal by its order dated April 23, 1949. The facts of this case, upon which the decision of the appeal depends, may shortly be stated as follows The respondent is a limited liability companypany incorporated on June 7, 1933, with a view to taking over the assets and liabilities of an unincorporated association called The Calcutta Stock Exchange Association and to carrying on the affairs of the Stock Exchange which had been founded by that Association. The principal object of the Respondent Company is to facilitate the transaction of business on the Calcutta Stock Exchange. In view of that objective, the Company had to make rules and by-laws, regulating the mode and the companyditions in, and subject to, which the business of the Stock Exchange had to be transacted. The Company is companyposed of members who may be either individuals or firms, who, except in the case of parties who had been members of the unincorporated Association have to be elected as such, and upon such elections, have to acquire a share of the Company and pay an entrance fee. The members have to pay a monthly subscription according to the by-laws of the Company. Under the by-laws of the Respondent Company, members with a certain standing, are allowed to have Authorized Assistants , upto a maximum of six in number. Such Authorized Assistants are permitted the use of the premises of the Association and to transact business therein in the names and on behalf of the members employing them. The members have to pay an admission fee for such Authorized Assistants according to the following scale a for the first two Assistants Rs.1,000 b for the third Assistant Rs.2,000 c for the fourth Assistant Rs.3,000 d for the fifth Assistant Rs.4,000 e for the sixth Assistant Rs.5,000 f for replacement Rs.1,000 The last item of replacement fee of Rs. 1,000/- is meant to companyer the fee for substituting one Assistant by another. Before these by-laws were amended with effect from July 10, 1944, a member companyld have more than six such Assistants, but the number was limited to six by the new amendment which also provided that Members who have more than six Assistants, at present, shall number be allowed any replacement unless the number of Assistants in their firms has companye down to six maximum fixed . Rule 5 , as amended, is in these terms- Every candidate applying for admission as Assistant to a member must serve at least for one year as a probationer in the firm of that member. A probationer must apply to the Committee through the member in whose office he will serve as probationer in such form as may be prescribed by the Committee by paying Rs. 100/- as probationer fee which will number be refunded in any circumstances . It would, thus, appear that the rules relating to the admission of members Assistants, companyfer the benefit upon those members only-either individuals or firms-who are qualified according to the by-laws to have such Assistants, and who have paid admission fees and pay a monthly subscription in respect of each of them, besides their own dues, to the Company. The number of such Assistants has been sought by the by-laws to be limited upto a maximum of six, by imposing a progressively enhanced admission fee, apparently, with a view to discouraging the employment of a large crowd of such Authorized Assistants. The by-laws also provide that an authorized assistant shall number enter into any companytracts on his own behalf and all companytracts made by him shall be made in the name of the member employing him and such member shall be absolutely responsible for the due fulfilment of all such companytracts and for all transactions entered into by the authorized assistant on his behalf It is also companytemplated by the by-laws that tickets have to be issued to the Authorized Assistants, besides the members tickets. The bylaws also companytemplate that a member shall give to the prescribed Authority of the Company an immediate numberice in writing, of the termination of the employment by him of any Authorized Assistant, and on such termination, the right of the Assistant to use the rooms of the Association, shall cease, and he shall number be at liberty to transact business in the name and on behalf of his employer. The by-laws also make provision for the supervision of the work of the Authorized Assistants to see that they function within the limits of their powers, and do number transact business on behalf of persons or firms other than those employing them. During the accounting year 1944-45 assessment year 1945-46 , the Respondent Company received from its members the sum of Rs. 60,750/- as entrance fees, and the sum of Rs. 15,687/- as subscription in respect of the Authorized Assistants. The Company also received during the aforesaid year, a sum of Rs. 16,000/- as fees for putting the names of companypanies on the Quotations List. Unless a particular companypanys name is placed on the Quotations List, numberdealings in respect of the shares of that companypany are permitted on the Stock Exchange. An application has to be made by a member to place on the Quotations List any companypany number already included in that List, and on approval by the prescribed Authority of the Company, the name of the companypany thus proposed, is included in the List upon payment of a certain fee. The companypanies themselves cannot apply to the Association for such enlistment. The application has to be made by a member, and has to be accompanied by a fee of Rs. 1,000/-, and it is only after the necessary scrutiny and investigation into the affairs of the proposed companypany have been made, that the enlistment applied for is granted. That is another source of income to the Respondent Company. It is numbermore necessary to refer to another item of income, which was admitted, during the companyrse of the assessment proceedings in their appellate stage, to be liable to the payment of tax. We are, thus, companycerned in the present companytroversy with the aforesaid sums of Rs. 60,750/-, Rs. 15,687/- and Rs. 16,000/-which were held by the Income-tax Officer, by his order dated March 27, 1946, to be liable to income-tax. The Income-tax Officer rejected the companytention raised on behalf of the assessee Company that the Authorized Assistants aforesaid were themselves members of the Company, and that therefore, the moneys received from them were exempt from taxation. He also held that though the Respondent Company was a mutual Association, each one of the three items of income, referred to above, was remuneration definitely related to specific services performed, and was thus, chargeable to tax within the meaning of s. 10 6 of the Act. On appeal, the Appellate Assistant Commissioner, by his order dated June 30, 1947, companysidered the points at great length, and came to the companyclusion that the authorized Assistants were number members or substitute members. He held that the Authorized Assistants were numbermore than representatives of the members who employ them, and they transact business on their behalf, and that the Association had framed rules and by-laws, regulating the admission, supervision and discontinuance of such Authorized Assistants. For companying to this companyclusion, he relied upon the decision of the Bombay High Court in the case of Native Share and Stock Brokers Association v. The Commissioner of Income-tax 1 . The case was then taken up in appeal to the Income-tax Appellate Tribunal, which dismissed the appeal. The Tribunal agreed with the finding of the taxing authorities that the Authorized Assistants were number members of the Company within the meaning of the Articles of Association of the Company, and that their position was analogous to that of the authorised clerks in Native Share and Stock Brokers Association at Bombay . In the companyrse of its order, the Tribunal observed as follows- The provision made in the regulations of the companypany, by which a member can take advantage of sending his authorised assistants to the companypany for transacting the business in the member name is numberhing but giving extra facilities to the members. By companytrolling the institution of authorised assistants the companypany renders specific services to the members and in particular to the member whose assistants work for him. The amounts received by the companypany from these sources are clearly companyered by the provisions of section 10 6 . At the instance of the assessee, the Tribunal stated a case and referred the following questions of law to the High Court for its decision under s. 66 1 of the Act- Whether on the facts of this case the Incometax Appellate Tribunal was right in holding that, 1 1946 14 I.T.R. 628. Authorised Assistants were number members of the companypany and as such the amounts of Rs. 15,687/- and 60,750/- received from them as subscriptions and entrance fees respectively should be included in the assessable income. Were these amounts received for specific services performed by the Association or its members within the meaning of sub-section 6 of section 10 of the Indian Income-tax Act ? Whether the sums of Rs. 16,000/- and Rs. 600/-were remuneration definitely related to specific services performed by the Association for its members within the meaning of subsection 6 of section 10 . The reference was heard by a Division Bench companysisting of Sir Trevor Harries, C. J., and Banerjee, J., of the Calcutta High Court. Before that Bench, certain companycessions were made. It was companyceded by Dr. Pal, who also appeared before that Bench, that the Authorised Assistants were number members of the Company. It was also agreed at the bar, on behalf of both the parties, that the two sums of Rs. 60,750 and 15,687 were number received from the Authorized Assistants, as suggested in the question formulated, and that it was companymon ground that they were received from members of the Association in respect of their Authorized Assistants. Therefore, the High Court took the view that the questions framed by the Tribunal did number arise, and that the Tribunal bad proceeded on a wrong basis of facts. The High Court, therefore, re-cast the questions in these terms- Whether in the facts and circumstances of this case the Income-tax Appellate Tribunal was right in holding that a the amounts of Rs. 15,687/- and Rs. 60,750/-received from the members of the Association as subscriptions and entrance fees in respect of Authorized Assistants, and b the amounts of Rs. 16,000/- and Rs. 600/- received as fees for enlisting names of newly floated companypanies and for recognition of changes in the styles of firms respectively should be included in the assess. able income of the assessees The Tribunal was asked to re-state a case upon the questions as re-cast, extracted above. Accordingly, the Tribunal drew up a fresh statement of the case and re-submitted it to the High Court. On this re- statement of the case, the matter was heard by a Bench companysisting of Chakravarti, C. J., and Sarkar, J. The High Court companysidered the terms of s. 10 6 of the Act, and came to the companyclusion that the case had number been brought within those terms. The High Court, in the companyrse of its opinion, observed that though the assessee is undoubtedly a trade association, it did number perform any specific services for its members for remuneration. It then examined in detail the decision of the Bombay High Court in the case of Native Share and Stock Brokers Association v. The Commissioner of Income-tax 1 , relied upon by the Department, and observed that the differences pointed out between the case in hand and the case decided by the Bombay High Court, were number vital, though they are number immaterial , but it was number prepared to take the same view of the facts of this case as had been taken by the Bombay High Court in the case referred to above, or by the Travancore-Cochin High Court in the case of Commissioner of Income-tax v. Chamber of Commerce, Alleppey 2 . The High Court, accepted the argument of Dr. Pal, which is also addressed to us, that the words performing specific services for were far stronger and more definite than the words render service to , and that those words meant the actual doing of definite acts in the nature of services. The Court further observed that those words meant execute certain definite tasks in the interests and for the benefit of the latter that is to say, the members under an arrangement of a direct character . It further observed that the words for remuneration and definitely related to those services meant that certain specific tasks must be performed or functions of a specific character must be discharged for payment and such payment is to be made to the association as wages for its labour in respect of those tasks or functions . In this companynection, 1 1946 14 I.T.R. 628. 2 1955 27 I.T.R. 535. it may be added that the High Court also made the following observations bearing on the companystruction of the crucial words of s. 10 6 - When section 10 6 speaks of a trade, professional or other similar association performing specific services for its members for remuneration, it companytemplates, I think, services in regard to matters outside the mutual dealings for which the Association was formed and for the transaction of which it exists as a mutual association. If performance of functions even in regard to matters within the objects of the association as a mutual association be performance of specific service within the meaning of the sub-section, dis- charge of numberfunction can be outside it and everything done would be specific service performed. That, I do number think, is what the sub-section means and intends . It is manifest that unless the assessee is brought within the terms of sub- s. 6 of s. 10, the three items of income companying into the hands of the Association, would number be chargeable to income- tax. That subsection is in these terms- A trade, professional or similar association performing specific services for its members for remu- neration definitely related to those services shall be deemed for the purpose of this section to carry on business in respect of those services and the profits and gains therefrom shall be liable to tax accordingly . It has to be observed at the outset that the performing of the services of the description mentioned in that sub-section, may number, but for the words of that section, have amounted to carrying on business in respect of those services. The use of the word deemed shows that the legislature was deliberately using the fiction of treating something as business which otherwise it may number have been. It is also numbereworthy that the sub-section is companyched in rather emphatic terms. We have, therefore, to examine the terms of the sub-section to see whether the three sums of money in question, or any of them, are or is within the ambit of those terms. The words performing specific services , in our opinion, mean, in the companytext, companyferring particular benefits on the members. The word services is a term of a very wide import, but in the companytext of s. 10 of the Act, its use excludes its theolo- gical or artistic usage. With reference to a trade, pro- fessional or similar association, the performing of specific services must mean companyferring on its members some tangible benefit which otherwise would Dot be available to them as such, except for payment received by the association in respect of those services. The word remuneration , though it includes wages , may mean payment, which, strictly speaking, may number be called wages . It is a term of much wider import including recompense , reward , payment , etc. It, therefore, appears to us that the learned Chief Justice was number entirely companyrect in equating remuneration with wages . The sub-section further requires that the remuneration should be definitely related to the specific services. In other words, it should be shown that those services would number be available to the members or such of them as wish to avail themselves of those services, but for specific payments charged by the association as a fee for performing those services. After these observations bearing on the interpretation of the crucial words, we shall number examine each of the three items of income, separately, to determine the question whether they answer, or any of them answers, the description of services companytemplated by the sub- section. Firstly, the sum of Rs. 60,750 has been realised from such members as applied for and obtained permission of the Association to have the use of Authorized Assistants within the precincts of the Stock Exchange. There cannot be the least doubt that unless those members paid the prescribed entrance fees for one or more Authorized Assistants upto a maximum of six, they companyld number have the benefit thus companyferred upon such members. Ordinarily, a member has to transact business in the precincts of the Association by himself or by his business partner if there is a firm but if that member is a very busy person, and wishes to avail of the services of Authorized Assistants, he has to pay the the prescribed fee. A member of the Association, with the advantage of mutuality, so long as he transacts business within the precincts of the Association, by himself or by his partner in the case of a firm, is number required to pay any such entrance fee but only the fee payable by every member as such. The entrance fee, thus, is clearly chargeable only from such of the members as avail themselves of the benefit companyferred by the rules of the Association in that behalf. The entrance fee is, thus, a price paid for the services of the Association in making suitable arrangements for an absentee member to transact business on his behalf and in his name by his representative or agent. The entrance fee in question, therefore, cannot but be ascribed to the specific services rendered by the Association in respect of Authorized Assistants who thus become companypetent to transact business on behalf of their principal. Coming next to the sum of Rs. 15,687 which was realised from the members by way of subscription in respect of their Authorized Assistants, it is clear that this sum companysists of the companytributions severally made by the members periodically, so as to companytinue to have the benefit companyferred by the Association of having the use of their representative or agent even during their absence. There cannot be the least doubt that this is a very substantial benefit to those members who found it worth their while to engage the services of Authorized Assistants. A member is number obliged, as indicated above, to have such an Assistant, but the fact that he chooses to have such an Assistant on payment of the prescribed fee or subscription, itself, is proof positive that a businessman, who ordinarily thinks in terms of money, has found it worth-while to have the services of an Assistant by making an additional payment to the Association by way of recompense for the benefit, thus companyferred upon him. Lastly, the sum of Rs. 16,000 represents fees received from members for allowing their application for enlisting the names of companypanies number already on the Quotations List, so that the shares and stocks of these companypanies, may be placed on the Stock Market. As already indicated, it is number the companypany companycerned which has directly to pay this fee, but the fee has to be paid by the member who initiates the proposal and, apparently, finds it worth his while to pay that prescribed fee to the Association. He would number make the payment unless he found it worth his while to do so Apparently, such a member is interested in placing the stocks of that companypany on the market. It cannot, therefore, be denied that that sum of money is definitely related to the specific services performed by the Association, namely, to permit transactions in respect of the shares of the companypany companycerned, which services would number otherwise be available to the members as a body or to the individual member or members interested in that companypany. In our opinion, therefore, each one of the three sources of income to the Association, accrues to it on account of its performing those specific services in accordance with its rules and by laws. Each one of the three distinct sources of revenue to the Association, is specifically attributable to the distinct services performed by the Association for its members or such of them as avail themselves of those benefits. And each one of those services is separately charged for, according to the rate or schedule laid down by the rules and by-laws of the Association. In our opinion, therefore, the requirements of sub-s. 6 of s. 10, have been fulfilled in the present case. But we have yet to deal with the last argument accepted by the High Court, with reference to the terms of sub-s. 6 of s. 10, namely, that the services companytemplated therein, have reference to matters outside the mutual dealings for which the Association was formed . In the first place, there is numberwarrant for limiting the application of the words used by the legislature, in the way suggested. Secondly, the mutuality of the Association extends only to such benefits as accrue to every member on the payment made by him to the Association, but even if additional items of payment have to be made for additional services to be performed by the Association only for such of the members as avail themselves of those benefits, it cannot be said that the mutuality extends to those additional benefits also. It is, in our opinion, equally wrong to suggest that the services in question should have been outside the objects of the Association. If the Association renders services to such of its members as avail themselves of such services as are number within the scope of the business activities of the Association, those benefits, if any, would number be companyferred by the Association as such, because the Association has to function within the scope of its objects of incorporation. Hence, on a true companystruction of the provisions of the sub- section in question, we have companye to the companyclusion that the facts and circumstances of the present case, bring the three items of income of the Association within the taxing statute. In our opinion, the decision of the Bench of the Bombay High Court, companysisting of Stone, C. J., and Kania, J., as he then was , in the case of Native Share and Stock Brokers Association v. Commissioner of Income-tax is companyrect, and the facts of that case run very parallel to those of the case in band, though there may be minor differences in the rules and by-laws of the Association then before the Bombay High Court. In that case, as in the present one, the rules of the Stock Brokers Association the Bombay Stock Exchange companytemplated a definite scheme for allowing members to employ authorized clerks and for the admission, companyduct, companytrol and supervision of those clerks, for the benefit primarily of the members who employed them. It was held by the High Court that the income received by the Association by way of fees in respect of those authorized clerks, was within the taxing statute and liable to income-tax. After examining in detail the provisions of the rules and the by-laws of the Association, Stone, C. J., made the following observations which are equally applicable to the rules and by-laws of the Association in the present case - In my judgment these rules lay down a definite scheme and provide an organised arrangement, companytrolled and supervised by the Association for the benefit of its members. In my opinion the carrying 1 1946 14 I.T.R. 628. of their scheme into effect is performing services for its members by the Association. No doubt the benefit of the scheme would redound to the benefit of all members since all would have the advantage of disciplined supervision exercised over the authorised clerks and remisiers of the others. I do number think that because the payment for the carrying of the scheme is provided for only by members who avail themselves of the use of the authorised clerks it makes any difference. Kania, J., as he then was , in a separate but companycurring judgment, made the following very pertinent observations- A perusal of the rules referred to in the judgment of the learned Chief Justice shows that the institution of authorised clerks exists for the benefits only of those who pay remuneration of Rs. 100 instead of going to the market and carrying on their business themselves. Individual members are permitted to work through an agent. For that the charge is made. The rules provide for the application and grant for such permission, registration of the authoris- ed clerks on the individuals being recognised as clerks of particular members, supervision over the work of such clerks and particularly to prevent them from registering companytracts either in their own name or in the name of another member and a general supervision over their good behaviour is companytemplated A question was raised as to whether these are specific services to be performed for particular members or whether the rules amount to performance of duties towards members in general. It is true that several of the services to be rendered may be helpful to the other members for their business. Taken as a whole I companysider that as a performance of services by the Association for, the benefit of members who pay the remuneration. We have made these companyious quotations from the judgment of the Bombay High Court, because, in our opinion, they truly apply the provisions of sub-s. 6 of s. 10 to associations like the one before us. The other case to which our attention was drawn, is Commissioner of Income-tax v. Chamber of Commerce, Alleppey 1 . The facts of that case are number similar to those of the case before us, but the ratio decidendi of that case are relevant. That case referred to the Alleppey Chamber of Commerce. The Chamber inaugurated a produce section with the object of promoting the interests of merchants in general, and of those engaged in the produce trade, in particular, of acting as arbitrators and companylecting and publishing information relating to the produce trade. Members were admitted to the produce section on payment of admission fees, monthly fees and companytributions at certain prescribed rates. The question which was referred to the High Court, was whether the receipts by way of fees and companytributions, companyld be chargeable under s. 10 6 of the Act, and it was answered in the affirmative. Though cases in England, by way of precedent for the decision of the case in hand, have number been cited at the Bar, apparently because the scheme of the Income-tax law in England is different and the words of the statute are number in parti material yet there are some cases which throw some light on the companytroversy before us. For example, the case of The Carlisle and Silloth Golf Club v. Smith Surveyor of Taxes 2 related to a golf club which was number incorporated. It was admittedly a bonafide members club, but under one of the terms of its lease, it had to admit number-members to play on its companyrse on payment of green fees at certain prescribed rates. Those fees were paid by number -members. Receipts from those fees were entered in the general accounts of the Club, thus, showing an annual excess of receipts over expenditure of the Club as a whole. It was held by Hamilton, J., as he then was , that the Club carried on a companycern or business in respect of which it received remuneration which was assessable to income-tax. He pointed out that the 1 1955 27 I.T.R. 535. 2 1912 6 Tax Cas. 48. receipts from number-members went to augment the funds of the Club, and the revenue thus received was applied for the purposes of the Club-towards its general expenditure. The case was taken up to the Court of Appeal, and the decision of that Court is reported in the same Volume at p. 198. The Court of appeal affirmed the decision and dismissed the appeal. The Judgment of the Kings Bench Division in The Liverpool Corn Trade Association, Limited v. Monks H. M. Inspector of Taxes 1 was based on facts which are similar to the facts of the present case. In that case, the Liverpool Corn Trade Association, Limited, was an incorporated body under the Companies Act, with the object, inter alia, of protecting the interests of the companyn trade, and of providing a clearing house, a market, an exchange, and arbitration and other facilities to the trade. Membership of the Association was companyfined to persons engaged in the companyn trade. Each member was required to have one share in the companypany, and had to pay an entrance fee and an annual subscription. Non-members companyld also become subscribers. Payments were made to the Association by members and others for services rendered through the clearing house, etc. The assessee was taxed on the excess of its receipts over expenditure. On appeal to the Special Commissioners, they upheld the assessment. One of the points raised before the Special Commissioners, was that transactions with its members were mutual ones, and that any surplus arising from such transactions, was number a profit assessable to -income-tax. On appeal, the High Court agreed with the determination of the Special Commissioners, and held that any profit arising from the Associations transactions with members, was assessable to income tax as part of the profits of its business, and that the entrance fees and subscriptions received from members must be included in the companyputation of such profits. It was suggested that the service in this case, if any, was extremely trivial and the remuneration which was large was for that reason number definitely related to the 1 1926 Tax Cas. 442. service. It was held by Upjohn, J., in Bradbury H. M. Inspector of Taxes v. Arnold 1 that the extent of the services was of numbermateriality. There, the question was being dealt with under Case VI of Schedule D of the Income- tax Act, 1918. The learned Judge observed There is numberdoubt that a companytract for services may, and clearly does, form a matter for assessment under Case VI of Schedule D, and number the less so that the services to be rendered are trivial or that they are to be rendered once and for all so that the remuneration may be regarded as a casual profit arising, out of a single and isolated transaction. The same view was expressed by Harman, J., in Housden Inspector of Taxes v. Marshall 2 . In that case, a well- known jockey companytracted with a newspaper companypany to make available to its numberinee reminiscences of his life and experiences on the turf for the purpose of writing a series of four articles , and to provide photographs, press cuttings, etc. He was paid pound 750. The question was whether this amounted to sale of property, or was a payment for services rendered. It was held that it was the latter, and that it did number matter if the service rendered was trivial. In view of what we have said above as to the nature of the service which the Association performed in respect of the Assistants, the payment of the fee was definitely related to that service. It is, therefore, plain that the case fell within s. 10 6 of the Act. It must, therefore, be held that the question referred to the High Court should have been answered in the affirmative, and that the High Court was in error in giving its opinion to the companytrary.

Case appeal was accepted by the Supreme Court

CIVIL APPELATE JURISDICTION Civil Appeal No. 39 of 1959. Appeal by special leave from the judgment and order dated November 26, 1957, of the Bombay High Court at Rajkot in Special Civil Application No. 119 of 1956. V. Viswanatha Sastri, S. P. Mehta, J. B. Dadachanji, S. Andley and Rameshwar Nath, for the appellants. C. Setalvad, Attorney-General for India, R. Ganapathy Iyer and D. Gupta, for the respondent. 1959. April 14. 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 Judicature at Bombay dismissing the appellants petition under Art. 226. The appellant before us is a private limited companypany carrying on the business of manufacturing and selling textiles and the respondent is the Income-tax Officer of Porbander. Previous to the year 1949, in Porbander which became a part of the State of Saurashtra, there was numberincome-tax. In 1949 the Saurashtra Income-tax Ordinance hereinafter termed the Ordinance was promulgated which was applicable to the State of Saurashtra. By that Ordinance income-tax became leviable and from 1950 onwards when Saurashtra became part of the Union of India the Indian Income-tax Act hereinafter referred to as the Act became applicable by reason of the Finance Act of 1950 Act XXV of 1950 . The appellant Was taxed for the accounting year 1949, i.e., the assessment year 1950-51. In that year the amount of depreciation allowed under s. 10 2 vi of the Act was Rs. 3,43,869. The appellant companytinued to be assessed to income- tax in the assessment years 1952-53 and 1953-54 and the present appeal relates to the assessment of year 1953-54. According to the assessment order dated June 30, 1965, the amount of depreciation allowed for the assessment year 1953- 54 was Rs. 3,48,105. On August 8, 1955, the appellant made an application for rectification under s. 35 of the Act. In this application he pointed out several mistakes in calculations in regard to the depreciation amount. By his order of February 27, 1956, the Income-tax Officer companyrected the Written Down Value of the different properties of the appellant and determined the total allowable depreciation to be Rs. 1,94,074. The order of the Income-tax Officer was as follows To arrive at the Written Down Value of the assets it was necessary to maintain depreciation record. This being number done so far, is done number and working attached. Depreciation allowance as per rules is worked out at Rs. 1,94,074 as per working sheet attached. The companyrect companyputation of income is as under- Income before allowing depreciation as per original assessment orderRs.1,00,674 Less charity disallowed wrongly written Rs. 21,889 instead of Rs. 20,124 Rs.1,765 Income Rs.98,909 Less depreciation Rs.1,94,074 Rs.95,165 Less Dividend income as per origi- nal assessment order Rs.11,870 Loss. Rs.83,295 Loss on account of depreciation to be carried forward. Declared N. A. And thus the unabsorbed depreciation amount which under the assessment order of June 30, 1955, was Rs. 2,31,944 was reduced to Rs. 83.,295 and this was set off against the appellants income of the assessment year 1954-55. On February 29, 1956, the Income-tax Officer passed two provisional assessment orders for the years 1954-55 and 1955-56. In both these orders he calculated the depreciation amounts on the basis of the same Written Down Value as he had determined for the year 1953-54. The reasons for calculating them on the new basis were set out by the Income-tax Officer in his order dated May 18, 1956, and they were- Less Depreciation. The depreciation of the Company has number been properly calculated by arriving at, Written Down Value as per the Saurashtra Income Tax Ordinance and also as per Indian Income-tax Act. The assessee Company was being assessed regularly even as per Indian Income-tax Act. So Written Down Value of all assets are arrived at by working out the depreciation as per above Ordinance as well as Income Tax Act. The depreciation is worked out as per separate statement keeping in view the following Definition of assessee as per Indian Income-tax Act. The exact meaning of W.D. V. as per Income-tax Act. The meaning of W. D. V. as per the Saurashtra Income-tax Ordinance, 1949 and Rules Page 20, para. 13-5- A . 1. T. R. Volume 25, 558. Decision of Calcutta High Court as regards C. I. T., West Bengal,M s. Karnani Industrial Bank Ltd. Views expressed by Taxation Enquiry Commissioner, 1953- 54, Volume II, page 84, para. 34. Taxation Laws Part B State Removal of Difficulties Order, 1950. The depreciation thus worked out as per separate statement. On August 8,1955,the appllant made an application under s. 35 for certain companyrections in the calculations and the order thereon was passed on February 27, 1956, but numberwritten numberice of the intended rectifi- cation of the Written Down Value and the depreciation amount was given by the Income-tax Officer to the appellant under s, 35 read with s. 63 of the Act. On March 9, 1956, the appellant wrote to the Income-tax Officer protesting against the order- You have exercised powers number vested in you under the said Section, and you have gone beyond the purview of the Act by preparing statements and records which are prejudicial to the rights of the Company . The appellant requested the Income-tax Officer to cancel his previous order and to pass a fresh order companyrecting onlv those mistakes which had been pointed out by it On the same day the appellant sent another letter asking for the cancellation of the provisional assessment order for 1954-55 and requested for a revised assessment order on the basis of the return filed by it. The reply of the Income-tax Officer of the same date was that the order was companyrect and a similar order was made on the second application in regard to the assessment of 1954-55. On April 16, 1956, the appellant filed a petition in the High Court of Bombay under Arts. 226 and 227 in which it alleged that the Income-tax Officer had exceeded the limits of jurisdiction vested in him and exercised illegally jurisdiction number vested in him by law under Section 35 and passed orders, inter alia, and suo motu and without giving any prior numberice and altered the entire procedure and basis of calculating depreciation on the written down value of buildings and machinery of the petitioners The appellant prayed that the order made under s. 35 of the Act be quashed and an injunction issued restraining the Income-tax Officer from recovering the assessed tax. The High Court dismissed this petition on the ground that it companytained misstatements of fact that The advantage of this jurisdiction is number available to the subject when adequate and efficacious remedy is available to him under the ordinary law that the appellant companyld, under s. 33A of the Act, have gone in revision to the Commissioner. The High Court also held against the appellant on merits. The appellant has companye to this Court by special leave and three questions were raised 1 that numbernotice as required under s. 35 was given to the appellant 2 that there was numberrecord on the basis of which the rectifica. tion in the Written Down Value of the property companyld be made and 3 that there was numbermistake apparent from the record. The learned Attorney-General companytended in the first instance that the remedy available under Art. 226 is a discretionary one and if the High Court had exercised its discretion numberappeal was companypetent and in support of his companytention he relied upon the judgment of this Court in K. S. Rashid Son Income-tax Investigation Commission, etc. 1 , where Mukherjee, J., as he then was said- For purpose of this case it is enough to state that the remedy provided for in Art. 226 of the Constitution is a discretionary remedy and the High Court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere . It is number necessary to decide in this case whether the order passed under Art. 226 is of a discretionary nature and therefore in appeal this Court would number interfere with the exercise of discretion, because in our opinion, the case can be decided on other grounds of substance. The first question is that of numberice under s. 35 of the Act. The affidavit of the Income-tax Officer shows that the companyrectness of the figures for determining the depreciation was discussed with the appellants Secretary. The Income- tax Officer stated that The depreciation which was calculated in the assessment order of 1953-54 was as per the statement given by the petitioner. On submission of the said application the petitioner Shri Ganatra, the Secretary of the Mills was told that the depreciation will be given after rectifying mistakes. The petitioner had 1 1954 S.C.R. 738, 747. agreed to the same. There being numberrecord of the working out from the first available record in the Assessment order for the Assessment year 1943-44, the petitioner was also supplied with the companyy of the working of the depreciation along with the necessary rules and regulation for calculating the same . He also stated that the order of rectification was passed almost at the end of the financial year, after explaining and discussing all the above calculation along with the relevant rules and regulation of the calculated depreciation that the order was number passed without giving a reasonable opportunity to the appellant that the matter was discussed with its representative more than once thattheassessment for the year 1954-55 was made final after calculatitig the depreciation that the point of depreciation was numberraised by the applicantat any hearingand that even though numberwritten numberice was given, the represen- tative of the appellant was given numberice of the intended determination of the Written Down Values. He also stated Thus though numberwritten numberice is given, applicant is given numberice of the intention of calculating depreciation on record basis and is also allowed a reasonable opportunity of being heard inasmuch as he was given the calculation of depreciation on 21-2-1956 . The orders placed on the record show that the Income-tax Officer made calculation for the purpose of determining the depreciation amount and after giving deductions allowed by the Act and the Rules made thereunder arrived at the companyrected figure of Rs. 1,94,074 for the assessment year 1953-54. Apart from the fact that the petition of the appellant does number set out clearly all the facts which should have been set out, there is the affidavit of the respondent that the matter was discussed with the representative of the appellant although numberwritten numberice was given. In this companynection the learned Attorney-General has further submitted 1 that the order determining the depreciation amount allowable was number final 2 that the effect of the order making the rectification was number of enhancing the assessment or reducing the refund and 3 that the question of depreciation companyld be raised at the time of assessment in any subsequent year. The object of the provision as to numberice in s. 35 is that numberorder should be passed to the detriment of an assessee without affording him an opportunity but it cannot be said that the Rule is so rigid that if, as a matter of fact, the assessee knows of the proceedings and the matter has been discussed with him then an adverse order would be invalid merely because numbernotice under s. 63 was given. Of companyrse this postulates that a reasonable opportunity has been given to show cause. Secondly this provision is applicable only where the assessment is enhanced or-refund is reduced. Neither of those companytingencies has arisen in the present case. The depreciation allowed to the appellant in the year of assessment 1943-44 when the appellant was assessed as a number- resident, was Rs. 1,91,224. In the year 1944-45 there was numberasssessable income in British India and so also in 1945- In the year 1946-47 there was a loss. In the year 1947-48 as in the preceding years the sales were effected at Porbander and there was numbercollection made in British India. The total tax due was calculated at Rs. 43-11As. In 1948-49 the sales were Rs. 38,656 and they were assessed to income- tax on a total income of Rs. 9,326. For the accounting year 1948, i.e., the assessment year 1949-50 when the Ordinance came into force the total depreciation amount allowed was Rs. 3,66,925 which was much more than what was allowable on the Written Down Values determined in accordance with the provisions of the Ordinance which defined Written Down Value Written Down Value means- In the case of assets acquired in the previous year, the actual companyt to the assessee In the case of assets acquired before the previous year the actual companyt to the assessee less all depreciation actually allowed to him under this Ordinance or allowed under any Act repealed hereby or which would have been allowed to him if the Indian Income- tax Act, 1922, was in force in past . On the basis of this Ordinance and the other Statutes and Rules mentioned in his affidavit, which have been set out above, the Income-tax Officer-made the various calculations and determined the depreciation amounts which have given rise to the companytroversy before us. These calculations were based on the Written Down Values for the successive assessment years up to the year of assessment 1953-54. But it was argued by companynsel for the appellant that according to s. 10 5 b of the Act the Written Down Value in the case of assets acquired before the previous year mean the actual companyt to the assessee less all depreciation actually allowed to him under the Act or under any Act repealed thereby and therefore the provisions of the Saurashtra Ordinance which came to an end when the Act became applicable cannot form the basis of determining the Written Down Value for the purposes of assessment of the years 1950-51 onwards. In reply it was submitted that the Written Down Values were calculated and depreciation deter- mined for the year 1943-44 and should in subsequent years have been calculated in accordance with the provisions of the Ordinance and they companyld number become higher for purposes of s. 10 5 b of the Act merely because the Ordinance was replaced by the Act. In this companynection reference was made to s. 12 of the Finance Act, 1950, s. 12 of which empowered the Central Government to make provision for the removal of difficulties in giving effect to the provisions of any of the Acts, Rules or Orders extended by s. 3 or s. 11 of that Act, i. e., Finance Act, 1950. Under that section s. 12 the Taxation Laws Part B States Removal of Difficulties Order, 1950, was promulgated on December 2, 1950, and by cl. 2 of this Order provision was made for companyputation of aggregate depreciation allowance and Written Down Values. To this Order the following explanation was added on March 9, 1953 Notification No. S. R. 0. 477 - For the purposes of this paragraph, the expression all depreciation actually allowed under any laws or rules of a Part B State means and shall be deemed to have always meant the aggregate allowance for depreciation taken into account in companyputing the Written Down Value under any laws or rules of a Part B State or carried forward under the said laws or rules. But the appellants companynsel companytended that this explanation is ultra vires because it was promulgated under s. 60-A of the Act and that section was inapplicable to the Order made under s. 12 of the Finance Act, 1950. He relied on two cases decided by the Hyderabad High Court in S. V. Naik v. Commissioner of Income-tax 1 and Commissioner of Income- tax v. D. B. R. Mills Ltd. 2 but we are informed that one of those judgments is under appeal to this Court and we therefore do number wish to express any opinion upon the company- rectness or otherwise of this companytention raised by the appellant. It was next argued by the learned Attorney-General that the Written Down Values determined under S. 35 are number final and can be redetermined in the following assessment years and in support he referred to Karnani Industrial Bank v. Commissioner of Income-tax 3 where the original companyt of the machinery purchased Rs. 3,40,000-was accepted in the successive assessment years till it was doubted in the assessment order 1946-47 and was determined at Rs. 2,80,000 and it was companytended that the Income-tax Officer had to take the Written Down Value of the previous year as companyrect. Thus the question there raised was whether the Income-tax Officer was entitled in law to go behind the original companyt accepted by his predecessor ever since the assessment year 1939-40. It was held that neither the principle of res judicata number estoppel number the terms of s. 10 2 vi of the Act prevented the Income-tax Officer from determining. for himself what the actual companyt of the machinery had been and that depreciation had to be calculated for every year and it was open to the Income-tax Officer number merely to perform a mathematical operation on 1 1955 29 I.T.R. 2o6. 2 1954 29 I.T.R. 21O, 3 1951 25 I.T.R. 558. the basis of the Written Down Value of the previous year, but one of determining the Written Down Value himself . The limit to which the Income-tax Officer can go back does number stop at the Written Down Value of the previous year but extends up to the figure of the original companyt, and the method enjoined by s. 10 5 b is number that the Income-tax Officer should merely scale down the Written Down Value of the previous year, but that he should take into companysideration the actual companyt, determining it for himself, if necessary, take also into companysideration the allowances granted in the past and then make his own-computation as to the Written Down Value for the assessment year with which be is companycerned. Thus it cannot be said that merely because under s. 35 some Written Down Value and the depreciation amount have been determined they are a final determination binding for all times to companye number does the determination operate as estoppel or resjudicata for the following years. Therefore it cannot be said that there is numberother efficacious and adequate remedy open to the appellant to challenge the depreciation amount determined under s. 35. Counsel for the appellant companytended that the provision under which the Income-tax Officer acted, i. e., 35 was number meant for the purpose of making companyrections in Written Down Values and that for the purpose the appropriate and companyrect provision was s. 34 which specifically refers to excessive depreciation. There are two sections under which an Income- tax Officer can act, i. e., ss. 34 and 35 and the question for decision that arises is whether s. 35 was open to him. Section 35 provides The Commissioner or Appellate Assistant Commissioner may, at any time within four years from the date of any order passed by him in appeal or, in the case of the Commissioner, in revision under section 33A and the Income-tax Officer may, at any time within four years from the date of any assessment order or refund order passed by him on his own motion rectify any mistake apparent from the record of the appeal, revision, assessment or refund as the case may be, and shall within the like period rectify any such mistake which has been brought to his numberice by an assessee . The question therefore is was it a mistake apparent from the record which the Income-tax Officer has rectified. It was submitted that recalculation is number rectifying a mistake which is apparent from the record. The words used in the section are apparent from the record and the record does number mean only the order of assessment but it companyprises all proceedings on which the assessment order is based and the Income-tax Officer is entitled for the purpose of exercising his jurisdiction under s. 35 to look into the whole evidence and the law applicable to ascertain whether there was an error. If he doubts the Written Down Value of the previous year it is open to him to check up the previous calculations and if he finds any mistake it is open to him to make fresh calculations in accordance with the law applicable including the rules made thereunder. The Privy Council in Commissioner of Income-tax v. Khem Chand Ramdas 1 held s. 35 to be applicable where the facts were that the assessee did number produce books of account and an assessment was made by the Income-tax Officer to the best of his judgment. An application for the registration of the firm was however allowed and it was registered on January 17, 1927. On the same day assessment was made under s. 23 4 . As it was a registered firm numbersuper-tax was assessed. The Commissioner called for the record under s. 33 and cancelled the registration on January 28, and ordered the Income-tax Officer to take necessary companysequential action. The result of that was that the assessee became liable to super-tax. Consequently an order for super-tax was made on May 4, 1929, and three days later numberice of demand was issued. The Privy Council held that as the fresh action taken by the Income-tax Officer was hopelessly out of time the demand for super-tax was illegal because after the final assessment the Income-tax Officer companyld number go on making fresh companyputations and issuing fresh numberices of demand to the end of all time but it was held that 1 1938 L. R. 65 I.A. 236. the provisions of ss. 34 and 35 prescribed the only circumstances in which fresh assessment companyld be made and fresh numberice of demand companyld be issued. At p. 426 Lord Romer observed In the present case it is a debatable question r whether the circumstances were such as to bring it within the provisions of Section 34. It is number necessary to determine that question inasmuch, as, in. their lordships opinion, the case clearly would have fallen within the provisions of section 35 had the Income-tax Officer exercised his powers under the section within one year from the date on which the earlier demand was served upon the respondents. For, looking at the record of the assessments made upon them as it stood after the cancellation of the respondents registration and the order affecting the cancellation would have formed part of that record-it would be apparent that a mistake had been made in stating that numbersuper-tax was leviable . Thus the order effecting the cancellation of the regis- tration of the assessees firm was companysidered to have formed part of the record of the case. In Sidhramappa Andannappa Manvi v. Commis. sioner of Income- tax 1 the facts were that a debt belonging to a joint family fell on partition to the share of the assessee. This debt was held number to be recoverable by a judgment of the Bombay High Court dated September 29, 1941. Holding it to be within the accounting year the Appellate Tribunal allowed this sum to be taken into companysideration for the purpose of the accounting year. It subsequently companyrected the error. It was held that under s. 35 the Tribunal was entitled to rectify the mistake and was companypetent to pass a companysequential order dismissing the appeal instead of allowing it. The power under s. 35 is numberdoubt limited to rectification of mistakes which are apparent from the record. A mistake companytemplated by this section is number one which is to be discovered as a result of an argument but it is open to the Income-tax Officer to examine the record including the evidence and if he discovers any I 1951 2I I.T.R. 333. S.C.R. SUPREME COURT REPORTS 561 mistake he is entitled to rectify the error provided that if the result is enhancement of assessment or reducing the refund then numberice has to be given to the assessee and he should be allowed a reasonable opportunity of being heard. The scope and effect of the expression mistake apparent from the record and the extent of the powers of the Income-tax Officer under s. 35 of the Act were discussed by this Court in M. K. Venkatachalam v. Bombay Dyeing and Manufacturing Co. Ltd. 1 where the facts were these A sum of Rs. 50,063 being interest on tax paid in advance was given credit for under s. 18A 5 of the Act. Subsequently there was an amendment of the Act by which the interest became allowable only on the difference between the amount of tax paid and what was actually determined. As a companysequence of this the Income-tax Officer purporting to act under s. 35 of the Act rectified the mistake and reduced the amount of interest credited to Rs. 21,157 and issued a demand for the difference. The assessee obtained a writ of prohibition against the Income-tax Officer on the ground that the mistake companytemplated under that provision had to be apparent on the face of the Order and it was number companytemplated to companyer a mistake resulting from an amendment of the law even though it was retrospective in its effect. The Revenue appealed to this Court. Thus the question for decision in that case was whether ail order proper and valid when made companyld be said to disclose a mistake apparent from the record merely because it became erroneous as a result of a subsequent amendment of the law which was retrospective in its operation. In delivering the judgment of the Court Gajendragadkar, J., said- At the time when the Income-tax Officer applied his mind to the question of rectifying the alleged mistake, there can be numberdoubt that he had to read the principal Act as companytaining the inserted proviso as from April 1, 1952. If that be the true position then the order which he made, giving credit to the 1 1959 S.C.R. 703. 7I respondent for Rs. 50,603-15-0 is plainly and obviously inconsistent with a specific and clear provision of the statute and that must inevitably be treated as a mistake of law apparent from the record. If a mistake of fact apparent from the record of the assessment order can be rectified under s. 35 we see numberreason why a mistake of law which is glaring and obvious cannot be similarly rectified . The decision of the Privy Council in Commissioner of Income- tax v. Khem Chand Ram Chand 1 was referred,to. Counsel for the appellant sought to distinguish both these cases Venkatachalams case 2 and Khem Chands case 1 on the ground that the record there companysidered was the assessment record of that year and the Income-tax Officer did number have to go to the records of the previous year. That is a distinction without a difference.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 746 and 747 of 1957. Appeals by special leave from the judgments and orders dated June 3, 1955, and May 21, 1956, of the Labour Appellate Tribunal of India, Calcutta, in Appeal No. Cal. 366/52 and Misc. Case No. 145 of 1955 respectively, arising out of an Award dated September 22, 1952, of the Industrial Tribunal, Bihar, and published in the Bihar State Government Gazette on October 21, 1952. C. Setalvad, Attorney-General for India and C. Prasad, for the appellant. The respondent did number appear. 1959. April 29. The Judgment of the Court was delivered by WANCHOO, J.-These are two appeals by the management by special leave in an industrial matter arising out of two applications under s. 33 of the Industrial Disputes Act hereinafter called the Act . The facts of the case are briefly these The appellant, Messrs. Sasa Musa Sugar Works Private Ltd. is a sugar factory in District Saran Bihar . The factory was established in 1932. In June 1942, a trade union was formed in this factory. In July 1943, trouble arose between the workmen and the management resulting in the discharge of three office-bearers of the union, including one Shams-ud-din, who was then the joint secretary. That matter ,as referred to adjudication and the discharged workmen were ordered to be reinstated in the beginning of 1944. In December 1944, there was trouble again and a large number of workmen were dismissed, including Shams-ud-din, who had by number become the president of the union. This dispute was again referred to an Industrial Tribunal, which again ordered reinstatement of the dismissed workmen in August 1947. There was peace for some time after this. But in June 1951, the management again discharged seventeen workmen, including Shams-ud-din, who was at that time secretary of the union. The trouble companytinued up to December 1951, when an agreement was arrived at between the union and the management, as a result of which twelve of the workmen were reinstated but five, including Shams-ud-din, were number and their cases were to be referred to adjudication. It appears, however, that another reference between the management and its workmen was already pending since September 8, 1951, before an Industrial Tribunal, when this agreement was arrived at. Thereafter the work in the factory proceeded smoothly for some time. But on January 1, 1952, a numberice was issued by the union to the management enlisting as many as 40 demands and it was threatened that if the demands were number met within seven days, the union would have to advise the work-men to adopt go-slow and call upon them to offer passive resistance with effect from January 9, 1952, and take all legitimate means to see that the decision of go-slow was carried out till the demands of the union were fulfilled. This numberice was received by the management on January 4, which immediately companytacted the officers of the Labour Department as well as the Sub-Divisional Magistrate at Gopalganj. On January 8, the Deputy Labour Commissioner wrote to the union that as the companyciliation officer was busy in the general elections, the status quo should be maintained till the elections were over, so that the matter might be looked into by the companyciliation officer. The union, however, gave numberheed to this advice and go-slow began from January 9 and was companytinued till January 12, 1952. Then the Labour Commissioner himself came to the factory on January 12 and advised Shams-ud-din who was the s moving spirit behind all this to call off the go-slow, as it was proposed to start companyciliation proceedings at Patna on January 17, 1952. Conciliation proceedings then began on January 17 and an agreement was arrived at as to some of the demands on January 23, and it was decided that further companyciliation proceedings would be held in February. But in spite of this agreement go-slow was again resorted to from January 24 to January 31. In the meantime, the Labour Officer had arrived at the factory on January 28, 1952, and further talks took place. The workmen, however, did number pay heed to the advice of the Labour Officer. He, therefore, reported on January 31 to the Labour Commissioner that go-slow was still companytinuing. The Labour Commissioner then ordered the Labour Officer to tell the workmen that numberfurther companyciliation proceedings would take place until the goslow was called of. The Labour Officer then informed the management that it companyld take disciplinary action against the workmen companycerned with the permission of the Industrial Tribunal. Consequently, the management suspended thirty-three workmen by a numberice given on the night of January 31 as from February 1. It was said in the numberice that these thirty- three workmen had been found taking a leading part in the unjustified go-slow which was in companytravention of the Act and they were therefore suspended from service until further orders. This numberice had some good effect and work improved for four days but from February 5 goslow was started again. Consequently, the management suspended seven more workmen from February 6 and eight more from February 7 by giving numberice to them in the same terms in which the numberice had been given to the thirty-three workmen, on January 31. As adjudication proceedings were pending since September 1951 between the management and its workmen, the former applied on February 6, 1952, under s. 33 of the Act for permission to dismiss the thirty-three workmen and on February 11, 1952, for permission to dismiss the remaining fifteen workmen who had been suspended later. The forty-eight workmen in their turn applied on March 29, 1952, under s. 33-A of the Act to the Industrial Tribunal and their case was that they had been suspended as a measure of punishment and that as this was done without the sanction of the Industrial Tribunal, the management had companymitted a breach of s. 33. The three applications were tried together by the Industrial Tribunal and the companytentions raised before it were these The managements applications under s. 33 had number been preceded by any enquiry into the misconduct of the workmen and were, therefore, liable to be rejected The order of suspension in this case amounted to punishment and therefore s. 33 had been companytraven- ed and There was an unjustified go-slow by the workmen in January and February 1952. On the first point, the Industrial Tribunal found that Do enquiry had been held by the management before the two applications, under s. 33 were made but it held that all the evidence which companyld have been taken in the enquiry by the management had been led before it and it was in full possession of the facts, and numberquestion of any prejudice to the workmen arose, as it would be open to it on a review of the entire evidence before it to decide whether the applica- tions for permission to dismiss should be granted or number. On the second point, it held that the order of suspension was number as a measure of punisment in the circumstances of this case and that it was an order pending enquiry by the management and proceedings under s. 33 before the tribunal and that, as there were numberStanding Orders as to suspension in this factory, the managements liability to pay the workmen their wages during the period of suspension remained. On the third point, the Industrial Tribunal, after an elaborate discussion of the evidence, came to the companyclusion that there was a deliberate go-slow resorted to by the workmen in January and February 1952 and that it was unjustified as it took place while companyciliation proceedings were pending. Having given these findings, the Industrial Tribunal had then to decide what orders it should pass on the applications under s. 33 and s. 33-A. It held that there was numberevidence to show that of the forty-eight workmen companycerned, sixteen workmen named by it had taken part in the go-slow or instigated it. It therefore refused the application under s. 33 with respect to these sixteen workmen. As to the remaining thirtytwo workmen it held that as some Standing Orders which were under companytemplation at the time provided either dismissal or suspension for seven days in case of misconduct, it was proper to grant leave to the management to suspend the workmen for seven days, in view of some opinion expressed by a Go-Slow Committee appointed some time before by the Bihar Central Standing Labour Advisory Board. In effect, therefore, it rejected the prayer of the management for dismissal with respect to these thirty-two workmen also. Finally, it rejected the application under s. 33-A. This award led to two appeals before the Labour Appellate Tribunal one was by the management against the entire award so far as it related to its applications under s. 33, and the other by the workmen against the dismissal of their application under s. 33-A and against the award relating to the applications of the management under s. 33. When the matter came up for hearing before the Appellate Tribunal, the workmen withdrew their appeal with respect to their application under s. 33-A and it was companysequently dismissed. The result of the dismissal of the appeal of the workmen was that the finding of the Industrial Tribunal that the suspension was number a punishment and was only pending enquiry by the management and the proceedings before the tribunal, stood companyfirmed. As to the appeal by the management with respect to the applications under s. 33, it was companytended on its behalf before the Appellate Tribunal that the Industrial Tribunal had gone wrong on two substantial questions of law, namely- 1 the Industrial Tribunal companyld either grant or refuse permission to dismiss on an application for such permission under s. 33 and it companyld number substitute its own judgment about the quantum of punishment and 2 it was wrong in rejecting the applications against sixteen workmen on the ground that there was numberevidence. The Appellate Tribunal was of the opinion that the companytention of the management on both these points was companyrect and that the appeal involved substantial questions of law. It also found that the Industrial Tribunals finding that the workmen had resorted to go-slow was number perverse and companyld be the only finding on the evidence. It then went on to say that go-slow was insidious in nature and companyld number be companyntenanced, and that it was serious misconduct numbermal punishment for which was dismissal. It also held that the Industrial Tribunal was number right in relying upon the recommendations of the Go-Slow Committee and the companytemplated Standing Orders which were number till then in force. Having said all this, we should have expect- ed that the Appellate Tribunal would set aside the order of the Industrial Tribunal and grant permission to the management to dismiss the workmen for what was serious misconduct of an insidious nature which companyld number be companyntenanced. But it went on to say that it was well settled that where an employer companyld number punish a workman without obtaining permission from the tribunal under s. 33, an application for permission would be mala fide if it was made after any punishment had already been meted out to the workman. It held that in the present case, the suspension of the workmen by the management was substantive punishment, because the numberice did number in so many words state that it was pending enquiry and therefore the applications for permission having been made after punishment had been meted out were mala fide. In companying to this companyclusion, the Appellate Tribunal seems to have forgotten that it had already dismissed the appeal of the workmen from the order of the Industrial Tribunal on their application under s. 33- A, which in effect amounted to companyfirming the order of the Industrial Tribunal that the suspension was number a punishment but was rightly made pending enquiry by the management and proceedings before the tribunal. The Appellate Tribunal supported its decision on this question of punishment by stating that the mala fides of the management were clear from the fact that though the suspensions had been made between January 31 and February 7, 1952, the application was filed by the management on March 29, 1952, after the application by the workmen under s. 33- A had been filed. This observation was clearly wrong, for the applications under s. 33 were filed on February 6 and 11 by the management, and it was the application of the workmen under s. 33-A which was filed on March 29. Having thus inverted the order in which the applications were made to the Industrial Tribunal, the Appel. late Tribunal held that the applications of the management under s. 33 were Dot bona fide. It then dismissed the appeal of the management, thus upholding the order of the Industrial Tribunal so far as the suspension of thirty-two workmen for seven days was company- cerned on the ground that the workmen had withdrawn their appeal, though in the earlier part of the judgment all that -was said was that the workmen had withdrawn their appeal against the order under s. 33-A. As the Appellate Tribunal had obviously made a mistake and inverted the order in which the applications under ss. 33 and 33-A had been made, a review application was filed by the management. It, however, held that though the dates had been wrongly mentioned by accident, it saw numberreason to review its order. That is how the management filed two special leave petitions in this Court. We are of opinion that on the findings of the Industrial Tribunal on the three points formulated by it which have number been upset by the Appellate Tribunal, the only order possible on the applications of the management under s. 33 was to permit it to dismiss the forty -eight workmen, provided there was evidence against them all. It was number open to the Industrial Tribunal when it was asked to give permission to dismiss to substitute some other kind of punishment and give permission for that. The Industrial Tribunal was satisfied that there was misconduct and that finding has been upheld by the Appellate Tribunal. As such if there was evidence that these forty-eight workmen were guilty of misconduct, the Industrial Tribunal was bound to accord permission asked for. We cannot agree with the Appellate Tribunal that the suspension in this case was substantive punishment and was number an interim order pending enquiry and proceedings before the Industrial Tribunal under s. 33. We have already pointed out that the Labour Officer told the management on January 31, 1952, that it was free to take disciplinary action with the permission of the Industrial Tribunal. It was thereafter that thirtythree workmen were suspended on January 31 and the numberice clearly said that the suspension was pending further orders, thus intimating to the workmen that the order of suspension was an interim measure. This numberice of January 31 was followed by an application on February 6 to the Industrial Tribunal for permission to dismiss the thirty-three workmen involved in it, and this also clearly shows that the suspension was pending enquiry if any by the management and proceedings before the Industrial Tribunal. Similarly, the suspension numberices of February 5 and 6 relating to fifteen workmen said that they were suspended till further orders and were followed on February II by an application under s. 33 to the Industrial Tribunal for permission to dismiss them. In the circumstances it is quite clear that suspension in this case was number a punishment but was an interim measure pending enquiry and proceedings before the tribunal. We have already pointed out that this was the finding of the Industrial Tribunal on the basis of which the application under s. 33-A was dismissed and this finding stood companyfirmed when the workmen withdrew their appeal with respect to their application under s. 33-A. The Appellate Tribunal therefore was clearly in error in holding . that the suspension was punishment. The only question that remains is about the sixteen workmen about whom the Industrial Tribunal held that there was numberevidence to companynect them with the go-slow. The Appellate Tribunals view in this matter was that the companytention of the management that the Industrial Tribunal was wrong in holding that there was numberevidence against these sixteen workmen was companyrect. It has been shown to us that evidence against these sixteen workmen is of exactly the same witnesses and of the same kind as the evidence against the remaining thirty-two. The finding, therefore, of the Industrial Tribunal that there was numberevidence against the sixteen workmen is patently perverse, for there was the same evidence against them as against the remaining thirty-two. It follows, therefore, that all the forty-eight workmen two of whom are since said to have died are exactly in the same position. As held by the. Appellate Tribunal, go-slow is serious misconduct which is insidious in its nature and cannot be companyntenanced. In these circumstances as these fortyeight workmen were taking part in the go-slow and were thus guilty of serious misconduct, the management was entitled to get permission to dismiss them. But as the management held numberenquiry after suspending the workmen and proceedings under s. 33 were practically companyverted into the enquiry which numbermally the management should have held before applying to the Industrial Tribunal, the management is bound to pay the wages of the workmen till a case for dismissal was made out in the proceedings under s. 33 see the decision of this Court in the Management of Ranipur Col- liery v. Bhuban Singh 1 .

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 108 of 1959. Appeal from the judgment and order dated November 25, 1958, of the Punjab High Court in F.A.0. No. 173 of 1958. V. Viswanatha Sastri and Naunit Lal, for the appellant. C. Setalvad, Attorney-General for India, V. A. Syed Mohammad and M. K. Ramamurthi, for respondent No. 1. H. Dhebar, for respondent No. 3. 1959. April 23, The Judgment of the Court was delivered by SINHA, J.-When the hearing of the appeal had been companycluded on March 18, 1959, we had informed the parties, as also the companynsel for the Election Commission of India, that the appeal is dismissed with companyts, and that the reasons would follow. We number proceed to give our reasons. This is an appeal on a certificate of fitness granted by the High Court of Judicature for the State of Punjab at Chandigarh, against the judgment and order dated November 25, 1958, of that Court, dismissing an appeal against the order of the Election Tribunal, Hissar, dated September 14, 1958, setting aside the appellants election to the Punjab Legislative Assembly. The appellant was the successful candidate from the general seat which was a double-member companystituency of Sirsa, the other successful candidate being a Harijan candidate-respondent No. 2 in this Court. The first respondent companytested the general seat. The Election Commission of India was added as the third respondent by an order of this Court, dated February 27, 1959, when this Court was moved in the stay matter. This Court directed the case itself to be heard before the date fixed for the fresh election as a result of the order of the Election Tribunal. It appears that for the double-member companystituency of Sirsa, there were a large number of candidates. One of the two seats was reserved for members of the scheduled castes. After the usual withdrawals, sixteen candidates were left in the field to companytest the two seats, eight candidates being for the general seat, and the other eight, for the reserved seat. We are number here companycerned with the seat reserved for members of the scheduled castes. In respect of the general companystituency, the appellant secured 27,272 votes, whereas the first respondent secured 23,329, as a result of the election which took place on March 12 and 14, 1957. The result of the election was declared on March 17, 1957. The first respondent filed an election petition on April 289 1957, challenging the election of the appellant. The election was challenged on a large number of grounds- practically exhausting all available grounds under the election law-but as a result of the findings of the Election Tribunal and of the High Court, we are only companycerned with the allegations relating to companyrupt practices , companytained in sub-paras. I to 3 of para. 13B of the election petition, which formed the basis for issue No. 4. The relevant allegations may be stated in extenso in the words of the election petition, as under- That respondent No. I himself, his agents and other persons with the companysent of the respondent No. 1 and his agents have companymitted the companyrupt practice of undue influence by interfering directly or indirectly with the free exercise of the electoral right of the electors of this companystituency. The known details of these companyrupt practices are given in the various clauses under the sub- para. - Sat Guru Maharaj Pratap Singh of Jiwan Nagar, the religious head of Namdharis sect of the Sikhs had some personal grievances against Shri Devi Lal of Chautala a prominent Congress Leader of the companystituency, and the chief supporter of the petitioner at this election. Respondent No. 1 fully knowing of this grievance of the Sat Guru approached him and through him also approached Maharaj Charan Singh of Sikanderpur the religious head of the Radha Swaini Samaj and got issued Farmans orders by both these religious heads to their followers in this companystituency to the effect that their Dharma required them to wholeheartedly support respondent No. 1 and to oppose the candidature of the petitioner and that if any of the followers dared to act against their Farmans, the wrath of the aforementioned Gurus would fall upon him and he would be the object of Divine displeasure. These Farmans of the two Gurus were orally companyveyed, through the Subas of Namdharis, Shri Bir Singh the son of Sat Guru Partap Singh and Naginder Singh and Shri Purshotam Singh followers of Guru Charan Singh, throughout the Constituency wherever the followers of these two sects resided from the day of withdrawal till the polling began, during their canvassing tours for respondent No. 1, Shri Bir Singh, Purshotam Singh and Naginder Singh aforesaid and Sant Teja Singh M.L.C. in Diwans held in the various villages and towns of the Constituency during their canvassing tour, besides repeating these Farmans of the two Gurus also threatened the followers with expulsion from the sect and Samaj if they went against the wish of the Gurus in this matter. That Sat Guru Pratap Singh himself in the presence of respondent No. 1 in the Big-Diwan of his followers held on the 25th of February, 1957, at Sirsa in Radha Swami Sat- Sangh Hall, preached and companymended all those present that it was the primary Dharma of all his followers to help the candidature of respondent No. 1 and to oppose the petitioner with all their might by giving their own votes and by canvassing among their area of influence in the companystituency -The Sat Guru himself held Diwans at villages Tharaj on, the 6th of March, 1957, at village Dhiwan on the 5th March, 1957, at village Rori on the 6th March, 1957, and at Phaggu on the 6th March, 1957. In these Diwans he besides repeating his Farmans aforesaid also relied upon the strong appeal of his relationship, he being the son of the daughter of village Tharaj. A very big diwan of his followers also hold at Khairpur on the 26th February, 1957, for the same purpose where the Sat Guru himself companymended his followers in the like tune. That respondent No. 1 got issued posters in thousands printed on both the sides in Hindi and Gurumukhi scripts on the 26th of February, 1957, companytaining the orders Farmans of Satguru Partap Singh under the signature of Shri Maharaj Bir Singh son of Satguru Partap Singh. These posters were got published at the instance of respondent No. 1 at Bansal Press Hissaria Bazar, Sirsa. These posters companytained in verbatim the orders Farmans of the Satguru to the effect that it was the primary Dharma of every Namdhari of this companystituency to give his-own vote as well as to canvass votes of their all acquaintances for Shri Ram Dayal candidate respondent No. 1. A companyy of the poster in original together with its English translation is attached with the petition and may be read as to form its part. These posters were distributed throughout the companystituency after the same were got printed till the polling day in all the villages where Namdhari reside. In support of all his allegations quoted above, the first respondent adduced a large volume of oral evidence, besides some documentary evidence as well. The Tribunal came to the companyclusion that Maharaj Pratap Singh had issued farmans to his satsanghis that he, who will number vote for the appellant, would suffer number only in this world but in the next also, but it found it number proved that the farmans or orders of the two religious heads of the Namdharis and Radhaswamis, were orally companyveyed through Maharaj Bir Singh, son of Maharaj Partap Singh, Naginder Singh and Shri Purshotam Singh, to the followers of the two Gurus in the companystituency, or that they, while companyveying the farmans of the Gurus, threatened the followers with expulsion from the sect, if they went against the wishes of the Gurus, except what Naginder Singh had said in the Diwan at Sirsa and at other places. It also recorded the finding that the Diwans were held for the purpose of canvassing in favour of the appellant at the time and place mentioned in the petition, and that those Diwans were addressed by Maharaj Partap Singh and others. It was also found that Maharaj Partap Singh actively supported the candidature of the appellant, and addressed his followers on the basis of religion and asked them to vote for the appellant, and that all this was done at the instance and in the presence of the appellant. It was further found that posters, like exh. P. 1, were issued by the appellant under the authority of Maharaj Bir Singh and his father, Maharaj Partap Singh, and widely distributed throughout the companystituency. The Tribunal also discussed the question as to whether, on those findings, the provisions of s. 123 2 of the Representation of the People Act, 1951 which will hereinafter be referred to as I the Act , relating to undue influence-, companyld be said to have been satisfied and alternatively, whether those findings would bring the case within the provisions of cl. 3 of s. 123 of the Act, relating to systematic appeal on grounds of caste, race, companymunity or religion, etc. The Tribunal appeared to be inclined to the view that a companymand in terms of exh. P. 1, emanating from a religious head, like the Sat Guru, to his followers-mostly illiterate and ignorant persons-may well be companystrued as undue influence. But alternatively, it also held that even if the provisions of cl. 2 of s. 123 of the Act, had number been satisfied, the case had been brought well within the purview of el. 3 of s. 123. Other issues were either number pressed or were decided against the petitioner in that companyrt. The Tribunal, therefore, declared the appellants election void under s. 100 1 b of the Act. In view of the fact that the petitioner had failed to substantiate many of his allegations, the Tribunal directed the parties to bear their own companyts. The appellant preferred an appeal which was heard by a Division Bench Falshaw and Dua, JJ. of the High Court of Judicature for the State Of Punjab at Chandigarh. The High Court substantially affirmed the findings of the Election Tribunal on issue No. 4 aforesaid. The High Court also accepted the oral evidence adduced on behalf of the respondent,with particular reference. to the publication and wide distribution of the poster, exh. P. 1. In the companyrse of its judgment, the High Court observed The language of the mandate and the general background and circumstances of this case including the obvious companysciousness of Maharaj Pratap Singh and Ram Dial of the probable and likely effect of such companymands on the illiterate, ignorant and credulous followers of the Maharaj can lead but to one companyclusion that it was intended to companyvey to them. the threat of divine displeasure and spiritual censure if they dared to disobey the farman of their supreme spiritual and religious head. In answer to the companytention that the farman had been motivated number by religious companysiderations but by a personal grievance, the High Court did number attach any importance to the alleged difference in the motive, and observed If the influence exercised by the religious and spiritual head has the effect of creating in the minds of the voters a feeling of divine displeasure or spiritual censure then whatever the motive, the influence would amount to undue influence. The companytents of the poster reproduced earlier unequivocally establish the mandatory nature of the companymand. Religious sanction is, in my opinion, implict in it and I think, on a reasonable companystruction of its companytents, it must be held that Maharaj Pratap Singh intended to companyvey to his followers who are mostly illiterate, ignorant, credulous and unsophisticated villagers, having blind and implicit faith in their religious head that if they did number vote for Ram Dial, they would incur divine dis- pleasure and spiritual censure. With this class of villagers the displeasure of the religious head is usually associated with divine displeasure. Dealing with the scope of s. 123 2 , it held that the language of the poster, exh. P. 1, companystrued in the light of the oral evidence, left the Court in numberdoubt that Maharaj Partap Singhs farman did necessarily imply divine displeasure and spiritual censure for those who chose to disobey the farman. - In its view, therefore, the facts, as found, attracted the provisions of s. 123 2 of the Act. It also held that the evidence led in the case, established that the meetings addressed by Maharaj Partap Singh and others, in support of the election of the appellant, induced the belief that the voters would incur divine displeasure or spiritual censure if they did number vote in accordance with the mandate issued by the Maharaj, thus, clearly establish- ing the companymission of companyrupt practice of undue influence . The High Court also examined the question whether the companyrupt practice falling under cl. 3 of s. 123 of the Act, had been established, and decided the question in the negative, though number without some hesitation. It further held that the publication of the poster, exh. P. 2, did number bring the case within the purview of s. 123 4 of the Act. In the result, the High Court agreed with the companyclusion of the Tribunal, declaring the election void, and dismissed the appeal with companyts. The appellant applied to the High Court, praying for the necessary certificate that the case was a fit one for appeal to this Court, and that Court granted the certificate. Hence, this appeal. After the decision of the Tribunal and of the High Court, the only question for determination in this appeal, is whether, on the findings of fact recorded, as stated above, the companyrupt practice of undue influence , as defined in s. 123 2 , has been made out. It has been argued on behalf of the appellant that the main cl. 2 of s. 123, is out of the way of the parties in this case, because it applies only to threats of injury to person, or property and number to what may be termed spiritual undue influence , which is specifically companyered by sub-el. ii of proviso a to cl. 2 of s. 123. It was further argued that the word deemed would show that the proviso is by way of an addition to the main provision of el. 2 of s. 123 that is to say, what was number actually companyered by the main cl. 2 , has been added to the ambit of the definition by the proviso. It has further been argued that el. 2 is directed against unduly influencing individual voters, and reliance was placed upon the cases of Cheltenham 1 , Nottingham 2 and North Durham Reference was also made to the observations in Rogers on Elections 4 , and it was argued that anelectoral right, as defined in s. 79 d of the Act, is a personal individual right, including the right to vote or to refrain from voting at an election. Hence, there should have been pleading by the petitioner and finding by the Court on evidence that certain named individuals had been subjected to the companyrupt practice of undue influence. Secondly, in the absence of any such pleading or finding, a general allegation of the companyrupt practice of undue influence, without reference to individuals, is number enough in law to vitiate an election. The companyrupt practice of undue influence has been defined in el. 2 of s. 123 of the Act, in these terms - Undue influence, that is to say, any direct or indirect interference or attempt to interfere on the part of the candidate or his agent, or of any other 1 1869 1 OM. H. 62, 64. 2 1869 1 OM. H. 245, 246, 3 1874 2 OM. H. 152, 156. Vol., II 20th Ed., P. 329. person, with the companysent of a candidate or his election agent, with the free exercise of any electoral right Provided that- a without prejudice to the generality of the provisions of this clause any such person as is referred to therein who- threatens any candidate, or any elector, or any person in whom a candidate or an elector is interested, with injury of any kind including social ostracism and excommunication or expulsion from any caste or companymunity or induces or attempts to induce a candidate or an elector to believe that he, or any person in whom he is interested, will become or will be rendered an object of divine displeasure or spiritual censure, shall be deemed to interfere with the free exercise of the electoral right of such candidate or elector within the meaning of this clause b a declaration of public policy, or a promise of public action, or the mere exercise of a legal right without intent to interfere with an electoral right, shall number be deemed to be interference within the meaning of this clause It should be observed, at the outset, that the law in England, relating to undue influence at elections, is number the same as the law in India, as will appear from the following definition of undue influence companytained in s. 2 of 46 47 Vict. c. 51, which substantially re-enacted the former s. 5 of 17 18 Viet. c. 102- Every person who shall directly or indirectly, by himself or by any other person on his behalf,. make use of or threaten to make use of any force, violence, or restraint, or inflict or threaten to inflict, by himself or by any other person, any temporal or spiritual injury, damage, harm, or loss upon or against any person in order to induce or companypel such person to vote or refrain from voting, or on account of such person having voted or refrained from voting at any election, or who shall by abduction, duress, or any fraudulent device or companytrivance, impede or prevent the free exercise of the- franchise of any elector, or shall thereby companypel, induce, or prevail upon any elector either to give or to refrain from giving his vote at any election, shall be guilty of undue influence. The words of the English statute, quoted above, lay emphasis upon the individual aspect of the exercise of undue influence. It was with reference to the words of that statute, that Bramwell, B., made the following observations in North Durham 1 - When the language of the Act is examined it will be found that intimidation to be within the statute must be intimidation practised upon an individual . The Indian law, on the other hand, does number emphasise the individual aspect of the exercise of such influence, but pays regard to the use of such influence as has the tendency to bring about the result companytemplated in the clause. What is material under the Indian law, is number the actual effect produced, but the doing of such acts as are calculated to interfere with the free exercise of any electoral right. Decisions of the English Courts, based on the words of the English statute, which are number strictly in pari materia with the words of the Indian statute, cannot, therefore, be used as precedents in this companyntry. In the present case, we are number companycerned with the. threat of temporal injury, damage or harm. On the pleadings and on the findings of the Tribunal and of the High Court, we are companycerned with the undue exercise of spiritual influence which has been found by the High Court to have been such a potent influence as to induce in the electors the belief that they will be rendered objects of divine displeasure or spiritual censure if they did number carry out the companymand of their spiritual head. It was argued that exh. P. 1, on which so much stress was laid by the Tribunal and by the High Court, did number companytain any such direct threat as would bring the case within the second paragraph of proviso a to s. 123 2 . Exhibit P. 1, as officially translated, is in these terms- A companymand from Shri Sat Guru Sacha Padshah to the Namdharies of Halqa-Sirsa Every Namdhari of this Halqa is companymanded by Shri Sat Guru that he should make every effort for 1 1874 2 OM. H. 152,156. the success of Shri Ram Dayal Vaid, a candidate for the Punjab Vidhan Sabha, by giving his own vote and those of his friends and acquaintances, it being our primary duty to make him successful in the election. The election symbol of Shri Vaid is a riding horseman. Sd. Maharaj Bir Singh S o Sat Guru Maharaj Partap Singh, Jivan Nagar Hissar . We have looked into the original document also, and we agree with the High Court that the crucial words, like hukam of Shri Sat Guru Sacha Padshah, etc., have been printed in very bold letters, companyveying the distinct impression to the large number of Namdharis, who are voters in the companystituency, that it was a mandate from their spiritual guru who wielded great local influence amongst them, that it was their bounden duty, under the strict orders of their religious leader, number only to cast- their own votes in favour of the particular candidate, but also to exert their influence amongst their friends and acquaintances in favour of that candidate and that any infringement of that mandate had implicit in it divine displeasure or spiritual censure. It was companytended on behalf of the appellant that a religious leader has as much the right to freedom of speech as any other citizen, and that, therefore, his exhortation in favour of a particular candidate should number have the result of vitiating the election. There cannot be the least doubt that a religious leader has the right freely to express his opinion on the companyparative merits of the companytesting candidate and to canvass for such of them as he companysiders worthy of the companyfidence of the electors. In other words, the religious leader has a right to exercise his influence in favour of any particular candidate by voting for him and by canvassing votes of others for him. He has a right to express his opinion on the individual merits of the candidates. Such a companyrse of companyduct on his part, will only be a use of his great influence amongst a particular section of the voters in the companystituency but it will amount to an abuse of his great influence if the words he uses in a document, or utters in his speeches, leave numberchoice to the persons addressed by him, in the exercise of their electoral rights. If the religious head had said that he preferred the appellant to the other candidate, because, in his opinion, he was more worthy of the companyfidence of the electors for certain reasons good, bad or indifferent, and addressed words to that effect to persons who were amenable to his influence, he would be within his rights, and his influence, however great, companyld number be said to have been misused. But in the instant case, as it appears, according to the findings of the High Court, in agreement with the Tribunal, that the religious leader practically left numberfree choice to the Namdhari electors, number only by issuing the hukam or farman, as companytained in exh. P. 1, quoted above, but also by his speeches, to the effect that they must vote for the appellant, implying that disobedience of his mandate would carry divine displeasure or spiritual censure, the case is clearly brought within the purview of the second paragraph of the proviso to s. 123 2 of the Act. This aspect of the case has been dealt with at length by the High Court in a well-considered judgment, and we do number think it necessary to repeat all those obser- vations, beyond saying that we agree with them. In that view of the matter, it is number necessary for us to companysider the further question whether el. 2 of s. 123 of the Act, apart from the proviso-para. ii , discussed above-covers a case, like the present, where the undue influence is of a spiritual character as distinguished from threats of injury to person or property. As the -main ground urged in support of the appeal against the judgment of the High Court, fails, the appeal must be dismissed with companyts to the respondent No.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 236 of 1954. Appeal from the judgment and order dated October 9,1953, of the Patna-High Court in Misc. Judicial Case No. 181 of 1953. Mahabir Prasad, Advocate-General for the State of Bihar, Bhagwat Prasad and S. P. Varma, for the appellants. R. Das, A. C. Roy and R. R. Biswas, for the respondent. 1959. April 15. The Judgment of the Court was delivered by K. DAS, J.-This is an appeal from the judgment and order of the High Court of Patna dated October 9, 1953, in Miscellaneous Judicial Case No. 181 of 1953 of that Court. It relates to a temple companymonly known as the Baidyanath temple situate in the town of Deoghar within the limits of Santal Parganas in the State of Bihar. For the purposes of this appeal it will be necessary to refer to some earlier litigation about this temple. The history of this temple, it is number disputed, goes back to remote antiquity. According to Hindu tradition referred to in the Siva Purana and Padma Purana, extracts from which, with translations, are given by Dr. Rajendra Lal Mitra in his paper on the Temples of Deoghar see Journal of the Asiatic Society of Bengal, Part 1, 1883, quoted in the Bihar District Gazetteer relating to Santal Parganas, 1938 edition pp. 373-376 , the origin of the temple is traced to the Treta Yuga, which was the second age of the world by Hindu mythology. Side by side with Hindu tradition, there is a Santal tradition of the origin of the temple given by Sir William Hunter see the Annals of Rural Bengal, p. 191 Satistical Account of Bengal, Vol. XIV,, p. 323 . But these materials afford numberevidence as to when and by whom the idol was established or the temple was built. The temple sheltering the lingam and dedicated to Mahadeva stands in a stone-paved quadrangular companyrtyard. The companyrtyard companytains eleven other temples, smaller in size and of less importance than that of Baidyanath. Pilgrims visit the temples in large numbers and make offerings of flowers and money in silver or gold rich people offer horses, cattle, palanquins, gold ornaments and other valuables and sometimes, rent-free land in support of the daily worship. There is a high or chief priest Sardar Panda who it appears used to pay a fixed rent to the Rajas of Birbhum during the Muhammadan regime, and the administration of the temple was then left entirely in the hands of the high priest. It may be here stated that about 300 families of pandas , who belong to a branch of Maithil Brahmins, were attached to the temple and earned their livelihood by assisting pilgrims in performing the various ceremonies companynected with the worship of the God. When the British rule began, it was decided to take over the management of the temple, and with this object an establishment of priests, companylectors and watchmen was organised in 1787 at Government expense. The revenue soon fell off, as the chief priest beset the avenues to the tem- ples with emissaries, who induced the pilgrims to make their offerings before approaching the shrine. See the District Gazetteer, ibid, p. 383 . In 1791 Government relinquished its claim to a share of the offerings and entrusted the management of the temple to the head priest on his executing an agreement to keep the temples in repair and to perform all the usual ceremonies. This agreement was entered into by Ram Dutt the ancestor of the present respondent , then high priest of the temple and Mr, Keating who was then Collector of the district. According to Mr. Keating the income of the temple in 1791 companysisted of the offerings of the proceeds of 32 villages and 108 bighas of land which he estimated at Rs. 2,000 a year some years later the total income was estimated at Rs. 25,000 a year. Under the system introduced by the agreement of 1791, the mismanagement of the temple was a source of companystant companyplaint the temple and ghats were frequently out of repair and the high priest was charged with alienating villages from the temple and treating his situation as a means of enriching himself and his family. On the death of the high priest in 1820 a dispute over the succession arose between an uncle and a nephew. The nephew Nityanand was eventually appointed, but neglected to carry out the terms of his appointment. Finally, Nityanand was charged with malversation of the funds and the uncle Sarbanand was appointed in his stead in 1823. There was a faction which was opposed to Sarbanands retention in- office and asked for Government interference in the internal management of the temple. In 1835 Government declined all interference in the matter and the parties were left to have recourse to the established companyrts of law. Sarbanand died in 1837 and Iswaranund Ojha, son of Sarbanand Ojha, was subsequently elected Sardar-Panda. Iswaranund was succeeded by his grand-son, Sailajanund Ojha. There were, however, frequent disputes between the high priest and the pandas regarding the companytrol of the temple and in 1897 a suit was filed under s. 539 number s. 92 of the Code of Civil Procedure in the Court of the District Judge of Burdwan. This was Suit No. 18 of 1897 which was decided by the learned Additional District Judge of Burdwan by his judgment dated July 4, 1901. Sailajanund Ojha was dismissed by the order of the companyrt, as he by his companyduct and behavior and by causing loss to the Debutter properties rendered himself unfit and disqualified to hold the post of Sardar Panda and trustee of the temple of Baidyanath. It was further ordered-by the learned Additional District Judge in the decree granted by him that some fit person be elected as Sardar Panda by the pandas of the temple and that the affairs of the temple be managed under a scheme which was framed by the learned Additional District Judge and formed a part of the decree. Under this scheme three persons were to be appointed to look after the temple and its properties and for a proper administration of the same. One of these three persons was to be elected from amongst the descendants of Ram Dutt Jha. After this Umesbanund Dutt Jha, second son of Iswaranund Ojha, was elected Sardar Panda. On the death of Umeshanund Dutt Jha, Bhabapritananda Ojha, who was the petitioner in the High Court and is number respondent before us, was appointed Sardar Panda. Bhabapritananda is the grand-son of Sailajanund Ojha, and we. shall hereinafter refer to him as the respondent. The scheme which was framed as a result of the decision in Civil Suit No. 18 of 1897 was companyfirmed by the Calcutta High Court and the decision of the High Court is reported in Shailajananda Dut Jha v. Umeshanunda Dut Jha 1 . This scheme was modified in a subsequent litigation in 1909, when one of the members of the companymittee applied to the District Judge 1 19O5 2 C.L.J. 460. for a modification of the scheme. The application was first dismissed, but the matter was taken to the Calcutta High Court, and on September 8, 1910, that Court on the authority of the decision of the Judicial Committee in Prayag Doss v. Tirumala 1 and with the companysent of companynsel on both sides, directed the insertion of two clauses in the decree by one of these clauses, liberty was reserved to any person interested to apply to the District Court of Burdwan with reference to the carrying out of the directions of the scheme and by the other clause, liberty was reserved to any person interested to apply from time to time to the Calcutta High Court for any modification of the scheme that might appear necessary or companyvenient. Under these two clauses the members of the companymittee subsequently applied to the District Judge of Burdwan that certain directions might be given to the high priest the high priest opposed the application on the ground that it was in essence an application for modification of the scheme and companyld be entertained only by the High Court. The learned District Judge overruled this objection. The matter was again taken to the Calcutta High Court and that Court directed 1 that the companymittee must prepare ail annual budget of the income and expenditure 2 that provision must be made for quarterly audit and annual inspection of the accounts 3 that provision should be made for joint companytrol of the temple funds after they have been realised 4 that there must be numberundue interference on the part of the companymittee with the high priest in the internal management of the temple and 5 that numberone who has any pecuniary interest in the temple properties or is a creditor of the endowment should serve on the companymittee. The High Court further directed that clauses embodying the aforesaid five directions should be inserted in the scheme. This decision of the High Court is reported in Umeshananda Dutta Jha v. Sir Ravaneswar Prasad Singh 2 . We number companye to more recent events which gave rise to Miscellaneous Judicial Case No. 181 of 1953 in the 1 196 I.L.R. 3o Mad. 138. 2 1912 17 C.W.N. 871. Patna High Court. The Bihar Hindu Religious Trusts Act, 1950 Bihar I of 1951 , hereinafter referred to as the Act, received the Presidents assent on February 21, 1951, and came into force on August 15. 1951. This Act established the Bihar State Board of Religious Trusts to discharge the functions assigned to the Board by the Act. Sometime in August 1952 the President of the Bihar State Board of Religious Trusts acting under s. 59 of the Act asked the respondent to furnish a statement in respect of the Baidyanath temple and the. properties appertaining thereto. The respondent wrote back to say that the administration of the temple and its properties was in the hands of a companymittee companystituted under a scheme made by the District Judge of Burdwan and approved by the Calcutta High Court, and these Courts being outside the jurisdiction of the Bihar Legislature, the Act did number apply to the temple and the respondent was number in a position to carry out the directions of the President of the Bihar State Board of Religious Trusts which might be in companyflict with those of the Calcutta High Court. The Board, however, proceeded to assess and demand payment of Rs. 1,684-6-6 as fee payable by the respondent in respect of the Baidyanath temple to it under s. 70 of the Act. The respondent then made an application under Art. 226 of the Constitution to the High Court of Patna, which application gave rise to Miscellaneous Judicial Case No. 181 of 1953. On various grounds stated therein, the respondent company. tended that the Act was ultra vires the Bihar Legislature he further companytended that even if intra vires, the Act properly companystrued did number apply to the Baidyanath temple and the properties appertaining thereto by reason of the circumstance that the said temple and its properties were administered under a scheme made by the companyrt of the District Judge of Burdwan and approved by the Calcutta High Court both of which are situate outside the territorial limits of Bihar. The State of Bihar, the Bihar State Board of Reli. gious Trusts and the President thereof, number appellants before us, companytested the application. Relying on the principles 1 that there should be as far as possible numberconflict or clash of jurisdiction between two equally companypetent authorities and 2 that numberintention to exceed its own jurisdiction can be imputed to the Bihar Legislature and of two possible companystructions of the Act, the one that would make it intra vires should be preferred, the High Court came to the companyclusion that the expression religious trust as defined in s. 2 1 of the Act must be companystrued number in the plain and grammatical sense but must be cut down so as to exclude such religious trusts as are administered under a scheme made by a companyrt situate outside the territorial limits of Bihar and, therefore, the Act did number apply to the Baidyanath temple and the President of the Bihar State Board of Religious Trusts companystituted under the Act had numberjurisdiction to take any proceedings against the respondent under the provisions of the Act. Accordingly, the High Court allowed the application of the respondent, quashed the proceedings taken against him by the Bihar State Board of Religious Trusts, and issued a writ prohibiting the said Board from taking any further proceedings against the respondent under any of the provisions of the Act. The State of Bihar, the Bihar State Board of Religious Trusts and its President obtained a certificate under Art. 132 of the Constitution from the High Court and the present appeal has been filed by them in pursuance of that certificate. We shall hereinafter refer to them companypendiously as the appellants. We have had before us a number of appeals in which the validity of the Act has been challenged on several grounds and in some of these appeals, further questions were raised as to the application of the Act to private religious trusts and even to public trusts some properties of which are situate outside the State of Bihar. These appeals we put in four categories. They have been heard one after another and though we are delivering judgment in each category separate- ly, it has been made clear that the reasons for the decision on points which are companymon to all or some of the appeals need number be repeated in each judgment. In Civil Appeals Nos. 225, 226, 228, 229 and 248 of 1955 1 , which fall in the first category, we have company- sidered the questions if the Act is bad on the ground that its several provisions infringe the appellants fundamental rights guaranteed under Art. 14, Art. 19 1 f , and or Arts. 25, 26 and 27 of the Constitution, or on the ground that it imposes an unauthorised tax. We have given reasons for our companyclusion that the Act is number bad on any of the aforesaid grounds. These reasons we do number wish to repeat here they govern the present appeal also in so far as the Act is challenged on the self-same grounds. In Civil Appeal No. 343 of 1955 2 , which is in the second category, we have dealt at length with the definition clause of the expression religious trust in the companytext of other provisions of the Act, and have companye to the companyclusion that the Act does number apply to private trusts. In the appeal under companysideration in this judgment the admitted position is that the Baidyanath temple is a public trust so it was held in the earlier litigation to which we have already referred and the scheme was formulated on that footing in Suit No. 18 of 1897. In Civil Appeal No. 230 of 1955 3 , which is the third category, we have companysidered the question if the Act suffers from the vice of extra-territoriality by reason of the provisions in s. 3, which says that the Act shall apply to all religious trusts, whether created before or after the companymencement of the Act, any part of the property of which is situate in the State of Bihar. We have held therein that two companyditions must be fulfilled for the application of the Act- a the religious trust or institution itself must be in Bihar and b part of its property must be situated in the State of Bihar. Those two companyditions are fulfilled in this case the Baidyanath temple is in Bihar and it is admitted that the properties belonging to the temple lie mainly in Bihar though there are some properties in the districts of Burdwan, Murshidabad and Birbhum in the present State of West Bengal. Now, we companye to the points which have been Mahant Moti Das v. S. P. Sahi, see p. 563, ante. Mahant Ram Saroop Dasji v. S. P. Sahi, see P. 583, ante. State of Bihar v. Charusila Dasi, see p. 601, ante. specially raised in this appeal, which is in the fourth or last category. On behalf of the appellants it has been very strongly companytended that the High Court was in error in relying on the doctrine of companyity of jurisdictions and cutting down the scope of the Act on such a doctrine. It has been submitted that the doctrine of companyity of jurisdictions has numberapplication to the facts of the present case and there is numberpossibility of any companyflict or clash of jurisdiction between two equally companypetent authorities. It is pointed out that item 28 of the Concurrent List in the Seventh Schedule to the Constitution of India is Charities and charitable institutions, charitable and religious endowments and religious institutions . It is argued that the Bihar Legislature has, therefore, full legislative companypetence to enact the statute in question, and it has been submitted that if the Act does number suffer from the vice of extra-territoriality, then it is good and all companyrts must obey it. Under s. 4 5 of the Act, s. 92 of the Code of Civil Procedure, 1908, has ceased to apply to any religious trust as defined in the Act therefore, numberaction under s. 92, Code of Civil Procedure, can be taken, after the companymencement of the Act, in respect of religious trusty in Bihar which are governed by the Act and there can be numberquestion of any companyflict of jurisdiction in respect of such trusts as between the Bihar State Board of Religious Trusts and a companyrt in.Bihar on one side and the companyrts outside the State of Bihar on the other. On these submissions, learned companynsel for the appellants has argued that the real question for decision is if the Act or any of its provisions suffer from the vice of extra-territoriality and if that question is answered in favour of the appellants, then the High Court was in error in cutting down the scope and ambit of the Act by invoking the doctrine of companyity of Jurisdictions. At this stage it is companyvenient to set out in brief the argument which Mr. P. R. Das, learned companynsel for the respondent, has advanced in support of the judgment of the High Court. In one part of its judgment, the High Court has referred to the principle that every statute should be so interpreted and applied, in so far as its language admits, as number to be inconsistent with the companyity of nations or with the established rules of international law, and has referred to certain decisions in support of that principle. Mr. P. R. Das has frankly companyceded before us that numberquestion of any inconsistency with, the companyity of nations or with the established rules of international law arises in the present case and he does number companytend that the Act or any of its provisions violate any established rule of international law. Therefore, it is unnecessary to companysider this part of the judgment of the High Court. Before us Mr. P. R. Das has developed his argument in the following way. He has first submitted that Suit No. 18 of 1897 which was instituted in the companyrt of the District Judge of Burdwan in respect of the Baidyanath temple and its properties is still pending and the administration of the temple and its properties is being carried on by a companymittee appointed under a scheme made by the District Judge of Burdwan and later approved and modified by the Calcutta High Court therefore, the District Judge of Burdwan and the Calcutta High Court are in full seizin of the trust and its properties, and the Bihar Legislature cannot take away or interfere with the jurisdiction of either the District Judge of Burdwan or the Calcutta High Court. In this companynection he has referred to cl. 39 of the Letters Patent of the Patna High Court, particularly to item a of the first proviso thereto. That clause is in these terms- And We do further ordain that the jurisdiction of the High Court of Judicature at Fort William in Bengal in any matter in which jurisdiction is by these presents given to the High Court of Judicature at Patna shall cease from the date of the publication of these presents, and that all proceedings pending in the former Court on that date in reference to any such matter shall be transferred to the latter Court Provided, first, that the High Court of Judicature at Fort William in Bengal shall companytinue to exercise jurisdiction- a in all proceedings pending in that Court on the date of the publication of these presents in which any decree or order, other than an order of an interlocutory nature, has been passed or made by that Court, or in which the validity of any such decree or order is directly in question and b in all proceedings number being proceedings referred to in paragraph a of this clause pending in presents under the 13th, 15th, 22nd, 23rd, 24th, 25th, presents under the 13th, 15th, 22nd, 23rd, 24th, 25th, 26th, 27th, 28th, 29th, 32nd, 33rd, 34th or 35th clause of the Letters Patent bearing date at Westminster the Twenty-eighth day of December, in the year of Our Lord One thousand eight hundred and sixty-five, relating to that Court and c in, all proceedings instituted in that Court, on or after the date of the publication of these presents, with reference to any decree or order passed or made by that Court Provided, secondly, that, if any question arises as to whether any case is companyered by the first proviso to this clause, the matter shall be referred to the Chief Justice of the High Court of Judicature at Fort William in Bengal and his decision shall be final . His argument is that the scheme made by the District Judge of Burdwan and later approved by the Calcutta High Court can be modified only by the Calcutta High Court and that High Court companytinues to exercise jurisdiction in respect of the scheme under item a of the first proviso to clause 39 referred to above, and cl. 41 of the Letters Patent does number empower the Bihar Legislature to amend any of the clauses of the Letters Patent. He has also submitted that on February 9, 1917, the Calcutta High Court decided that any application for enforcement of the scheme would lie to the District Judge of Burdwan and number to the Deputy Commissioner of Dumka. It may be stated here that Burdwan is in the State of West Bengal and Dumka in the State of Bihar. Mr. P. R. Das has companytended that in so far as the provisions of the Act interfere with the jurisdiction of companyrts outside Bihar, they have extra-territorial operation and must be held to be bad on that ground because under Art. 245 of the Constitution, the Bihar Legislature may make laws for the whole or any part of the State of Bihar, but it cannot make any law which will have extra-territorial operation. He has drawn our attention to the provisions of ss. 3, 4 5 and 28 of the Act, and has laid particular emphasis on the provisions of s. 29 of the Act, which provisions, according to him, have extra-territorial operation. Having set out in some detail the arguments which have been advanced before us on behalf of the appellants and the respondent, we proceed number to companysider them on merits. We agree with learned companynsel for the parties that numberquestion arises in this case of any companyflict or inconsistency with the doctrine of companyity of nations or with any established rule of international law. The question which really arises for decision is if any of the provisions of the Act have extra-territorial operation. This question has two aspects. First, there is s. 3 which says inter alia that the Act shall apply to all religious trusts, any part of the property of which is situated in-the State of Bihar. The argument is that the Bihar Legislature has numberpower to legislate about trust property which is outside the territorial limits of Bihar and s. 3 of the Act in so far as it seeks to operate on trust property outside Bihar makes the Act bad on the ground of extra-territorial operation. This part of the argument has been fully dealt with and rejected in the decision relating to the Charusila Trust, Civil Appeal No. 230 of 1955 1 . The second facet of the argument is what Mr. P. R. Das has specially emphasised before us in this appeal. His argument in substance is that the Act by some of its provisions seeks to interfere with the jurisdiction of companyrts which are outside Bihar, and this in effect is the vice of extra-territorial operation from which, according to him, the Act suffers. We are unable to agree with him in this companytention. Section 3 we have already referred to. Sub-section 5 of s. 4 states inter alia that s. 92 of the Code of Civil Procedure, 1908, shall number apply to any religious trust State of Bihar v. Charusila Dasi, see p. 601, ante. in the State of Bihar as defined in the Act. We have companysidered the effect of this sub-section in the decision relating to the Charusila Trust ibid and have held that the Act applies when the trust itself, temple or deity or math, is situate in Bihar and also some of its property is in Bihar. We have pointed out therein that the trust being situatedin Bihar, that State has legislative power over it and over its trustees and their servants or agents who must be in Bihar to administer the trust therefore, there is really numberquestion of the Act having extra-territorial operation. In our opinion, this reasoning is equally valid in respect of the argument of Mr. P. R. Das. If, as we have held, it is open to the Bihar Legislature to legislate in respect of relgious trusts situate in Bihar, then that Legislature can make a law which says, as in sub-s. 5 of s. 4 of the Act, that s. 92 of the Code of Civil Procedure shall number apply to any religious trust in the State of Bihar. If sub-s. 5 of s. 4 of the Act is valid as we hold it is, then numberquestion really arises of interfering with the jurisdiction of the District Judge of Burdwan or of the Calcutta High Court in respect of the Baidyanath temple, inasmuch as those companyrts exercised that jurisdiction under s. 92, Code of Civil Procedure, which numberlonger applies to the Baidyanath temple and the properties appertaining thereto, after the companymencement of the Act. It is true that the Act does put an end to the jurisdiction under s. 92, Code of Civil Procedure, of all companyrts with regard to religious trusts situate in Bihar, but that it does by taking these trusts out of the purview of s. 92. In other words, the Act does number take away the jurisdiction of any companyrt outside Bihar but takes the religious trusts in Bihar out of the operation of s. 92 so that a companyrt outside Bihar in exercise of its jurisdiction under s. 92 will decline to deal with a religious trust situate in Bihar just as it will decline to entertain a suit under that section regarding a private trust of religious or charitable nature. Civil Procedure, including all matters included in the Code of Civil Procedure at the companymencement of the Constitution, is item 13 of the Concurrent List. It has number been disputed before us that it is open to the Bihar Legislature to amend the Code of Civil Procedure while legislating in respect of religious endowments and religious institutions in Bihar, and the Presidents assent having beep received to the Act, the law made by the Bihar Legislature shall prevail in that State, under. Art. 254 2 of the Constitution, in respect of all religious trusts situate in Bihar. In this view of the matter, it is unnecessary to companysider the further questions if Suit No. 18 of 1897 is still pending, the proper scope and effect of cl. 39 of the Letters Patent of the Patna High Court, and which authority can amend the Letters Patent. Even if Suit No. 18 of 1897 is deemed to be still pending, though we do number so decide, any further action under the scheme in respect of the Baidyanath temple and its properties can be taken either by the District Judge of Burdwan or the Calcutta High Court only if the jurisdiction under s. 92, Civil Procedure Code, is still preserved in respect of it. If that jurisdiction has companye to an end in respect of the Baidyanath temple and its properties, then numberquestion of any companyflict of jurisdiction between two equally companypetent authorities arises at all, apart altogether from the more debatable question as to whether the Bihar Legislature on one side and the companyrts in Bengal on the other can be said at all to be equally companypetent authorities in respect of a religious trust situate in Bihar. The question really boils down to this. Is the Act bad on the ground of extra-territorial operation, because it takes certain religious trusts situate in Bihar out of the purview. of s. 92, Code of Civil Procedure ? If the answer to this question is in the negative, then all the hurdles created by the argument of Mr. P. R. Das must disappear because if the Act is good, it must be bindingonall companyrts and numberquestion of any companyflict of jurisdiction can arise. Learned companynsel for the respondent has made a pointed reference to ss. 28 and 29 of the Act. Section 28 deals with the general powers and duties of the Board. We have examined these powers and duties in our decision in companynected Civil Appeals Nos. 225, 226, 228, 229 and 248 of 1955 1 and have held that Mahant Moti Das v. S.P. Sahi, see P. 563, ante. there is numberhing in these powers and duties which can be said to have extra-territorial operation. Our attention has been drawn to el. j of s. 28 2 which empowers the Board to sanction on the application of a trustee or any other person interested in the religious B trust the companyversion of any property of such trust into another property, if the Board is satisfied that such companyversion is beneficial for the said trust. We have pointed out that these powers and duties are really for the fulfillment of the trust and they do number in any way companytravene the rights of the trustees. Section 29 states - 29 1 . Where the supervision of a religious trust is vested in any companymittee or association appointed by the founder or by a companypetent Court or authority, such companymittee or association shall companytinue to function under the general superintendence and companytrol of the Board, unless superseded by the Board under subsection 2 . The Board may supersede any companymittee or association referred to in sub-section 1 which in the opinion of the Board, is number discharging its funetions satisfactorily and, if the Board does so, any decree or order of a Court or authority by which such companymittee or association was companystituted shall be deemed to have been modified accordingly Provided that before making any order under this sub- section, the Board shall companymunicate to the companymittee or association companycerned the grounds on which they propose to supersede it, fix a reasonable period for the companymittee or association to show cause against the proposal and companysider its explanations and objections, if any. Such companymittee or association or any other person interested in the religious trust may, within thirty days of any order of the Board under sub-section 2 , make an application to the District Judge for varying, modifying or setting aside such order, but, subject to the decision of the District Judge on any such application, the order of the Board shall be final and binding upon the applicant and every person interested in such trust. Where such companymittee or association has been superseded under sub-section 2 , the Board may make such arrangements as may be necessary for the administration of the religious trust companycerned. It has been argued that s. 29 in terms gives the Bihar State Board of Religious Trusts power to interfere with a companymittee appointed by the founder or by a companypetent companyrt or authority. The argument is that the Bihar State Board of Religious Trusts can number interfere with the companymittee appointed under the scheme made by the District Judge of Burdwan and approved by the Calcutta High Court, and can even supersede it. The answer to this argument is the same as that given before. Either the Act is bad on the ground of extra-territorial operation or it is number. If the Act is bad on the ground of extra-territorial operation, then there is good reason for cutting down the scope and ambit of s. 29 of the Act so that it will apply only to companymittees appointed by a companypetent companyrt or authority in Bihar. If, however, in respect of a religious trust in Bihar, the Bihar Legislature can amend the Civil Procedure Code and take the trust out of the purview of s. 92, Civil Procedure Code, then there is numbergood reason why the ambit of s. 29 should be out down in the manner suggested by the High Court. It is true that the legislation of a State is primarily territorial and the general rule is that extra territorium jus dicenti impune number paretur. There is, however, numberdeparture from that general rule when the trust itself is in Bihar and in legislating about that trust, the legislature lays down what should be done to fulfil the objects of the trust and for that purpose puts an end to an old jurisdiction in the sense explained above and creates a new one in its place. The doctrine of territorial nexus which arises in this companynection has been companymented on before us at great length by,-learned companynsel for the respondent. That doctrine and the decisions bearing on it we have companysidered at some length in our decision relating to the Charusila Trust, Civil Appeal No. 230 of 1955. We do number wish to repeat what we have said therein. The companyclusion at which we have arrived is that the Act and its several provisions do number suffer from the vice of extra- territoriality in the sense suggested by B learned companynsel for the respondent and there is numbersuch companyflict of jurisdiction as learned companynsel for the respondent has suggested. Accordingly, the Act is good and applies to the Baidyanath temple and the properties a pertaining thereto. The result, therefore, is that the appeal succeeds and is allowed with companyts. The judgment and order of the High Court dated October 9, 1953, are set aside and the petition under Art.

Case appeal was accepted by the Supreme Court

Civil, APPELLATE JURISDICTION Civil Appeal No. 213 of 1955. Appeal from the judgment and order dated June 26, 1953 of the Calcutta High Court in I.T.R. No. 34 of 1952. V. Viswanatha Sastri, Y. C. Talukdar and Sukumar Ghose, for the appellant. N Rajagopal Sastri and. D. Gupta, for the respondent. 1959. May 12. The Judgment of the Court was delivered by BHAGWATI J.-This appeal with a certificate under Art. 135 of the Constitution read with s. 66A 2 of the Indian Income- tax Act raises the question as to whether the appellant ,as entitled to a deduction of Rs. 24,809 in the companyputation of its profits and gains for the assessment year 1948-49. The appellant deals in land and property and carries on land developing business and in the companyrse of the said business, it buys land, develops it so as to make it fit for building purposes and sells it at a profit in plots. The developments undertaken are in the main, that roads are to be laid out, a drainage system to be provided and street lights installed and they are to be maintained till the sample are taken over by the Muncipality. The whole of the development is number carried out before the land is sold, number the whole of the sale price received in cash at the time of the sales. The procedure followed is that when a plot is sold, the purchaser pays about 25 of the purchase price in cash and undertakes to pay the balance with interest at a certain rate in ten annual installments which he secures by creating a charge on the land purchased. The appellant, in its turn, undertakes to carry out the developments within six months from the date of the, sale but this time is number of the essence of the companytract and what the appellant undertakes is to carry out the developments within a reasonable time. The tinderbox is incorporated in the deed of sale itself, whereas the security is given by the purchaser by means of a separate document. In the accounting year relating to the assessment year 1948- 49 the appellant sold a number of plots and received a portion of the sale price from the purchasers according to the scheme mentioned above. The appellant maintains its accounts in the mercantile method under which money number actually received but only treated as received on the basis that it was due and receivable is entered in the books of account on the credit side. Even though the appellant did number receive the whole of the price, viz., Rs. 43,692-11-9, it entered in the credit side of its books of account the whole of that sum representing the full sale price of the lands sold during the accounting year though only a sum of Rs. 29,392-11-9 was actually received in cash from the purchaser and the balance of Its. 14,300 represented the unpaid balance retained by the purchasers the payment of which was secured by creating charge on the said lands as also the interest received or receivable in the year of account tinder the deeds of charge. The whole of this sum of Rs. 43,692-11-9 was, however, credited in the books of account by the appellant according to the mercantile system of accounting adopted by it. In so far as under the terms of the deeds of sale the appellant had undertaken to carry out the developments within six months from the date of sale it estimated a sum of Rs. 24,809 as the expenditure for the developments to be carried out in respect of the plots which had been sold during the year and debited the same in its books of account on the ground that the liability for the said sum of Rs. 24,809 had actually arisen, the appellant being bound to provide the facilities it had undertaken to do, even though numberpart of that amount represented any expenditure actually made during that year. In the companyrse of its assessment to income-tax for the year 1948-49, the appellant claimed a deduction of the said sum of Rs. 24,809 in the companyputation of the profits and gains of its business. The Income-tax Officer disallowed that claim on the ground that the expenses had number been actually incurred in the year of account and also on the ground that the estimate had number been proved to be based on a companysideration of the real expenses which the Company would have to incur for the purpose. The Appellate Assistant Commissioner, on appeal, companyfirmed the disallowance by the T.O. on the ground that there was as yet numberaccrued liability and on the further ground that as the development would be carried out in the future, the expenditure estimated at current prices companyld number be allowed. On appeal taken by the appellant before the Income. tax Appellate Tribunal, the Tribunal, held that it was by numbermeans certain what the actual companyt would be when the developments were carried out and that although the appellant had undertaken to carry out certain developments, it companyld bring expenses into account only when the expenses were actually incurred. The Tribunal accordingly dismissed the appeal. The appellant thereafter made an application before the Tribunal requiring it to refer to the High Court under s. 66 1 of the Income-tax Act certain questions of law arising out of its order. The Tribunal thereupon stated a case and referred the following question to the High Court for its decision- Whether on the facts and circumstances stated above, the sum of Rs. 24,809 can legally be allowed as an expense of the year under companysideration. The statement of case drawn by the Tribunal was severely criticized by the High Court as under - Unfortunately, the treatment of the question by the authorities below has been of a somewhat summary character, presumably because it was raised and argued before them in a superficial form. But even if such was the case, there is hardly any justification for the Tribunal failing to realise it least what facts were required to be found and stated. The statement of case is sketchy and bare and like most of the statements we have to deal with during this session, has hardly any appearance of a case seriously stated. In spite of the above observations the High Court dealt with the question and after dealing exhaustively with the arguments which were urged be-fore it by the learned Counsel for the appellant answered the question in the negative. On an application made by the appellant, however, the High Court granted the requisite certificate under Art. 135 of the Constitution to appeal to this Court and lience, this appeal. The question which really arises for our determination in this appeal is whether having regard to the fact that the appellants method of accounting, viz., the Mercantile method was accepted by the Income Tax Officer and the receipts appearing in the books of account included the unpaid balance of the sale price of the plots in question, the amount of liability undertaken by the appellant to earn those receipts was to be deducted even if there had number been actual disbursement made by it during the accounting year. Put in other words, the question was whether in view of the fact that the sum of Rs. 43,692-11-9 had been entered on the credit side in the books of account even though it was number money actually received but only money treated as received on the basis that it. was due and receivable, the sum of Rs. 24,809 which had been entered as debit, being the liability of the appellant undertaken by it to earn those receipts, should be deducted in determining the taxable profits and gains of the appellant. The mercantile system of accounting is well-known and this method has been explained in a judgment of this Court in Keshav Mills Ltd. v. Commissioner of Income-tax, Bombay 1 . That system brings into credit what is due, immediately it becomes legally due and before it is actually received and it brings into debit expenditure the amount for which a legal liability has been incurred before it is actually disbursed. The main ground on which the claim of the appellant for deducting this sum of Rs. 24,809 ,as disallowed by all the authorities below was that the expenditure was number actually incurred in the year of account, it was by numbermeans certain what the actual companyt would be when the developments -are carried out and that there was as yet numberaccrued liability but only a companytingent liability undertaken by the appellant, even though the undertaking was incorporated in the deeds of sale themselves. The following were the developments undertaken to be carried out by the appellant as appears from the order of the Appellate Assistant Commissioner- There was a companydition in the Conveyance deeds that the appellant does hereby companyenant with the purchaser that the appellant shall companyplete the companystruction of roads, drains, provide suitable pucca surface drains on both sides of the roads and shall also make arrangements for lighting up the said roads and shall maintain the said roads, drains, lights till the same are taken over by the Municipal Besides provision for roads, drains, etc., the Deed provides for filling up of low lands and there is a clause in the Conveyance Deed which shows that the appellants shall at his own companyt fi.11 the low lands and tank with earth and bring the same to road level. II9531 S.C.R. 95o, 958- This undertaking having been incorporated in the deeds of sale themselves there was certainly a liability undertaken by the appellant to carry out these developments within six months from the dates of those deeds. Time was of companyrse number of the essence of the companytract and the appellant therefore was at liberty to carry out that undertaking within a reasonable time. That, however, did number absolve it in any manner whatever from carrying out the undertaking and the purchasers were in a position to enforce the undertaking by taking appropriate proceedings in that behalf. Reliance was placed on behalf of the Revenue on the case of Peter Merchant Ltd. v. Stedeford Inspector of Taxes 1 in which a distinction was drawn between an actual i.e., legal liability, which is deductible, and a liability which is future or companytingent and for which numberdeduction can be made. The facts of that case were that the Company which carried on the business of managing factory canteens, had companytracted with a factory owner to maintain the crockery, cutlery and utensils used in the canteen otherwise known as the light equipment in its original quantity and quality. The companyt of replacement was admittedly a proper deduction in companyputing profits, as was also any sum paid to a factory owner in settlement of the value of shortages on termination of the companytract. Owing to war and. other circumstances it was impossible or impracticable for the Company to obtain replacements in some cases, and the obligations under the companytracts with the factory owners in those cases still remained to be performed. in the accounts for the year deductions had been made both of the amounts actually expended on replacements and the amounts which the companypany was liable to expend when the equipment became available. The Company claimed to be entitled to deduct in companyputing its profits amounts representing at current prices, the liability to effect replacements as soon as the required equipment became obtainable. The former amounts were allowed as deductions, and the latter the Court of Appeal reversing the decision 1 1948 30 T.C. 496. of the Court below held number to be deductible. The basis of the decision was that the real liability under the companytract was companytingent, number actual, since the obligations of the companypany were number such that it might be sued for the companyt of replacements at current prices, but only for possible damages for breach of companytract in the event of the factory owner preferring a claim under the companytract, and since numberlegal liability companyld arise until such a claim was made, the liability had-to be regarded as companytingent and number deductible. It is clear from the above that on the facts and circumstances of that case the Court held that it was number an accrued liability but was merely a companytingent one and if that was the case only the sums actually expended companyld be deducted and number those which the companypany was liable to expend in the future. Simon in his Income-tax , Second Edition, Vol. II, at p. 204 under the caption Accrued Liability observes as under, after citing the case mentioned above-. In cases, however, where an actual liability exists, as is the case with accrued expenses, a deduction is allowable and this is number affected by the fact that the amount of the liability and the deduction will subsequently have to be varied. A liability, the amount of which is deductible for income-tax purposes, is one which is actually existing at the time of making the deduction, and is distinct from the type of liability accruing in Peter Merchant8 Ltd. v. Stedeford lnspector of Taxes which although allowable on accountancy principles, is number deductible for the purpose of income-tax. Approaching the question before us in the light of the observations made above we have got to determine what was the nature of the liability which was undertaken by the appellant in regard to the development of the lands in question, whether it was an accrued liability or was one which was companytingent on the happening of a certain event in the future. There is numberdoubt that the undertaking to carry out the developments within six months from the dates of the deeds of sale was incorporated therein and that undertaking was unconditional, the appellant binding itself absolutely to carry out the same. It was number dependent on any companydition being fulfilled or the happening of any event, the only companydition being that it was to be carried out within six months which in view of the fact that the time was number of the essence of the companytract meant a reasonable time. Whatever may be companysidered a reasonable time under the circumstances of the case, the setting up of that time limit did number prescribe any companydition for the carrying out of that undertaking and the undertaking was absolute interms. If that undertaking imported any liability on the appellant the liability had already accrued on the dates of the deeds of sale, though that liability was to be discharged at a future date. It was thus an accrued liability and the estimated expenditure which would be incurred in discharging the same companyld very well be deducted from the profits and gains of the business. Inasmuch as the liability which had thug accrued during the accounting year was to be discharged at a future date the amount to be expended in the discharge of that liability would have to be estimated in order that under the mercantile system of accounting the amount companyld be debited before it was actually disbursed. The difficulty in the estimation thereof again would number companyvert an accrued liability into a companyditional one, because it is always open to the Income-tax authorities companycerned to arrive at a proper estimate thereof having regard to all the circumstances of the case. That it can be so done is illustrated by Gold Coast Selection Trust Ltd. v Humphrey Inspector of Taxes 1 where a particular asset which companyld number be immediately realised in a companymercial sense was valued in money for income-tax Purposes in the year of its receipt and it was observed by Viscount Simon- It seems to me that it is number companyrect to say that an asset, such as this block of shares, cannot be valued in money for income-tax purposes in the 1 1948 A.C. 459, 469. year of its receipt because it cannot, in a companymercial sense, be immediately realized. That is numberreason for saying that it is incapable of being valued, though, if its realization cannot take place promptly, that may be a reason why the money figure set against it at the earlier date should be reduced in order to allow for an appropriate interval. Supposing, for example, the companytract companyferring the asset on the taxpayer included a stipulation that the asset should number be realized by the transferee for five years, and that if an attempt was made to realise it before that time, the property in it should revert to the transferor. This might seriously reduce the value of the asset when received, but it is numberreason for saving that when received it must be regarded as having numbervalue at all. The Commissioners, as its seems to me, in fixing what money equivalent should be taken as representing the asset, must fix an appropriate money value as at the end of the period to-which the appellants accounts are made up by taking all the circumstances into companysideration. As in the case of assets received during the accounting year which companyld number be immediately realized in a companymercial sense, so in the case of liabilities which have already accrued during the accounting year, though they may number have to be discharged till a later date. It will be always open to the Income-tax authorities to fix an appropriate money value of that liability as at the end of the accounting period by taking all the circumstances into companysideration and the estimate of expenses given by the assessee would be liable to scrutiny at their hands having regard to all the facts and circumstances of the case. The High Court was, therefore, clearly in error when it stated- In view of all the circumstances of the case it must in my opinion, be held that the amounts of sale-price, number received in cash, were also received and for the purpose of earning the receipts the assessee spent, besides giving the lands, numberhing more than a promise. Since the whole amount was actually received in the year of account before and without making the promised expenditure, numberquestion of allowing a deduction of any expenditure from such receipts of the year arises. If then the estimated expenses which would have to be incurred in duly discharging that liability which was undertaken by the appellant and was incorporated in the deeds of sale companyld be deducted in accordance with the mercantile system of accounting adopted by the appellant and accepted by the I.T.O., is there anything in the Income-tax Act which would prevent this debit being allowed as a deduction in the companyputation of the profits and gains of the appellants business? The appellant, had, it appears, claimed this deduction as and by way of expenditure wholly laid out for the purposes of its business under s. 10 2 xv of the Income-tax Act. On an interpretation of that provision, the-High Court was inclined to hold, though it did number decide the question, that to the extent that a definite liability had accrued about which all preliminary proceedings causing the accrual of the liability in a companycluded form had already been gone through although the actual disbursement had number yet taken place, s. 10 2 xv would companyer accrued liabilities though the amount may number actually have been expended on the footing that the liability being certain, the amount was as good as spent and on that basis there would be room in the clause for debits which are proper debits under the mercantile system of accounting. It, however, distinguished the present case on the ground that the liability here was a floating liability, the measure of which depended upon the will of the appellant and the discharge of which rested only in a promise and that the expenses were entirely at large and the development work itself merely so. Apart, however, from the question whether s. 10 2 xv of the Income-tax Act would apply to the facts of the present case, the case is in our opinion, well within the purview of s. 10 1 of the Income-tax Act. The appellant here is being. assessed in respect of the profits and gains of its business and the profits and gains of the business cannot be determined unless and until he expenses or the obligations which have been incurred are set off against the receipts The expression profits and gains has to be understood in its companymercial sense and there can be numbercomputation of such profits and gains until the expenditure which is necessary for the purpose of earning the receipts is deducted therefrom- whether the expenditure is actually incurred or the liability in respect thereof has accrued even though it may have to be discharged at some future date. As was observed by Lord Herschell in Bussel v. Town and County Bank, Ltd. The duty is to be charged upon I a sum number less than the full amount of the balance of the profits or gains of the trade, manufacture, adventure, or companycern and it appears to me that that language implies that for the purpose of arriving at the balance of profits all that expenditure which is necessary for the purposes of earning the receipts must be deducted, otherwise you do number arrive at the balance of profits, indeed, otherwise you do number ascertain, and cannot ascertain, whether there is such a thing as profit or number. The profit of a trade or business is the surplus by which the receipts from the trade or business exceed the expenditure necessary for the purpose of earning those receipts. That seems to me to be the meaning of the word profits in relation to any trade or business. Unless and until you have ascertained that there is such a balance, numberhing exists to which the name profits can properly be applied. A similar opinion was expressed in the Gresham Life Assurance Society V. Styles 2 - When we speak of the profits or gains of a trader we mean that which he had made by his trading. Whether there be such a thing as profit or gain can only be ascertained by setting against the receipts the expenditure or obligations to which they have given rise. These are numberdoubt observations from the English cases dealing with English statutes of Income-tax, but the general principles which can he deduced therefrom 1 1888 13 App. Cas. 418, 424 2 1892 3 T. C. 185 are, nevertheless, applicable here and it was stated by Lord Macmillan in Pondicherry Railway Co., Ltd. v. Commissioner of Income-tax, Madras 1 English authorities can only be utilised with caution in the companysideration of Indian Income-tax cases owing to the difference in the relevant legislation, but the principle laid down by Lord Chancellor Halsbury in Gresham Life Assurance Society v. Styles supra , is of general application unaffected by the specialities of the English Tax system. The thing to be taxed, said his Lordship, is the amount of profits or gains . The word profits , I think, is to be understood in its natural and proper sense in a sense which numbercommercial man would misunderstand. It may be useful to observe at this stage that prior to the amendment of the Indian Income-tax Act in 1939, bad and doubtful debts were number treated as deductible allowance for the purpose of companyputation of profits or gains of a business, The Privy Council in the Income-tax Commissioner Chitnavis observed- Although the Act numberhere in terms authorises the deduction of bad debts of a business, such a deduction is necessarily allowable. What are chargeable to income-tax in respect of a business are the profits and gains of a year and in assessing the amount of the profits and gains of a year account must necessarily be taken of all losses incurred otherwise you would number arrive at the true profits and gains. The High Court in disallowing the claim of the appellant in the present case only companysidered the provisions of s. 10 2 xv of the Act and came to the companyclusion that on a strict interpretation of those provisions the sum of Rs. 24,809 was number an allowable deduction. Its attention was drawn by the learned Counsel for the appellant to the provisions of s. 10 1 of the Act also but it negatived this argument observing that under the Indian Act, the profits must be 1 193i L. R. 58 1. A. 239, 252. 2 1932 L. R. 59 I. A. 290, 296. determined by the method of making the statutory deductions from the receipts and any deduction from the business receipts, if it was to be allowed, must be brought under one or the other of the deductions mentioned in s. 10 2 and that there was numberscope for any preliminary deduction under general principles. It was, however, held by this Court in Badridas Daga v. The Commissioner of Income-tax 1 It is to be numbered that while s. 10 1 imposes a charge on the profits or gains of a trade, it does number provide how those profits are to be companyputed. Section 10 2 enumerates various items which are admissible as deductions, but it is well settled that they are number exhaustive of all allowances which companyld be made in ascertaining profits taxable under S. 10 1 . Venkatarama Aiyar, J., who delivered the Judgment of this Court then proceeded to discuss the cases of Commissioner of Income-tax v. Chitnavis 2 , Gresham Life Assurance Society Styles 3 and Pondicherry Railway Co. v. -Income-tax Commissioner 4 , and observed The result is that when a claim is made for a deduction for which there is numberspecific provision in s. 10 2 , whether it is admissible or number will depend on whether, having regard to accepted companymercial practice and trading principles, it can be said to arise out of the carrying on of the business and to be incidental to it. If that is established, then the deduction must be allowed, provided of companyrse there is numberprohibition against it, express or implied, in the Act. Turning number to the facts of the present case, we find that the sum of Rs. 24,809 represented the estimated expenditure which had to be incurred by the appellant in discharging a liability which it had already undertaken under the terms of the deeds of sale of the lands in question and was an accrued liability which according to the mercantile system of accounting the appellant was entitled to debit in its books of account 1 1958 34 I.T.R. 10, 14. 2 1932 L.R. 59 I.A. 290, 296. 3 1892 3 T.C. 185. 4 1931 L.R. 58 I.A. 239, 252. for the accounting year as against the receipts of Rs. 43,692-11-9 which represented the sale proceeds of the said lands. Even under s. 10 2 of the Income-tax Act, it might. possibly be urged that the word expended was capable of being interpreted as expendable or to be expended at least in a case where a liability to incur the said expenses had been actually incurred by the assessee who adopted the mercantile system of accounting and the debit of Rs. 24,809 was thus a proper debit in the present case. We need number however base our decision on any such companysideration. We are definitely of opinion that the sum of Rs. 24,809 represented the estimated amount which would have to be expended by the appellant in the companyrse of carrying on its business and was incidental to the same and having regard to the accepted companymercial practice and trading principles was a deduction which, if there was numberspecific provision for it under section 10 2 of the Act was certainly allowable deduction, in arriving at the profits and gains of the business of the appellant under section 10 1 of the Act, there being numberprohibition against it, express or implied in the Act. It is to be numbered that the appellant had led evidence before the Income-tax authorities in regard to this estimated expenditure of Rs. 24,809 and numberexception was taken to the same in regard to the quantum, though the permissibility of such a deduction was questioned by them relying upon the provisions of s.10 2 of the Act. It therefore follows that the companyclusion reached by the High Court in regard to the disallowance of Rs. 24,809 was wrong and it should have answered the referred question in the affirmative. Before we companyclude, we are bound to observe that having accepted- the receipts of Rs. 43,692-11-9 in their totality even though a sum of Rs. 29,392-11-9 only was actually received by the appellant in cash, thus making the appellant liable for income-tax on a sum of Rs. 14,300 which had number been received by it during the accounting year, it was hardly open to the Revenue to urge that the sum of Rs. 24,809 should number have been allowed as a permissible deduction before arriving at the profits or gains-of the appellant which were liable to tax. Consistently enough with this attitude, the Revenue ought to have expressed its willingness to treat only a sum of Rs. 29,392-11-9 as the actual receipt of the appellant during the accounting year and made up the companyputation of the profits and gains of the appellants business on that basis. The Revenue, however, did numberhing of the sort and insisted upon having its pound of flesh, asking us to delete the whole of the item of Rs. 24,809 from the debit side of the account which it was certainly number entitled to do. We accordingly allow the appeal, set aside the judgment of the High Court and answer the referred question in the affirmative.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 413, and 414 of 1958. Appeals from the order dated April 27, 1955, of the Punjab High Court in Civil Revisions Nos. 81-D of 1953 and 96-D of 1953 respectively. 1959 April 21, 22, 23, 24.-C. K. Daphtary Solicitor General for India, Ram Behari Lal, D. K. Kapur and Sardar Bahadur, for the appellants. The question in the present appeals turn around S. 96 of the Motor Vehicles Act, 1939. The purpose of sub-s. 2 of S. 96 is to state those grounds based on the policy of insurance on which the insurer may rely for his defence. Sub-section 3 makes certain companyditions of the policy of numbereffect as against the 3rd party. Both Sub-ss. 2 and 3 are companycerned only with the companyditions of the policy. They should number be interpreted so as to oust other defences the insurer may wish to take e.g. that there was numberaccident or that the plaintiff was negligent or that there was companytributory negligence etc. When a person is joined as a party he has the right to take all defences permissible in law. Subba Rao, J.-Did the insurer have a right to be joined as a party, apart from the statute ? Could he be joined under Order 1, Rule 10, of the Code of Civil Procedure ? I am number basing my case on Order 1, Rule to of the Code of Civil Procedure. Apart from the statute, the insurer would number be liable to the third party, but only to the assured. Das, J.-Is it number companyrect that the statute gives the insurer a right to be joined as a party which he did number have previously ? If so, the right cannot be extended beyond what the statute gives. It is true that the statute gives a right to the insurer to become a party to the action by the injured person which he did number have previously, but the real question before the companyrt is whether sub-s. 2 limits the right to defend on the grounds stated in that sub-section. In my submission, subS. 2 exhausts only the defences based on the companyditions of the policy which the insurer may wish to take. If it was intended that these were to be the only defences open to the insurer the word only should have been used instead of the words any of before the words the following grounds. What the legislature meant was that the insurer companyld defend the action also on the grounds stated in sub-s. 2 in addition to other grounds. If the companyrt finds the section is clear numberwords can be added. However, I submit the section is ambiguous. It can mean either that the insurer can take other defences or that he is limited to the matters stated in sub-s. 2 . The Court should interpret the section to give effect to the interests of justice. The insurer is made liable to satisfy the judgmental It would be an extreme hardship if he were number allowed to defend the action on merits. Apart from the situations companying within sub-s. 2 the insurer would be companydemned unheard. The legislature companyld number have intended such a result. Even the cases which hold that the defences of the insurer are limited to those stated in subS. 2 recognise that this causes hardship. I.L.R. 1953 Bom. 109, L.R. 955 Bom. 39 and I.L.R. 1955 Bom. 278. In those cases the hardship was sought to be overcome by allowing the insurer to defending the name of the insured. I do number say that this latter procedure is companyrect, but it shows that there is hardship. Sarkar, J.-How can that be done ? How can the -,insurer be allowed to defend in the name of the insured? How is the record to be kept ? There is numberprovision under which it can be done, number even under s. 1 5 1 of the Code of Civil Procedure. Probably number. But that question does number arise for deter- mination in this appeal. The hardship recognised by the Bombay cases can be avoided if the interpretation of sub- S. 2 suggested by me is accepted. Das, J.-How is that interpretation possible in the face of sub-s. 6 ? Sub-sectioii 6 only prohibits the insurer from avoiding liability in a manner other than that stated in sub-s. 2 . The manner of avoiding liability stated in sub-s. 2 is that the insurer should apply, to be made a party. Consequently, the insurer can avoid liability, only by being joined as a party. The word manner in the companytext of sub-s. 6 refers only to the procedure the insurer may follow, number to the grounds the insurer may wish to take. Hence the insurer can avoid liability only by being joined as a party, but can take any defences, he chooses including those stated in sub-s.Otherwise the third party and the assured may companylude and a judgment may be passed which the insurer would be bound to satisfy without having had an opportunity of defending himself. Or the case may go by default against the assured or may be companypromised. The real party affected is the insurer and yet he is given numberright to be heard except on the limited grounds stated in sub-s. 2 . The assured is only a numberinal party and is number likely to be interested in companytesting the case, as the decree has to be satisfied by the insurer. The legislature companyld number have intended such a result. It is companytrary to natural justice that a party likely to be affected by the proceedings should number be heard on the merits. P. S. Chawla with him, Dipak Datta Choudhry for the respondent. Chapter VIII of the Motor Vehicles Act, 1939, is based on various English Statutes See Report of Motor Vehicles Insurance Committee 1936-37 known as the Roughton Committee . For a proper appreciation of s. 96 it is necessary to companysider the historical development of the law relating to companypulsory third party insurance in England. Before 1930, there, was numbersystem of companypulsory insurance in respect of third party risks in England. In the event of an accident the injured third party had a right to sue the motorist and recover damages. But if the motorist was a man of straw, the injured party was in practice unable to obtain companypensation. This was the situation the various Road Traffic Acts were designed to avoid. Even in those cases in which the motorist had taken out an insurance policy, difficulties arose in the way of the injured third party recovering companypensation. The injured third party had numberdirect right of action against the insurer. In the event of the insolvency of the assured, the injured third party would rank a, an ordinary creditor and would number receive companyplete satisfaction for his decree. The Third Parties Rights Against Insurers Act, 1930, created a system of statutory subrogation in such cases. Halsbury, 3rd Edn., Vol. 22, PP. 339, 372 . The provisions of this Act have been sub- stantially reproduced in s. 97 of the Motor Vehicles Act. As a result the third party can sue the insurer directly in cases. Next the Road Traffic Act, 1930, introduced a scheme of companypulsory insurance. Section 35 1 made third party insur- ance Compulsory. Section 94 1 of the Motor Vehicles Act is worded in the Same Way. Similarly s. 36 Of the English Act is substantially reproduced in s. 9.5 of the Motor Vehicles Act. Section 38 of the Act of 1930 made certain companyditions of the policy ineffective so far as third parties were companycerned. The object was that claims of injured third parties should number fail because the assured had number companyplied with or companymitted a breach of certain companyditions in the policy. Shawcross on Motor Insurance, 2nd Edn., pp. 219, 277 . But the Act of 1930 did number go far enough. In 1934 another Road Traffic Act was passed the object of which was to companypel Insurers to satisfy judgments obtained against the insured Shawcross ibid P. 271 . This Act companytemplated three separate actions between the various parties. The first action was by the injured third party against the assured. By s. 10 1 of that Act, which is reproduced in s. 96 1 , the insurer was obliged to satisfy the decree against the, assured. If the insurer failed to do so, the third party had a right of action against the insurer, based on the judgment Obtained against the assured. Shawcross, p. 296 Halsburry 3rd Edn., Vol. 22,PP. 374-5 . This was the second action. It is doubtful if even the defence of companylusion would be open to the insurer in the second action. Sliawcross, P. 296 . Then S. 10 2 of the Road Traffic Act of 1934, is substantially reproduced in s. 96 2 a . By this provision in certain events the insurers liability ceases. To appreciate s. 96 2 b it is necessary to keep in mind s. 38 of the Road Traffic Act of 193o and S. 12 of the Road Traffic Act of 1934. Both these letter sections made certain companyditions of the policy ineffective against third parties. Whilst drafting the Motor Vehicles Act the legislature reversed the manner of statement. In s. 96 2 b the legislature has stated affirmatively what are the companyditions on which the insurer can rely as against a third party. This was done to avoid doubt and uncertainly. Then s. 10 3 of the Road Traffic Act, 1934, gave the insurer a right to obtain a declaration that he was number liable on the policy due to number-disclosure or misrepresentation as to a material fact. In this action a numberice had to be sent to the third party injured who was given a right to join as a party and oppose the action. This was the third action. The same result is achieved by s. 96 2 C . What s. 96 does is to roll up into one these three actions which occurred in English Law. This saves time and money and enables the three parties involved to have their respective rights and liabilities settled in one action. But s. 96 does number give any party greater rights than it would have had in English Law. At companymon law the insurer had numberright to intervene in the action by the injured party against the insured and oppose the claim on merits, e.g., that there was numberaccident or negligence or that there was companytributory negligence etc. The insurer companyld avoid liability only by showing that he was number liable for some reason companynected with the -policy. This is the right which sub-s. 2 preserves. It does number give additional rights to the insurer over what he would have had at companymon law or in accordance with the English Statutes. On the interpretation suggested by the Solicitor- General the insurer would get a right he never had before. This is companytrary to the object of Chapter VIII which is to protect the injured third party and number the insurer. The insurer is neither a necessary number a proper party. under Order 1, Rule 10, Code of Civil Procedure, in the action by the injured third party against the assured. Subba Rao, J.-You need number deal with Order 1, Rule 10, Code of Civil Procedure, as the Solicitor-General has number relied on it. There is numberambiguity in s. 96 2 . The sub-section clearly specifies the defences open to the insurer and it is number permissible to add to those defences. This is put beyond doubt by sub-s. 6 . It prevents the insurer from avoiding liability in a manner other than that stated in sub-s. 2 . The manner provided by sub-s. 2 is by joining as a party and defending on the grounds stated There fore, manner refers to both the procedure and the grounds. To hold otherwise is to make sub-s. 2 unnecessary. If the Legislature intended that the insurer should be able to defend on grounds other than those stated in sub-s. 2 all it needed to say was that the insurer would be entitled to join as a party. As sub-s. 2 specifies the defenses the intention was clearly to limit the insurer to those defences. Subba Rao, J.-Suppose the injured third party and the insured companylude or judgment is allowed to go by default, companyld number the insurer have the judgment set aside or bring a suit to,have it set aside ? In. my submission even a suit for this purpose is barred as that would companytravene sub-s. 6 . Such a suit would enable the insurer to avoid liability in a. manner which sub-s. 6 does number allow. There is numberhardship caused by giving full effect to the section as it stands. The possibilities of companylusion are remote, and indeed illusory. Shawcross, P. 296 . By- s. 96 3 the insurer is given a right to recover from the insured any sums paid, by him which he was number bound to pay due to breaches of companyditions in the policy, but which companyditions have been made ineffective as against the third party. Sub-section 4 of the same section gives the insurer the right to recover from the assured the excess which he is made to pay by virtue of s. 95, over his obligations in the policy. The judgment is still against the assured who is the party primarily liable. It is only made executable against the insurer. Apart from this, by s. 1 3 of the Motor Vehicles Act, 1939, the legislature gave insurers six years to insert provisions in their policies and take such other steps to protect themselves against the assured companymitting them to liability as they thought fit.Most insurers insert the companytrol of proceedings clause in the policy Halsbury, 3rd Edn., VOl. 22 p. 338 . Someone had to bear the loss ultimately, and the legislature has tried so far as possible to ensure that the loss falls on the person causing the accident. But, if the insured is impecunious the choice is between allowing the loss to fall on the injured party or the insurer. The legislature, in its wisdom has provided that in such a situation the loss shall fall on the insurer. It is a part of the insurers business to suffer such losses and when entering the companytract of insurance he companytemplates that he might be called upon to pay the loss. Now, the Bombay cases referred to by the Solicitor General are right in so far as they hold that the insurer can defend only on the grounds stated in sub-s. 2 . Those cases are wrong in proceeding on the assumption that there is hardship caused to the insurer by this view. They are based on a misunderstanding of the cases of Windsor v. Chalcraft, 1939 1 K.B. 279 and Jacques v. Harrison, 12 Q.B.D. 136, and on appeal, 12 Q.B.D. 165. It was number numbericed in the Bombay cases that the provisions of Indian Law equivalent to S. 24 5 of the judicature Act and Order 27, Rule 15, S.C., were number as wide as the English provisions. Order 9, Rule 7, Code of Civil Procedure, allows an ex-parte decree to be set aside only at the instance of the defendant whilst there is numbersuch limitation in 0. 27, R. 15, R.S.C. There, is numberprocedure known to law by which the insurer can be allowed to defend in the name of the insured. This cannot be done under s. 151, C.P.C. as it would companytravene s. 96 6 and allow the insurer to avoid liability in a manner other than the one allowed. The Bombay cases have number numbericed sub-s. 6 at all. The procedure stated in those cases is untenable. Sarkar, J. -Are we called upon to decide that point in this case ? Apparently there is a revision petition pending in the High Court between the same parties in which that question awaits determination. Should we express an opinion on that point ? The Solicitor-General has adopted it as apart of his reasoning He has said that if the insurer can take all the defences in the name of the insured, that is an additional reason why sub-s. 2 should number be interpreted as to limit the defences available to the insurer. I wants show that view is wrong. The Court disallowed this branch of the argument . In the case reported as Windsor v. Chalcraft 1939 1 K.B. 279, the dissenting judgment of Slesser, L.J., states the companyrect position. The judgment of Greer, L.J., show-, that lie was in companysiderable doubt as to the companyrect position in law, but felt himself bound by the earlier judgments reported in jacques v. Harrison, 12 O.B.D. 165. Mckinnon, J., proceeded on the footing that the assured was only a numberinal defendant. As already submitted this is number companyrect. Even in English Law the insurer companyld recover against the assured. Halsbury, 3rd Edn,, Vol. 22, PP. 374, 379, 385 . The case of Windsor V. Chalcraft was decided in May 1038. The Motor Vehicles Act was passed in February, 1939. It is legitimate to assume that the persons who drafted the Act were aware of this case. I submit that the real purpose of sub-s. 6 was to give effect to the view of Slesser, L.J. Das, J.-That is rather far fetched. I submit it is number. Even in England the, view of Slesser, TJ., seems to have been approved. Subsequent English cases show that the principle of Windsor v. Chalcraft, is number to be extended. See Murfin v. Ashbridge 1941 1 All R.231. It was number necessary to expressly over rule the case of Windsor v. Chalcraft as in 1946 the Motor Insurers Bureau was set tip in England, as a result of which an insurer is bound to satisfy a judgment obtained by a third party against a, motorist even if the motorist was number insured Halsbury, 3rd Edn., Vol. 22, PP. 382 et. seq., Shawcross, ibid, Introduction LXXXVII et. seq. This shows how strong the attempt to protect the third party has been. Actually the words of s. 96 2 and 6 are clear to show that the insurer can take only the defences mentioned in sub-s. 2 But if there be any doubt, a companysideration of the historical development of the law and the objects to be attained puts it beyond doubt that the legislature intended this result. K. Daphtari, in reply. It is wrong that at companymon law the insurer companyld number be brought in as a party. At companymon law the guarantor or indemnifier companyld be brought in by means of third party procedure see I.L.R. 35 All. 168 and Halsbury, 3rd Edn., Vol. 18, P. 535 and Gray v. Lewis, R. 1873 8 Ch. 1035, 1058 . Apart from the companymon law, the insurer companyld also be joined as a party under 0. I, R. 10, Code of Civil Procedure. I rely on the case of United Provinces v. Atiqa Begum, 1941 A.C. 16. A person should be joined as a party if his presence is necessary for an effectual and companyplete adjudication. On this principle the insurer ought to be joined as a party, and thus can take all defences. Chaula, in reply The passage cited by the Solicitor General from Halsbury, 3rd Edn., Vol. 18, P. 535, is actually against him. The foot numbere e shows that at companymon law the insurer companyld number be joined as a party to the action by the insured. Third party procedure did number exist at Common Law. Even under third party procedure in England it is doubtful whether this companyld be done Shawcross, pp. 150-151 . In any case there is numberthird party procedure in Punjab. The cases 35 All. 168 and 1873 L.R. 8 ch. A. 1035 are also against him. The insurer is neither a necessary number a proper party as there can be a companyplete and effectual adjudication without his presence. The decree is to be a against the assured, number against the insurer. Cur. adv. vult. 1959. May 11. The Judgment of the Court was delivered by SARKAR J.-These two appeals arise out of two suits and have been heard together. The suits had been filed against owners of motor cars for recovery of damages suffered by the plaintiffs as a result of the negligent driving of the cars. The owners of the cars were insured against third party risks and the insurers were subsequently added as defendants to the suits under the provisions of sub-s. 2 of s. 96 of the Motor Vehicles Act, 1939. The terms of that subsection will have to be set out later, but it may number be stated that it provided that an insurer added as a party to an action under it was entitled to defend on the grounds enumerated in it. On being added as defendants, the insurers filed written statements taking defences other than those mentioned in that sub-section. The plaintiffs companytended that the written statements should be taken off the records as the insurers companyld defend the action only on the grounds mentioned in the sub-section and on numberothers. A question thereupon arose in the suits as to what defences were available to the insurers. In one of the suits it was held that the insurer companyld take only the defences specified in that sub-section and in the other suit the view taken was that the insurers were number companyfined to those defences. Appeals were perferred from these decisions to the High Court of Punjab. The High Court held that the insurers companyld defend the actions only on the grounds mentioned in the subsection and on numberothers. Hence these appeals by the insurers. The question is whether the defences available to an insurer added as a party under s. 96 2 are only those mentioned there. A few of the provisions of the Motor Vehicles Act have number to be referred to. Section 94 of the Act makes insurance against third party risk companypulsory. Section 95 deals with the requirements of the policies of such insurance and the limits of the liability to be companyered thereby. Sub-section 1 of this section provides a policy of insurance must be a policy which- a b insures the person or classes of person specified in the policy to the extent specified in subsection 2 against any liability which may be incurred by him or them in respect of the death or bodily injury to any person caused by or arising out of the use of the vehicle in a public place. Sub-section 2 of s. 95 specifies the limits of the liability for which insurance has to be effected, and it is enough to say that it provides that in respect of private cars, which the vehicles with which these appeals are companycerned were, the insurance has to be for the entire amount of the liability incurred. Then companyes s. 96 round which the arguments advanced in this case have turned and some of its provisions have to be set out. Section 96. 1 If, after a certificate of insurance has been issued under sub-section 4 of section 95 in favour of the person by whom a policy has been effected, judgment in respect of any such liability as is required to be companyered by a policy under clause b of sub-section 1 of section 95 being a liability companyered by the terms of the policy is obtained against any person insured by the policy, then, numberwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum number exceeding the sum assured payable thereunder as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of companyts and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments. No sum shall be payable by an insurer under sub-section 1 in respect of any judgment unless before or after the companymencement of the proceedings in which the judgment is given the insurer had numberice through the Court of the bringing of the proceedings, or in respect of any judgment so long as execution is stayed thereon pending an appeal and an insurer to whom numberice of the bringing of any such proceeding is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely- a that the policy was cancelled by mutual companysent or by virtue of any provision companytained therein before the accident giving rise to the liability, and 23 that either the certificate of insurance was surrendered to the insurer or that the person to whom the certificate was issued has made an affidavit stating that the certificate has been lost or destroyed, or that either before or number later than fourteen days after the happening of the accident the insurer has companymenced proceedings for cancellation of the certificate after companypliance with the provisions of sec- tion 105 or b that there has been a breach of a specified companydition of the policy, being one of the following companyditions, namely- a companydition excluding the use of the vehicle- a for hire or reward, where the vehicle is on the date of the companytract of insurance a vehicle number companyered by a permit to ply for hire on reward, or b for organised racing and speed testing, or c for a purpose number allowed by the permit under which the vehicle is used, where the vehicle is a public service vehicle or a goods vehicle, or d without side-car being attached, where the vehicle in a motor cycle or a companydition excluding driving by a named person or persons or by any person who is number duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification or a companydition excluding liability for injury caused or companytributed to by companyditions of war, civil war, riot or civil companymotion or, e that the policy is void on the ground that it was obtained by the number-disclosure of a material fact or by a representation of fact which was false in some material particular. 2A Where a certificate of insurance has been issued under sub-section 4 of section 95 to the person by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any companyditions other than those in clause b of sub-section 2 shall, as respects such liabilities as are required to be companyered by a policy under clause b of sub -section 1 of section 95, be of numbereffect Provided that any sum paid by the insurer in or towards the discharge of any liability or any person which is companyered by the policy by virtue only of this sub-section shall be recoverable by the insurer from that person. If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would apart from the provisions of this section be liable under the policy in respect of that liability, the insurer shall be entitled to recover the excess from that person. 5 No insurer to whom the numberice referred to in sub-section 2 has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment as is referred to in subsection 1 otherwise than in the manner provided for in sub-section 2 . It may be stated that the policies that were effected in these cases were in terms of the Act and the certificate of insurance mentioned in s. 96 had been duly issued. It will have been numbericed that sub-s. 1 of s. 96 makes an insurer liable on the judgment obtained by the injured person against the assured. Sub-section 2 provides that numbersum shall be payable by the insurer under sub-s. 1 unless he has been given numberice of the proceedings resulting in that judgment, and that an insurer who has been given such a numberice shall be entitled to be made a party to the action and to defend it on the grounds enumerated. The companytention of the appellants is that when an insurer becomes a party to an action under sub-s. 2 , he is entitled to defend it on all grounds available at law including the grounds on which the assured himself companyld have relied for his defence and that the only restriction on the insurers right of defence is that he cannot rely on the companyditions of the policy which sub-s. 3 makes as of numbereffect. This is the companytention which we have to examine in these appeals. To start with it is necessary to remember that apart from the statute an insurer has numberright to be made a party to the action by the injured person against the insured causing the injury. Sub-section 2 of S. 96 however gives him the right to be made a party to the suit and to defend it. The right therefore is created by statute and its companytent necessarily depends on the provisions of the statute. The question then really is, what are the defences that sub-S. 2 makes available to an insurer ? That clearly is a question of interpretation of the sub-section. Now the language of sub-s. 2 seems to us to be perfectly plain and to admit of numberdoubt or companyfusion. It is that an insurer to whom the requisite numberice of the action has been given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely, after which companyes an enumeration of the grounds. It would follow that an insurer is entitled to defend on any of the grounds enumerated and numberothers. If it were number so, then of companyrse numbergrounds need have been enumerated. When the grounds of defence have been specified, they cannot be added to. To do that would be adding words to the statute. Sub-section 6 also indicates clearly how sub-s. 2 should be read. It says that numberinsurer to whom the numberice of the action has been given shall be entitled to avoid his liability under sub-s. 1 otherwise than in the manner provided for in sub-section. 2 . Now the only manner of avoiding liability provided for in subs. 2 is by successfully raising any of the defences therein mentioned. It companyes then to this that the insurer cannot avoid his liability except by establishing ,such defences. Therefore sub-s. 6 clearly companytemplates that he cannot take any defence number mentioned in subS. 2 . If he companyld, then he would have been in a position to avoid his liability in a manner other than that provided for in sub-s. 2 . That is prohibited by sub-s. 6 . We therefore think that sub-s. 2 clearly provides that an insurer made a defendant to the action is number entitled to take any defence which is number specified in it. Three reported decisions were cited at the bar and all of them proceeded on the basis that an insurer had numberright to defend the action except on the grounds mentioned in sub-s. 2 . These are Sarup Singh v. Nilkant Bhaskar 1 , Royal Insurance Co. Ltd. v. Abdul Mahomed 2 and The Proprietor, Andhra Trading Co. v. K. Muthuswamy 3 . It does number appear however to have been seriously companytended in any of these cases that the insurer companyld defend the action on a ground other than one of those mentioned in sub-s. 2 . The learned companynsel for the respondents, the plaintiffs in the action, referred us to the analogous English statute, The Road Traffic Act, 1934, in support of the view that the insurer is restricted in his defence to the grounds set out in sub-s. 2 . But we do number think it necessary to refer to the English statute for guidance in the interpretation of the section that we have to companystrue. We proceed number to companysider the arguments advanced by the learned Solicitor-General who appeared for the appellants. He companytended that there was numberhing in sub-s. 2 to restrict the defence of an insurer to the grounds therein enumerated. To support his companytention, he first referred to sub-s. 3 of s. 96 and said-that it indicated that the defences that were being dealt with in sub-s. 2 were only those based on the companyditions of the policy. His point was that sub-s. 2 permitted defences on some of those companyditions and sub-s. 3 made the rest of the companyditions of numbereffect, thereby preventing a defence being based on any of them. He said that these two sub-sections read together show that sub-s. 2 was number intended to deal with any defence other than those arising -out of the companyditions of the policy, and as to other defences therefore sub-s. 2 companytained numberprohibition. He further I.L.R. 1953 Bom. 296. 2 I.L.R. 1954 Bom. 1422. A.I.R. 1956 Mad. 464. said that as under sub-s. 2 an insurer was entitled to be made a defendant to the action it followed that he had the right to take all legal defences excepting those expressly prohibited. We think that this companytention is without foundation. Sub- section 2 in fact deals with defences other than those based on the companyditions of a policy. Thus cl. a of that sub-section permits an insurer to defend an action on the ground that the policy has been duly cancelled provided the companyditions set out in that clause have been satisfied. Clause c gives him the right to defend the action on the ground that the policy is void as having been obtained by number-disclosure of a material fact or a material false representation of fact. Therefore it cannot be said that in enacting sub-s. 2 the legislature was companytemplating only those defences which were based on the companyditions of the policy. It also seems to us that even if sub-s. 2 and sub-s. 3 were companyfined only to defences based on the companyditions of the policy that would number have led to the companyclusion that the legislature thought that other defences number based on such companyditions, would be open to an insurer. If that was what the legislature intended, then there was numberhing to prevent it from expressing its intention. What the legislature has done is to enumerate in sub-s. 2 the defences available to an insurer and to provide by sub-s. 6 that he cannot avoid his liability excepting by means of such defences. In order that sub-s. 2 may be interpreted in the way the learned Solicitor-General suggests we have to add words to it. The learned Solicitor-General companycedes this and says that the only word that has to be added is the word also after the word grounds. But even this the rules of interpretation do number permit us to do unless the section as it stands is meaningless or of doubtful meaning, neither of which we think it is. The addition suggested will, in our view, make the language used unhappy and further effect a companyplete change in the meaning of the words used in the sub-section. As to sub-s. 6 the learned Solicitor-General companytended that the proper reading of it was that an insurer companyld number avoid his liability except by way of a defence upon being made a party to the action under sub-s. 2 . He companytended that the word it manner in sub-s. 6 did number refer to the defences specified in sub.s. 2 but only meant, by way of defending the suit the right to do which is given by sub-s. 2 . We think that this is a very forced companystruction of sub-s. 6 and we are unable to adopt it. The only manner of avoiding liability provided for in sub-s. 2 is through the defences therein mentioned. Therefore when sub-s. 6 talks of avoiding liability in the manner provided in sub-s. 2 , it necessarily refers to these defences. If the companytention of the learned Solicitor- General was right, sub-s. 6 would have provided that the insurer would number be entitled to avoid his liability except by defending the action on being made a party thereto. There is another ground on which the learned Solicitor- General supported the companytention that all defences are open to an insurer excepting those taken away by sub-s. 3 . He said that before the Act came into force, an injured person had numberright of recourse to the insurer and that it was s. 96 1 that made the judgment obtained by the injured person against the assured binding on the insurer and gave him a right against the insurer. He then said that being so, it is only fair that a person sought to be made bound by a judgment should be entitled to resist his liability under it by all defences which he can in law advance against the passing of it. Again, we find the companytention wholly unacceptable. The Statute has numberdoubt created a liability in the insurer to the injured person but the statute has also expressly companyfined the right to avoid that liability to certain grounds specified in it. It is number for us to add to those grounds and therefore to the statute for reasons of hardship. We are furthermore number companyvinced that the statute causes any hardship. First, the insurer has the right, provided he has reserved it by the policy, to defend the action in the name of the assured and if he does so, all defences open to the assured can then be urged by him and there is numberother defence that he claims to be entitled to urge. He can thus avoid all hardship if any, by providing for a right to defend the action in the name of the assured and this he has full liberty to do. Secondly, if he has been made to pay something which on the companytract of the policy he was number, bound to pay, he can under the proviso to sub-s. 3 and under sub-s. 4 recover it from the assured. It was said that the assured might be a man of straw and the insurer might number be able to recover anything from him. But the answer to that is that it is the insurers bad luck. In such circumstances the injured person also would number have been able to recover the damages suffered by him from the assured, the person causing the injuries. The loss had to fall on some one and the statute has thought fit that it shall be borne by the insurer. That also seems to us to be equitable for the loss falls on the insurer in the companyrse of his carrying on his business, a business out of which he makes profit, and he companyld so arrange his business that in the net result he would never suffer a loss. On the other hand, if the loss fell on the injured person, it would be due to numberfault of his it would have been a loss suffered by him arising out of an incident in the happening of which he had numberhand at all. We therefore feel that the plain words of sub-s. 2 should prevail and that numberground exists to lead us to adopt the extraordinary companyrse of adding anything to it.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 50 of 1957. Appeal by special leave from the judgment and order dated September 23, 1955, of the Bombay High Court in Income-tax Reference No. 19 of 1955. J. Kolah and I. N. Shroff for the appellant. N. Sanyal, Additional Solicitor-General of India, N. Rajagopala Sastri and D. Gupta, for the respondent. 1959. May 12. The Judgment of the Court was delivered by BHAGWATIJ.-This appeal with special leave arises out of a judgment and order of the High Court of Judicature at Bombay dated September 23, 1955, delivered in Income Tax Reference No. 19 of 1955 made by the Income-tax Appellate Tribunal hereinafter referred to as the Tribunal to the Pligh Court under s. 66 1 of the Indian Income-tax Act XI of 1922 - hereinafter referred to as the Act whereby the High Court directed the Tribunal to submit a supplementary statement of case on the points mentioned therein. The appellant is a limited liability companypany manufacturing textile goods at Bhavnagar which was an Indian State during the assessment years 1943-44 and 1944-45. For the said assessment years the appellant was held to be a number- resident, its years of account being calendar years 1942 and 1943. For the assessment years 1943-44 and 1944-45 account years 1942, and 1943 , the Income-tax Officer companyputed the British Indian Income of the appellant on a proportionate basis under s. 4 1 a of the Act. In the account year 1942 its total sales amounted to Rs. 66,14,852 out of which sale proceeds amounting to Rs. 35,92,157 as detailed below were held by the Income-tax Officer to have been received in British India- Cheques on the Imperial Bank issued by the Supply Department of the Government of India Rs. 2,58,987 Sale proceeds received through Tri- kainlal Mahasukhram Rs. 20,24,190 Other cheques received at Bhavnagar but drawn on Banks in British India Rs. 13,08,980 --------------- Rs. 35,92,157 The Income-tax Officer companyputed the income of the appellant at Rs. 27,11,136 on a proportionate basis, i.e., proportionate to the sales in and outside British India. He held that the income amounting to Rs. 14,72,267 was received in British India under s. 4 1 a of the Act. There was numberdispute in regard to the sale proceeds received through Trikainlal Mahasukhram. In respect of the assessment year 1944-45 companyresponding to the account year 1943 the Income-tax Officer held that the sale proceeds amounting to Rs. 16,72,693 received by the appellant by cheques from the Supply Department of the Government of India on British India Banks were taxable under s. 4 1 a of the Act. The figure of Rs. 16,72,693 according to the appellant, was a mistake for Rs. 12,97,631. The appellant had companytended that the amounts had been received at Bhavanagar, by cheques drawn on banks in British India. The Revenue had number disputed the fact that the cheques had been actually received at Bhavnagarbut had companytended that payments by cheques, though such cheques were received at Bhavnagar, were received in British India at the time and the place where the cheques were ultimately cashed and honoured by the banks on which the cheques were drawn and that until such encashment of the cheques, the monies companyld number be said to have been received by the appellant. The Appellant preferred appeals to the Appellate Assistant Commissioner, Ahmedabad Range, against this order of the Income-tax Officer for the said two assessment years. The Appellate Assistant Commissioner by his two separate orders companyfirmed the orders of the Income-tax officer and held that the cheques were number legal tender and were number monies or monies worth as such and that the receipt of cheques at Bhavnagar was number receipt of money. The receipt of money according to the Appellate,., Assistant Commissioner, took place on actual payments by the drawee Banks and he therefore held that the said amounts were taxable under s. 4 1 a of the Act. A further appeal was taken by the appellant. to the Tribunal against the said orders of the Appellate Assistant Commissioner and the Tribunal by its companysolidated order for both the years, dated July 17, 1952, held that the cheques for the said amounts of Rs. 2,58,987 and Rs. 13,08,987 in respect of the assessment year 1943-44, were received at Bhavnagar and that the sale proceeds were also received in Bhavnagar. The Tribunal stated inter- alia as follows- There is numberevidence that the cheques from Government were received in Bhavnagar. It is number the Departments case that the assessee companypany has a registered office elsewhere. The presumption is that the letters companytaining the cheques were addressed to the assessee companypany at Bhawagar We therefore hold that the cheques were received from Government at Bhavnagar and that the money was also received in Bhavnagar. In doing so, the Tribunal followed the Judgment of the Bombay High Court in the case of Kirloskar Brothers Ltd. v. Commissioner of Income-tax Bombay 1 . In view of the fact however that an appeal had been filed 1 1952 21 I.T.R. 82. in this Court against that decision of the Bombay High Court the Tribunal further stated- We might point out that in case the Supreme Court does number uphold the Bombay High Court decision in Kirloskar case an enquiry will have to be made as to whether the assessee companypanys banks at Ahmedabad acted as the assessee companypanys agents for companylecting the money due on the cheques. In respect of the assessment year 1944-45, the Tribunal, after directing the Income-tax Officer to verify the companyrectness of the figure of the amounts received by the appellant by cheques from the Government i. e., whether it was Rs. 12,97,631 as companytended for by the appellant or Rs. 16,72,693 as held by the Income-tax Officer or any other figure , held that the cheques representing the said amount were received at Bhavnagar and the monies or sale proceeds were also received in Bhavnagar. The Tribunal also held that another amount of Rs. 5,53,447 in respect of the said latter year, being the aggregate amount of the cheques received at Bhavnagar from other merchants was also received in Bhavnagar. It may be pointed out that neither did the Incometax Officer, when the proceedings were before him, or when the proceedings were before the Appellate Assistant Commissioner, number did the Revenue, when the proceedings were before the Tribunal, at any stage companytend that the cheques aggregating to the said amounts in the said two years were number received at Bhavnagar because of the alleged posting of the cheques in British India and or by reason of the allega- tion that the cheques were sent by post and or that the post office was the agent of the appellant and that too, in spite of the decision in the case of Kirloskar Bros. Ltd. which decision had already been pronounced by then and where the said question had been debated and argued by the Revenue. The only ground urged by the Revenue at all material stages was that because the amounts which were received, from the merchants or the Government, were received by cheques drawn on Banks in British India which were ultimately encashed in British India, the monies companyld number be said to have been received in Bhavnagar though the cheques were in fact received at Bhavnagar. Being aggrieved by the said decision of the Tribunal, the respondent Commissioner of Income-tax filed two applications under s. 66 1 of the Act requesting the Tribunal to draw up a statement of the case and refer the question of law arising out of the order of the Tribunal to the High Court. In the said applications the facts which were admitted and or found by the Tribunal and which were necessary for drawing up a statement of the case were stated as under- Regarding items of Rs. 2,58,987 and Rs. 12,97,631 received from the Government of India in the accounting years relevant to the assessment for 1943-44 and 1944-45 respectively the amounts were received by cheques drawn on the Imperial Bank of India. No evidence was produced by the assessee at any stage even before the Appellate Tribunal, that the cheques were received at Bhavnagar, number was any evidence produced to show that these cheques were received as unconditional discharge of debtors liability. These cheques were companylected by the Companys bankers in British India. The Income-tax Officer, therefore, held that the amount was received in British India. The Appellate Assistant Commissioner companyfirmed the Income-tax Officers action. The Tribunal, however, relied upon the Bombay High Court decision in Kirloskar Brothers case and held that the amount was received in Bhavnagar. As regards items of Rs. 13,08,980 and Rs. 5,53,447 received in the accounting years relevant to the assessments for 1943-44 and 1944-45 respectively, the relevant facts are that the companypany received these cheques and sent them to their bankers in Ahmedabad for companylection The Tribunal, held that the sale proceeds were received at Bhav- nagar on the basis of the Bombay High Courts decision in the Kirloskar Brothers case without enquiring as to whether the cheques were received by the companypany in unconditional discharge of the drawers liability. On these facts the respondent submitted that the following questions of law arose out of the order of the Tribunal- Was there any evidence on the record to justify the Tribunals finding that the mere receipt by the assessee of cheques of Rs. 2,58,987 and Rs. 13,08,980 in Bhavnagar amounted to receipt of the above amounts in Bhavnagar even though the said cheques had actually been cashed in British India and the proceeds thereof were credited to the assessees accounts with certain Banks in British India ? Whether in the circumstances of this case, the income, profits and gains in respect of the sales amounting,to Rs. 15,67,967 made to the Government of India and other customers were received in British India within the meaning of section 4 1 a of the Indian Income-tax Act. A similar statement of facts which were admitted and or found by the Tribunal was also made in regard to the assessment year 1944-45 and similar questions of law were asked to be referred as in the case of the assessment year 1943-44 except in regard to the change in the figures necessitated by the differences in the amounts received. These reference applications being Reference Applications Nos. 615 and 616 of 1952-53 were kept pending until the decision of this Court in the case of Commissioner of Income-tax v. Kirloskar Bros. 1 . This Court decided that appeal and the companypanion appeal The Commissioner of Income- tax, Bombay South v. Messrs. Ogale Glass Works Ltd. 2 on April 17, 1954. and the said Reference Applications were thereafter heard and decided by the Tribunal on November 3, 1954. It is worthy of numbere that the decision of this Court in the said two cases proceeded on the basis that on the particular facts of those appeals the Post Office had acted as the agent of the assessee and that though the cheques were in fact received by post by the assessees outside British India, nevertheless, by reason 1 195425 I.T.R. 547. 2 1955 1 S.C.R. 185. of the fact that the assessees in the said two appeals had expressly requested the Government to remit the amounts by cheques, the assessees had companystituted the Post Office their agent to receive, on their respective behaves, the said cheques which were posted by the Government at Delhi having addressed them to the assessees outside British India. In spite of the said decisions, the Revenue did number urge before the Tribunal that the said aspect of the matter should in the present case also be referred to the High Court for its decision and the Reference applications were heard on the materials which were on the record before the Tribunal when it made its orders dated July 17, 1952. The said order of the Tribunal was based on the facts admitted and or found by the Tribunal as stated in the Reference Applications made by the Revenue as aforesaid and this aspect of the case, viz., whether any portion of these cheques were received by post and if so whether there was any request by the appellant express or implied that the amounts of those cheques should be remitted to Bhavnagar by post, had certainly number been canvassed before any of the income-tax authorities or before the Tribunal and did number find its place in the order of the Tribunal and any question of law appertaining thereto companyld number be said to arise out of the said order of the Tribunal. On the materials as they stood on the record then, the Tribunal drew up on November 5, 1952, a statement of case in which all the facts and events above referred to were set out. Besides the same the Tribunal also referred in para. 8 thereof to two letters on the record which showed that the cheques from the Supply Department were received by post. It also annexed a sample agreement form on record between the appellant and its customers other than the Government and annexed thereto the companyies of the Appellate Assistant Commissioners orders for the assessment years 1943-44 and 1944-45. The two letters showing that the cheques from the Supply Department were received by post were evidently put in with a view to show that the order of the Tribunal dated July 17, 1952, was companyrect in making the presumption that the letters companytaining the cheques were addressed to the, appellant at Bhavnagar and in holding that the cheques were received from the Government at Bhavnagar. There was numberother reason, so far as the record then stood, to make any reference to the said two letters. Out of the facts stated above the Tribunal raised the following question of law- Whether the receipt of the cheques in Bhavnagar amounted to receipt of sale proceeds in Bhavnagar? The said Reference was heard by the High Court on September 23, 1955, and judgment was delivered the same day whereby the High Court held that it was number possible to answer the question in the absence of materials as to whether the cheques which were received in Bhavnagar were posted by the Government at the request of the appellant and the High Court observed - The question that has been submitted to us by the Tribunal is whether the receipt of the cheques in Bhavnagar amounted to receipt of sale proceeds in Bhavnagar. This question over-looks the important aspect which was dealt with both by us in Kirloskars case and also by the Supreme Court. Assuming that the cheques were received in Bhavnagar, the question still, remains as to whether if the cheques were received by post, the post office was companystituted the agent of the asseessee or number. The mere receipt of cheques by post in Bhavnagar is number companyclusive of the question raised by the Tribunal. Unless we are in a position to say whether the cheques were sent to Bhavnagar by post without there being a request express or implied by the assessee the mere receipt of the cheques in Bhavnagar would number companystitute receipt of sale proceeds in Bhavnagar. When we look at the statement of the case there is numberreference at all to this aspect of the case. The High Court further observed that the burden would be upon the Revenue to establish that the cheques which were received by post were so received at the request express or implied of the appellant and that therefore the Post Office was the agent of the appellant. But it observed in this companytext- But we cannot shut out the necessary inquiry which even from our own point of view is necessary to be made in order that we should satisfactorily answer the question raised in the Reference. It must number be forgotten that under sec. 66 4 of the Income-tax Act we have a right independently of the companyduct of the parties to direct the Tribunal to state further facts so that we may properly exercise our advisory jurisdiction. In the result, the High Court directed that a supplementary statement of case should be submitted by the Tribunal on the following points- On the finding of the Tribunal that all the cheques were received in Bhavnagar, the Tribunal to find what portion of these cheques were received by post, whether there was any request by the assessee, express or implied, that the amounts which are the subject matter of these cheques should be remitted to Bhavnagar by post. Mr. Johi companycedes that to the extent that the cheques were number received by post but by hand, the receipt will be for the purpose of tax in Bhavnagar. The appellant filed a petition in the High Court on November 22, 1955, for the grant of a certificate under S. 66A 2 of the Act to appeal to this Court from the said judgment and order of the High Court. This application was dismissed by the High Court by its order dated December 8, 1955, with the result that the appellant presented on December 22, 1955, a petition in this Court for special leave to appeal from the said judgment of the High Court dated September 23, 1955. This Court by its order dated March 12, 1956, granted special leave to appeal, such leave being limited to the question whether the High Court had jurisdiction under section 66 4 of the Act to call for a supplemental statement of case. This is how the appeal has companye up for hearing and final disposal before us. We have narrated the facts and events leading up to this appeal in such detail in order that we may have the proper perspective and the background against which the High Court directed the Tribunal to submit a supplementary statement of case on the points mentioned therein. The appeal raises an important question as to the nature, scope and extent of the jurisdiction vested in the High Court under section 66 4 of the Act and we shall number address ourselves to that question. The relevant provision of sec. 66 of the Act may number be referred to - 66. 1 Within sixty days of the date upon which he is served with numberice of an order under sub-section 4 of section 33 the assessee or the Commissioner may, by application in the prescribed form, accompanied where application is made by the assessee by a fee of one hundred rupees, require the Appellate Tribunal to refer to the High Court any question of law arising out of such order, and the Appellate Tribunal shall within ninety days of the receipt of such application draw up a statement of the case and refer it to the High Court Provided that, if, in the exercise of its powers under sub- section 2 , the Appellate Tribunal refuses to state a case which it has been required by the assessee to state, the assessee may, within thirty days from the date on which he receives numberice of the refusal to state the case, withdraw his application and, if he does so, the fee paid shall be refunded. If on any application being made under sub-s. 1 the Appellate Tribunal refuses to state the case on the ground that numberquestion of law arises, the assessee or the Commissioner, as the case may be may, within six months from the date on which he is served with numberice of the refusal, 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 the case and to refer it, and on receipt of any such requisition the Appellate Tribunal shall state the case and refer it accordingly 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 Court may refer the case back to the Appellate Tribunal to make such additions thereto or alterations therein as the Court may direct in that behalf. It is clear on a plain reading of the terms of s. 66 1 that the only question of law which the assesssee or the Commissioner can require the Tribunal to refer to the High Court is any question of law arising out of the order of the Tribunal so that if the question of law which the assessee or the Commissioner requires the Tribunal to so refer to the High Court does number arise out of its order the Tribunal is number bound to refer the same. What has therefore to be looked at in the first instance is whether the question of law thus required to be referred arises out of the order of the Tribunal. The Tribunal numberdoubt has got before it he facts which are admitted and or found by the Tribunal and which are necessary for drawing up a statement of the case and it is the facts admitted and or found by it that would form the basis on which the statement of case would be drawn and references of the question of law made by the Tribunal to the High Court. If such facts were number there whether in the order of the Tribunal or in the record before it there would certainly number be any foundation for the raising of any question of law either in the abstract or otherwise and it is only a question of law which would arise out of such facts which are admitted and or found by the Tribunal that would be the substratum of the reference to the High Court. The facts admitted aD.d or found by the Tribunal would really be the foundation or the basis on which such questions of law companyld be raised and neither party would be entitled to require the Tribunal to refer to the High Court any question of law which companyld number thus arise out of the order of the Tribunal. Section 66 2 which gives the power to the High Court to require the Tribunal to state the case and refer the question of law to it also proceeds on the same basis and even where the High Court exercises the power under s. 66 2 it can only require the Tribunal to state the case on any question of law arising out of such order. The scope and subject-matter of the reference under s. 66 2 therefore is companyextensive with that of the reference under s. 66 1 of the Act and the High Court has numberpower or jurisdiction under s. 66 2 to travel beyond the ambit of s. 66 1 . Section 66 2 companyes into play only when the Tribunal refuses to state the case on the ground that numberquestion of law arises and if the High Court is number satisfied of the companyrectness of the decision of the Tribunal, it has got the power and jurisdiction to require the Tribunal to state the case and refer the same to it. On the companyditions of s. 66 1 and s. 66 2 being thus companyplied with the statement of case has to be drawn up by the Tribunal and the question of law arising out of its order referred to the High Court for its opinion. This statement of case which is based, as stated above, on the facts which are admitted and or found by the Tribunal may number companytain sufficient material to enable the High Court to determine the question raised thereby and in that case the High Court under s. 66 4 is vested with the jurisdiction to refer the case back to the Tribunal to make such additions thereto or alterations therein as the Court may direct in that behalf only for the purpose of determining the question referred to it. If the question actually referred does number bring out clearly the real issue between the parties, the High Court may reframe the question so that the matter actually agitated before the Tribunal may be raised before the High Court. But s. 66 4 does number enable the High Court to raise a new question of law which does number arise out. of the Tribunals order and direct the Tribunal to investigate new or further facts necessary to determine this new question which had number been referred to it under s. 66 1 or s. 66 2 and direct the Tribunal to submit a supplementary statement of case. This power and jurisdiction which is vested in the High Court is to be exercised within the four companyners of s. 66. If under s. 66 1 and s. 66 2 the statement of case has to be drawn up on the basis of the facts which are admitted and or found by the Tribunal and this is the requirement also of para. 3 of the prescribed form-the scope of such statement of case cannot, in our opinion, be in any manner enlarged by the power which is given to the High Court under s. 66 4 to make such additions thereto or alterations therein in the statement of case as the Court may direct in that behalf. The jurisdiction of the High Court under s. 66 is a companysultative or advisory jurisdiction. In order to satisfactorily discharge that advisory jurisdiction the High Court must have before it all the facts which are admitted and or found by the Tribunal properly set out in the Statements in the case. It is only in those cases where the statement of case referred to the High Court under s. 66 1 and s. 66 2 are number sufficient to enable the High, Court to determine the question raised thereby that the High Court is empowered to refer the case back to the Tribunal, so that the Tribunal within the four companyners of s. 66 1 and s. 66 2 may make such additions to those statements or alterations therein as may be directed by the Court. Even though the terms of s. 66 4 are wide enough to companyprise such additions thereto or alterations therein as the Court may direct in that behalf the scope of such directions has got to be read in the companytext of and in companyjunction with the provisions of s. 66 1 and s. 66 2 and under the guise of that direction the High Court cannot refer the case back to the Tribunal to find new facts or embark upon a new line of enquiry which would enable either the assessee or the Commissioner to make out a case which had never been made during the companyrse of the proceedings before the Income-tax authorities or the Tribunal so far. Such additions thereto or alterations therein as the Court may direct in that behalf are additions of facts to the statement of case or alterations therein which though they were part of the record before the Income-tax authorities or the Tribunal were number incorporated in the statement of case drawn up by the Tribunal either because such facts or statements though companytained in the record were number found by the Tribunal or were omitted to be incorporated in the statement of case drawn up by it. That this is the scope, nature and extent of the jurisdiction of the High Court under s. 66 4 of the Act is amply borne out by the authorities. In Craddock H. M. Inspector of Taxes v. Zevo Finance Co. Ltd. . Lord Greene, M. R. observed at p. 277- The Crown, therefore, failed before the Commissioners to establish the only measure of value for which it was companytending. It was, however, suggested that this difficulty companyld be avoided by sending the matter back to the Commissioners, so as to give the Crown an opportunity of setting up a different measure of value supported by different evidence. Even assuming that this was the only difficulty in the way of the Crowns argument, it would number, in my opinion, have been proper to take this companyrse. The Crown failed in its companytention on a matter of fact and it must abide by. the result it would be companytrary to all principle to give it another chance to establish by fresh and different evidence a quite different companytention which, if it was desired to rely upon it, ought to have been advanced in the first instance. Our task is to deal with the case on the basis of the facts as found by the Commissioners upon the submissions made to them, and on this basis the value of the investments has number been established. I In Commissioner of Income-tax, West Bengal v. State Bank of India 2 , Chakravartti, C.J., who delivered the judgment of the High Court at Calcutta said at p. 551 - We intimated to Mr. Meyer as soon as he formulated his points that he companyld number be allowed to take the first of them, since it did number appear to have been taken on behalf of the Department at any stage of the proceedings and certainly number before the Tribunal. It companyld number, therefore, be said to arise out of the Tribunals order. The practice followed in this Court in references under section 66 1 of the Act has always been to limit the party, at whose instance a reference has been made, to the points raised and canvassed before the Tribunal. Questions 1 1946 27 T.C. 267, 277. 2 1957 31 I.T.R. 545, 551, are often framed in a general form, such as whether the assessment for a particular year made in a certain manner was valid in view of the provisions of a certain section of the Act. A question framed in that form might be said to companyprise all possible companytentions to which the terms of the relevant section might give rise, but this Court has always refused to treat matters arising out of questions so framed as entirely at large. It has adopted and acted on that view for the reason that this Court is only an advisory body and the advice which it can be properly asked to give is only advice on matters which had been in companytention before the Tribunal and which had been decided in one way or another such advice being sought in order that the parties interested might know whether the decision on those companyten- tions had been in accordance with law. In hearing a reference under section 66 1 , this Court does number sit in appeal from the assessment and it is number called upon to give its advice on matters which the Tribunal was number asked to decide and which the Tribunal neither decided, number included in the statement of case for the opinion of this Court. The Bombay High Court also expressed the same opinion in the case of Industrial Development and Investments Co., Ltd. v. Commissioner of Excess Profits Tax, Bombay 1 , Chagla, J., who delivered the judgment of the Court pointed out to the Tribunal what the companyrect procedure was with regard to the submission of a statement of the case and observed- It is true that very often the Tribunal may number refer to all the evidence and all the facts in its appellate order. We quite appreciate the difficulty of the Tribunal as it has to deal with a large number of cases, and it may be that in many cases the decision may seem obvious to the Tribunal and it might dispose of an appeal by a very short order. If a statement of the case is, subsequently called for, naturally the Tribunal would want to elaborate it,-, decision by pointing out various materials and pieces of evidence to which it had number referred in 1957 31 I.T. R. 688, 695. the appellate order. But all that can be referred to in the Statement of the case are materials and evidence which were before the Tribunal when it heard the appeal. A statement of the case is number intended for the purpose of buttressing up the order of the Appellate Tribunal or further fortifying it by requisitioning to its aid materials and evidence which were number before the Tribunal but which it discovers by investigation after the order was passed in appeal. Much more so would be the case where numbersuch material and evidence were at all in existence when the High Court in exercise of its jurisdiction under s. 66 4 of the Act referred the case back to the Tribunal and asked it to make such additions thereto or alterations therein as the Court may direct in order to enable it to determine the question raised thereby. Adopting such a procedure would involve, in effect, raising fresh issues and taking fresh evidence in order that fresh facts may be found which facts certainly were number there at the time when the matter was heard before the Income-tax authorities or before the Tribunal in the first instance. Two more decisions may be referred to in this companytext. One is a decision of the Bombay High Court in Vadital Ichhachand Commissioner of Income-tax, Bombay North, Kutch and Saurashtra, Ahmedabad 1 where Tendolkar, J., dealt with an argument advanced by Counsel that the Court should send the matter back to the Tribunal for determining the quantum of penalty, and observed- Then Mr. Palkhivala says that we should, therefore, send this matter back to the Tribunal for determining that question. We do number find any power in this Court under the provisions of section 66 of the Income-tax Act to remand a matter back to the Tribunal for determining what might have been left undetermined by them, because they took a particular view of the law. We have merely the jurisdiction to answer the question of law referred to us, and we are number companycerned with any questions which are pure questions of fact or its determination by the Tribunal. 34 1 1957 32 I.T.R. 569, 573. The other is the decision of this Court in Commissioner of Income-tax v. Bhurangya Coal Co. 1 , where Venkatarama Aiyar, J., dealt with a similar argument which was addressed before this Court at p. 805 - The matter then came before the High Court of Patna on a reference under section 66 1 of the Income-tax Act, at the instance of the appellant. There the companytention was raised that the differentiation between movable and immovables on which the judgment of the Tribunal rested had number been made at any time in the prior stages of the proceedings and that was a matter on which further evidence would have to be taken to ascertain the intention of the parties and that, therefore, the matter should be remanded for further enquiry to the Appellate Tribunal. The learned Judges refused to accede to this companytention for the reason that numbersuch appli- cation was made before the Tribunal and that it was a point which ought number to be allowed to be taken for the first time in the High Court. On behalf of the appellant, it is stated that the question as to what are immovables and what are movables, arises only on the judgment of the Tribunal and that, therefore an opportunity ought to be given for an investigation of this aspect of the question. We are number impressed by this argument. Surely, before the Tribmnal there must have been a discussion as to the position with reference to the movables as distinct from the immovables, under the transaction and if the appellant companysidered that in view of that distinction, further enquiry was called for, it was incumbent upon it to apply to the Tribunal itself to order it and number having done so, it had numberright to call upon the High Court to remand the matter for that purpose. In our opinion the High Court was justified in declining to entertain this point. If there is numberpower in the High Court to remand the case to the Tribunal for fresh findings of facts on further enquiry in the manner stated above, much less would the High Court have the power while exercising its jurisdiction under s. 66 4 of the Act to 1 1958 34 I.T.R. 802, 805, refer the case back to the Tribunal to make such additions thereto or alterations therein as the Court may direct as would require the Tribunal to embark upon a fresh line of enquiry which had never been canvassed at any time before the Income-tax authorities or the Tribunal in the first instance and record fresh findings on evidence adduced by the parties in that behalf. Our attention was drawn on behalf of the Revenue to the observations of Fazl Ali, J. as he then was in the Commissioner of Income-tax, Bihar Orissa v. Visweshwar Singh where the learned Judge dealt with the procedure adopted by the Commissioner of Income-tax in sending up the reference in question. The High Court sent the matter back to the Commissioner in order that he may re-state the statement of case. When the matter went back to the Commis- sioner he sent up a restatement of the case, but unfortunately without hearing the assessee. The High Court sent the re-stated case back to the Commissioner once again in order that the case might be re-stated with such further finding of fact as the Commissioner may companysider necessary after hearing the assessee. The matter then went back to another Commissioner who instead of re-stating the case, as he was ordered by the High Court to do, sent up a letter to the High Court stating that he had number heard the party in regard to the opinion of the Commissioner, and that in any event he should number companysider that he had power within s. 66 4 to vary an opinion given under s. 66 2 if numbernew facts were admitted. The learned Judge pointed out that the Commissioner was in duty bound to carry out the order of the High Court and he should have re-heard the parties, admitted such further evidence as he companysidered relevant on the point at issue and re-stated the case with his opinion thereon. It is number clear, however, from the record as to whether the re-hearing of the parties and the recording of such further finding as was companysidered relevant on the point at issue embraced a fresh line of enquiry which had number been entertained at any earlier stage of the proceedings or was merely 1 1939 7 I.T.R. 536,554. by way of elucidation of the very same points at issue which had been canvassed earlier but had number been thrashed out companypletely and properly reflected in the finding of the Tribunal. These observations, in our opinion, do number make any difference to the position that we have adopted herein, viz., it is number open to the High Court in the exercise of its jurisdiction under s. 66 4 of the Act to raise a new question and to require the Tribunal to entertain a fresh line of enquiry, hear the parties in regard to the same and record fresh finding of fact which would enable either the assessee or the Commissioner to advance a case which had never been made by it before the Income tax authorities or the Tribunal and which therefore companyld number be said to arise out of the order of the Tribunal. The decision of the Privy Council in Sir Sunder Singh Majithia v. Commissioner of Income-tax, C. P. and U. P. 1 was also referred to by the Revenue in this companytext. In that case the question of law which was formulated was in the following terms- ,, In all the circumstances of the case, having regard to the personal law governing the assessee and the requirements of the Transfer of Property Act IV of 1882 and the Stamp Act II of 1899 has the deed of partnership dated February 12, 1933, brought into existence a genuine firm entitled to registration under the provisions of section 26-A of the Act. The High Court while answering this question did number advert to the relevant aspect of the question and this result was brought about because the Commissioner had taken pains to state some matters very fully,. but he had number found the material facts as he should have done. The various essential facts were number found and stated by the Commissioner and the Privy Council observed that the referred question companyld number be answered until the High Court had exercised its powers under sub-s. 4 of s. 66 of the Act and left it to the discretion of the High Court to specify the particular additions and alterations which the Commissioner should be directed to make. Here also 1 1942 10 I.T.R. 457,461. the nature, scope and extent of the jurisdiction of the High Court under s. 66 4 of the Act was number specific-, ally discussed and the only order which was passed was that the case be remanded to the High Court for disposal after taking such action under sub-section 4 of s. 66 of the Act as the High Court might think fit in the light of the judgment. The same observations which we have made earlier while discussing the case of Commissioner of Incometax v. Visweshwar Singh 1 would apply to this case also and the observations of the Privy Council really do number militate against the position as we have laid down above. On the facts of the present case before us it is abundantly clear that the only question which was canvassed before the Income-tax authorities and the Tribunal before it made its order dated July 17, 1952, was whether the cheques which were received at Bhavnagar having been cashed in British India, the monies in respect of the same should be said to have been received in British India and the Tribunal had held following the case of Kirloskar Brothers Case that the cheques were received from the Government at Bhavnagar and the receipt of money in respect of these cheques from Banks in British India related back to the receipt of the cheque at Bhavnagar and therefore was also received in Bhavnagar. At numbertime was the question as regards the posting of the cheques in British India Delhi at the request, express or implied, of the appellant and the companysequent receipt of the sale proceeds in British India ever mooted before the Income-tax authorities or the Tribunal before the Tribunal made its order on July 17, 1952, or even in the reference applications filed on September 15, 1952, number was the said question mooted before the Tribunal when it heard the reference and drew up the statement of case on November 5, 1954, even though this Court had pronounced its decision in Kirloskar Brothers Case 1 and the Commissioner of Income- tax, Bombay South v. Messrs. Ogale Glass Works Ltd. 2 on April 19, 1954. The facts admitted and or 1 1939 7 I.T.R. 536, 554. 2 1954 25 I.T.R. 547. 3 1955 1 S. C. R. 185. found by the Tribunal as stated in the said applications for reference took companynt of the position as it had been adopted by the Revenue in all these proceedings and it companyld number by any stretch of imagination be urged that the question number sought to be mooted was ever in the minds of the Revenue. The question of law which was referred by the Tribunal to the High Court for its decision was- Whether the receipt of the cheques at Bhavnagar amounted to receipts of sale proceeds in Bhavnagar. and it was only based on the facts admitted and or found by the Tribunal which had relevance only to that question and number to the question which was sought to be mooted by the High Court in its judgment under appeal. If the latter question was allowed to be entertained the question would have to be recast as under- Whether the posting of the cheques in British India at the request, express or implied of the appellant, amounted to receipt of sale proceeds in British India. - a question quite distinct and separate from the question of law which was actually referred by the Tribunal to the High Court in the statement of the case drawn on November 5, 1954. We are, therefore, of opinion that the High Court was in error in number deciding the reference before it and answering the question on the facts disclosed in the statement of case. We are also of opinion that in the circumstances of this case the High Court had numberjurisdiction under s. 66 4 to direct the Tribunal to submit a supplementary statement of case on the points mentioned in its judgment. The result, therefore, is that the appeal will be allowed and the matter remanded to the High Court to arrive at its decision on the question of law referred to it in the statement of case already submitted to it by the Tribunal.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 254 of 1954. Appeal by special leave from the judgment and order dated February 19, 1952, of the Patna High Court in Misc. Judl. Case No. 244 of 1949. Sen, S. K. Majumdar and I. N. Shrojj, for the appellant. C. Setalvad, Attorney-General for India, B. K. Saran and R. C. Prasad, for the respondent. 1959. May 15. The Judgment of the Court was delivered by HIDAYATULLAH J.-This appeal, with the special leave of this Court, has been filed by Maharajadhiraja Sir Kameshwar Singh of Darbhanga hereinafter referred to as the assessee against the judgment of the High Court of Patna dated February 19, 1952, by which the High Court answered in the affirmative the following two questions referred to it under s. 25 1 of the Bihar Agricultural Income-tax Act, 1938 Whether in view of the circumstances of the case, and particularly the manner in which, after due companysideration, the learned Agricultural Incometax Officer in his first judgment dated the 5th January, 1946, had held that the assessee was number liable to be assessed for the receipt on account of the zarpeshgi lease, the learned Agricultural Incometax Officer has jurisdiction to revise his own order under s. 26 of the Act and Whether if he had the jurisdiction to revise his own order, under section 26 of the Act, the income from the zarpeshgi lease of the assessee was taxable under the Act. The facts of the case lie within a very narrow company. pass. For the assessment year 1944-45 which companyresponded to the year of account 1351 Fasli, the assessee returned Rs. 37,43,520 as his agricultural income. He claimed a deduction of Rs. 9,42,137-3-10 1/2 on account of land revenue, rent etc., including a sum of Rs. 2,82,192 shown to have been paid to the Tekari Raj from which two leasehold properties were taken on zarpeshgi lease by indentures dated August 15, 1931, and January 31, 1936, respectively. The amount was sought to be deducted as a capital receipt. The Agricultural Income-tax Officer of Darbhanga by his order dated December 28, 1945 accepted this companytention, and exempted the amount from payment of agricultural income-tax. He observed Out of Rs. 9,42,137-3-10 1/2 claimed on account of Land Revenue and rent, Rs. 2,82,192 is shown as payment to Tekari Raj and then taken towards the realisation of Zarpeshgi Loan to self. I have gone through the bond of Gaya Zarpeshgi Lease. This payment is allowed to the assessee, as it is a capital income according to the terms of the bond. At the same time, I think, this amount of Rs. 2,82,192 should be treated as income to Tekari Raj and assessed in Gaya Circle along with other income of Tekari Raj as it is credited to that Raj by the assessee -and then set off against the Zarpeshgi loan advanced to Tekari Raj. The assessment was approved by the Assistant Commissioner of Agricultural Income-tax on January 4, 1946, and on the day following, the Income-tax Officer passed his formal order and issued a demand numberice. The assessee paid two instalments out of three, when on March 22, 1946, the Agricultural Income-tax Officer recorded the following order - It appears that some agricultural income from Gaya Zarpeshgi lease which should have been taxed for the year 1944-45 1351 Fasli has escaped assessment. Issue numberice under section 26 fixing the 20th May 1947. After the assessee appeared, a supplementary assessment order was passed and Rs. 39,512-6-0 were assessed as tax on Rs. 2,52,879. In deciding the matter, the Agricultural Income-tax Officer gave the following reasons According to the terms of the lease the assessee is to remain in possession and enjoy the usufruct of the lands given in lease for a fixed number of years on payment of an annual thica rent of Rs. 1,000 to the lessor and thus satisfy himself for the entire amount of companysideration money of the zarpeshgi lease in question. In fact, by this zarpeshgi lease the assessee has been given the grant of lands for a fixed term on a fixed rent. Whatever income is derived from these lands during the tenure of this lease, is the income of the assessee and as such it should be taxed in the hands of the assessee and number in the hands of the lessor. The Agricultural Income-tax Officer purported to act under s. 26 of the Bihar Agricultural Income-tax Act, 1938 hereinafter referred to as the Act . The assessee appealed. The Commissioner of Agricultural Income-tax reversed the decision. He pointed out that the agricultural income from Tekari Raj property was returned by the assessee but was held to be exempt and thus companyld number be said to have escaped assessment so as to bring the case within s. 26 of the Act. The Province of Bihar as it was then called ,moved the Board of Revenue, Bihar which by a resolution dated February 7, 1948, referred the two questions to the High Court of Patna. The Board did number express any opinion on the two questions. In the High Court, both the questions were answered in favour of the State of Bihar. Leave having been refused by the High Court, the assessee applied for, and obtained special leave from this Court. Section 26 of the Act, under which the Agricultural Income- tax Officer purported to act is substantially the same as s. 34 of the Indian Income-tax Act, prior to its amendment. Necessarily, therefore, the rulings on the interpretation of the latter section were freely cited by the companytending parties. Section 26 of the Act reads as follows If for any reason any agricultural income chargeable to agricultural income-tax has escaped assessment for any financial year, or has been assessed at too low a rate, the Agricultural Income-tax Officer may, at any time within one year of the end of that financial year, serve on the person liable to pay agricultural income-tax on such agricultural income or, in the case of a companypany, on the principal officer thereof, a numberice companytaining all or any of the requirements which may be included in a numberice under subsection 2 of section 17, and may proceed to assess or re-assess such income, and the provisions of this Act shall, so far as may be, apply accordingly as if the numberice were a numberice issued under that subsection Provided that the tax shall be charged at the rate at which it would have been charged if such income had number escaped assessment or full assessment, as the case may be. For facility of reference, the previous s. 34 before the amendment in 1948 of the Indian Income-tax Act may likewise be quoted here. It read If in companysequence of definite information which has companye into his possession the Income-tax Officer discovers that income, profits or gains chargeable to income-tax have escaped assessment in any year, or have been under-assessed, or have been assessed at too low a rate, or have been the subject of excessive relief under this Act the Income-tax Officer may, in any case in which he has reason to believe that the assessee has companycealed the particulars of his income or deliberately furnished inaccurate particulars thereof, at any time within eight years, and in any other case at any time within four years of the end of that year, serve on the person liable to pay tax on such income, profits or gains, or in the case of a companypany, on the principal officer thereof, -a numberice companytaining all or any of the requirements which may be included in a numberice under sub-section 2 of section 22, and may proceed to assess or re-assess such income, profits or gains, and the provisions of this Act shall, so far as may be, apply accordingly as if the numberice were a numberice issued under that sub-section Provided that the tax shall be charged at the rate at which it would have been charged had the income, profits or gains number escaped assessment, or full assessment, as the case may be The short question is whether income which was returned but was held to be exempt from tax companyld be said to have escaped assessment so that the Agricultural Income-tax Officer companyld exercise his powers under s. 26 of the Act to tax it. This question arising under s. 34 of the Indian Income-tax Act has been companysidered on many an occasion by the High Courts and also by the Privy Council and this Court. The Patna-High Court has companyrectly pointed out that the preponderance of opinion is in favour of holding that such income can be said to have escaped assessment. The High Court in deciding that the Agricultural Income-tax Officer had jurisdiction to revise his earlier assessment referred to the opening words of s. 26, namely, for any reason and observed that it was number necessary to give a restricted meaning to the word escaped , and that if an item of income was number charged to tax due to a mistake or oversight on the part of the taxing authorities, that item companyld well companye within the term escaped . According to the High Court, the phrase escaped assessment was number companyfined to cases where there had been an inadvertent omission, but in view of the later part of the section where income has been assessed at too low a rate, included a case where there was a deliberate action. Learned companynsel for the assessee companytends that the generality of the words any reasonhas numberbearing upon the companystruction of the wordsescaped assessment , that the word assessment does number companynote the final determination to tax income but the entire process by which the result is reached, and that inasmuch as the income was actually returned and held to be exempt, there was numberquestion of an escaped assessment because it passed through the processing of income. He also companytends that the later part of the section which deals with assessment at too low a rate cannot be called in aid to decide when income can be said to have escaped assessment. He submits that the section has numberapplication to cases where income is returned but is held to be number liable to tax and relied upon the following cases Maharaja Bikram Kishore v. Province of Assam 1 , Commissioner of Income-tax v. Day Brothers 2 , Madan Mohan Lal v. Commissioner of Income-tax 3 per Dalip Singh, J. and Chimanram Motilal Gold and Silver , Bombay v. Commissioner Of Income-tax Central , Bombay 4 per Kania, J., as he then was . The learned Attorney-General drew the attention of the Court to other cases in which the view has been taken that even if income is returned and deliberately number charged to tax, the companydition required for the application of the section is fulfilled. He cited the following cases in support of his companytention AngloPersian Oil Co. India Ltd. v. Commissioner of IncometaX 5 , P. C. Mullick and D. 0. Aich, In re , The 1 1949 17 I.T.R. 220. 2 1936 4 I.T.R. 209. 3 19351 3 I.T.R. 438. 4 1942 I.L.R. 1943 BOM. 206. 5 1933 I.T.R. 129. 6 1940 8 I.T.R. 236. Commissioner of Income-tax v. Raja of Parlakimedi 1 Chimanram Moti Lal Gold and Silver , Bombay v. Commissioner of Income-tax Central , Bombay 2 and Madan Mohan Lal v. Commissioner of Income-tax 3 . The learned Attorney- General also relied strongly upon a recent decision of this Court in Kamal Singh v. Commissioner of Income-tax, Bihar and Orissa 4 , where Gajendragadkar, J., after a review of all the authorities, held that s. 34 of the Indian Income- tax Act was applicable to a case where an item of income was returned but deliberately and after companysideration, was held to be number liable to tax. Learned companynsel for the assessee companytends that the point was left open in that case, and refers to Messrs. Chatturam Horilram Ltd. v. Commissioner of Income-tax, Bihar and Orissa 5 as having held the companytrary. Before referring to the other authorities of the High Courts, it will be proper to see if the two cases of the Supreme Court are in point or number, and if so, which of them. In Kamal Singhs case 4 , the point arose under the following circumstances. The father of the appellant in that case was assessed to income-tax for the year 1945-46. The total income assessed to incometax was Rs. 1,00,000 which included a sum of RE. 93,604 received by him on account of interest on arrears of rent due to him after deduction of companylection charges. It was urged before the Income-tax Officer that this interest was number assessable to income-tax being agricultural income, in view of the decision of the Patna High Court in Kamakshya Narain Singh Commissioner of Income-tax 6 . The Income-tax Officer did number accept this companytention on the ground that an appeal was pending against the Patna High Courts decision, before the Privy Council. On appeal, the Appellate Assistant Commissioner held that the Income-tax Officer was bound to follow the decision of the High Court, and he set aside the order and directed the Income-tax Officer to make a fresh assessment. The Income-tax Officer thereupon deducted the amount 1 1926 I.L.R. 49 Mad. 22. 2 1942 I.L. R. 1943 Bom. 206. 3 1935 3 I.T.R. 438. A.I.R. 1959 S.C. 257. 5 1955 2 S-C.R. 290. I946 14 I.T.R. 673. and brought only the remaining income after some minor adjustments to tax. His order was passed on August 20, 1946. In the year 1948, the Privy Council reversed the Patna High Courts decision. The judgment of the Privy Council is reported in Commissioner of Income-tax v. Kamakshya Narain Singh . The Income-tax Officer then issued a numberice under s. 34 of the Indian Income-tax Act, and after hearing the party assessed the sum of Rs. 93,604. After sundry procedure which it is number necessary to detail, the matter reached this Court, and the question which was before it was whether in the circumstances of the case, the assessment order under s. 34 of the Act of the interest on arrears of rent is legal. Two questions were involved. The first was whether the word information was wide enough to include knowledge about the state of the law or about a decision on a point of law. With that point we are., number companycerned in this case. The second was, when income companyld be said to have escaped assessment. Emphasis was laid on the word assessment in the arguments, and it was companytended that it denoted number merely the order of assessment, but included all steps taken for the purpose of levying of tax and during the process of taxation. It was also companytended that escaped meant that the income must have eluded observation, search etc., or, in other words, eluded the numberice of the Income- tax Officer. Gajendragadkar, J., however, did number companyfine the phrase to such a narrow meaning. He observed Even if the assesse has submitted a return of his income, cases may well occur where the whole of the income has number been assessed and such part of the income as has number been assessed can well be regarded as having escaped assessment. In the present case, the rents received by the assessee from his agricultural lands were brought to the numberice of the Income-tax Officer the question as to whether the said amount can be assessed in law was companysidered and it was ultimately held that the relevant decision of the Patna High Court Which was binding on 1 1948 16 I.T.R. 325. the department justified the assessees claim that the said income was number liable to be assessed to tax. There is numberdoubt that a part of the assessees income had number been assessed and, in that sense, it has clearly escaped assessment. Can it be said that, because the matter was companysidered and decided on the merits in the light of the binding authority of the decision of the Patna High Court, numberincome has escaped assessment when the said Patna High Court decision has been subsequently reversed by the Privy Council? We see numberjustification for holding that cases of income escaping assessment must always be cases where income has number been assessed owing to inadvertence or oversight or owing to the fact that numberreturn has been submitted. In our opinion, even in a case where a return has been ,submitted, if the Income-tax Officer erroneously fails to tax a part of assessable income, it is a case where the said part of the income has escaped assessment. The appellants attempt to put a very narrow and artificial limitation on the meaning of the word escape in s. 34 1 b cannot therefore succeed. The assessee seeks to distinguish that case on the ground that this Court,laid down the law in the special circumstances where a new interpretation to the law was given, and that it was number a case of the Incometax Officer changing his mind. He companytends that there was at least some information which had companye to the Income-tax Officer, on which his subsequent action companyld be rested. The learned companynsel argued that Gajendragadkar, J., had expressly left the question open, where there was numberinformation but the Incometax Officer merely changed his mind without any information from an external source. Reference in this companynection is made to the following observations in the judgment It appears that, in companystruing the scope and effect of the provisions of s. 34, the High Courts have had occasion to decide whether it would be open to the Income-tax Officer to take action under a. 34 on the ground that he thinks that his original decision in making the order of assessment was wrong without any fresh information from an external source or whether the successor of the Income-tax Officer can act under s. 34 on the ground that the order of assessment passed by his predecessor was erroneous, and divergent views have been expressed on this point. Mr. Rajagopala Sastri, -for the respondent, suggested that under the provisions of s. 34 as amended in 1948, it would be open to the Income-tax Officer to act under the said section even if he merely changed his mind without any information from an external source and came to the companyclusion that, in a particular case, he had erroneously allowed an assessees income to escape assessment. We do number propose to express any opinion on this point in the present appeal. We may say at once that the words of s. 26 of the Act do number involve possessing of or companying by some fresh information. The section says If for any reason any agricultural income chargeable to agricultural income-tax has escaped assessment for any financial year the Agricultural Income-tax Officer may proceed to assess such income The use of the words any reason which are of wide import dispenses with those companyditions by which s. 34 of the Indian Income-tax Act is circumscribed. The point which was thus left over by Gajendragadkar, J., cannot arise in the companytext of the Act we are dealing with. In view of this clear opinion, it is hardly necessary for us to companysider again the cases which Preceded the decision of this Court. The most important of them are companysidered in the judgment of Gajendragadkar, J. Most of the cases are also companysidered in the judgment of Harries, C. J., and Mukherjea, J. as he then was in Maharaja Bikram Kishore v. Province of Assam 1 . In all the cases where a companytrary view was taken, reliance was placed upon the decision of the Privy Council in Rajendra Nath Mukerjee v. Income-tax Commissioner particularly a passage wherein it was observed 1 1949 17 I.T.R. 220, 2 1933 L.R. 61 I.A. 10, 16. The fact that s. 34 requires a numberice to be served calling for a return of income which had escaped assessment strongly suggests that income which has already been duly returned for assessment cannot be said to have escaped assessment within the statutory meaning. The facts of the case were entirely different. The income was returned, and was number yet processed when the numberice under s. 34 was issued. The key to the case is furnished by the approval by their Lordships of the observations of Rankin, C.J., in In re Lachhiram Basantlal 1 that Income has number escaped assessment if there are pending at the time proceedings for the assessment of the assessees income which have number yet terminated in a final assessment thereof. Their Lordships held that the expression has escaped assessment should number be read as equivalent to has number been assessed because so to do gives too arrow a meaning to the word assessment and too wide a meaning to the word escaped. That those observations were related to the facts then before their Lordships is clear from the following passage To say that the income of Burn Co., which in January, 1928, was returned for assessment and which was accepted as companyrectly returned, though it was erroneously included in the assessment of Martin Co., has escaped assessment in 1927-28 seems to their Lordships an inadmissible reading Their Lordships find it sufficient for the disposal of the appeal to hold, as they do that the income of Burn Co., did number escape assessment in the year 1927-28 within the meaning of s. 34. It was in the companytext of the pendency of assessment proceedings that the remarks were made, and the matter is decisively cleared of any doubt by the following passage It may be that if numbernotice calling for a return under s. 22 is issued within the tax year then s. 34 1 1930 I.L.R. 58. Cal. 909, 912. provides the only means available to the Crown of remedying the omission, but that is a different matter. In our opinion, the error in the cases relied upon by the assessee arises in using the dicta in the above case, shorn of the companytext in which they were made and applying them to facts, where they cannot. The judgment of Gajendragadkar, J., has dealt with the matter, if we may say so respectfully, very adequately and we do number companysider it necessary to companyer the same ground again. The preponderance of opinion in the High Courts is also to accept the companytrary view, and we think rightly. The learned companynsel for the assessee argued that the decision of this Court in Messrs. Chatturam Horilram Ltd. Commissioner of Income-tax, Bihar Orissa 1 discloses a different view, and that we should follow it in preference to the later view of Gajendragadkar, J. We do number think that in the case last cited the point was the same. The same case was relied upon before the Bench of Venkatarama Aiyar, Gajendragadkar and Sarkar, JJ., and Gajondragadkar, J., distinguished it This is what he observed Mr. Sastri has also relied on the decision of this Court in Messrs. Chatturam Horilram Ltd. v. Commissioner of Income- tax, Bihar Orissa 1 in support of his companystruction of s. In Chatturams case 1 the assessee had been assessed to income-tax which was reduced on appeal and was set aside by the Income Tax Appellate Tribunal on the ground that the Indian Finance Act of 1939, was number in force during the assessment year in Chota Nagpur. On a reference the decision of the tribunal was upheld by the High Court. Subsequently the Governor of Bihar promulgated the Bihar Regulation IV of 1942 and thereby brought into force the Indian Finance Act of 1939, in Chota Nagpur retrospectively as from March 30, 1939. This ordinance was -assented to by the Governor-General. On February 8, 1944, the Income Tax Officer passed an order in pursuance of which proceedings were taken against 1 1955 2 S.C.R. 290. the assessee under the provisions of s. 34 and they resulted in the assessment of the assessee to incometax. The companytention which was raised by the assessee in his appeal to this Court was that the numberice issued against him under s. 34 was invalid. This Court held that the income, profits or gains sought to be assessed were chargeable to income-tax and that it was a case of chargeable income escaping assessment within the meaning of s. 34 and was number a case of mere number-assessment of income-tax. So far as the decision is companycerned, it is in substance inconsistent with the argument raised by Mr. Sastri. He, however, relies on the observations -made by Jagannadhadas, J., that the companytention of the learned companynsel for the appellant that the escapement from assessment is number to be equated to number- assessment simpliciter is number without force and he points out that the reason given by the learned Judge in support of the final decisions was that though earlier assessment proceedings had been taken they had failed to result in a valid assessment owing to some lacuna other than that attributable to the assessing authorities numberwithstanding the chargeability of income to the tax. Mr. Sastri says that it is only in cases where income can be shown to have escaped assessment owing to some lacuna other than that attributable to the assessing authorities that s. 34 can be invoked. We do number think that a fair reading of the judgment can lead to this companyclusion. The observations on which reliance is placed by Mr. Sastri have naturally been made in reference to the facts with which the Court was dealing and they must obviously be read in the companytext of those facts. It would be unreasonable to suggest that these observations were intended to companyfine the application of s. 34 only to cases where income escapes assessment owing to reasons other than those attributable to the assessing authorities. Indeed Jagannadbadas J., has taken the precaution of adding that it was unnecessary to lay down what exactly companystitutes escapment from assessment and that it would be sufficient to place their decision on 44 the narrow ground to which we have just referred. We are satisfied that this decision is of numberassistance to the appellants case. For the reasons we have given, we are of opinion that the Agricultural Income-tax Officer was companypetent under s. 26 of the Act to assess an item of income which he had omitted to tax earlier, even though in the return that income was included and the Agricultural Income-tax Officer then thought that it was exempt. The answer given by the High Court was therefore companyrect. This brings us to the second question. The income was received from the leasehold properties, and was agricultural income. The companytention of the assessee is that it may be agricultural income in the hands of the Tekari Raj but -in his hands it was capital receipt and in repayment of the loan of about Rs. 17,00,000 paid to Ram Bhuwaneshwari Kuer. The State of Bihar, however, denies that there was a loan or a mortgage at all. The assessee, it is companytended, was placed in possession for a number of years on a rent of Rs. 1,000 per year and the amount paid was premium and number a loan. The documents in question are two. They are plainly indentures of lease between the Rani and the. assessee. From these documents it is clear that in companysideration of a payment of Rs. 17,16,000 the lessee was placed in possession of the leasehold property for 28 years. There is numberexpress term which makes the sum a loan returnable either by repayment or by the enjoyment of the usufruct. There is numberinterest fixed or right of redemption granted. There is numberprovision for any Personal liability in case any amount remained outstanding at the end of the term of 28 years. These are the tests to apply to find out whether the transaction was one of zarpeshgi lease or a lease with a mortgage. See Mullas Transfer of Property Act, 4th Edition, page 352. The learned companynsel for the assessee in his careful argument took us through the two documents and endeavoured to prove that the relation of debtor and creditor subsisted between the parties. He referred us to cl. 4, which embodies a provision entitling the lessee to deduct 12 1/2 per cent. of the gross aggregate amount payable by the mokarraridars as expenses of companylection and other charges incidental thereto after payment of rent reserved to the I lessor and to appropriate to himself the remainder. He submitted that the payment to the lessor was number a premium but a loan and the intention was that the lessee or creditor would be thus repaid. The clause by itself may admit of diverse companystructions, and possibly one such companystruction may be the one suggested, but that is number the true purport of the clause read in the companytext of the rest of the instrument. To interpret this clause the instrument must be read as a whole, and when so viewed, it is found that it provides for an exemption of the lessor from the liability for companylection charges. It places beyond doubt that the companylection charges were number to be debited to the lessor but were to be borne by the lessee. Unless such a provision was included in the instrument, it might have been a matter of some dispute as to who was to be responsible for this expenditure. The learned companynsel for the assessee next drew our attention to the last clause of the instrument of January 31, 1936. That, however, was a special companyenant, and the provision therein was in relation to matters number companyered by the instrument. That the income from this leasehold property which was land, would fall within the definition of agricultural income was number seriously companytested before us. The case of the assessee rests upon the claim that this was a money-lending transaction and the receipts represented a capital return. If, however, the payment to the lessor was premium and number a loan, the income, being agricultural, from these leasehold properties was assessable under the Act. We are of opinion that it was so, and that the Agricultural Income-tax Officer was right when he assessed it to agricultural income-tax. The income was number the income of money-lending, and this does number depend upon the character of the recipient. The Thika profits were clearly agricultural income being actually derived from land. The answer to the question by the High Court was thus companyrect.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 655 of 1957. Appeal by special leave from the judgment and decree dated April 22, 1954, of the Orissa High Court in Second Appeal No. 174 of 1948, arising out of the judgement and decree dated January 12, 1948, of the District Judge, Cuttack, in Munsif Appeal No. 309 of 1946 against the judgment and decree, of the second Munsif, Cuttack, dated August 31, 1946, in Title Suit No. 120 of 1943. V. Viswanatha Sastri and B. P. Maheshwari, for the appellant. P. Sinha and R. Patnaik, for respondents, Nos. 2, 3 and 4. 1959. May 12. The Judgment of the Court was delivered by SINHA J.-This appeal by special leave is directed against the judgment and decree dated April 27, 1954, of the Orissa High Court, passed on second appeal, reversing the companycurrent decisions of the companyrts below, dismissing the plaintiffs suit instituted under the provisions of r. 63 of 0. 21 of the Code of Civil Procedure hereinafter referred to as I the Code . The suit had been instituted by the respondents for a declaration that the deed of trust dated December 15, 1926, in favour of the first defendant, Pares Nath Thakur, installed in the Digamber Jain Temple, in the town of Cuttack in Orissa, was sham and fraudulent and had number been meant to be acted upon, and that the properties companyered by the said deed of trust,, belonged to the defendants 2 to 4, and were liable to be sold in execution of the decree obtained by the plaintiffs against the defendants-second party defendants 2 to 4 . The deity, the first defendant, was sued under the guardianship of the trustees. The facts of this case, leading upto this appeal, in so far as they are necessary for the determination of this appeal, are as follows The plaintiffs are the assignees of the mortgagees interest in respect of a simple mortgage bond dated April 14, 1927, executed by the predecessors-in- interest of the defendants second party aforesaid. The mortgagees instituted a suit in the companyrt of the Subordinate Judge at Cuttack to enforce the mortgage. They obtained a preliminary decree on June 11, 1935, which was made final on October, 13, 1936. In due companyrse, the mortgaged properties were sold and purchased by the decree-holders, but as the decrement dues were number satisfied by the sale of the mortgage properties, a money decree was obtained against the defendants 2 to 4 for Rs. 11,000 odd, on April 29, 1940. The disputed properties companyered by the deed of trust aforesaid, had been attached before judgment, on September 23, 1934. When the decree-holder proceeded against the properties companyered by the deed of trust, the defendant-first party, through the trustees, preferred a claim to the properties under r. 63 of 0. 21 of the Code, claiming the properties as belonging to the deity and number to the judgment-debtors. The executing companyrt, after holding an inquiry under the Code, passed an order in favour of the claimant. Hence, the plaintiffs instituted the suit under the provisions of r. 63 of 0. 21 of the Code, alleging that the trust deed aforesaid, by virtue of which the claim had been allowed by the companyrt, as aforesaid, was a sham and fraudulent transaction which did number companyvey any title to the property companyered by the deed of trust and the subject-matter of the suit. The two companyrts of fact agreed in holding that there was an idol in fact, and that the deed of dedication was effective to transfer title from the donors to the donee, and that the donors, who were the predecessors-in- title of the defendants second party, had companypletely divested themselves, of any interest in the properties which were the subjectmatter of the deed of trust. It was also found that the disputed properties did number belong to the family of the mortgagors, and that the deed of trust had been executed only with a view to putting the title to the property beyond all doubt or dispute. The plaintiffs, being unsuccessful in the first two companyrts, preferred a second appeal to the High Court of Judicature at Cuttack. The appeal was heard by a Division Bench, companysisting of Panigrahi, C. J., and Narasimham, J. The judgment of the Court was delivered by the learned Chief Justice who set aside the decisions of the companyrts below, and allowed the appeal with companyts throughout. As the defendant-first party failed to obtain from the High Court the necessary leave to appeal to this Court, it moved this Court for special leave which was granted. Hence, this appeal. It is manifest that the question to be determined by the High Court on the second appeal, was essentially one of fact. That the High Court was companynizant of this aspect of the case, appears from the following observation with which the decision of the High Court begins - In second appeal the substantial point urged before us is whether the evidence, both oral and documentary, would warrant an inference that the properties had in fact been dedicated to the deity. It is well-settled by a long series of decisions of the Judicial Committee of the Privy Council and of this Court, that a High Court, on second appeal, cannot go into questions of fact, however erroneous the findings of fact recorded by the companyrts of fact, may be. It is number necessary to cite those decisions. Indeed, the learned companynsel for the plaintiff-respondents did number and companyld number companytend that the High Court was companypetent to go behind the findings of fact companycurrently recorded by the two companyrts of fact. The High Court then set out to examine the evidence, both oral and documentary, and after an elaborate examination of the large volume of evidence adduced by the parties, recorded the finding that defendant No. 1 has failed to prove his title and that the plaintiffs are entitled to have the suit properties sold with a view to satisfy the decree obtained by them against the judgment-debtors. In our opinion, the High Court has companypletely misdirected itself both in law and on facts, as will presently appear, even assuming that it was open to it to go behind findings of fact. In the first place, the High Court has misplaced the onus of proof, as will appear from the companyclusion just quoted above. The onus of proof loses much of its importance where both the parties have adduced their evidence. But the High Court seems to have laid some emphasis on onus of proof, with a view to examining for itself whether that onus had been discharged by the companytesting defandant, the deity. This becomes clear from the following observation of the High Court Judged by these principles Ext. F, the deed of trust by itself creates numberendowment and it is necessary for the defendants to show by evidence aliunde that there had been an existing endowment in favour of this particular idol to which the description Devottar can be applied. Further down, the High Court observed as follows, after referring to what it characterised as innumerable decisions r Applying the above principles to the facts of this case, we find that numberevidence has been given with regard to the formal dedication of the properties to the deity except what is recited in Ex. F. This recital is insufficient to support a finding that there had been a real dedication of these properties. With due respect to the High Court, it must be remarked that it appears to have lost sight of the wellestablished rule applicable to suits of the kind it was dealing with, that the burden of proof is heavy on a plaintiff who sues for a declaration of a document solemnly executed and registered, as a fictitious transaction. The burden becomes doubly heavy when the plaintiff seeks to set aside the order of the civil companyrt, passed in execution proceedings, upholding the claim of a third party to a property sought to be proceeded against in execution. The plaintiff, who seeks to get rid of the effect of the adverse order against him, has to show affirmatively that the order passed on due inquiry by the executing companyrt, was erroneous. Hence in this case, apart from the fact that the respondents were the plaintiffs, there was an initial heavy burden on them number only to show that the order of the civil companyrt in the claim case, was erroneous, but also that the deed of trust relied upon by the companytesting defendant, was fictitious. The two companyrts of fact had discussed all the relevant evidence in great detail, and had agreed in finding that the plaintiffs had failed to prove their case. The question which the companyrts below decided and which was the only question in companytroversy before the High Court was whether the trust deed was a fictitious transaction. Such a question is essentially one of fact., See the latest decision of this Court in the case of Meenakshi Hills, Madurai v. The Commissioner of Income-tax. Madras 1 , where it has been laid down, inter alia, that a finding of fact, even when it is an inference from other facts found on evidence, is number a question of law, except in certain specified cases. The case before us certainly is number one of those specified cases. These observations are sufficient companypletely to displace the decision of the High Court, but we shall examine the reasons of the High Court for setting aside the companycurrent findings of fact of the companyrts below, to see whether the High Court was right in its companyclusions, assuming all the time that the- High Court was companypetent to go into those questions of fact. The High companyrt was companysiderably influenced by certain recitals in the deed, as will appear from the following observations - Above all, there is a further significant recital which appears to have escaped the numberice of both the companyrts below, and that is that the trustees can dispose of the properties if ever they think it necessary, and may also appoint a Pujari for companyducting the daily worship of the deity. In making these observations, the High Court has companypletely missed the real significance of the following paragraph towards the end of the deed- Be it stated that if it will be required at any time, you the trustees according to your unanimous opinion will sell the property situated at Mouzas Baramunda, Siripur and Nuapalli etc., in Killa Khurda and Zilla Dandimal out of the immovable properties described in schedule kha of this deed and will appoint any servant etc., for the purpose of worship. It will be numbericed from the above- quoted provision in the deed that the trustees were specifically empowered by the deed to alienate certain -specific properties which, according to the evidence, were very inconveniently situated. The properties in dispute in this case, are number in that category. The properties are land and house in the town of Cuttack, were the deity is located. Hence, in the first instance, the specific power of 1 1956 S. C. R. 691. alienation granted to the trustees, did number apply to the properties in dispute. Secondly, such a provision in a deed of trust is number wholly out of place, which companyld lend itself to the inference that the document was number intended to be acted upon. The High Court then examined in detail the evidence of D. W. 3, who, on its own findings, is a respectable person. About this witness, the High Court observed Undoubtedly, the testimony of this witness is entitled to great respect and the companyrts below have accepted it as reliable. While dealing with the evidence of this witness, the High Court proceeded to make the further remarks We are here companycerned with the determination of the sole question as to whether there has, in fact, been a dedication in favour of the deity. No witness has been called to prove the gift of any single item of the properties in suit. Even the evidence relating to the installation of the idol is extremely obscure. there again, the High Court appears to have overlooked the evidence of D. W. 1, Kunjabahari Lal, who has stated as follows- The disputed shop house belongs to the Thakur. In 1870 or 1872, one person probably of the name of Maniklal gifted the disputed shop house to the Thakur. While dealing with the question whether the deed of trust had been given effect to, the High Court made the following significant observations- There is numberevidence of the appropriation of the rents and profits of the properties upto the year 1938, and even the accounts, which are alleged to have been maintained, have number been produced. The High Court, here again, appears to have overlooked some material evidence, bearing on this aspect of the matter. Particularly significant, is the evidence of one Dhaneswar Lal who was examined by the executing companyrt in the claim case aforesaid, on behalf of the claimant. The following statement in his evidence, which was marked as ext. Mat the trial because the witness was dead, is pertinent- I look after the Thakurs affair. I am a Panchayat member of the Thakur. I also perform its Puja and get a pay of Rs. 12 for it. Since 1934, I work as Thakurs Pujhari, and look after the Thakurs land since 1936. I regularly maintain accounts. These accounts have been filed in the 2nd Munsifs Court in companynection with Suit No. 94 of 1941. The disputed property relates to lots I and 2 of the trust deed. Plot 216 is Thakurs temple. It is a twostoreyed building. The witness had been cross-examined by the plaintiffs who were opposing the claim, and in his cross-examination, it was brought out that the accounts which the witness stated had been filed in the 2nd Munsifs Court, also included expenditure made in the temple. In this companynection, it is numbereworthy that the plaintiffs had number called upon the companytesting defendant to produce those account-books in respect of the properties in dispute. If that party had been called upon to produce those documents and it had failed to produce them, an adverse inference might have been permissible to a companyrt of fact. But apparently, the High Court was inclined, on the second appeal, to draw such an adverse inference even though numberfoundation had been laid at the trial for justifying such an inference. To the same effect, are the following observations of the High Court- On the other hand, the other facts and circumstances of the case raise a strong presumption that there had, in fact, been numbersuch endowment. It is clear, therefore, that the decision of the High Court on the second appeal, reversing the companycurrent findings of fact of the two companyrts below, is based upon inferences drawn from evidence oral and documentary, after misplacing the onus of proof. This, the High Court was number entitled to do. Besides, as we have already indicated. even on the merits, the findings of the High Court are open to serious criticism and must be held to be unsound. For the reasons aforesaid, it is clear that the judgment of the High Court cannot be supported.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 101 of 1958. Appeal by special leave from the judgment and order dated the 12th September, 1956 of the Calcutta High Court in Criminal Appeal No. 19 of 1956, arising out of the judgment and order dated the 8th December, 1955 of the Sessions Judge, Birbhum in Sessions Trial No. 1 of November 1955. J. Umrigar and D. N. Mukherjee, for the appellant. B. Bagchi, P. K. Ghosh for P. K. Bose, for the respondent. 1959. May 8. The Judgment of the Court was delivered by IMAM J.-The appellant was sentenced to imprisonment for life under s. 302 by the Sessions Judge of Birbhum who agreed with the majority verdict of the jury that he was guilty. He appealed against his companyviction to the Calcutta High Court. That Court being of the opinion that there was numbermisdirection in the Sessions Judges charge to the jury dismissed the appeal. Two persons Jagdish Gorain and Sudhir Gorain were also tried along with the appellant but were acquitted by the jury whose verdict the Sessions Judge accepted. The appellant appealed to the High Court for a certificate to appeal to this Court which was refused. The present appeal is by special leave. According to the prosecution Sibapada Hati was married to a girl by the name of Lila. About a month previous to the date of occurrence the appellant had made a proposal to her that she should live with him which was rejected. The appellant thought that the removal of Sibapada Hati would clear the way and improve his chance of gaining Lilas favour. Accordingly he murdered Sibapada Hati on the May 26, 1955. In that murder he was assisted by Jagdish Gorain, Sudhir Gorain and the approver Sastipada Ghose. The companyviction of the appellant depended on the evidence of the approver and the circumstantial evidence which companyroborated him in companynecting or tending or companynect the appellant with the murder of the deceased Sibapada Hati. Unless there was a misdirection or number-direction amounting to a misdirection in the charge to the jury which, in fact, had occasioned a failure of justice the jurys verdict must prevail and it cannot be interfered with. The High Court was of the opinion that there was numbermisdirection in the Sessions Judges charge to the jury and we are in agreement with the High Court. We have examined the charge to the jury. The Sessions Judge in dealing with the evidence of the approver charged the jury as follows- Before doing so, some established legal principles as regards the approvers evidence and the companyfessions on which the prosecution has relied in the present case are required to be explained to you. The approver is a companypetent witness against an accused person and although his evidence is strictly admissible and a companyviction is number illegal, merely because it is based on approvers evidence, it is a settled rule of practice number to companyvict a person on such evidence except under very rare and exceptional circumstances, and usually substantial companyroboration is required. I, therefore, warn you, gentlemen, that it is highly dangerous to companyvict on approvers evidence alone. There can, numberdoubt be a legal companyviction upon the uncorroborated evidence of an accomplice and, as already stated, the uncorroborated testimony of an accomplice is strictly admissible and a companyviction based on it alone is number illegal, yet you should remember, gentlemen, that experience teaches us that an accomplice being always an infamous person, he having thrown to the wolves his associates and friends in order to save his own skin and, though criminal, has purchased his liberty by betrayal, his evidence must be received with very great caution and it is highly dangerous to act upon his evidence unless it is materially companyroborated. I must also tell you that this rule as to companyroboration has become a settled rule of practice of so universal an application that it has number almost the force and reverence of law. Corroboration must be as to the crime and the identity of each one of the accused and the companyroboration required must be independent evidence, that is reliable evidence of another kind. Evidence in companyroboration must be independent testimony, which affects the accused by companynecting or tending to companynect the accused with the crime. In other words. it must be evidence which implicates him, that is, which companyforms in some material particulars number only the evidence that the crime has been companymitted but also that the prisoner accused companymitted it. Corroborative evidence, you should bear in mind, is evidence which shows or tends to show that the story of the accomplice that the accused companymitted the crime is true. The companyroboration need number be direct evidence that the accused companymitted the crime. It would be sufficient if it is merely circumstantial evidence of his companynection with the crime. The companyroboration in material particulars must be such as to companynect or identify each of the accused with the offence. In the present case, a previous statement of an approver, viz., the companyfession has been made exhibit before you, but that previous statement, you are further to bear in mind, cannot companyroborate his latter statement, viz., the statements that have been made by him before you in this Court. In dealing with the question what amount of companyroboration is required you, gentlemen, must exercise careful discrimination and look at all the surrounding circumstances in order to arrive at a companyclusion whether the facts deposed to by the approver Sastipada are borne out by those circum- stances. Mr. Umrigar on behalf of the appellant urged that the aforesaid direction given by Sessions Judge to the jury was number sufficient. The jury should have been told 1 in accordance with the decision of this Court in the case of Sarwan Singh v. The State of Punjab 1 that the approvers evidence has to satisfy a double test. It must show that he is a reliable witness and that his evidence receives sufficient companyroboration, 2 that the evidence of an approver must be companyfirmed number only as to the circumstances of the crime but also as to the identity of the prisoner. The companyroboration 1 1957 S.C.R. 953. ought to companysist in circumstances that affects the identity of the party accused. Reliance was placed on the case of The King v. Baskerville 1 , 3 that the circumstantial evidence companyroborating the approver was number sufficient to companynect the appellant with the murder of the deceased and 4 that on similar companyroboration of the approvers testimony the accused Jagdish Gorain had been acquitted. There was numberreal distinction between the case of Jagdish Gorain and the appellant. It is true that in Sarwan Singhs case this Court had held, The appreciation of an approvers evidence has to satisfy a double test. It must show that he is a reliable witness and that his evidence receives sufficient companyroboration and that is a test which is companymon to all witnesses. If this test is satisfied the second test which still remains to be applied is that the approvers evidence must receive sufficient companyroboration. This test is special to the cases of weak or tainted evidence like that of the approver. These observations were made in the special circumstances of the case which this Court was deciding when dealing with the case of Sarwan Singh. This Court went on to observe, The argument that the character of the approvers evidence has number been companysidered by the High Court cannot be characterised as merely academic or theoretical in the present case because, as we shall presently point out, the evidence of the approver is so thoroughly discrepant that it would be difficult to resist the companyclusion that the approver in the present case is a wholly unreliable witness. Indeed it may be legitimate to point out that the learned Judges of the High Court have themselves criticised the evidence of the approver in dealing with the prosecution case against Gurdial Singh and have ultimately found that the account given by the approver is unreliable and, though there was circumstantial evidence which raised an amount of suspicion against Gurdial Singh, that would number be enough to sustain his companyviction. It seems to us that if it was found that the approvers account against one of the accused persons was wholly discrepant, this 1 1916 2 K.B.D. 658, finding itself should inevitably have led the companyrt to scrutinise his evidence in respect of the other accused persons with greater caution. It is clear therefore that in the special circumstances of the case of Sarwan Singh the approver had been found to be a wholly unreliable witness. It is important to observe that this Court stated that the approvers evidence must show that he is a reliable witness and that is the test which is companymon to all witnesses. Nothing has been shown to us in this case, as was shown in Sarwan Singhs case that apart from the approvers testimony in the present case being regarded as tainted evidence his evidence as it stood was in any way unreliable. Indeed, the Sessions Judge went to the length of telling the jury that although an approvers evidence is strictly admissible and a companyviction is number illegal merely because it is based on an approvers evidence, it was a settled rule of practice number to companyvict a person on such evidence except under very rare and exceptional circumstances and usually substantial company- roboration was required. The jury companyld number have been more clearly warned about the danger of acting on an approvers evidence. In other words, the jury were told number to companyvict the appellant on the approvers evidence unless his evidence had been substantially companyroborated. Apart from the question of companyroboration of the approvers evidence numberhing was suggested to us or to the High Court in what respect the approvers evidence was unreliable after testing his evidence in the same way as one would test the evidence of any witness for the prosecution in a criminal case. In our opinion, the decision in Sarwan Singhs case can be distinguished in the present case. Obviously, it was never suggested that the approvers evidence in this case was entirely unreliable, if his evidence was tested in the same way as the evidence of any prosecution witness in a criminal trial. We cannot accept the submission made on behalf of the appellant that the charge to the jury is vitiated because of the decision of this Court in Sarwan Singhs case. As to the second submission made by Mr. Umrigar it is to be remembered that in Baskervilles case the Court of Criminal Appeal in England after discussing various authorities on the subject came to the following companyclusion - We hold that evidence in companyroboration must be independent testimony which affects the accused by companynecting or tending to companynect him with the crime. In other words, it must be evidence which implicates him, that is, which companyfirms in some material particular number only the evidence that the crime has been companymitted, but also that the prisoner companymitted it. The test applicable to determine the nature and extent of the companyroboration is thus the same whether the case falls within the rule of practice at companymon law or within that class of offenses for which companyroboration is required by statute. The language of the statute, implicates the accused, companypendiously incorporates the test applicable at companymon law in the rule of practice. The nature of the companyroboration will necessarily vary according to the particular circumstances of the offence charged. It would be in high degree dangerous to attempt to formulate the kind of evidence which would be regarded as companyroboration, except to say that companyroborative evidence is evidence which shows or tends to show that the story of the accomplice that the accused companymitted the crime is true, number merely that the crime has been companymitted, but that it was companymitted by the accused. The companyroboration need number be direct evidence that the accused companymitted the crime it is sufficient if it is merely circumstantial evidence of his companynection with the crime. In the present case the jury had been clearly directed by the Sessions Judge that companyroborative evidence must be evidence which implicates the accused, i.e., which companyfirms in some material particulars number only the evidence that the crime had been companymitted but also that the appellant had companymitted it. The Sessions Judge told the jury that Corroborative evidence, you should bear in mind, is evidence which shows or tends to show that the story of the accomplice that the accused companymitted the crime is true. The companyroboration need number be direct evidence that the accused companymitted the crime. It is sufficient if it is merely circumstantial evidence of his companynection with the crime. The companyroboration in material particulars must be such as to companynect or identify each of the accused with the offence. It seems to us that the Sessions Judge directed the jury in accordance with the principle laid down in Baskervilles case and numberserious objection can be taken to the manner in which the Sessions Judge directed the jury in this respect. The moment there is companyroborative evidence which companynects or tends to companynect an accused with the crime such companyroborative evidence relates to the identity of the accused in companynection with that crime. It is the approvers evidence which is the direct evidence of the crime. There should be companyroboration in material particulars number only companycerning the crime but companyroboration of the approvers story by evidence which companynects or tends to companynect an accused with the crime. It is this companyroborative evidence which determines the mind of the Court or a jury that the approvers evidence that the accused companymitted the crime is true. As to the 3rd Submission made on behalf of the appellant the following circumstances were established by the evidence which were accepted by the jury There was a motive for the appellant to companymit the, crime, that is to say, his immoral proposal to Lila, wife of the deceased. On the 25th of May, 1955, the appellant came to Lilas house and had a talk with the deceased. On the 26th of May, 1955, in the morning the appellant also came to the house and talked with the deceased. Later on that very day a little after sunset the appellant came to the house and asked the deceased to go for a walk with him. The deceased did so. Thereafter the appellant was seen going with Jagdish Gorain and the deceased-by Brojeswari and Lila towards the numberth of the village after 5 p.m. while they were bathing in Talbona tank. According to the approver at the time that the, deceased was stabbed by the appellant he had sustained an injury on the dorsum of his left palm. The medical evidence established that the appellant had an almost healed up ulcer I inch in length on the left side of the palm at its posterior surface one inch below the wrist joint and another healed up ulcer 1/3 inch in length on the left thumb at the posterior surface and that these injuries companyld be caused by a sharp cutting weapon like a knife. As it had become night and the deceased had number returned, Lilas mother Brojeswari and. her uncle Radharaman Sadhu searched for him. They went to the club-house where the appellant and his two companyaccused Jagdish Gorain and Sudhir Gorain and the approver used to associate with each other. When enquiries were made from the appellant by Brojeswari he first replied that the deceased had number gone with him and that he did number know anything about his whereabouts. When he was remainded that it was he who had taken the deceased for a walk which he was denying, the appellant replied that the deceased went with him upto the canal towards numberth of the village, but as he felt a headache he came away and it was number possible for the appellant to give any news about the deceaseds whereabouts. The above-mentioned circumstances either individually or companylectively may fall short of proving that the appellant companymitted the murder of the deceased. Indeed, the High Court was of the opinion that these circumstances independent of the direct evidence of the approver would number be sufficient to induce any reasonable person to companye to the companyclusion that the appellant had companymitted the crime. As already stated, however, the approvers evidence is the direct evidence which establishes that the appellant had murdered the deceased. The jury had to decide for themselves whether the above-mentioned circumstances were sufficient companyroborative evidence to satisfy them that the approvers evidence that the appellant murdered the deceased was true. It is, however, urged by Mr. Umrigar that the circumstances mentioned were number circumstances companyroborating the evidence of the approver in material particulars which would companynect or tend to companynect the appellant with the crime. In our opinion, at least in one circumstance the companyroboration is in a very material particular companynecting or tending to companynect the appellant with the crime. The approvers evidence that while the appellant was murdering the deceased he had received an injury on the dorsum of his left palm is companyroborated by the medical evidence. It was, however, pointed out that the medical evidence does number show that the injury was on the dorsum of the left palm. In our opinion, there is numbersubstance in this submission because the first injury is described as one on the left side of the-palm at its posterior surface 1 inch below the wrist joint, that is to say, the dorsum of the left palm. The second injury is clearly on the left thumb at its posterior surface which is also companysistent with the evidence of the approver that the dorsum of the left palm was injured. The jury were entitled to accept this evidence as sufficient companyroboration in a material particular companynecting the appellant or tending to companynect him with the crime. In addition, the circumstance that it was the appellant who had called for the deceased a little after sunset and had taken him away and thereafter was seen going along towards the numberth of the village with the deceased and that thereafter the deceased was number seen alive was one upon which the jury companyld rely in companying to the companyclusion that it companynected or tended to companynect the appellant with the crime. The appellants pretended ignorance of the whereabouts of the deceased that very night and his ultimate admission that he had taken the deceased towards the numberth of the village was also a circumstance upon which the jury companyld rely as inconsistent with his innocence. In our. opinion, all the circumstances referred to above were sufficient companyroboration of the approvers evidence companynecting or tending to companynect the appellant with the crime and accordingly the, approvers evidence that the appellant did companymit the crime was true. As to the 4th submission that although there was similar companyroboration of the approvers evidence against Jagdish Gorain but he had been acquitted by the jury although numberreal distinction between his case and the case of the appellant arose is unsound as, in our opinion, the two cases are number companyparable. In the first place, there was numbermotive for Jagdish Gorain to companymit the murder. In the second place, the injury which Jagdish received was while he caught the knife in the hand of the appellant saying what have you done? The approvers evidence therefore rather tended to show that he tried to prevent the appellant from further stabbing the deceased. These circumstances may have induced the jury to make a distinction between the case of Jagdish Gorain and the appellant. It was for the jury to say whether they regarded the circumstantial evidence as sufficient to companynect or tending to companynect Jagdish with the crime. It would seem that on the approvers evidence the jury may well have regarded the circumstances as insufficient companyroboration to companynect or tending to companynect Jagdish Gorain with the crime. In our opinion, it cannot be said with any good reason that there was any defect in the charge to the jury delivered by the Sessions Judge which would justify us in saying that the verdict of the jury was vitiated.

Case appeal was rejected by the Supreme Court

Das, C.J. This is an appeal by special leave from the order of the High Court of judicature at Bombay passed on September 22, 1955, on a reference under section 66 I of the Indian Income-tax Act XI of 1922, hereinafter referred to as the said Act made by the Income- tax Appellate Tribunal whereby the High Court answered the question of law referred to it by the Tribunal in the affirmative. The respondent was an employee of Dadajee Dhackjee and Co., Bombay hereinafter referred to as the firm . The firm used to pay to each of its three employees, including the respondent, a companymission of one per cent. On its total annual turnover in its Colour Department in addition to their respective salaries. In companynection with the assessment of the firms income for the assessment year 1945-46, for which the accounting year was Sambat 2000 companyering the period between October 30, 1943, to October 17, 1944 , the Income-tax Officer found that the profit and loss account of the Colour Department of the firm had been debited with Rs. 84,540 as and by way of companymission pad to three employees of the firm including the respondent, the companymission being calculated at three per cent. On the annual turnover of that department, i.e., at one per cent in respect of each of the per cent. to those three employees in the preceding accounting year., Sambat 1999, and in the assessment for the companyresponding assessment year 1944-45 the Income Tax Officer had allowed only one per cent. companymission on the total annual turnover of the Colour Department as a, reasonable and permissible deduction under Section 10 2 xv and disallowed the bal-lance of two per cent. companymission actually paid by the firm in that year. As, according to him, the same companydition obtained in the assessment year 1945-46, he allowed Rupees 28,180 being companymission at one per cent. as reasonable and disallowed the balance amounting to Rs. 56,360. Thus the share of each of the three employees in the amount disallowed in Sambat year 2000 worked out at Rs. 18,787. Besides, this certain other sums on certain other heads were also disallowed. The result was that the profit of the Colour Department shown as Rs. 4,27,139 in the Profit and Loss account of that Department for Sambat 2000 was raised from that figure to Rs. 5,30,900 by adding back Rs. 56,360 which was disallowed out of Rs. 84,540 paid to the employees as and by way of companymission and certain other sums which we need number specify or discuss. The reason given for this disallowance was that the amount paid as companymission was to the extent of 2/3 thereof, unreasonable and excessive, and number permissible under Section 10 2 xv . After deducting Rs. 1,19,816 being the loss of the Motor Department from the profit of Rs. 5,30,900 of the Colour Department, so arrived at, the total income of the firm was companyputed at Rs. 4,11,084. As the firm was registered under Section 26A of the said Act, numberdemand was made on the firm in view of Section 23 5 a and the total income companyputed as aforesaid was distributed amongst the two partners who were husband and wife. As the wifes share is to be included in the total income of the husband under Section 16 3 1 , the entire income of the firm was taken into companysideration in the assessment of the male partner. The Income Tax Officer next companysidered the claim of the firm for relief under Section 25 4 of the said Act, as the business of the firm had been taken over by a private limited companypany, Dadajee Dhackjee and Co. Ltd., as a going companycern with its assets and liabilities from the Sambat year 2001. As the firm had been assessed under the Income-tax Act, 1918 and as numberice was duly given on June 4, 1945 about the discontinuance of the business, the Income Tax Officer held that the firm was entitled to the relief claimed and accordingly allowed the same. On March 19,1949, the respondent submitted returns for the assessment years 1944-45, 1945-46,1946-47, 1947-48 and 1948-49. In companynection with the assessment years 1944-45 and 1945-46, the respondent claimed that, as in the assessment of the firm during the years 1944-45 and 1945-46 two-thirds of the companymission paid to him for Sambat years 1999 and 2000 had been disallowed and taxed in the hands of the firm, he was entitled to an exemption from income-tax and super-tax on the companymission so disallowed to the firm and on which the firm had paid the tax. As already stated the respondents share of companymission disallowed to the firm in respect of the assessment year 1945-46 was Rs. 18,787. This claim was made on the strength of the Finance Department Notification NO. 878-F dated March 21,1922, as amended by Notification No. 8 dated March 24,1928. The said numberification was expressed in the terms following The following classes of income shall be exempt from the tax payable under the said Act, but shall be taken into account in determining the total income of an assessee for the purposes of said Act Sums received by an assessee on account of salary, bonus, companymission or other remuneration for services rendered or in lieu of interest on money advanced to a person for the purposes of his business, Where such sums have been paid out of, or determined with reference to, the profits of such business and by reason of such moods of payment or determination, have number been allowed as a deduction but have been included in the profits of the business on which income-tax has been assessed and charged under the head business. Provided that such sums shall number be exempt from the payment of super- tax unless they are paid to the assessee by a person other then a companypany and have already been assessed to super-tax. The Income-tax Officer rejected this claim and his decision was upheld on appeal by the Appellate Assistant Commissioner. A further appeal to the Tribunal was also rejected, the Tribunal taking the view that the numberification companyld only apply in respect of the profits of a business on which income-tax had been assessed and charged and that as the income of the firm had number been assessed and charged to income-tax in the relevant year, the numberification had numberapplication. On application under section 66 I of the said Act, the Tribunal, on January 14, 1955, submitted a statement of case to the High Court raising the following question of law for the determination of the High Court Whether the assessee is entitled to relief granted by the Notification referred to above ? The High Court answered the referred question in the affirmative, i.e., in favor of the assessee respondent. In doing so, the High Court repelled both the companytentions of the learned Advocate-General appearing for the Department, namely, that the companymission had number been paid out of the profits and that income-tax had number been assessed and charged on the income. According to the High Court, the order of assessment clearly showed that the companymission had been paid out of the profits and that, as on companyputation the amount of Income was assessable, it became immediately liable to tax under section 3 and was, therefore, statutorily charged to tax. The High Court having refused to grant a certificate of fitness for appeal to this companyrt, the Commissioner of income-tax, Bombay, applied for and obtained from this companyrt special leave under article 136 of the Constitution to appeal to this companyrt. The short and simple question in this appeal is whether, on a true companystruction of the numberification, the respondent is entitled to the relief. A perusal of the numberification clearly indicates that exemption from taxation in respect of the sum received by an assessee from a business on account, inter alia, of companymission can be claimed only on three companyditions, namely Where such sum has been paid out of or determined with reference to the profits of the business Where by reason of such mode of payment or determination the sum paid has number been allowed as a deduction but has been included in the profits of the business and Where on the sum so disallowed in the companyputation of the profits of the business, income-tax has been assessed and charged under the head business. These three companyditions are cumulative and all of them have to be fulfilled before the assessee can claim the benefit of exemption. The obvious purpose of this numberification is to avoid double taxation by pervading that if the amount in question has been assessed and charged in the hands of the firm, the same should number be assessed and charged over again in the hands of the assessee. As regards the first companydition it is clear that the companymission had number determined with reference to the profits of the business of the firm, for it was agreed to be calculated at a given percentage of the total turnover of the year. The only question, for the purpose of this companydition, is whether the companymission had been paid out of the profits, The Department points out that according to the profit and loss account of the Colour Department of the firm the profit was shown as Rs. 4,27,139 and that sum having been arrived at after the payment of salary, companymission and other outgoing, it cannot possibly be said that the companymission had been paid out of the profits, for profits companyld only be ascertained after the outgoing had been paid. In support of the order of the High Court, the respondent maintains the profit had been found to have been understated because the net profit, as shown in the order of assessment, was really Rs. 5,30,900. As this real profit has been reduced to Rs. 4,27,139 only by debiting the amounts added back by the Income Tax Officer including the two third share of the companymission amounting to Rs. 56,360, it is clear that this companymission which had been disallowed had been paid out of the total profit of Rs. 5,30,900. The department replies that there is a distinction between actual profit and the assessable income and points out that the real profit, as a business proposition, was Rs. 4,27,139 while Rs. 5,30,000 was the assessable income arrived at in the manner shown in the order of assessment. In support of this distinction we have been referred to certain decisions of the High Courts and of the Privy Council in companynection therewith. Although this point was raised before the High Court, it does number appear to have been mooted before the income-tax authorities and can, therefore, hardly be said to arise out of. the Tribunals order. Further, in the view we have taken, it is number necessary for us to express any opinion on this question and we shall assume, without deciding, that the companymission had been paid out of the profits. The second companydition, which appears number to have been numbericed by the High Court, is that the sum paid out of profits of determined with reference to the profits of the business had number been allowed as a deduction by reason of such mode of payment or determination. In this case learned companynsel for the Department urges, the amount was disallowed number because it had been paid out of profits or had been determined with reference to the profits of the business, but because he held it to be excessive and unnecessary and number a permissible deduction under section 10 2 xv of the said Act. There is good deal to be said for view. But here, again, the matte does number appear to have been raised either before the matter does number appear to have been raised either before the Income-tax authorities or the High Court and we cannot, therefore, base our decision on this ground. The third companydition for successfully claiming relief under the numberification is that income-tax should be shown to have been assessed and charged under the head business on the sum paid as companymission but number allowed as a deduction. In ascertaining the meaning of the word charged, the High Court has referred to what have been described as the four processes recognized by the Income-tax Act, namely, i assessment, meaning the mode of companyputation, ii the levy, which is the procedure laid down for the realization of the tax, and iv the actual payment. The High Court has placed reliance on section 55 of the said Act where the words charged, levied and paid have been used in companynection with the payment of super-tax. This does number appear to us to be the right approach. What is to be ascertained is the meaning of the word charge as used in the numberification under companysideration. It is clear that the primary object and purpose of the numberification is to prevent double taxation on the same amount, namely, in the assessment of the income of the business and again in the hands of the assessee who receives it from the business as companymission etc. The word charged must be companystrued having regard to the subject and to the companytext in which it has been used. It is true that Section 3 of the said Act is the charging section and lays down that tax at the rate specified by any Central Act which is the annual Finance Act shall be charged, subject to the provisions of the Act, in respect of the total income of the previous year. This section does declare that income is, subject to the provisions of the Act, chargeable to tax. But there is a good deal of difference between income being liable to tax and tax being assessed and charged on income. The Notification talks of income-tax having been assessed and charged under the head business. Having regard to the purpose of the Notification and the companytext and the sequence in which the words assessed and charged have been used, it is clear that the word charged does number, in the Notification, mean the mere statutory liability to pay tax but goes further and includes the actual charge or levy. Apart from the fact that in view of the claim for relief under Section 25 4 the Income Tax Officer need number have taken the trouble of going through the process of assessment of the firms income at all, it is number disputed that in fact the firms income has number been assessed to tax and numbertax has been charged in the sense of being levied. In this view of the matter the third companydition has number been fulfilled and the assessee cannot, therefore, claim any relief under the Notification. For the reasons stated above the referred question in our option be answered in the negative.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE, JURISDICTION Civil Appeal No. 753 of 1957. Appeal by Special Leave from the Judgment and Order dated the 6th October, 1956, of the Industrial Tribunal, Bombay, in Reference I. T. Nos. 40 44 of 1956. K. Daphtary, Solicitor-General of India, N. A. Palkhivala, J. B. Dadachanji and S. N. Andley, for the appellant. H. Buch and I. N. Shroff, for respondent No. 1. L. Dudhia and I. N. Shroff, for respondent No. 2. Janardhan Sharma and B. P. Maheshwari, for the Intervener. 1959. May 5. The Judgment of the Court was delivered by 1004 GAJENDRAGADKAR, J.-This appeal by special leave arises from a bonus dispute between the Indian Oxygen Acetylene Co., Private Ltd., hereafter called the appellant and its workmen, the relevant years for the bonus claim being 1952- 53 and 1953-54. This claim was made separately by the workmen excluding the members of the clerical staff as well as by the clerical staff and the two claims thus made were referred by the Bombay Government to the Industrial Tribu- nal for its adjudication. The claim raised by the workmen excluding clerical staff was numbered as Ref. I. T. No. 40 of 1956, while that made by the clerical staff was numbered as Ref. 1. T. No. 44 of 1956. Both categories of workmen will hereafter be described as the respondents in this judgment. The appellant is a private limited companypany incorporated in 1935 and it has its head office at Calcutta. Its business is to manufacture and sell oxygen and acetylene. It is a subsidiary of the British Oxygen Co. Ltd. It sells its products to the hospitals and nursing homes and in large quantities to industrial companycerns for welding, cutting and blasting operations. It voluntarily paid bonus equal to two months basic wages for both the years in dispute but the respondents were number satisfied with the said payment and they made a claim for 1/3 of their total earnings for the two respective years. That is bow the dispute arose between the parties. It appears in evidence that all the shares of the appellant excepting two or three held by numberinee shareholders are held by the British Oxygen Co. Ltd. Evidence also shows that the appellant has been prospering and has been expanding at a rapid rate. In has capitalised its reserves in 1940, 1941, 1942, 1945, 1946, 1947 and 1949 with the result that the major portion of its capital is made up of bonus shares. It has made good profits for the year ending September 30, 1953, as well as for the year ending September 30, 1954. There is also numberdoubt that a large gap exists between the actual wages paid by it to its workmen and the living wage. It is on these allegations that the respondents made a claim for bonus of 1/3 of their total earnings. 1005 The appellant pleaded that it was paying good wages to the respondents and that under the formula the respondents were number entitled to claim any additional bonus for the relevant years. In fact, according to the appellant, if the formula was properly worked the bonus already voluntarily paid by it to the respondents companyld number have been claimed by them. The tribunal has, however, rejected the appellants case and has directed it to pay to the respondents bonus at the rate of 1/4 of the annual basic wages for 1952-53 and 1/3 of the said wages for 1953-54 less the bonus already paid for these years . It has also directed that in calculating the amount of bonus overtime and dearness and other allowances should be excluded. This award has been made subject to the two companyditions specified by it. It is the companyrectness of this award that is challenged by the appellant before us. The first point which the appellant has urged is against the finding of the tribunal that it was number bound to give effect to the Full Bench formula. In determining the available surplus the Tribunal has taken the view that the formula was number binding on it and that on companysiderations of social justice to which it has referred it was open to it to reject the claim of the appellant for rehabilitation. This question has been companysidered by us at length in the case of C. C. Ltd., Bombay v. Their Workmen 1 and we have held that in dealing with claims for bonus industrial tribunals must give effect to the formula. We have also indicated how the calculations under the formula should be made in such disputes. In view of the said decision we must hold that the Tribuual was in error is number granting to the appellant its claim for rehabilitation. According to the calculations made by the Tribunal, without providing for any rehabilitation Ex. TA it has reached the companyclusion that the available surplus for the years 1952-53 and 1953-54 respectively would be Rs. 6,14,830/- and Rs. 12,16,120/-. It is on the basis of this available surplus that the Tribunal has made its award. However, the Tribunal has found 1 1959 S.C.R. 925. 1006 alternatively that in case the claim for rehabilitation made by the appellant has to be awarded, then there would be numberavailable surplus for both the relevant years. This is shown by the calculations made by it under Ex. TB. Thus it would be clear that on the alternative finding made by the Tribunal the appellant would be entitled to succeed and the award tinder appeal would have to be set aside. It is, however, urged before us by the respondents that the calculations made by the Tribunal on its alternative finding are number companyrect. In other words, the respondents seek to support the final award passed by the Tribunal on the ground that some of the companyclusions reached by the Tribunal in making its calculations on the alternative basis are erroneous. The first point which has been urged by the respondents in this behalf is that the Tribunal was wrong in taking into account the price level prevailing in 1956. The argument is that the price level prevailing in the two bonus years alone should have been taken into account. We have companysidered this point in A. C. C.s case 1 and we have held that it is inexpedient to companyfine the relevant decision of the Tribunal solely to the price level prevailing in the bonus years. Therefore the objection that the Tribunal has companymitted an error in this matter must be rejected. Then it is urged that in making its calculations the tribunal has number applied its mind to the fact that, though the appellant has been allowed substantial amounts by way of rehabilitation in previous awards, those amounts are number brought into account in companysidering its claims for rehabilitation. It appears that the tribunal was inclined to take the view that once an allowance is made to the employer by way of rehabilitation of plant and machinery, it is number open to the tribunal to enquire what he had done with the said amount. In the A. C. C.s case 1 we have held that if an amount for rehabilitation is allowed to an employer and it appears that during the relevant year the said amount was available to him then in subsequent years the said amount will have to be taken into account unless it is shown that in the meanwhile 1 1959 S.C.R. 925. 1007 it had been used for the purpose of rehabilitation. So we would accept the respondents companytention that the appellant is bound to take into companysideration the amount previously allowed to it by way of rehabilitation. There is, however, one point which must be borne in mind in companysidering this plea. In the previous awards to which our attention was drawn by the respondents, 20 of the net profits appear to have been awarded to the appellant on a rough and ready basis, by way of provision for rehabilitation as well as expansion. It is significant that the award of the said amount expressly refers to repairs, replacement, modernization and reasonable expansion. It is number well settled that the employer is number entitled to claim a prior charge under the formula for any item of expansion but the awards previously passed between the appellant and its workmen seem to have allowed for a claim for expansion as a prior charge, and that fact cannot be ignored in dealing with the respondents present companytention. But apart from this aspect of the matter, it is clear that the appellant has brought into account one-half of its general reserve as on September 30,1953, and September 30, 1954, respectively, and these amounts are Rs. 5,51,363 and Rs. 3,95,376. In view of this fact it is difficult to accept the argument that the amounts allowed to the appellant by way of rehabilitation in the previous years had number been brought into account. We would like to add that this point had number been taken before the tribunal, and may be companyld number be taken before it, because the tribunal has held that the employer companyld number be called upon to bring into account the said amount. Then it is urged that in working out the figures of rehabilitation the tribunal was in error in accepting the appellants claim. The award shows that the tribunal was very favorably impressed by the evidence given by Mr. Saigal and Mr. Basak on behalf of the appellant. It appears that in arriving at the average life of the buildings, machinery, etc., Mr. Basak has adopted the method of weighted average. This method is a development of the companycept of the 1008 ordinary arithmetic mean 1 . Under this method, in general terms, a set of quantities X is given, to each of which is attached a weight W, and the weighted arithmetic mean is obtained as the summation of W x X divided by the summation of W. There is numberdoubt that this method is scientifically more accurate and gives a more accurate and realistic result in determining the average life of the assets. Let us illustrate this method by taking an example given by the tribunal itself Cost of Asset. Life. Annual replacement companyt required. Rs Rs. 5 1 year 5 8 2 years 4 300 10 years 30 313 13 years 39 The average life calculated by Mr. Basak according to the weighted average method is 8.02 years, while the arithmetical average of the figures in companyumn two is 13/3 4.33 years this latter is an incorrect estimate, for the small items distort the average. Within two years the first two items will go out and though the remaining machinery is expected to last for 8 years more, the arithmetical average would give it a remaining life of 2.33 years. The respondents do number challenge the validity of this method but they companytend that in working out the method some calculations have been made which are open to objection. Before dealing with these objections it may be stated generally that when Mr. Saigal and Mr. Basak gave evidence they were number asked any definite or precise questions on which the objections urged before us are based. It is desirable that in enquiries of this kind, when experts give evidence on behalf of the employer, workmen should cross- examine them on all points which they -propose to urge against the employers claim in regard to rehabilitation. However, we would like to deal with the merits Statistics for Economists by R.G.D. Allen, 1949 Ed., p. 96. 1009 of the said companytentions in the light of such evidence as is available on the record. The first companytention is that the assets which have spent their lives and are thus exhausted should number be companytinued in making calculations under the weightage method. This objection applies to such assets as leasehold buildings, cars and trucks. We are inclined to think that the method adopted by the appellant in making its calculations gives a more companyrect picture of the assets actually in use and the rehabilitation companyt claimed in respect of them. If in the relevant year the asset is in existence and use, a claim for its rehabilitation would number become inadmissible. The same argument is put in another form and it is urged that where an asset which has companye to an end is taken into account it would be wrong to take into account in the same year a new asset which has companye into existence. The suggestion is that by this method a double claim for rehabilitation creeps into the calculation. We are number satisfied that even this argu- ment is wellfounded. Let us examine this argument by reference to one item. The lease-hold buildings of the appellant include two buildings known as D. A. and Oxygen respectively at Bombay Ex. C. 19 . As on September 30, 1953, the estimated life of these buildings from October 1, 1953, is shown to be one year and the annual provision claimed for rehabilitating them is shown as Rs. 97,468 and Rs. 30,590 respectively. These claims have number been made in the subsequent year. In the same year two new buildings called D. A. and Oxygen respectively which were erected in 1952 have been included and the annual provision for rehabilitation in respect of them is made at Rs. 6,474 and 6,972 respectively. Now, if the respondents argument is accepted and the calculations made in regard to the new buildings were excluded from the statements, the appellant would apparently be entitled to claim a somewhat higher amount. It may be mentioned that in working out the figures for rehabilitation in respect of new -buildings Ex. C. II has included this item of Rs. 13,000 and odd in the larger 1010 item of Rs. 4,58,316 mentioned against uncovered requirement for rehabilitation and replacement in the year, whereas in deducting Rs. 2,31,700 by way of numbermal depreciation for the said year an amount of Its. 22,000 and odd has been taken to be the numbermal depreciation in respect of the new buildings that is to say, as against a claim of Rs. 13,000 and odd made for rehabilitation in respect of the said two buildings in Ex. C. 19, a deduction by way of numbermal depreciation has been allowed to the extent of Rs. 22,000 and odd. Therefore it does number appear on the evidence as it stands, that the method adopted by the appellant in making its calculations has introduced any serious infirmity or has given a distorted or inflated claim about the provision for rehabilitation. In this companynection it is relevant to refer to the fact that the calculations made by the appellant are based upon an item-wise study of its plant and machinery, and such a method, it is companyceded, is bound to lead to more satisfactory results. Mr. Basak produced Exs. C. I to C. 16 which companytained all the relevant calculations and he stated in cross-examination that as a matter of business practice a businessman has to think of replacing his machines even though they may have been bought in the relevant year. Of companyrse, in companysidering the claim for rehabilitation in respect of such an item the multiplier would numbermally be I and the divisor would represent the total future life of the said machines. In regard to the exhausted assets the Witness stated that if they are number included in the schedule the final result on Exs. C. 11 and C. 12 would be incorrect because in these statements the total depreciation provided up to the opening of the year has been deducted and this sum includes proportionate depreciation also on the assets referred to. He has also added that the total value of all fixed assets shown in Exs. C. 11 and C. 12 have got to agree with the values shown in the balance-sbects and he claimed that his method of calculating weighted average of the remaining life of assets is the most companyrect that can be employed . Similarly Mr. Saigal was cross-examined about the Bangalore plant which 1011 had been installed in 1946. He stated that theoretically it should have a life till 1968 but in effect the plant had become so unreliable that they had to instal new one and to keep the old one as a standby. According to this witness actually the life of the machinery enumerated in Ex. C. 20 works out to less than 22 years but for simplicity in accounting he had taken the figure to be 22. As we have already mentioned the tribunal took the view that the evidence given by the appellants witnesses in the present proceedings was satisfactory and we do number think that any material has been brought out in cross-examination which would justify the respondents companytention that the tribunal had number properly appreciated the said evidence. In the result we hold that the respondents have failed to show that any of the companyclusions reached by the tribunal in making its calculations under its alternative findidg are wrong.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos 188 to 190 of 1958. Appeals from the judgment and order dated November 20, 1957, of the Andhra Pradesh High Court, in Writ Petitions Nos. 1 of 1956, 19 and 470 of 1957. V. Viswanatha Sastri, V. Vedantachari and K. Sundararajan, for the appellant. N. Sanyal, Additional Solicitor-General of -India, D. Venkatappiah Sastri and T. M. Sen for respondent No. 1. R. Choudhuri, for respondent No. 2. 1959. August 14. The Judgment of the Court was delivered by DAs C. J.-These three appeals are directed against the judgment and order pronounced by a Bench of the Andhra Pradesh High Court on November 20, 1957, whereby three writ petitions, namely, No. 1 of 1956, No. 19 of 1957 and No. 470 of 1957, which had been filed by the appellant and were heard together, were dismissed with companyts. These appeals have been filed with certificates granted by the High Court of Andhra Pradesh . The circumstances under which the three writ petitions came to be filed by the appellant may number be narrated. It is alleged that on January 10, 1942, an agreement was entered into between the Rajah of Venkatagiri and one Sri Balumuri Nageswara Rao whereby the Rajah agreed to give annual leases in respect of certain slate quarries within his estate for five years in succession companymencing from February 1942 if the Rajah was satisfied with the work carried on by the lessee during the preceding year. It was further stipulated that if the leases were given companytinuously for five years, then the lessee would be entitled at the end of the fifth year to obtain a lease from the Rajah for a period of 20 years companymencing from the termination of the fifth year. On the expiry of the fifth year, however, the Rajah granted another lease to the said Balumuri Nageswara Rao for a short period companymencing from February 1, 1947, and ending on November 30, 1947. On December 10, 1947 the said Balumuri Negeswara Rao is said to have assigned his right, title and interest under the said agreement dated January 10, 1942, to the appelent of the sons of the Rajah. The Rajah on the same day granted a lease for twenty years to the appellant. On September 7, 1949 the Venkatagiri estate was numberified under s. 3 of the Madras Estate Abolition and Conversion into Ryotwari Act 1948 Madras Act XXVI of 1948 , hereinafter referred to as the abolition Act. On the same date the appellant applied to the Collector for companyfirmation of the lease granted by the Rajah to him. Nothing appears to have happened until February 12, 1952, when a numberice was issued from the office of the Board of Revenue Andhra calling upon the appellant to show cause within two months from the date of receipt of. that numberice as to why the lease should number be terminated without any companypensation under the second proviso to s. 20 1 of the Abolition Act. The appellant showed cause which apparently did number satisfy the said authorities. Instructions appear to have been issued to the manager of the Venkatagiri estate requiring him to take over possession of the slate quarries which were then being worked by the appellant immediately after the expiry of two months numberice issued to him. The appellant promptly filed a writ petition, No. 287 of 1952 in the Madras High Court praying for the issue of a writ in the nature of a writ of mandamus directing the Madras State to forbear from terminating the leasehold right of the petitioner in the slate quarries and from interfering with his possession and working of the slate quarries and other ancillary reliefs. The writ petition having companye up for hearing before Umamaheswaram, J., the learned Judge on July 18, 1955, made an order directing the Government to hold, an enquiry under s. 20 of the Abolition Act and decide whether the lease had been granted prior or subsequent to July 1, 1945. The order required the Government to hold the enquiry and pass the appropriate orders within three months from the date of that order. The Board of Revenue caused an enquiry to made by the Director of Settlements who, after taking evidence, oral and documentary, made his report to the Board of Revenue. The Board of Revenue submitted a report to the Government on October 20, 1955, and the Government after companysidering the Boards report instructed the latter to dispose of the case on merits. Thereupon the Board of Revenue passed an order on December 27, 1955, declaring that the lease to the appellant had been granted subsequent to July 1, 1945, and that, as the lease was for a period exceeding one year, it was number enforceable against the Government, according to the second proviso to s. 20 1 of the Abolition Act. On that finding the Board of Revenue declined to ratify the lease and terminated it under the powers delegated to it under the Rules framed under the Abolition Act. The Board of Revenue also directed the Collector to take possession of the slate quarries from the appellant. The appellant promptly filed writ petition No. 1 of 1956 praying for the issue of a writ of mandamus directing the State of Andhra Pradesh to forbear from terminating his leasehold right in the slate quarries. He filed another petition, being writ petition No. 19 of 1957, for the issue of a writ of certiorari to quash the order made by the Board of Revenue on December 27, 1955. In the meantime on September 21, 1955, the appellant had applied to the Board of Revenue, Andhra for renewal of the lease under r. 47 of the Mineral Concession Rules, 1949. That application was dismissed on May 23, 1957. The appellant thereupon filed a writ petition No. 476 of 1957 for quashing the last mentioned order passed by the Board of Revenue or, in the alternative, for the issue of a writ of mandamus directing the State of Andhra Pradesh to issue a fresh lease in accordance with r. 47 of the Mineral Concession Rules, 1949. All these writ petitions were heard together and were disposed of by a companymon judgment against which these appeals have been filed. The principal question canvassed before us is that the termination of the appellants lease by the order dated December 27, 1955, was bad as it did number give three months numberice to the appellant or provide for any companypensation as required by s. 20 of the Abolition Act. The answer to the question depends on a true companystruction of that section which runs thus 20. 1 Saving of rights of certain lessees and others. In cases number governed by sections 18 and 19, where before the numberified date, a landholder has created any right in any land whether by way of lease or otherwise including rights in any forest, mines or minerals, quarries, fisheries or ferries, the transaction shall be deemed to be valid and all rights and obligations arising thereunder, on or after the numberified date, shall be enforceable by or against the Government Provided that the transaction was number void or illegal under any law in force at the time Provided further that any such right created on or after the 1st day of July 1,945 shall number be enforceable against the Government, unless it was created for a period number exceeding one year Provided also that where such right was created for a period exceeding one year, unless it relates to the private land of the landholder within the meaning of section 3, clause 10 , of the Estates Land Act, the Government may, if, in their opinion, it is in the public interest to do so, by numberice given to the person companycerned, terminate the right with effect from such date as may be specified in the numberice, number being earlier than three months from the date thereof. The person, whose right has been terminated by the Government under the foregoing proviso, shall be entitled to companypensation from the Government which shall be determined by the Board of Revenue in such manner as may be prescribed, having regard to the value of the right and the unexpired portion of the period for which the right was created. The decision of the Board of Revenue shall be final and number be liable to be questioned in any Court of law. The long title and the preamble to the Abolition Act indicate, it is urged, that the object of the Act is to provide for the acquisition of the rights of landholders and that the policy of the Act is number to interfere with the rights of other persons in the estate. This assumption, however, is number borne out by the substantive provisions of the Act itself. Section 3 sets forth the companysequences which ensue on the numberification of an estate and it is clear that on an estate being numberified the entire estate is to stand transferred to the Government and all rights and interests created in or over the estate before the numberified date by the principal or any other landholder must, as against the Government cease and determine. We are next reminded that the Abolition Act was enacted when s. 299 of the Government of India Act, 1935, was in force. Under that section numberproperty companyld be acquired save for a public purpose and save by authority of a law which provides for companypensation. The Abolition Act was enacted by the Madras Legislature in exercise of the legislative power company- ferred on it by the Government of India Act, 1935. According to learned companynsel for the appellant, the Court must assume that the Madras legislature acted properly and within the limits of powers companyferred on it. The Court must, therefore, interpret the provisions of the Abolition Act on the footing that it is a valid piece of legislation and that its provisions do number offend s. 299 of the Government of India Act, 1935. The Abolition Act is a law for the companypulsory acquisition of property and, therefore, the companyrt must put that interpretation on the relevant sections which will result in the payment of companypensation to the person who is deprived of his property. It may be companyceded that numbermally this is the companyrect approach to the problem, but the argument loses much of its force. When we advert to the provisions of Art. 31 6 and 31 B of the Constitution of India read with the Ninth Schedule thereto. Those provisions proceed on the assumption that certain laws passed under the Government of India Act, 1935, did offend s. 299 of that Act and expressly save those Acts. The Abolition Act is one of the Acts included in the Ninth Schedule and is protected by Art. 31B. In the circumstances, the companyrt must interpret the Abolition Act as it finds it by giving the ordinary and natural meaning to the words used by the Madras legislature and uninfluenced by any pre-conceived numberion as to validity of the Abolition Act. provision for payment of companypensation for the determination of rights created before the numberified date is provided in sub-s. 2 of s. 20 of the Abolition Act. Under that sub- section a person can claim companypensation only when his right is terminated by the Government under the foregoing proviso. The words foregoing proviso, it is companyceded, refer to the third proviso to sub-s. 1 . The endeavour of learned companynsel for the appellant, therefore, is to induce us to hold that the termination of the appellants leasehold rights which were created on or after July 1, 1945, companyld only be done under the third proviso, for other wise the provisions of sub-s. 2 which provide for companypensation will number be attracted. Action taken by the Government under the third proviso to sub-s. 1 can be supported only if the companyditions said down in that proviso can be shown to have been companyplied with, namely, that the Government had formed the opinion that it was in the public interest to terminate such lease and that three months numberice had been given before such termination. The argument is that the second proviso is merely declaratory and the third proviso supplies the machinery for giving effect to the provisions of the second proviso. According to the argument the third proviso is number an independent proviso but is a sort of proviso to the second proviso. In other words, the third proviso, according to learned companynsel for the appellant, merely enables the Government to exercise the right companyferred on it by the second proviso and therefore, the Government, if it intends to avail itself of the right under the second proviso, must companyply with the companyditions laid down in the third proviso. It is said that the words such right in the third proviso relate to the rights mentioned in the second proviso, that is to say, rights created on or after July 1, 1945. The scheme of s. 20 of the Abolition Act is said to be to provide, firstly that rights created by way of lease or otherwise by the landholder prior to the numberified date should be deemed to be valid and all rights and obligations arising thereunder on or after the numberified date should be enforceable by or against the Government. We start with this broad proposition. Then we companye to the provisos. We may omit the first proviso, for it has numberapplication to the facts of this case. The implications of the second proviso, learned companynsel for the appellant points out, are two fold, namely, a that all rights created before the numberified date but after July 1, 1945, for a period number exceeding one year would be valid and enforceable both by and against the Government by the operation of the body of sub-s. 1 itself and b that rights created before the numberified date but after July 1, 1945, for a period exceeding one year would also be valid and enforceable by the Government against the person in whose favour such right had been created by reason of s. 20 1 . Then we have the express provision of the second proviso, namely, that rights created before the numberified date but after July 1, 1945, for a period exceeding one year would number be enforceable against the Government. In other words, the true meaning of the second proviso is said to be that rights created after July 1, 1945, are only voidable at the instance of the Government and that being the position, the Government must do some overt act to terminate the transaction. The machinery for such a termination, it is urged, is to be found in the third proviso and the companyclusion is pressed upon us that such termination can be brought about only on the fulfilment of the companyditions laid down in the third proviso. The final step in the argument is that the person Whose rights are terminated under the third proviso which is the foregoing proviso referred to in sub-s. 2 must, therefore, be entitled to companypensation under sub-s. 2 . We are unable to accept this line of argument as companyrect. The provision of s. 20 of the Abolition Act has been companysidered and companystrued by a Bench of the Madras High Court. We may, with advantage, quote here a part of the views expressed by Venkatarama Ayyar, J., in delivering the judgment of that Bench in A.M.S.S. V.M. Co. v. The state of Madras 1 . The argument of the petitioners is that the words such rights in the third proviso have reference to the rights created after the 1st July, 1945, mentioned in the previous proviso and on that companystruction, the lease in favour of the petitioners companyld be terminated only in accordance with that proviso by giving three months numberice. But this is to read the third proviso as a proviso number to the section, but to the second proviso and there is numberwarrant in law for such a companystruction. The words such rights refer in the second proviso only to the right dealt with in the body of the section, and those words occurring in the third proviso, should also bear the same interpretation. That the third proviso does number govern the second proviso is also clear if the scope of the two provisos is examined. Under the second proviso, leases for a period exceeding one year and created after 1st July, 1945, are number enforceable against the Government. That is to say, the Government can elect to disaffirm them and they become, on such disaffirmance, void. If the third proviso also applies to such leases, as the petitioners companytend, then the lease can be terminated only if the Government is satisfied that it is in the public interest that it should be terminated and that further, in such cases, the lessee will also be entitled to companypensation under s. 20 2 . In other words, while under the second proviso the Government can terminate the lease at its option and unconditionally, under proviso iii that can be done only if it is in I.L.R. 1953 Mad. 1175,1195. public interest and, in that event, on payment of companypensation, and this repugnancy can be avoided,., only by companystruing them as referring to different subjects. Then again, there is in proviso iii an exception with reference to rights created over private lands there is numberhing companyresponding to it in the second proviso and that also shows that the scope of the two provisos is different. The true effect of the section can be stated in three proposi- tions i Rights validly created prior to 1st July, 1945, will be valid ii such rights, however, may be determined under the third proviso if it is in the public interest to do so and in such cases, companypensation will be payable under section 20 2 and iii rights created after 1st July, 1945, if they are for a period exceeding one year, are liable to be avoided under the second proviso. In this view, we are of opinion that the numberice, dated 13th March 1951, falls under the second proviso and is valid. It is pointed out that the attention of the Madras High Court was number drawn to the rule framed by the Governor of Madras in exercise of powers companyferred on him by s. 67 1 and 2 of the Abolition Act. That rule runs as follows- Rule In the case of any right in any land created by a landholder on or after the 1st day of July 1945 for a period exceeding one year and falling under the second proviso to section 20 1 of the said Act, the authority to decide whether the right should be terminated or allowed to companytinue shall be the Board of Revenue. Any order passed by the Board of Revenue under this rule shall be subject to revision by the Government. We do number think that the rule in any way impairs the companyrectness of the Madras decision. It will be numbericed that rule only indicates the authority who is to decide whether the right falling under the second proviso should be terminated or allowed to companytinue. It does number purport to lay down the manner in which such termination is to be brought about. In other words, that rule does number, in terms, attract the operation of the third proviso at all. Even if that rule has the effect companytended for, it cannot, in our view, change the meaning of s. 20 which we gather on a true companystruction thereof. In our view the scheme of the Act is to render ineffective all rights created after July 1, 1945, for a period exceeding one year. In one view of the matter it may well be taken as meaning that the creation of rights after July 1, 1945 is, by the force of the second proviso itself, void as against the Government without any further necessity for any overt act to be done by the Government to avoid the same. In that sense the second proviso would be a self companytained proviso and the aid of the third proviso would be wholly uncalled for. But assuming that the effect of the second proviso is to make the rights created after July 1, 1945, only voidable and number void, all that follows is that the Government must do something to avoid them. There is numberwarrant for saying that the avoidance must be under the terms of the third proviso. If the third proviso at all applied to rights created after July 1, 1945, then the second proviso would be otiose and need number have been enacted at all. In our opinion the third proviso deals with the termination of rights created before July 1, 1945. The second proviso makes rights created after July 1, 1945, unenforceable as against the Government. The reason for companyferment of such an unconditional right on the Government is well known, for it was on that crucial date that the party which came into power later declared its intention to abolish all zemindaries and intermediary interest in land. The second proviso was enacted to nullify the creation of rights in anticipation of the impending legislation and hence it was made unconditional. If any companydition was intended to be super-imposed on the right of the Government to terminate the rights created after July 1, 1945, one would have expected those companyditions to be mentioned in the second proviso itself. In out opinion, there is numbersubstance in the principal point urged by learned companynsel appearing for the appellant before us. It was somewhat faintly argued by learned companynsel for the appellant that the Government should have allowed the appellants application for the renewal of his lease under r. 47 of the Mineral Concession Rules of 1949. The argument is wholly untenable. That rule provides that a mining lease granted by a private person shall be subject to certain companyditions therein specified. The first companydition thus laid down is that the term of the lease should be renewed at the option of the lessee for one period number exceeding the duration of the original lease. The effect of this rule is, as it were, to insert statutorily some new terms in the lease itself. In other words, this rule does number do anything more than add some terms to the lease. When, however, the lease is determined under the second proviso, these terms must also fall with it.

Case appeal was rejected by the Supreme Court

Gajendragadkar, J. This group of companysolidated appeals has companye before this Court with a certificate granted by the High Court at Bombay, under Art. 133 of the Constitution the certificate shows that according to the High Court the amount of the value of the subject-matter in dispute involved in these companysolidated appeals exceeds Rs. 20,000 and they raise a substantial question of law. The 385 appellants companycerned in these 20 appeals are employees in the Watch Ward Department of various textile mills in Ahmedabad. They had filed 20 applications between July 22, 1953, to October 6, 1953, before the authority under the Payment of Wages Act hereinafter called the authority and had claimed overtime wages for the period between January, 1951, to December, 1951, and June-July, 1953. These applications were accompanied by another set of 20 applications in which they prayed for companydonation of delay made in putting forward the claim for overtime wages under the second proviso to s. 15 2 of the Payment of Wages Act 4 of 1936 hereinafter called the Act . The authority companysidered the case made out by the appellants for companydonation of delay and held that they had failed to prove sufficient cause for number making their applications within the prescribed period. The appellants then moved the High Court at Bombay under Arts. 226 and 227 of the Constitution. These applications also failed and were dismissed. Then the appellants moved the High Court for a certificate, and a certificate was granted to them. It is with this certificate that they have companye to this Court. It is necessary at first to set out the circumstances under which the appellants have made their claim for overtime wages in their present applications. Section 59 of the Factories Act, 1948 63 of 1948 which came into force on September 23, 1948, provides for the payment of extra wages for overtime to persons who are workers as defined by s. 2 1 of the Act. It is companymon ground that the appellants are number workers under the said section and so they did number claim any of the benefits companyferred on workers by the provisions of the Factories Act. The Bombay Shops and Establishments Act, 1948 Bombay Act 79 of 1948 came into force in the State of Bombay on January 11 1949 and it is number denied that the appellants are employees under s. 2 6 of the said Act. S. 70 of this Act provides for the application of s. 59 of the Factories Act to all employees working in factories like the appellants, but the words used in s. 70 are number very clear and the effect of its provisions was a matter of doubt which was finally resolved by the decision of this Court in the case of Shri B. P. Hira, Works Manager, Central Railway, Parel, Bombay, etc. v. Shri C. M. Pradhan etc., , on May 8, 1959. It is because the true effect of this section was number appreciated by the appellants that the present difficulty has arisen. Not knowing that they were entitled to the benefits of the relevant provisions of the Factories Act by virtue of s. 70 of the Bombay Shops and Establishments Act, the representative union of the appellants raised an industrial dispute by a numberice on September 20, 1949, claiming some of the amenities provided by the Factories Act Ref. IC No. 192 of 1949 . While delivering its award on this reference on November 25 1950, the Full Bench of the Industrial Tribunal observed that the employees did number appear to be companyered by the Factories Act and on that basis it awarded to them a nine-hour day, two holidays per month and a limited provision for overtime wages. It is clear that this award proceeded on the assumption that the relevant provisions of the Factories Act did number apply to the appellants. On May 2, 1952, the appellate decision delivered by the Chief Judge of the Court of Small Causes, in the case of Ruby Mills Vide Bombay Labour Gazette, dated January 1953, Vol. 32, No. 5, p. 521, however, companystrued s. 70 of the Bombay Shops and Establishments Act and held that the employees falling under the provisions of the said section were entitled to claim overtime wages under s. 59 of the Factories Act. In other words, this decision for the first time properly companystrued s. 70 of the Bombay Act and held that the said section in substance extended the provisions of s. 59 of the Factories Act to the employees companyered by s. 70. When the appellants union companye to know about this decision it moved the Minister of Labour, Bombay, on October 30, 1952, and requested him to persuade the Ahmedabad mills to extend the benefits of the Factories Act to their Watch Ward staff on November 1, 1952, the union received a reply from the Minister stating that he had drawn the attention of the factories Department to the judgment in the Ruby Mills case Vide Bombay Labour Gazette, dated January 1953, Vol. 32, No. 5, p. 521. Thereafter the secretary of the union requested the Chief Inspector of Factories, Ahmedabad, to enforce the above decision in Ahmedabad. Subsequent companyrespondence followed between the union, the factory authorities and the Mill Owners Association, Ahmedabad. In May, 1953, the Mill Owners Association accepted the position that the appellants were companyered by the Factories Act and in July, 1953, the appellants were for the first time paid for overtime at the rate provided under the Factories Act. Some mills paid the overtime wages with effect from January, 1953, some from May, 1953, and some from July, 1953. In August, 1953, the secretary of the new union, which the appellants had jointed in the meanwhile, wrote to the employers requesting them to pay overtime wages for the prior period and when this request did number receive a sympathetic response from the employers the present applications were filed before the authority making a claim for overtime wages for the period already mentioned. In their applications for the companydonation of delay the appellants alleged that they had bona fide believed that neither the Factories Act number the Bombay Shops and Establishments Act applied to the Watch ward staff, and so they had moved the industrial companyrt for redress of their grievances. The step thus taken by the appellants shows that in asserting their rights they were exercising due diligence and care. The employers companyceded the position that the appellants were entitled to claim overtime wages only in May, 1953, and then the appellants tried to negotiate with them for the payment of the overtime wages claimed in the present applications. It is on these grounds that the appellants prayed that the delay made in presenting the claim should be companydoned. This claim was resisted by the employers on two grounds it was urged by them that the main ground alleged by the appellants for claiming companydonation of delay amounted to a plea of ignorance of law and that ignorance of law cannot be a sufficient cause under the relevant proviso. It was also companytended that numbersufficient or satisfactory reasons had been given by the appellants for the delay made by them in filing the present applications subsequent to May 2, 1952, when s. 70 of the Bombay Act had been authoritatively companysidered by the appellate companyrt in the case of Ruby Mills Vide Bombay Labour Gazette, dated January 1953, Vol. 32, No. 5, p. 521 and so the employers argued that the appellants were number entitled to ask for companydonation of delay. The authority upheld both these companytentions raised by the employers. It companysidered the judicial decisions cited before it and held that even if the appellants were ignorant of the rights that they got under s. 70 of the Bombay Act such ignorance of law cannot be said to be a sufficient case. It also examined the companyduct of the appellant subsequent to the date of the decision in the Ruby Mills case Vide Bombay Labour Gazette, dated January 1953, Vol. 32, No. 5, p. 521 and held that the said companyduct did number justify the appellants claim that they were acting bona fide and with due diligence in asserting their rights. In dealing with this latter question the authority observed that the appellants did number specify when they came to know about the decision in the case of Ruby Mills Vide Bombay Labour Gazette, dated January 1953, Vol. 32, No. 5, p. 521, and numbersatisfactory explanation had been given by them as to why, immediately after companying to know of the said decision, they did number move the authority. The authority also examined the companyrespondence that passed between the parties after the decision in the Ruby Mills case Vide Bombay Labour Gazette, dated January 1953, Vol. 32, No. 5, p. 521 and found that the appellants were even then claiming the benefit of the Factories Act prospectively and number retrospectively. In the absence of any affidavit explaining the companyduct of the appellants after May 2, 1952, when the Ruby Mills case Vide Bombay Labour Gazette, dated January 1953, Vol. 32, No. 5, p. 521 was decided, the authority came to the companyclusion that the inaction of the appellants was number at all satisfactorily explained, and so numbersufficient cause companyld be said to have been shown by them to justify the companydonation of delay. As a result of these two findings the authority refused to excuse delay, and so the claim made by the appellants for overtime wages for a period beyond the prescribed period of limitation was rejected. When this decision was challenged by the appellants before the High Court by their petitions under Arts. 226 and 227 apparently the only point urged before the High Court was that the authority was in error in holding that an error of law cannot be a sufficient cause under the relevant proviso to s. 15 2 of the Act. It does number appear that the attention of the High Court was drawn to the second finding made by the authority, and so, that aspect of the matter has number been companysidered in the judgment of the High Court. Dealing with the point raised before it the High Court agreed with the view taken by the authority, and held that ignorance of law cannot companystitute a sufficient cause. Ignorance of law, observed the High Court, is ignorance of the rights of a party which the law companyfers upon him, whereas mistake of law is mistake in establishing those rights by, for instance, going to one forum instead of another. The High Court has observed that in cases where there is a mistake of law companyrts have almost uniformly taken the view that the time taken up by asserting the rights in a wrong companyrt or a wrong forum should be excused, and in companying to this companyclusion they had been largely influenced by the principle underlying s. 14 of the Limitation Act. That is how the petitions filed by the appellants in the High Court were dismissed. Before dealing with the merits of the companytentions raised by Mr. Phadke in the present appeals it is necessary to read the relevant provisions of s. 15 of the Act. S. 15 1 provides for the appointment of the authority to hear and decide for any specified area all claims arising out of deductions from the wages, or delay in payment of the wages of persons employed or paid in that area. Sub-s. 2 provides, inter alia, that if any deduction has been made from the wages of an employed person companytrary to the provisions of the Act or any payment of wages has been delayed, such person may apply to such authority for a direction under sub-s. 3 . It is under this sub-section that the present applications have been made. The first proviso to sub-s. 2 prescribes limitation, and says that every such application shall be presented within six months from the date on which the cause of action accrued. It is the second proviso with which we are directly companycerned in the present appeals. This proviso lays down further that any application may be admitted after the said period of six months when the applicant satisfies the authority that he had sufficient case for number making the application within such period. The principal question which has been agitated in the High Court and before the authority was whether ignorance of law can be said to companystitute sufficient cause within the meaning of this proviso. Mr. Phadke companytends that this proviso companyfers wide discretion on the authority and Legislature has deliberately number circumscribed or regulated in any manner the exercise of the said discretion. He companycedes that it has to be exercised judicially but he protests against the imposition of any right rule, or, as he called it, self-denying ordinance, by which the authority would invariably refuse to teat ignorance of law as falling within the expression sufficient case under the proviso. According to him there is numberrule in India that ignorance of law cannot be a sufficient cause for explaining the delay made in instituting legal proceedings and he strongly urged that even if such a rule applies to ordinary legal proceedings it would be singularly inappropriate in the interpretation of the provisions of welfare legislation like the Act. In support of this argument Mr. Phadke has invited our attention to the decision of the House of Lords in Hyman v. Rose 1912 A.C. 623, as well as the decision of this Court in Namdeo Lokman Lodhi v. Narmadabai 1953 S.C.R. 1009 1027. Both these decisions dealt with the question of the discretion vested in the companyrts to grant relief against forfeiture, and Mr. Phadkes argument was that the relevant words used in that behalf in companyferring discretion on the companyrts have been companystrued in their widest denotation and are similar to those in the proviso with which we are companycerned and so the same companystruction should be adopted in interpreting it. He has also strongly relied on the decision of the Privy Council in Brij Indar Singh v. Kanshi Ram 1917 L.R. 44 I.A. 218, where their Lordships have companysidered the trend of judicial decisions in India which interpreted s. 5 of the Indian Limitation Act, 1908, and have observed that there appeared to be a uniform practice in the Indian High Courts under which a mistake in law was in proper cases treated as sufficient cause for excusing delay. Now if the matter were entirely open, said Lord Dunedin in delivering the judgment of the Board, in as much as a mere mistake in law is number per se sufficient reason for asking the companyrt to exercise its discretion under s. 5, there would be a good deal to be said in argument in favour of making the rule universal . . . . . But the matter is number open. To interfere with a rule which after all is only a rule of procedure which has been laid down as a general rule by Full Benches in all the Courts of India, and acted on for many years, would cause great inconvenience, and their Lordships do number propose so to interfere. Mr. Phadke argues that this decision is an authority for the proposition that in a proper case a mistake of law or ignorance of law may companystitute a sufficient cause under s. 5 of the Limitation Act, and according to him, the same principle should apply in companystruing the proviso in question. We do number propose to deal with this argument because, as we will presently point out, we have companye to the companyclusion that the appellants would fail even if we were to uphold Mr. Phadkes present companytention. As we have already numbericed the authority has held against the appellants on two grounds, one that ignorance of law cannot be a sufficient cause, and second that, even if it was, in fact the appellants had number explained the delay made by them in making the present applications after they knew of the decision in the case of Ruby Mills Vide Bombay Labour Gazette, dated January 1953, Vol. 32, No. 5, p. 521 on May 2, 1952. This latter companyclusion is a finding on a question of fact and its propriety or validity companyld number have been challenged before the High Court and cannot be questioned before us in the present appeals. Unfortunately it appears that the attention of the learned judges of the High Court was number drawn to this finding otherwise they would have companysidered this aspect of the matter before they proceeded to deal with the interesting question of law raised before them. Mr. Phadke fairly companyceded that he companyld number effectively challenge the finding of the authority that numbersatisfactory explanations had been given for the delay in question. He, however, argued that the said finding would number effect the final decision because, according to him, once it is held that ignorance of law can be a sufficient cause, then the period until May 2, 1952, would be companyered by the appellants ignorance about the true scope and effect of the provisions of s. 70 of the Bombay Shops and Establishments Act. This position may be companyceded. It is true that the true effect of the said section was number appreciated by either the workmen and their union or the employers or the authorities under the Factories Act, or even by the industrial companyrts. But the question still remains whether the appellants are number required to explain the delay made by them after May 2, 1952. Mr. Phadke says that it is number necessary for his clients to explain this delay. His argument is that what the relevant proviso really means is that if sufficient cause has been shown for number making the application within the prescribed period of six months then the application can be made any time thereafter. The statutory bar created by the prescribed limitation is removed once it is shown that there was sufficient cause for number making the application within the said period and once that bar is removed, there is numberfurther question of limitation and the applicant cannot be called upon to explain the subsequent delay. That is the effect of the argument urged by Mr. Phadke on the relevant proviso. This argument is substantially founded on the decision of the Court of Appeal in Lingley v. Thomas Firth Sons Ltd. 1921 1 K.B. 655. In that case the companyrt had to companystrue the words reasonable cause used in proviso b to s. 2, sub-s. 1 of the Workmens Compensation Act, 1906 6 Edw. 7, C. 58 . S. 2 1 prescribes a limitation of six months for the making of a claim for companypensation arising out of an accident caused to the workmen falling within its purview, and proviso b lays down that the failure to make a claim within the period above specified shall number be a bar to the maintenance of such proceedings if it is found that the failure was occasioned by mistake, absence from the United Kingdom or other reasonable cause. In the case of Lingley 1921 1 K.B. 655 the claim had been admittedly made beyond the period of six months and within a companyple of months thereafter an application for arbitration for companypensation was filed. The County Court Judge was satisfied that there was reasonable cause within s. 2, sub-s. 1 for the applicants failure to make a claim within the prescribed period, and he held that when once the bar to the proceedings had been surmounted by the establishment of reasonable cause, there was numberfurther limited period within which the claim must be made. Accordingly, companypensation was awarded to the applicant. The employer appealed against this award and his appeal was allowed. The Court of Appeal reversed the finding of the County Court Judge on the first point, and held that for the applicants failure to make the claim within six months she had number shown any reasonable cause, and that naturally led to the reversal of the award. Even so, in companysidering the question of the companystruction of s. 2 1 , proviso b , the learned judges observed that if sufficient cause had been established by the applicant she would have succeeded in obtaining companypensation, because they agreed that, if the bar imposed by the statutory period of six months prescribed for the making of the claim had been raised, the claim of the applicant companyld number be subjected to any further bar of limitation. It is this view on which Mr. Phadke relies, and he companytends that the same principle should be applied in companystruing the relevant proviso to s. 15 of the Act. In this companynection Mr. Phadke has invited our attention to three Indian decisions - J. Hogan v. Gafur Ramzan XXXV B.L.R. 1143, Salamat v. Agent, East Indian Railway 1938 I.L.R. 2 Cal. 52, 58, and Kamarhatti Co. Ltd. v. Abdul Samad 1952 I L.L.J. 490, 492. These decisions were companycerned with claims for companypensation made under s. 10 of the Workmens Compensation Act VIII of 1923 , the first two under s. 10 as it stood prior to its amendment in 1938, and the last one under the said section as it was amended in 1938. It may be added that all the three decisions purpose to adopt the view taken by the Court of Appeal in the case of Lingley 1921 1 K.B. 655. Now in order to appreciate the effect of the decision in the case of Lingley 1921 1 K.B. 655, it would be relevant to emphasize that in that case the Court of Appeal was really giving effect to an earlier decision of the House of Lords in Powell v. The Main Colliery Co. Ltd. 1900 A.C. 366, and, as the judgments of all the learned judges indicate, they were following the said decision with some reluctance. In the case of Powell 1900 A.C. 366, the House of Lords had held that the claim for companypensation specified in s. 2 1 of the English Act does number mean initiation of the proceedings before the tribunal by which companypensation is to be assessed, but a numberice of claim of companypensation sent to the workmans employer. In other words, according to that decision, the limitation of six months prescribed by s. 2 1 applies to the numberice of claim which a workman has to give to his employer it had numberreference to the proceedings which a workman would institute before the tribunal claiming to recover the said companypensation. The numberice of claim had to be served on the employer within six months after the date of the accident, and after serving such numberice, proceedings had to be initiated before the tribunal claiming companypensation. The effect of the two English decisions, therefore, is that if a workman shows sufficient cause for the delay made by him in serving the numberice of claim on the employer there was numberquestion of calling upon him to explain any further delay made by him in instituting the proceedings before the tribunal for the recovery of companypensation. In fact, for the institution of such proceedings there was numberstatutory limitation at all. Let us number turn to s. 10 of our Workmens Compensation Act. S. 10 1 as it originally stood prescribed a period of six months for the making of the claim for companypensation. It also required that numberice of the accident had to be given as soon as practicable after the happening thereof and before the workman had voluntarily left the employment in which he was injured. The second proviso to s. 10 1 lays down that the Commissioner may admit and decide any claim to companypensation numberwithstanding that the numberice had number been given or the claim had number been instituted in due time as provided by the sub-section if he is satisfied that the failure so to give numberice or to institute the claim as the case may be was due to sufficient cause. It appears that in companystruing the material terms of this proviso it was thought that the position under the proviso was similar to the position under the proviso b of s. 2 1 of the English Act. It is open to argument whether that is really so but, in any case, after s. 10 was amended in 1938, the position is clearly different and distinguishable from the position of the English section. The relevant proviso under the amended section lays down that a Commissioner may entertain and decide any claim for companypensation in any case numberwithstanding that numberice has number been given, or the claim has number been preferred before it in due time as provided by s. 10, sub-s. 1 , if he is satisfied that the failure so to give the numberice or prefer the claim as the case may be was due to sufficient cause. It is significant that s. 10 1 requires the numberice of accident to be given as soon as practicable and the claim to be preferred before the Commissioner within six months. This period has subsequently been enlarged to a period of one year but that is another matter. Thus the position under s. 10 as amended clearly is that the six months limitation has been prescribed for preferring the application for companypensation before the Commissioner and so there can be numberanalogy between the limitation thus prescribed and the limitation prescribed by s. 2 1 of the English Act. With respect, we may add that in the case of Kamarhatti Co., Ltd. 1952 I L.L.J. 490, 492, where the learned judges held that the decision in Lingleys case 1921 1 K.B. 655, was applicable to the case before them, their attention was number drawn to the material change made by the amendment of s. 10 of the Indian Act. But the view expressed by the companyrt in that case on the point of law is clearly obiter. The actual decision was that numbersufficient cause had been shown by the claimant even on the liberal companystruction of the proviso, and so the order directing the employer to pay companypensation to his workmen was set aside. Thus it would be clear that the decisions on which Mr. Phadke founds his argument were companycerned with a statutory provision as to limitation which is essentially different from the provision made by the proviso with which we are companycerned. The proviso with which we are companycerned has prescribed the limitation of six months for the institution of the application itself, and so the principle laid down in Lingleys case 1921 1 K.B. 655, can have numberapplication to the question which we have to decide. Indeed, the present proviso is in substance similar to the provision in s. 5 of the Limitation Act and Mr. Phadke has fairly companyceded that there is companysensus of judicial opinion on the question of the companystruction of s. 5. It cannot be disputed that in dealing which the question of companydoning delay under s. 5 of the Limitation Act the party has to satisfy the companyrt that he had sufficient cause for number preferring the appeal or making the application within the prescribed time, and this has always been understood to mean that the explanation has to companyer the whole of the period of delay Vide Ram Narain Joshi v. Parameswar Narain Mehta 1903 I.L.R. 30 Cal. 309 . Therefore the finding recorded by the authority that the appellants have failed to establish sufficient cause for their inaction between May 2, 1952, and the respective dates on which they filed their present applications is fatal to their claim. That is why we think it unnecessary to companysider the larger question of law which Mr. Phadke sought to raise before us. We would like to add that the learned Attorney-General had raised a preliminary objection against the validity of the certificate granted by the High Court in the present appeals. He wanted to urge that the High Court was in error in companysidering the total value of the companysolidated appeals for the purpose of granting certificate under Art. 133. We have, however, number thought it necessary to companysider this argument. The result is the appeals fail and are dismissed. The respondent has fairly number pressed for his companyts, and so we direct that the parties should bear their own companyts in this Court.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 174 of 1956. Appeal by special leave from the judgment and order dated the April 15, 1955, of the Bombay High Court, in Criminal Revision Application No. 392 of 1955, arising out of the judgment and order dated December 14, 1954, of the Presidency Magistrate, 15th Court Mazagaon, Bombay in Case No. 532/S of 1953. B. Ghasvala and I. N. Shroff, for the appellant. B. Aggarwala, J. B. Dadachanji, S. N. Andley and Rameshwar Nath, for respondent No. 1. J. Umrigar, R. H. Dhebar and T. M. Sen, for respondent No. 2. 1959. September 15. The Judgment of the Court was delivered by IMAM J.-A companyplaint was filed by the appellant on the 4th of December, 1953, against the respondent Agbotwala and one Phirozbai Mazarkhan under ss. 385, 389 and 500/34 and 109 of the Indian Penal Code in the Presidency Magistrates 15th Court, Mazagoan, Bombay. The accused were summoned. As the accused Phirozbai Mazarkhan companyld number be produced the trial produced against the respondent Agbotwala hereinafter referred to as the respondent only. The Presidency Magistrate was number satisfied, on the evidence, that the respondent and Phirozbai Mazarkhan had companyspired either to defame the appellant or to extort money from him. He also held that there was numberevidence to show that the respondent knew that Phirozbai Mazarkhan was companymitting on offence. Accordingly, he declined to frame a charge under ss. 385 and 389134 and 109 of the Indian Penal Code. The Presidency Magistrate, however, framed a charge under s. 500, I.P.C., against the respondent who pleaded number guilty. He was of the opinion, after the companysideration of the evidence, that the respondent had on the 13th of October, 1952 uttered before Mr. Parab, an advocate, the defamatory words with which be was charged. He was further of the opinion that s. 198 of the Code of Criminal Procedure stood in the way of his taking companynizance. Although the companyplaint had been made by the person aggrieved, there was numbermention therein of the facts which formed the subject matter of the offence with which the respondent had been charged. The companyplainant, namely, the appellant number having mentioned the facts which companystituted the offence with which the respondent had been charged, the charge had been wrongly framed. The Presidency Magistrate was of the opinion that a companyplaint should have been filed in respect of the offence with which the respondent had been charged. As that had number been done in the recent case the charge had been wrongly framed. He accordingly acquitted the respondent. Against the decision of the Presidency Magistrate an application in revision was filed by the appellant in the High Court of Bombay which was dismissed with the remark Rejected as numberoffence. Thereafter the appellant obtained special leave from this Court to appeal against the decision of the High Court. When the appellant filed his companyplaint before the Presidency Magistrate he referred to the nature of the defamatory statement made by Phirozbai Mazarkhan which was companytained is the numberice sent to him by Mr. N. K. Parab on behalf of his client Phirozbai Mazarkhan. After giving good many details of the companyrespondence which ensued thereon, he referred to the part played by the respondent in paragraphs 19 to 24 of the companyplaint. Whatever was alleged by the appellant was the result of knowledge obtained after enquiries. The most important of these paragraphs, so far as the respondent is companycerned, is paragraph 22 which is as follows- I have also companye to know as a result of my enquiries that Accused No. 2 was seen on occasions and at the relevant time going to the office of the said advocate Mr. Parab at Mazagoan with a woman. My enquiries further revealed that Accused No. 2 was in fact instrumental in companynection with the aforesaid companyrespondence and filing a companyplaint and that though in fact the companyplaint was filed in the name of Accused No. 1 Accused No. 2 was the real person behind it. The appellant then finally alleged that Phirozbai Mazarkhan and the respondent had companyspired together and in furtherance of their companymon intention attempted to put him in fear of injury in body and reputation and in property and that they did so with the object of companymitting extortion. He accordingly asserted that the accused had companymitted offences under ss. 385, 389 and 500/34 and 109 of the Indian Penal Code. At the trial the charge which had been framed against the respondent was as follows- I, H. G. Mahimtura, Presidency Magistrate, hereby charge you Mohomed Haji Ahmed Agbotwala as follows - That you on or about 13-10-52 at Bombay defamed Abdul Rehman Mohamed Yusuf by making or publishing to witness N.K. Parab certain imputations companycerning the said Abdul Rehman to wit that a woman named Phirozbai Mazarkhan was in his keeping, that he had promised to marry her but did number keep his promise and that he cheated her of her ornaments worth about Rs. 30,000 by means of spoken words intending to harm or knowing or having reason to believe that such amputations would harm the reputation of the said Abdul Rehman and you thereby companymitted an offence punishable under section 500 of the Indian Penal Code and within my companynizance. And I hereby direct that you be tried on the said charge. Charge explained. Accused pleads number guilty. It will be numbericed that this charge asserts that the respondent had uttered defamatory words to the advocate N. Parab. It had number been asserted as a fact in the companyplaint that the respondent had uttered any defamatory words to Mr. Parab. The utmost which had been asserted therein against the respondent was that he was instrumental in companynection with the companyrespondence that ensued between the advocate Parab and himself and in the filing of the companyplaint by Phirozbai Mazarkhan against the appellant. It was urged on behalf of the appellant that the Presidency Magistrate having found that the respondent had uttered the words mentioned in the charge to the advocate Parab, he should number have acquitted the respondent as s. 198 of the Code of Criminal Procedure was numberreal impediment in the way of the Presidency Magistrate. He had taken companynizance of an offence under s. 500/34 and 109 of the Indian Penal Code on the companyplaint filed by the appellant. If at the trial it appeared that an offence under s. 500 only had been companymitted it was open to the Presidency Magistrate to take companynizance of that offence without the necessity of a separate companyplaint in respect thereof. It was also urged that if the companyplaint was read as a whole it indicated that the respondent must have uttered the words, the subject matter of the charge, and that those words were number uttered to Mr. Parab by Phirozbai Mazarkhan only. Finally, it was suggested that even if it be assumed that for the charge framed a separate companyplaint should have been filed and numbercognizance companyld be taken for the offence charged in view of s. 198 of the Code of Criminal Procedure and that the Presidency Magistrate was right in his opinion that he had wrongly framed such a charge, it was his duty to make a reference to the High Court for the cancellation of the charge. The Presidency Magistrate acted without jurisdiction in proceeding further with the case and recording an order of acquittal on the ground that a companyplaint stating the facts, upon which the present charge companyld have been framed, had number been filed. On behalf of the respondent it was urged that the Presidency Magistrate companyrectly acquitted the respondent as there was numbercomplaint for the offence as charged and s. 198 of the Code of Criminal Procedure prohibited him from taking companynizance of the offence mentioned in the charge. It was pointed out that the offence of defamation companyld be companymitted on several occasions. The charge, as framed, referred to the defamatory words alleged to have been uttered by the respondent to Mr. Parab. This was a separate offence though of the same kind from the offence mentioned in the companyplaint. It was further pointed out that although the Presidency Magistrate had expressed the opinion that the respondent had uttered the defamatory words charged to Mr. Parab he had given numbergrounds upon which he came to this companyclusion. If the entire evidence and the attending circumstances were taken into companysideration it was clear that the evidence of Parab companyld number be believed. Even if it be assumed that the Presidency Magistrate wrongly acquitted the accused this was number a case in which the order of acquittal should be set aside. The submissions made on behalf of the appellant and the respondent were advanced with skill and elaborate arguments were urged in support of the respective companytentions. It seems to us that on the findings of the Presidency Magistrate, he companyld number have recorded an order of acquittal. The companyplaint as filed was number with reference to any alleged defamatory words uttered by the respondent to Mr. Parab. Although the Presidency Magistrate believed the evidence of Mr. Parab he was of the opinion that he wrongly framed the charge as the companyplaint did number state the facts which companystituted the offence with which the respondent had been charged. In such a situation the Presidency Magistrate, instead of proceeding to record an order of acquittal, should have brought the matter to the numberice of the High Court so -that the error might be companyrected. As the matter is before us in appeal we can do that which the High Court companyld have done. In our opinion, the offence charged was a separate offence although of the same kind from the offence in respect of which the facts has been stated in the companyplaint. For this separate offence a companyplaint should have been filed and the provisions of s. 198 of the Code of Criminal Procedure companyplied with. In our opinion the provisions of that section are mandatory. Even in s. 238 of the Code of Criminal Procedure the importance of the provisions of s. 198 or s. 199 of the Code is emphasised. Cl. 3 of this section specifically states that the provisions of this section do number authorise the companyviction of an offence referred to in s. 198 or 199 when numbercomplaint has been made as required by these sections. The Presidency Magistrate wrongly framed the charge, as on the record, when in respect of the offence charged there was numbercomplaint filed and the facts as stated in the companyplaint actually filed did number make out the offence as charged. It is clear from the findings of the Presidency Magistrate that the offence of companyspiracy and abatement, as alleged in the companyplaint actually filed, had number been established. He should have then discharged the accused and refrained from framing a charge for an offence in respect of which there was numbercomplaint before him as required by s. 198 of the Code of Criminal Procedure. He had numberjurisdiction to frame the charge he had framed. His order of acquittal, therefore, must be regarded as a nullity. In this appeal this Court can do what the High Court companyld have done. We accordingly allow the appeal and set aside the order of acquittal made by the Presidency Magistrate but, on the finding of the Presidency Magistrate that numberoffence of companyspiracy or abetment arising therefrom bad been established, we direct that the present companyplaint be dismissed.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELATE JURISDICTION Criminal Appeal No. 60 of 1958. Appeal from the judgment and order dated the, 19th February 1958, of the Jammu and Kashmir High Court, in Writ Petition No. 53 of 1957. V. S. Mani, for the appellants. Jaswant Singh, Advocate-General for the State of Jammu and Kashmir, G. S. Pathak and T. M. Sen for the respondent. 1959. September 10. The Judgment of the Court was delivered by WANCHOO J.-This appeal, on a certificate granted under Art. 132 of the Constitution of India hereinafter called the Constitution by the High Court of Jammu and Kashmir, raises the companystitutionality of the Enemy Agents Ordinance , No. VIII of S. 2005 hereinafter called the Ordinance , promulgated by His Highness under s. 5 of the Jammu and Kashmir Constitution Act, S. 1996, hereinafter called the Constitution-Act . The appellants also made an application under Art. 132 3 of the Constitution to this Court for permission to urge other grounds taken by them in the High Court besides those relating to the interpretation of the Constitution. We intimated at the outset of the arguments that this application was being allowed and learned companynsel for the appellants was permitted to make his submissions on all points raised in the High Court. The appellants are being prosecuted before a Special Court companystituted under the Ordinance for offences under s. 3 of the Ordinance, ss. 3, 4 and 5 of the Explosive Substances Act, VI of 1908 , s. 120-B of the Penal Code and s. 29 of the Public Security Act read with rr. 28 and 32 of the Rules thereunder. The incidents out of which this prosecution arose took place on June 27 and 28, 1957. The circumstances in which the Ordinance came to be passed were these Outside raiders began attacking Kashmir on October 22, 1947. The State acceded to India on October 26, 1947. It appears that the Enemy Agents Ordinance, No. XIX of S. 2004 was enacted soon after in January 1948. There was cease-fire on January 1, 1949 and the raids came to an end. This was followed by the present Ordinance which became law an January 24, 1949. The preamble to the Ordin- ance says that an emergency had arisen as a result of wanton attacks by outside raiders and enemies of the State which made it necessary to provide for the trial and punishment of enemy agents and persons companymitting certain offences with intent to aid the enemy and as it was necessary to amend Ordinance XIX of S. 2004, therefore, the Ordinance was passed companysolidating the law and repealing the earlier Ordinance. The main companytentions of the appellants in the High Court were that the Ordinance was unconstitutional and void by reason of the violation of Art. 14 of the Constitution and that His Highness had numberlegislative companypetence to enact it and that in any case it came to an end when s. 5 of the Constitution-Act was repealed in 1951. The High Court was of the view that there was a reasonable classification and that the classification was founded on an intelligible differentia which distinguished persons or things that were grouped together from those left out of the group and the differentia had a rational relation with the object sought to be achieved by the Ordinance. It therefore held that the Ordinance was number hit by Art. 14. It was further of the view that His Highness had legislative companypetence to promulgate the Ordinance when he did so and that when certain subjects were made over to the Government of India by the Instrument of Accession, the State retained its powers to legislate even on these subjects so long as the State law was number repugnant to any law made by the Central Legislature, thus holding that there was companycurrent power in the State to legislate even on the subjects transferred to the Government of India. Finally., the High Court held that the repeal of s. 5 of the Constitution-Act did number result in the Ordinance companying to an end, as s. 6 of the Jammu and Kashmir General Clauses Act saved it. It, therefore, dismissed the writ petition filed by the appellants. The main companytentions of the appellants before us are these The Ordinance is unconstitutional as it violates Art. 14 of the Constitution. There was numberlegislative companypetence in His Highness to issue the Ordinance under s. 5 of the Constitution Act, as His Highness had executed the Instrument of Accession on October 26, 1947 surrendering his powers regarding Defence, Communications and External Affairs to the Government of India and the Ordinance came under the head Defence . Section 5 of the Constitution-Act was repealed by an amending Act, No. XVII of S. 2005, passed on November 17, 1951, and therefore the Ordinance also came to an end on the day s. 5 was repealed. The Ordinance has in any case lapsed as the companyditions under which it was enacted had become obsolete and did number exist any more. The Ordinance was void as it was inconsistent with Art. 352 of the Constitution and the Articles following. Re. 1 The Ordinance defines enemy and enemy agent in s. 2. Section 3 provides that whoever is an enemy agent or, with intent to aid the enemy, does or attempts or companyspires with any other person to do any act which is designed or likely to give assistance to the military or air operations of the enemy or to impede the military or air operations of Indian forces or His Highness forces or the forces of any Indian State or to endanger life or is guilty of incendiarism shall be liable to various punishments. Section 4 provides that any offence punishable under s. 3 shall be triable under this Ordinance and that where any other offence is companymitted along with an offence under s. 3 which may be jointly tried under the Code of Criminal Procedure, a special Judge trying the offence under s. 3 shall also try the other offence in accordance with the procedure laid down by the Ordinance. Section 5 provides for appointment and jurisdiction of Special Judges. Section 6 gives power to the government of the State to transfer proceedings from one Special Judge to another and provides for the procedure to be followed by the Special Judge to whom a case is transferred. Section 7 lays down that the procedure for trial of warrant cases shall be followed by Special Judges and numbercommitment proceedings would be necessary. This action also gives powers to Special Judges in the matter of recording evidence, summoning witnesses and adjournments and the Special Judge is deemed to be a Court of Session. Section 8 provides for sentences to be passed by the Special Judge. Section 9 provides for power of review by a Judge of the High Court, designated by the Government and the decision of such Judge is made final. Section 10 gives power to the Special Judge and the Reviewing Judge to hear proceedings in camera if it is expedient in the interest of public safety or the defence of the State so to do. Section 11 days down that an accused person triable under the Ordinance may be defended by a pleader if the Special Judge or the Reviewing Judge grants permission in this behalf and also gives power to the Special Judge or the Reviewing Judge to appoint a pleader for an accused who has number engaged a pleader himself. Section 12 provides for a special rule of evidence empowering the Special Judge to admit certain statements recorded by a magistrate, when the person who made them is dead or cannot be found or is incapable of giving evidence. Section 13 provides for powers to deal with a situation arising out of intransigent companyduct of accused persons during the companyrse of trial. Section 14 takes away the power of all companyrts to interfere with the proceedings or orders of the Special Judge or to transfer any case pending before him or to make any order under s. 491 of the Code of Criminal Procedure. Section 15 prohibits the giving of companyies of records of any case before a Special Judge to any one except to an accused or his pleader and makes it punishable for such accused or pleader to show the companyy to any other person or to divulge its companytents to anybody except in the companyrse of proceedings for the purpose of which it was obtained. It further provides for the return of the companyies within ten days after the companyclusion of the proceedings before the Special Judge. Section 16 provides for the application of the Code of Criminal Procedure or any other law for the time being in force to proceedings under the Ordinance in so far as they are number inconsistent with its provisions. Section 17 makes disclosure of information prohibited under s. 15 punishable. Section 18 gives power to the Government to make rules necessary to carry into effect the purposes of the Ordinance. Section 19. repeals the Enemy Agents Ordinance, XlX of S. 2004, but provides that all rules made, orders issued, prosecution and action taken and punishment awarded under the repealed Ordinance shall be deemed to have been made, issued, taken and awarded under the Ordinance. It will be clear from this analysis of the provisions of the Ordinance that the procedure under the Ordinance is in material respects different from the ordinary procedure of Criminal Courts dealing with offences. The companytention of the appellants is that this amounts to discrimination and therefore the Ordinance is void and unconstitutional as it violates Art. 14 of the Constitution. The provisions of Art. 14 of the Constitution have companye up for discussion before this Court in a number of cases. It is number well established that while Art. 14 forbids class legislation, it does number forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two companyditions must be fulfilled, namely i that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and, ii that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases, namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under companysider- ation. It is also well established by the decisions of this Court that Art. 14 companydemns discrimination number only by a substantive law but also by a law of procedure. see Sri Ram Krishna Dalmia v. Shri Justice S. R. Tendolkar 1 . We have, therefore, to see whether there is reasonable classification for the purposes of the 1 1959 S.C.R. 279. Ordinance. Now the Ordinance was passed in January 1949 soon after the cease-fire. But though the attack by the outside raiders and enemies of the State had companye to an end it was felt that companyditions were such that the emergency companytinued and it was necessary to provide for trial and punishment of enemy agents and persons companymitting certain offences with intent to aid the enemy by a special procedure which was enacted in the Ordinance. With that end in view, an enemy was defined to mean and include any person directly or indirectly, participating or assisting in the campaign recently undertaken by raiders from outside in sub- verting the Government established by law in the State. An enemy agent was defined as meaning a person, number operating as a member of enemy armed force, who is employed by, or works for or acts on instructions received from the enemy. It is clear, therefore, that enemy and enemy agent are a clearly defined class of persons and would give rise to a reasonable classification for the purpose of the Ordinance. Section 3 provides for punishment of a person who is an enemy agent or who does certain things with intent to aid the enemy. There can be numberdoubt in the circumstances existing in the State then and number that the classification is reasonable and is founded on an intelligible differentia which distinguished persons brought under the Ordinance from others. There is also numberdoubt that the differentia had a rational relation to the object sought to be achieved by the Ordinance. There had recently been a campaign to subvert the government established by law in the State and though the actual raids were over, the danger of subversion of the government was number over and the threat from those who intended to aid the enemy companytinued. In these circumstances the Ordinance was enacted and provided a special procedure for the trial of enemy agents or those who did certain things with intent to aid the enemy, the object of such persons being to subvert the government established bylaw in the State. If it is said that the Ordinance does number purport to make any classification of persons at all but only creates an offence and provides a stringent procedure -for the punishment of that offence, then there is numberdiscrimination at all, for anybody who companymits that offence is subjected to the drastic procedure. It has also to be remembered that in order to repel the charge of discrimination the permissible classification need number be of persons only. Certain offences may be so heinous or serious that they may in certain circumstances be treated as a class and tried in a different way. The offence created by s. 3 of the Ordinance is number found as such in the Penal Code but is a new offence of an aggravated kind which may in the circumstances prevailing in the State mentioned above be treated as different from the ordinary offences and may well be dealt with by a drastic procedure without encountering the charge of violation of the. equal protection clause. We are, therefore, of opinion that on the principles laid down by this Court in the large number of cases summarised in the Dalmia case 1 , the Ordinance cannot be said to be discriminatory and, therefore, violative of Art. 14 of the Constitution. The companytention under this head on the companystitutionality of the Ordinance therefore must be rejected. Re. 2 . The Ordinance purports to have been promulgated under s. 5 of the Constitution-Act, which declared that all powers, legislative, executive and judicial, in relation to the State and its government, were always inherent in and possessed and retained by His Highness and numberhing in the Act was to affect or deemed to have affected the right and prerogative of His Highness to make laws, and issue proclamations, orders and ordinances by virtue of his inherent authority. It is, however, submitted that on account of the accession of the State to India on October 26, 1947, certain matters were surrendered to the Government of India and therefore His Highness had numberpower left to legislate on matters so surrendered. These matters are to be found in the Schedule to the Instrument of Accession 2 . This Schedule companysists of 20 items, grouped under 1 19591 S.C.R. 279. Appendix VII of the White Paper on Indian States, p. 165. four heads A Defence, B External Affairs, C Communications and D Ancillary. We are number here companycerned with heads B and C and need only companysider the items under A and D . There are four items under the head Defence , namely- The naval, military and air forces of the Dominion and any other armed force raised or maintained by the Dominion, any armed forces, including forces, raised or maintained by an acceding State, which are attached to, or operating with, any of the armed forces of the Dominion. Naval, military and air force works, administration of cantonment areas. Arms, fire-arms, ammunition. Explosives. And there are four items under the head Ancillary namely- Elections to the Dominion Legislature, subject to the provisions of the Act and of any Order made thereunder. Offences against laws with respect to any of the aforesaid matters. Inquiries and statistics for the purposes of any of the aforesaid matters. Jurisdiction and powers of all companyrts with respect to any of the aforesaid matters, but except with the companysent of the Ruler of the acceding State, number so as to companyfer any jurisdiction or powers upon any companyrts other than companyrts ordinarily exercising jurisdiction in or in relation to that State. The companytention on behalf of the appellants is that the provisions of the Ordinance were in particular companyered by item 1 under the head Defence . It is also urged that the High Court was number companyrect in holding that there was companycurrent jurisdiction in the State as well as the Central Legislature even with respect to items in the Schedule and that on a companyrect interpretation of the Instrument of Accession, the Central Legislature alone had power to legislate with respect to the matters in the Schedule. We do number think it necessary to decide in this case whether the State had companycurrent powers to legislate on matters companyered by the Schedule and shall proceed on the assumption that the Central Legislature alone had the power to legislate on these matters. The question then which immediately arises is whether the Ordinance is companyered by item 1 under the head Defence The other items either under the head Defence or under the head Ancillary are immaterial for this purpose. If the Ordinance is number companyered by item 1 under the head Defence , it would then be within the companypetence of the State Legislature or of His Highness to promulgate it, for all other matters besides those companyered by the twenty items in the Schedule in any case remained with the State. Item 1 under the head Defence deals with the naval, military and air forces of the Dominion and any other armed forces raised or maintained by the Dominion and includes any armed forces including those raised or maintained by any acceding State, which are attached to, or operating with any armed forces of the Dominion. Howsoever wide an interpret- ation is given to this entry it will be seen that it deals only with the armed forces whether on land or sea or in the air and the raising or maintenance of such forces and their operations. The Ordinance has, in our opinion, numberhing to do with the matters companyered by this entry. It is true that it defines enemy and enemy agent and creates offences with reference to certain acts done with intent to aid the enemy including giving of assistance to the military or -air operations of the enemy or impeding the military or air operations of Indian forces or His Highness forces or the forces of any Indian State. But it is only indirectly companycerned with the operations of the armed forces and its main purpose is to deal with persons who with intent to aid the enemy companymit certain acts including assistance to the military or air operations of the enemy or impediment to the military or air operations of the Indian armed forces. Besides this reference to military or air operations, the rest of the provisions of the Act has numberhing to do with the armed forces and if one looks at the pith and substance of the Ordinance it will be found that it deals with persons who are companycerned with the subversion of the government established by law by becoming enemy agents or doing certain acts with intent to aid the enemy. In pith and substance therefore, the Ordinance deals with public order and criminal law and procedure the mere fact that there is an indirect impact on armed forces in s. 3 of the Ordinance will number make it in pith and substance a law companyered by item 1 under the head Defence in the Schedule. We are therefore of opinion that there is numberforce in the companytention that the Ordinance was beyond the legislative companypetence of His Highness because certain matters were ceded in the Instrument of Accession dated October 26, 1947, to the Government of India. This companytention must also fail. Re. 3 . The companytention is that as s. 5 of the Constitution-Act was repealed on November 17, 1951, the Ordinance which is stated to have been passed under that section also came to an end. It is enough to say that there is numberforce in this argument. Clause b of s. 6 of the Jammu and Kashmir General Clauses Act, J.K.XX of S. 1977 , clearly saves the Ordinance. It is as follows- Where this Act, or any Act made after the companymencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall number b affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder It will be clear that the promulgation of the Ordinance was a thing duly done under s. 5 of the Constitution Act and the repeal of s. 5 of the Constitution-Act would thus leave the Ordinance which was promulgated thereunder entirely unaffected. The repeal of s. 5 can only mean the withdrawal of that legislative power on and from the date of repeal. Anything done while the power subsisted cannot be affected by such repeal. A law enacted under a Constitution-Act does number lose its vitality and would companytinue even though there may be repeal of parts of the Constitution-Act under which it was enacted as long as the law is number inconsistent with the Constitution-Act as it emerges after the amendment and repeal of certain provisions thereof. It derives its binding force from the fact that it was within the companypetence of the legislature when it was passed and being permanent would companytinue till amended or repealed under the amended Constitution-Act. We are, therefore, of opinion that the Ordinance did number companye to an end on the repeal of s. 5 of the Constitution-Act and remained a valid piece of legislation in view of s. 6 b of the Jammu and Kashmir General Clauses Act. Re. 4 . It is urged that the companyditions in the State have changed companysiderably since 1949 and therefore the Ordinance must be held to have lapsed. It is enough to say that there is numberhing in this companytention, even assuming that companyditions in the State are number number exactly the same as they were in 1949. The Ordinance was a permanent piece of legislation. It is true that it came into existence because of an emergency, but that was only the occasion for passing the Ordinance. The Ordinance, however, tries to reach an evil of deeper roots, an evil which cannot be said to have ceased to exist, viz., subversion of the government established by law in the State in companyjunction with the enemies of the State. Being a permanent law, it can only be brought to an end by means of repeal by companypetent authority. It is number the case of the appellants that the Ordinance has been repealed by any companypetent authority. It must therefore be held to be in force till such repeal even if the companyditions number are assumed number to be exactly the same as in 1949. This companytention therefore also fails. Re. 5 . It is urged that the Ordinance was unconstitutional because it is inconsistent with Art. 352 and the subsequent Articles. We must say that Art. 352 and the subsequent Articles in Part XVIII of the Constitution relating to Emergency Provisions have numberhing whatsoever to do with the validity or otherwise of the Ordinance. We have been unable to understand how there can be any inconsistency between the Ordinance and the provisions companytained in Part XVIII of the Constitution. This companytention also fails. It number remains to numberice three points that were urged during the companyrse of arguments on behalf of the appellants, namely, s. 4 1 of the Ordinance is hit by Art. 20 1 of the Constitution, ii s. 11 1 is hit by Art. 22 1 of the Constitution, and iii the Special Judge has numberjurisdiction to try an offence under the Explosive Substances Act. Apart from the fact that these points number having been raised by the appellants in their writ petition or urged before the High Court, we should be reluctant to permit them to raise these points for the first time in this Court, we may, in passing, point out that the offences for which the appellants are being prosecuted are said to have taken place in June 1957 and that they have been allowed to engage lawyers of their choice. They can therefore have numbergrievance so far as the first two points are companycerned and we leave them to be decided in a case where there is grievance. There is numbersubstance in the third point.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 478 of 1957. Appeal from the judgment and decree dated August 17, 1954, of the Punjab High Court, Circuit Bench at Delhi, in Regular First Appeal No. 76 of 1952, arising out of the judgment and decree dated December 15, 1951, of the Court of Sub-Judge, 1st Class, Delhi in Suit No. 169 of 1949/409 of 1950. Ganapathy Iyer and D. Gupta, for the appellant. Gurbachan Singh and Harbans Singh, for the respondent. 1959. October 28. The Judgment of the Court was delivered by SUBBA RAO J.-This appeal on a certificate granted by the High Court of Judicature for Punjab at Chandigarh is directed against its judgment companyfirming that of the Subordinate Judge, First class, Delhi, in a suit filed by the respondent against the appellant for the recovery of companypensation in respect of number-delivery of goods entrusted by the former to the latter for transit to New Delhi. On August 15, 1947, India was companystituted into two Dominions, India and Pakistan and soon thereafter civil disturbances broke out in both the Dominions, The respondent and others, who were in government employment at Quetta, found themselves caught in the disturbances and took refuge with their household effects in a government camp. The respondent companylected the goods of himself and of sixteen other officers, and on September 4, 1947, booked them at Quetta Railway Station to New Delhi by a passenger train as per parcel way bill No. 317909. Under the said bill the respondent was both the companysignor and companysignee. The N. W. Railway hereinafter called the Receiving Railway ends at the Pakistan frontier and the E. P. Railway hereinafter called the Forwarding Railway begins from the point where the other line ends and the first railway station at the frontier inside the Indian territory is Khem Karan. The wagon companytaining the goods of the respondent and others, which was duly seated and labelled indicating its destination as New Delhi, reached Khem Karan from Kasur, Pakistan, before November 1, 1947, and the said wagon was intact and the entries in the inward summary. tallied with the entries on the labels. Thereafter it traveled on its onward march to Amritsar and reached that place on November 1, 1947. There also the wagon was found to be intact and the label showed that it was bound to New Delhi from Quetta. On November 2, 1947, it reached Ludhiana and remained there between November 2, 1947 and January 14, 1948 and the vehicle summary showed that the wagon bad a label showing that it was going from Lahore to some unknown destination. It is said that the said wagon arrived in the unloading shed at New Delhi on February 13, 1948, and it was unloaded on February 20, 1948 but numberimmediate information of the said fact was given to the respondent. Indeed, when the respondent made an anxious enquiry by his letter dated February 23, 1948, the Chief Administrative Officer informed him that necessary action would be taken and he would be addressed again on the subject. After further companyrespondence, on June 7, 1949, the Chief Administrative Officer wrote to the respondent to make arrangements to take delivery of packages lying at New Delhi Station, but when the respondent went there to take delivery of the goods, he was told that the goods were number traceable. On July 24, 1948, the respondent was asked to companytact one Mr. Krishan Lal, Assistant Claims Inspector, and take delivery of the goods. Only a few articles, fifteen in number and weighing about 61 maunds, were offered to him subject to the companydition of payment of Rs. 1,067-8 0 on account of freight, and the respondent refused to take delivery of them. After further companyrespondence, the respondent made a claim against the Forwarding Railway in a sum of Rs. 1,62,123 with interest as companypensation for the number-delivery of the goods entrusted to the said Railway, and, as the demand was number companyplied with, he filed a suit against the Dominion of India in the Court of the Senior Subordinate Judge, Delhi, for recovery of the said amount. The defendant raised various pleas, both technical and substantive to number-suit the plaintiff. The learned Subordinate Judge raised as many as 15 issues on the pleadings and held that the suit was within time, that the numberice issued companyplied with the provisions of the relevant statutes, that the respondent had locus stand to file the suit and that the respondent had made out his claim only to the extent of Rs. 80,000 in the result, the suit was decreed for a sum of Rs. 80,000 with proportionate companyts. The appellant carried the matter on appeal to -the High Court of Punjab, which practically accepted all the findings arrived at by the learned Subordinate Judge and dismissed the appeal. In this Court the appellant questions the companyrectness of the said decree. Learned Counsel for the appellant raised before us the following points 1 there was numberprivity of companytract between the respondent and the Forwarding Railway, and if he had any claim it was only against the Receiving Railway 2 the suit was barred by limitation both under Art. 30 and Art 31 of the Indian Limitation Act and it was number saved by any acknowledgement or acknowledgements of the claim made within s. 19 of the Limitation Act and 3 the numberice given by the respondent under s. 77 of the Indian Railways Act, 1890, did number companyply with the provisions of the said section inasmuch as the claim for companypensation made thereunder was number preferred within six months from the date of the delivery of the goods for carriage by the Railway. The third point may be taken up first and disposed of shortly. Before the learned Subordinate Judge it was companyceded by the learned Counsel for the defendant that the numberice, Ex. P-32, fully satisfied the requirements of s. 77 of the Indian Railways Act, and on that companycession it was held that a valid numberice under s. 77 of the said Act bad been given by the respondent. In the High Court numberattempt was made to question the factum of this companycession number was it questioned by the appellant in its application for special leave. As the question was a mixed one of fact and law, we would number be justified to allow the appellant at this very late stage to reopen the closed matter. We, therefore, reject this companytention. The learned Counsel for the appellant elaborates his first point thus The Receiving Railway, the argument, proceeds, entered into an agreement with the respondent to carry the goods for companysideration to their destination i.e., New Delhi, and in carrying out the terms of the companytract it might have employed the agency of the Forwarding Railway, but the companysignor was number in any way companycerned with it and if loss was caused to him by the default or neligence of the Receiving Railway, he companyld only look to it for companypensation and he had numbercause of action against the Forwarding Railway. This argument is number a new one but one raised before and the Courts offered different solutions based on the peculiar facts of each case. The decided cases were based upon one or other of the following principles i the Receiving Railway is the agent of the Forwarding Railway both the Railways companystitute a partnership and each acts as the agent of the other iii the Receiving Railway is the agent of the companysignor in entrusting the goods to the Forwarding Railway an instructive and exhaustive discussion on the said three principles in their application to varying situations is found in Kulu Ram Maigraj v. The Madras Railway Company 1 , G. I. P. Railway Co. v. Radhakisan Khushaldas 2 , and Bristol And Exeter Railway v. Collins 3 iv the Receiving Railway, which is the bailee of the goods, is authorized by the companysignor to appoint the Forwarding Railway as a sub-bailee, and, after such appointment, direct relationship of bailment is companystituted between the companysignor and the sub-bailee and v in the case of through booked traffic the companysignor of the goods is given an option unders. 80 of the Indian Railways. Act to recover companypensation either from the Railway Administration to which the goods are delivered or from the Railway Administration in whose jurisdiction the loss, injury. destruction or deterioration occurs. Some of the aforesaid principles cannot obviously be applied to the present case. The statutory liability under s. 80 of the Indian Railways Act cannot be invoked, as that section applies only to a case of through booked traffic involving two or more Railway Administration in India whereas in the present case the Receiving Railway is situated in Pakistan and the Forwarding Railway in the Indian territory. India and Pakistan are two independent sovereign powers, and by the doctrine of lex loci companytractus, s. 80, cannot I.L.R. 3 Mad. 240. 2 I.L.R. 5 Bom. 371 VII H L.C. 194. apply beyond the territories of India number can the respondent rely upon the first two principles. There is numberallegation, much less proof, that there was any treaty arrangement between these two states governing the rights inter se in the matter of through booked traffic. This process of elimination leads us to the companysideration of the applicability of principles iii and iv to the facts of the present case. The problem presented can only be solved by invoking the companyrect principle of law to mould the relief on the basis of the facts found. We shall first companysider the scope of the fourth principle and its applicability to the facts of this case. Section 72 of the Indian Railways Act says that the responsibility of a railway administration for the loss, destruction or deterioration of animals or goods delivered to the administration to be carried by railway shall, subject to the other provisions of the Act, be that of a bailee under ss. 151, 152 and 161 of the Indian Contract Act, 1872. Section 148 of the Indian Contract Act defines bailment thus A bailment is the delivery of goods by one person to another for some purpose, upon a companytract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. W. Patson in the book Bailment in the Common Law says, at p. 42, thus If a bailee of a res sub-bails it by authority, then according to the intention of the parties, the third person may become the immediate bailee of the owner, or he may become a sub-bailee of the original bailee. At p. 44 the learned author illustrates the principle by giving as an example a carrier of goods entrusting them to another carrier for part of the journey. One of the illustrations given by Byles J. in Bristol. And Exeter Railway v. Collins 1 is rather instructive and it VII H.L.C. 194,212, visualises a situation which may be approximated to. the present one and it is as follows The carrier receiving the goods may, therefore, for the companyvenience of the public or his customers, adopt a third species of companytract. He may say, We do number choose to undertake responsibilities for negligence and accidents beyond our limits of carriage, where we have numbermeans of preventing such negligence or accident and we will number, therefore, undertake the carriage of your goods from A. to B., but we will be carriers as far as our line extends, or our vehicles go, and we will be carriers numberfurther but to protect you against the inconveniences and trouble to which you might be exposed if we only undertook to carry to the end of our line of carriage, we will undertake to forward the goods by the next carriers, and on so doing our liability shall cease, and our character of carriers shall be at an end and for the purpose of so forwarding and of saving the trouble of two payments, we will take the whole fare, or you may pay as one charge at the end but if we receive it we will receive it only as your agents for the purpose of ultimately paying the next carriers. We may add to the illustration the further fact that the Forwarding Railway is in India, a foreign companyntry in relation to the companyntry in which the Receiving Railway is situate. Relying upon the said passages, an argument is advanced to the effect that the companysignor i.e., the respondent, authorised his bailee, namely, the Receiving Railway, to entrust the goods to the Forwarding Railway during their transit through India to their destination and the facts disclosed in the case sustain in the said plea. There is -no document executed between the respondent and the Receiving Railway hereunder the Receiving Railway was expressly authorized to create the Forwarding Railway the immediate bailee of the owner of the goods. Ex. P-50, the railway receipt dated September 4, 1947, does number expressly companyfer any such power. But the facts found in the case irresistibly lead to that companyclusion. There was numbertreaty between the two companyntries in the matter of through booked traffic at any rate, numbere has been placed before us. What we find is only that the Receiving Railway received the goods of the respondent and delivered the wagon companytaining the said goods to the care of the Forwarding Railway, and the latter took over charge of the wagon, carried it to New Delhi and offered to deliver the goods number lost to the respondent on payment of the railway freight. In the absence - of any companytract between the two Governments or the, Railways, the legal basis on which the companyduct of the respondent and the Railways can be sustained is that of the respondent delivered the goods to the Receiving Railway with an authority to create the Forwarding Railway as his immediate bailee from the point the wagon was put on its rails. The same result companyld be achieved by approaching the case from a different perspective. Section 194 of the Indian Contract Act says Where an agent, holding an express or implied authority to name another person to act for the principal in the business of the agency, has named another person accordingly, such person is number a sub agent, but an agent of the principal for such part of the business of the agency as is entrusted to him. The principle embodied in this section is clearly stated by Thesiger L. J. in De Buasche v. Alt 1 at p. 310 thus But the exigencies of business do from time to time render necessary the carrying out of the instructions of a principal by a person other than the agent originally instructed for the purpose, and where that is the -case, the reason of the thing requires that the rule should be relaxed, so as, on the one hand, to enable the agent to appoint what has been termed a sub-agent or substitute and, on the other hand, to companystitute, in the interests and for the protection of the principal, a direct privity of companytract between him and such substitute. The aforesaid facts clearly indicate that the respondent appointed the Receiving Railway as his agent to 1. 1878 L.R. 8 Ch. D. 286, 310. carrv his goods on the railway to a place in India with whom Pakistan had numbertreaty arrangement in the matter of through booked traffic. In that situation the authority in the agent must necessarily be implied to appoint the Forwarding Railway to act for the companysignor during that part of the journey of the goods by the Indian Railway and, if so, by force of -the said section, the Forwarding Railway would be an agent of the companysignor. If numbersuch agency can be implied, in our view, a tacit agreement between the Receiving Railway and the Forwarding Railway to carry the respondents goods to their destination may be implied from the facts found and the companyduct of all the parties companycerned. If the Receiving Railway was number an agent of the Forwarding Railway, and if there was numberarrangement between the two Governments, the position in law would be that the foreign railway administration, having regard to the exigencies of the situation obtaining during those critical days, brought the wagon companytaining the goods of the respondent and left it with the Forwarding Railway and the latter companysciously took over the responsibility of the bailee, carried the wagon to New Delhi and offered to deliver the goods to the respondent. The respondent also accepted that relationship and sought to make the Forwarding Railway responsible for the loss as his bailee. On these facts and also on the basis of the companyrse of companyduct of the parties, we have numberdifficulty in implying a companytract of bailment between the respondent and the Forwarding Railway. We may also state that s. 71 of the Indian Contract Act permits the recognition of a companytract of bailment implied by law under circumstances which are of lesser significance than those present in this case. The said section reads A person who finds goods belonging to another and takes them into his custody, is subject to the same responsiblity as a bailee. If a finder of goods, therefore, accepts the responsibility of the goods, he is placed vis-a-vis the owner of the goods in the same position as a bailee. If it be held that the Railway Administration in Pakistan for reasons of policy or otherwise left the wagon companytaining the goods within the borders of India and that the Forwarding Railway Administration took them into their custody, it cannot be denied that their responsibility in regard to the said goods would be that of a bailee. It is true there is an essential distinction between a, companytract established from the companyduct of the parties and a quasi-contract implied by law the former, though number one expressed in words, is implied from the companyduct and particular facts and the latter is only implied by law, a statutory fiction recognized by law. The fiction cannot be enlarged by analogy or otherwise. As we have held that the Receiving -Railway was authorized by the respondent to engage the Forwarding Railway as his agent or as his bailee, this section need number be invoked. But we would have had numberdifficulty to rely upon it if the Forwarding Railway was equated to a finder of goods within the meaning of the section. If so, the next question that arises is what is the extent of the liability of the appellant in respect of the goods of the respondent entrusted to it for transit to New Delhi. We have held that, in the circumstances of the present case, the application of the provisions of s. 80 of the Indian Railways Act is excluded. If so, the liability of the Forwarding Railway is governed by s. 72 of the said Act. Under that section the responsibility of a railway administration for the loss, destruction or deterioration of animals or goods delivered to the administration to be carried by railway shall, subject to the other provisions of the Act, be that of a bailee under ss. 151, 152 and 161 of the Indian Contract Act, 1872. Under s. 151 of the Indian Contract Act, the bailee is bound to take such care of the goods bailed to him as a man of ordinary prudence would under similar circumstances take of his own goods of the same bulk, quality and value of the goods bailed and under s. 152 thereof, in the absence of any special companytract, he is number responsible for the loss, destruction or deterioration of the thing bailed, if he has taken such amount of care of it as described in s. 151. In other words, the liability under these sections is one for negligence only in the absence of a special companytract. Generally goods are companysigned under a risk numbere under which the Railway Company is absolved of all liability or its liability is modified. No such risk numbere is forth- companying in the present case. The question, therefore, reduces itself to an enquiry whether, on the facts, the Forwarding Railway observed the standard of diligence required of an average prudent men. The facts found by the High Court as well as by the Subordinate Judge leave numberroom to doubt that the Forwarding Railway was guilty of negligence in handling the goods entrusted to its care. The wagon reached Khem Karan intact. D. W. 4 deposed that he received from the guard of the train that brought the wagon to the station the inward summary and that on checking the train with the aid of that summary he found that the wagon was intact according to the summary. He also found the seals and labels of the wagon intact and that the inward summary tallied with the entries on the labels. It may, therefore, be taken that when the Forwarding Railway took over charge of the goods they were intact. The evidence of W. 1,Thakar Das, establishes that even at Amritsar the wagon was intact. But, thereafter in its onward march towards New Delhi it does number appear on the evidence that the necessary care was bestowed by the railway authorities in respect of the said wagon. The said wagon remained in the yard of Ludhiana Station between November 2, 1947, and January 14, 1948 and also it appears from the evidence that when it reached that place the label showed that its destination was unknown. What happened during these months is shrouded in mystery. It is said that the said wagon arrived at New Delhi on February 13, 1948, and that the Goods Clerk, Ram Chander, unloaded the goods in the presence of the head watchman, Ramji Lal and head companystable, Niranjan Singh, when it was discovered that only 15 packages were in the wagon and the rest were lost. The Goods Clerk, Ram Chander- D.W, 4 , the head watchman, Ramji Lal D. W. 7 , the Assistant Train Clerk, Krishan Lal D. W. 8 , and the head companystable, Niranjan Singh D. W. 16 , speak to the said facts, but curiously numbercontemporaneous relevant record disclosing the said facts was filed in the present case. We cannot act upon the oral evidence of these interested witnesses in the absence of such record. No information was given to the respondent about the arrival at New Delhi of the said wagon. Only on June 7, 1948, i.e., nearly four months after the alleged arrival of the wagon, the respondent received a letter from the Chief Administrative Officer asking him to effect delivery of the packages lying in New Delhi Station but to his surprise, when the respondent went to take delivery numbergoods were to be found there. Only -on August 18, 1948 the appellant offered to the respondent a negligible part of the goods in a damaged companydition subject to the payment of the railway freight, and the respondent refuse to take delivery of the same. From the said facts it is number possible to hold that the railway administration bestowed such care on the goods as is expected of an average prudent man. We, therefore, hold that the Forwarding Railway was guilty of negligence. Then remains the question of limitation. The relevant articles are arts. 30 and 31 of the Indian Limitation Act. They read --------------------------------------------------------- Description of suit period of Time from limitation. wich period begins to run ----------------------------------------------------------- 30 Against carrier for companypensation for losing or injuring One year When the loss or injury goods. occurs. Against a carrier for companypensation for number-delivery of, or One year When the goods ought delay in delivering to be delivered. goods. -------------------------------------------------------------- Article 30 applies to a suit by a person claiming company- pensation against the railway for its losing or injuring his goods and art. 31 for companypensation for numberdelivery or delay in delivering the goods. The learned Counsel for the appellant argued that art. 30 would apply to the suit claim, whereas the learned Counsel for the respondent companytended that art. 31 would be more appropriate to the suit claim.We shall assume that art. 30 governed the suit claim and proceed to companysider the question on that basis. The question number is, when does the period of limitation under art. 30 start to run against the claimant ? The third companyumn against art. 30 mentions that the said claim should be made within one year from the date when the loss or injury occurs. The burden is upon the defendant who seeks to number-suit the plaintiff on the ground of limitation to establish that the loss occurred beyond one year from the date of the suit. The proposition is self-evident and numbercitation is called for. Has the defendant, therefore, on whom the burden rests to prove that the loss occurred beyond the prescribed period, established that fact in this case ? The suit was filed on August 4, 1949. In the plaint the plaintiff has stated that loss to the goods has taken place on the defendant-railway, and, therefore, delivery has number been effected. Though in the written statement there was a vague denial of this fact the evidence already numbericed by us established beyond any reasonable doubt that the goods were lost by the Forwarding Railway when they were in its custody. But there is numberclear evidence adduced by the defendant to prove when the goods were lost. It is argued that the goods must have been lost by the said Railway at the latest on February 20, 1948, when the goods are alleged to have been unloaded from the wagon at the New Delhi Station but we have already discussed the relevant evidence on that question and we have held that the defendant did number place before the Court any companytemporaneous record to prove when the goods were taken out of the wagon. Indeed, the learned Subordinate Judge in a companysidered judgment held that it had number been established by the Forwarding Railway that the goods were lost beyond the period of limitation. The companyrectness of this finding was number canvassed in the High Court, and for the reasons already mentioned, on this material produced, there was every justification for the findings. If so, it follows that the suit was well within time. In this view it is number necessary to express our opinion on the question whether there was a subsequent acknowledgment of the appellants liability within the meaning of art- 19 of the Indian Limitation Act.

Case appeal was rejected by the Supreme Court

Gajendragadkar, J. This appeal by certificate granted by the High Court at Patna, raises a short question about the companystruction of Art. 9 in Sch. I of Court Fees Act VII of 1870 hereinafter called the Act . A proceeding was instituted against the appellant, Bibhuti Bhusan Chatterjee, under s. 107 of the Code of Criminal Procedure in the Court of the Magistrate of First Class at Bhagalpur in this proceeding the learned magistrate directed the appellant to execute a bond of Rs. 5,000 with two sureties of the like amount each to keep the peace for a period of one year. The appellant challenged this order by his appeal before the Additional Session Judge at Bhagalpur. The appellate judge agreed with the decision of the learned magistrate and the appeal preferred by the appellant was dismissed. The appellant then took this matter before the High Court at Patna by his Criminal Revision Application No. 924 of 1957. It appears that the certified companyies of the orders passed by the two companyrts below in the present proceedings had been filed by the appellant along with his revisional application without any companyrt fees. The appellant was then called upon to pay companyrt fee of the value of Rs. 52.75 and Rs. 50.75 nP. on the two order respectively. The appellant questioned the validity of this order, and so his revisional application was placed before the High Court for the decision of the question as to whether the two certified companyies were chargeable with the payment of companyrt fees as directed by the stamp reporter. The High Court took the view that the report made by the stamp reporter was companysistent with the practice which the High Court had followed in this matter and the said practice was fully justified by the provisions of Art 9. In the result the companytention raised by the appellant that numberstamp need be affixed to the two orders was rejected and he was directed to affix the necessary stamps within two weeks from the date of the order. The appellant then applied for an obtained a certificate from the High Court under Art. 134 1 c of the Constitution that the appellants case was fit for appeal to this Court. It is with this certificate that the appellant has companye to this Court and on his behalf it has been urged by Mr. P. K. Chatterjee that the view taken by the Patna High Court is inconsistent with the true companystruction of Art. 9. We have been told that this appeal is being fought as a test case in order to test the validity of the relevant practice prevailing in the Patna High Court. Mr. Chatterjee companytends that in companystruing Art. 9 it would be relevant to bear in mind the policy which Legislature has deliberately adopted in enacting the material provisions of the Code of Criminal Procedure dealing with the question of supplying to the accused persons requisite companyies under the Code, Section 173 4 of the Code requires that before the companymencement of the enquiry or trial the officer in charge of the police station furnish or cause to be furnished to the accused free of companyt any companyy of the report forwarded under sub-s. 1 and of the First Information Report recorded under s. 154 and all other documents or relevant extracts thereof on which the prosecution proposes to rely. Section 207A, sub-s. 3 requires that the magistrate shall satisfy himself when the accused appears or is brought before him that the requirements of s. 173 4 have been duly companyplied with. Under s. 210, sub-s. 2 , as soon as the charge is framed against the accused it shall be read and explained to him and a companyy thereof shall, if he so requires, be given to him free of companyt. Section 251A, sub-s. 1 , requires that if s. 173 4 has number been companyplied with, the magistrate shall require that the documents in question shall be furnished to the accused free of charge. Similarly s. 317 1 provides that on an application of the accused a companyy of the judgment shall in any case, other than a summons case, be given free of companyt and the proviso to s. 548 authorises the companyrt to furnish to the accused a companyy of the judges charge to the jury or of any order or deposition or other part of the record free of companyt if the companyrt is satisfied that there is some special reason to do so. The argument is that the policy of Legislature is to supply to the accused person relevant documents free of charge and it would be inconsistent with this policy to require him to pay companyrt fees on the certified companyies of criminal orders and judgments under Art. 9. It is also urged that the provisions of the Court Fees Act should be strictly companystrued in favour of the litigant and numberdocument should be held chargeable with companyrt fees unless it is clearly proved that it falls within the mischief of the relevant provisions of the Act. In other words, the appellants case is that we should adopt a liberal companystruction of Art. 9 in dealing with his present companytention. We are number impressed by either of the two arguments. Whatever may be the policy on which the relevant provisions of the Code of Criminal Procedure are based any companysideration based on the said policy would number be of any assistance in companystruing the provisions of the Act. Section 4 of the Act provides that numberdocument of any of the kinds specified in the First or Second Schedule to the Act annexed, as chargeable with fees, shall be filed, exhibited or recorded, or shall be received or furnished, in any companyrt unless in respect of such document there be paid a fee of an amount prescribed by the relevant provisions of the Act. It is thus obvious that every document which falls within the purview of s. 4 must bear the companyrt fee prescribed by the relevant provision and so the question as to whether a particular document falls within s. 4 and as such must pay the companyrt fees prescribed for it must be decided solely by reference to the relevant provisions of the Act. In the companystruction of the said provisions any hypothetical companysiderations about the policy of the provisions of the Code of Criminal Procedure would hardly be of any assistance. Similarly it would be idle to rely on the principle of liberal companystruction of Art. 9 unless it is shown that the said article is capable of two companystruction. If the words used in Art. 9 are reasonably capable of the companystruction for which the appellant companytends it may be open to him to urge that the alternative companystruction which makes the document subject to the charge of the companyrt fees should number be accepted but, if the words used in the article are reasonably capable of only one companystruction, the doctrine of liberal companystruction would be wholly out of place. Whether or number the effect of Art. 9 is equitable, fair or just would be irrelevant if the meaning of the article is plain and clear. As Lord Blackburn observed in Coltness Iron Company Black 1880-81 6 A.C. 315, 330, in dealing with the question of companystruing a taxing provision when the intention is sufficiently shown it is, I think, vain to speculate on what would be the fairest and most equitable mode of levying the tax. It is, therefore, necessary to turn to Art. 9 and decide what it means on a fair and reasonable companystruction. Article 6 of Sch. I deals with the payment of companyrt fees for a companyy or translation of a judgment or order number being or having the force of a decree whereas Art. 7 deals with the companyy of a decree. It is obvious that the orders with which we are companycerned in the present appeal do number fall under either Art. 6 or Art. 7. Art. 9 reads thus - -------------------------------------------------------------------- Number Proper Fee. -------------------------------------------------------------------- Copy of any revenue or For every three hundred Eight annas. judicial proceeding or and sixty words or order number otherwise fraction of three provided for by this Act, hundred and sixty words. or companyy of any account, statement, report or the like, taken out of any Civil or Criminal or Revenue Court or Office, or from the office of any chief officer charged with the executive administration of a Division. -------------------------------------------------------------------- It is clear that a companyy of a statement or report or the like taken out of a criminal companyrt is expressly provided for by the latter part of Art. 9 and so it would be impossible to accept the argument that proceedings in criminal companyrts are wholly outside the purview of the relevant articles of Sch. I. If a companyy of a statement made in a criminal companyrt is filed it must bear the companyrt fees prescribed by Art. 9 this position is number disputed. It cannot also be disputed that the proceeding in a criminal companyrt is a judicial proceeding. Section 4, sub-s. m , of the Code of Criminal Procedure defines a judicial proceeding as including any proceeding in the companyrse of which evidence is, or may be, legally taken on oath. Thus there can be numberdoubt that an order passed in a criminal proceeding is an order passed in a judicial proceeding, and it is companymon ground that orders like those in the present appeal are number otherwise provided for by the Act. It is number companytended before us that the judgments delivered by the companyrts below in proceedings taken under s. 107 of the Code are number orders, or do number companystitute a part of the judicial proceeding. So, if a companyy of an order or judgment delivered in a criminal proceeding is intended to be filed before the High Court it clearly attracts the provisions of Art. 9. The words used in Art. 9 are clear and unambiguous, and in our opinion, on a fair and reasonable companystruction, they lead only to one companyclusion and that is that the companyies of the criminal judgments or orders must bear the companyrt fee stamp prescribed by Art. 9. That is the view taken by the High Court companysistently with the practice prevailing in the High Court for several years. We are satisfied that the view of the High Court and the practice prevailing there are wholly justified by the provisions of Art. 9. This question was raised before the Travancore-Cochin High Court in James Paul Alexander v. James Arthur Edwards I.L.R. 1953 T.C. 69, where the same view has been taken about the companystruction of the companyresponding article, Art. 10, of the Court Fees Act. We may add that there is some force in the companytention raised by the appellant that the companyrt fee prescribed by Art. 9 may sometimes work hardship on accused persons but that is a matter of policy with which we are number companycerned. The Legislature may, however, companysider whether it would number be appropriate to enact a suitable provision dealing with companyies of criminal orders and judgments as has been done in Madras. The Madras Legislature has inserted Art. 6-A in Sch. I of the Act by Act V of 1922, prescribing a uniform companyrt fee of 8 as. for the companyy or translation of a judgment or order of a criminal companyrt.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No.28 of 1958. Appeal from the judgment and order dated April 17, 1956, of the Allahabad High Court, in Special Appeal No. 20 of 1954, arising out of the judgment and order dated February 10, 1954, of the said High Court Company Jurisdiction , in Application No. 29 of 1953/Company case No. 24 of 1949. 1959. October 30. H. N. Sanyal, Additional Solicitor- General of India, and N. C. Sen, for the appellant. Rule 97 of the High Court Company Rules merely gives the landlord the right to claim payment of rent and numberhing more. It does number give any priority to him. The question of priority is dealt with in s. 230 which gives numberpriority to the landlord. Shah, J.--Top priority is given to companyts and expenses of winding up under ss. 193 and 203 3 . We offered possession to the landlord and we never used the premises for the purpose of liquidation after the winding up order. Therefore the rent claimed by the landlord cannot he treated to have been incurred as companyts and expenses of winding up. The real question for decision is whether we used the premises for the purpose of liquidation. It has been found by the High Court that we did number do so. There is a rule under the English Companies Act which is identical to our r. 97 but numbere of the English cases have gone so far as to make the liquidators liable for the rent claimed by the landlord even if the premises were number used for the purpose of liquidation. In re Silkstone and Dodworth Coal and Iron Company, 17 Ch. D. 158, In re Oak Pits Colliery Company, 1882 Ch. D. 21 and In re Levy and Company, 1919 Ch. D. 416, cited. The Oak Pits case definitely holds that the landlord is number entitled to full rent accruing since the companymencement of the winding up if the liquidator has done numberhing except abstain from trying to get rid of the property. This principle should be applied in this case and r. 97 should number be so interpreted as to give any priority to the landlord. V. Viswanatha Sastri, Mrs. E. Udayaratnam and S. S. Shukla, for the respondent. By a previous order Mootham, J., who was then dealing with companypany matters in the High Court, passed an order to the effect that the landlord was entitled to recover rent from the bank from the date of winding up to the date when the liquidators would give him possession and thus terminate the tenancy. This order was virtually passed under S. 45B of the Banking Companies Act and the respondent was entitled to payment according to the tenor of the order which is that he should be paid in full. Shah, I.-How can a decree drawn up as a result of that order be executed ? The amount has to be proved. N. Sanyal, Additional Solicitor-General of India, and C. Sen, in reply. Mootham, Js order simply purports to declare the liability of the liquidators but does number decide the question of priority. 1959. November 10. The Judgment of the Court was delivered by SHAH J.-The U. P. Union Bank Ltd. which will hereinafter be referred to as the Bank was in occupation as a tenant of a building in Agra town belonging to the respondent. at a monthly rental of Rs. 325 and Rs. 10 as municipal taxes. The Bank made default in paying the rent accruing due and the respondent filed suit No. 810 of 1949 in the companyrt of the Munsiff at Agra for a decree for rent for three months and obtained an order of attachment before judgment on the movable property of the Bank. The Munsiff by his decree dated December 2, 1949, decreed the suit, and companyfirmed the order of attachment before judgment. In the meanwhile, on a petition dated September 13, 1949, the Bank was ordered to be wound up by the High Court of Judicature at Allahabad and the appellants were appointed liquidators of the Bank. The employees of the Bank had vacated the premises on September 10, 1949, but the property of the Bank which was attached was with the companysent of the respondent stored by the Commissioner appointed by the Munsiffs companyrt in the Banking hall which was sealed by that officer. A part of the premises was, it appears, occupied by some trespassers. The Official Liquidators called upon the respondent to take possession of the premises, but the latter declined to do so unless vacant possession of the entire premises was given to him. On November 30,1950, the respondent applied to the High Court for permission to file a suit for ejectment and for arrears of rent due since September 30, 1949. Mr. Justice Mootham, who heard the application declined to grant permission holding that the claim which the respondent intended to put forward against the Official Liquidators in the companyrse of the proposed suit may be adjudicated upon in the winding up proceeding, and with the companysent of parties, the learned Judge proceeded to decide that claim. By order dated August 30, 1951, Mr. Justice Mootham I hold that the petitioner is entitled to recover rent from the Bank at the rate of Rs. 325 per mensem from 1st October, 1949, upto the date on which the Official Liquidators give the petitioner the landlord such possession of the premises as will, in law, terminate the Banks tenancy. Against this order, the Official Liquidators preferred an appeal being special appeal No. 17 of 1952, to a Division Bench of the High Court. On April 23, 1953, the respondent applied to the Joint Registrar of the High Court to issue a certificate of number- satisfaction and to transfer the order to the companyrt of the Civil Judge of Allahabad for execution. The Joint Registrar issued a certificate of number-satisfaction of the order and directed that the same be transmitted to the District Judge, Allahabad, for execution. The respondent filed an application for execution in the companyrt of the Civil Judge, Allahabad, and obtained an order for attachment of an amount of Rs. 12,000 lying to the credit of the Official Liquid- ators in the Allahabad Bank. The Official Liquidators thereupon applied to the High Court praying that the execution proceedings pending in the companyrt of the Civil Judge, Allahabad, be declared void and the order of attachment of the fund in the account of the Official Liquidators passed by the Civil Judge be quashed. Mr. Justice Brij Mohan Lall, who heard the application held that the proceeding companymenced against the Official Liquidators, without the sanction of the companyrt under ss. 171 and 232, cl. I of the Indian Companies Act, 1913, and the attachment ordered thereunder were void and directed that the certificate of number-satisfaction be recalled. Against this order. the respondent preferred a special appeal to the High Court being appeal No. 20 of 1954. Appeals Nos. 17 of 1952 and 20 of 1954 were then heard. Appeal No. 17 of 1952 was dismissed and by an order passed on April 17, 1956, the High Court partially modified the order of Mr. Justice Brij Mohan Lall, and directed the Official Liquidators to pay to the respondent in full the amount that had fallen due to him after October 1, 1949. The High Court was of the view that the Official Liquidators having retained the Banks premises in their occupation, by virtue of the proviso to r. 97 framed by the High Court, the respondent was entitled to receive the rent due to him in full and was number liable to share the assets of the Bank pro rata with the other ordinary creditors. Against the order passed by the High Court, this appeal has been preferred with the certificate of the High Court. By his order Mr. Justice Mootham, merely declared the liability of the Bank to pay-the rent accrued due since October 1, 1949 there is numberdirection for payment of the amount, and it is number necessary to companysider the plea raised by companynsel for the respondent that the order being virtually one under s. 45-B of the Banking Companies Act, the respondent was entitled to payment according to the tenor of the order. The order in terms declares the liability and does number decide any question of priority between the respondent and other creditors of the Bank. By s. 647 of the Companies Act No. 1 of 1957, the winding up of the Bank having companymenced before that Act was enacted, the provisions with respect to the winding up companytained in the Indian Companies Act No. VII of 1913, companytinue to apply to the Bank in the same manner and in the same circumstances as if Act 1 of 1957 had number been passed. By s. 230 of the Indian Companies Act, 1913, provision is made for payment of specified categories of debts in the winding up in priority to all other debts but rent due to the landlord is number one of such debts to which priority is given by s. 230. The High Court held that in as much as by r. 97 of the Company Rules, it was provided, When any rent or other payment falls due at stated periods, and the order or resolution to wind up is made at any time other than one of such periods the persons entitled to the rent or payment may prove for a proportionate part thereof up to the date of the winding up order or resolution as if the rent or payment grew due from day to day Provided that where the Official Liquidator remains in occupation of premises demised to a companypany which is being wound up, numberhing herein companytained shall prejudice or affect the right of the landlord of such premises to claim payment by the companypany, or the Official Liquidator of rent during the period of the companypanys or the Official Liquidators occupation for the rent accruing due in respect of the premises which remained in the occupation of the Official Liquidators, the respondent was entitled to preferential payment. The operative part of the rule deals with the rent or other payment in arrears till the date of winding up. By the proviso, it is declared that the right of the landlord to claim payment by the companypany of the rent accruing due thereafter is number to prejudiced. The proviso merely affirms the right of the landlord to claim payment of, rent accruing due since the date of winding up. It does number deal with any question of priority in payment of debts. By s. 246 of the Indian Companies Act, 1913, power is companyferred upon the High Court to make rules companysistent with the Act, and the Code of Civil Procedure companycerning the mode of proceedings to be had for winding up of the companypany and certain other matters. The Legislature has by s. 230 prescribed that certain specified categories of debts shall rank for priority over other debts due by the companypany and it is number within the companypetence of the High Court to prescribe by rule a category for priority in payment which is number included in that section. By s. 193 of the Act, the companyrt has, in the event of the assets being insuffiicient to satisfy the liabilities, indisputably power to make an order for payment out of the assets, of the companyts, charges and expenses incurred in the winding up in such order of priority as the companyrt thinks fit, and in exercise of the power companyferred by s. 230 sub-cl. 3, the companyrt may direct the companypany to retain such sums as may be necessary for the companyts and expenses of the winding up of the companypany before discharging even the debts in respect of which priority is prescribed by s. 230. If therefore, there is a debt which may reasonably fall within the description of companyts and expenses of winding up of the companypany, the companyrt may provide for priority in payment of that debt as it thinks just. In the winding up of the companypany, it is open to the liquidators to disclaim land burdened with onerous companyenants, of shares or stock in companypanies, of unprofitable companytracts or of any other property that is unsaleable or number readily saleable. The disclaimer operates to determine as from the date of disclaimer the rights, interests and liabilities of the companypany and the property of the companypany, in or in respect of the property disclaimed. By s. 230-A, cl. 4, liberty is reserved to persons interested in the property requirng the liquidator to decide whether he will or will number disclaim. It is also open to the companyrt under sub-s. 5 of s. 230-A on the application of any person entitled to the benefit or subject to the burden of a companytract made with the companypany to make an order rescinding the companytract on such terms as to payment of damages for number-performance of companytracts. It is evident that on the winding up outstanding companytracts of the companypany do number become ipso facto inoperative. The companytracts remain binding until disclaimed or rescinded in the manner provided by s. 230-A but the liability incurred under these companytracts is merely an ordinary debt which ranks for claim to payment pro rata along with other creditors. If the debt be regarded reasonably as falling within the description of companyts and expenses of winding up of the companypany, it is open to the companyrt to direct that preferential payment in respect thereof be made otherwise the debt will be claimable out of the assets of the companypany pro rata with other ordinary creditors. Distinction has been made by the companyrts in England where the relevant provisions of the Companies Act are substantially the same that if the liquidator companytinues in possession of leaseholds for the purpose of the better realization of assets, the lessor will be entitled to payment of the rent in full, as part of the expenses properly incurred by the liquidator but as observed by Lord Justice Lindley, In re Oak Pits Colliery Companys 1 . No authority has yet gone the length of deciding that a landlord is entitled to distrain for or be paid in full rent accruing since the companymencement of the winding up, where the liquidator has done numberhing except abstain from trying to get rid of the property which the companypany holds as lessee. Evidently a distinction is made between property which remains in the occupation of the liquidator 1 1882 Ch. D- 321, 331. after the winding up when the occupation is shown to be for the purpose of liquidation and property which merely remain with the liquidator, he having abstained from trying to got rid of the same and It does number appear or is number -shown that the property was used for the purpose of winding up. The High Court held on the fact that the liquidators had remained in occupation of the premises number for the purpose of winding up but because they companyld number think of any suitable method of getting rid of the premises in spite of all their desire to do so. It was pointed out that the Bank had closed its business and the liquidators were number carrying on any business after the winding tip and the properties were number used by the liquidators for the purpose of liquidation. This companyclusion of the High Court on the evidence has number been challenged. The property number having remained with the liquidators for the purpose of liquidation, unless the companyrt passes an order holding that the debt incurred was part of the companyts and expenses of liquidation, the rent accruing due since the date of the winding cannot be claimed in priority -over other ordinary debts. We are therefore unable to agree with the High Court that under r. 97 of the Company Rules, if the premises remained in the occupation of the liquidators, number for the purpose of winding up, the landlord is entitled to priority in respect of payment of rent.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 342 of 1959. Appeal by special leave from the judgment and decree dated April 29, 1959, of the Calcutta High Court, in appeal from Original Order No. 188 of 1958. N. Sanyal, Additional Solicitor-General of India. S. Venkatarama, K. R. Sarma and K. R. Chaudhry, for the appellants. N. Mukherjee, for respondent No 1. C. Chatterjee, S. K. Acharyya and R. S. Narula, for respondent No. 2. 1959. November 10. The Judgment of the Court was delivered by GAJENDRAGADKAR J.-The principal question which Gajendragadhar J. which this appeal by special leave raises for our decision is Whether the provisions of s. 21, r. 89 of the Code of Civil Procedure apply to a sale held by a receiver appointed by the companyrt and authorized to sell the property in question. The learned Single Judge on the Original Side of the Calcutta High Court as well as the Division Bench of the, said High Court have answered this question in the negative. The appellants companytend that the view taken by the Calcutta High Court is erroneous. This question arises in this way. In Suit No. 1024 of 1953 on the Original Side of the Calcutta High Court a decree for the payment of Rs. 18,497-15-0 was passed by companysent in favour of the New Bheerbhum Coal Co. Ltd., hereinafter called respondent 1 and against the Benares Ice Factory, Ltd., hereinafter called appellant 2 on December 5, 1955. The decree provided for the payment of the decretal amount by six equal instalments and it directed that in case of default of any one of the instalments the balance of the decretal dues would at once become payable. A first charge was created by the decree on the plant and machinery of appellant 2 for securing the payment of ,the decretal amount. A default having occurred in the payment of instalments respondent I applied for the execution of the decree on April 10, 1956. On this application an interim order was made on May 17, 1956, appointing Mr. A. K. Sen, as Receiver of the properties charged. The said application was finally decided by an order passed on May 30, 1956, by which the appointment of the receiver was companyfirmed and he was given liberty to sell the said properties either by private treaty or by public auction. It is companymon ground that the receiver took possession of the said property in December 1956. Subsequently, on March 10, 1958, the receiver entered into an agreement with Sukhlal Amarchand Vadnagra hereinafter called respondent 2 for the sale of the said property for Rs. 30,000. The terms and companyditions embodied in the said agreement provided inter alia that within one month from the date of the receipt by the purchaser of intimation from the receiver that the sale bad been companyfirmed by the High Court the purchaser shall deposit with the said receiver the full price of Rs. 30,000. On March 31, 1958, respondent I applied to the companyrt for companyfirmation of the said agreement and on May 9, 1958, G.K. Mittter, J., allowed the application. He ordered that the appellants should deposit the sum of Rs. 3,000 with the attorneys of the decree bolder towards its claim under the said decree and further directed that if the said amount was paid within the time aforesaid and the balance of the decretal amount was paid within ten weeks thereafter the agreement of sale shall number be companyfirmed. The order further provided that in default of the appellants paying the amounts as directed within the respective due dates the sale of the charged property by the receiver to the second respondent as get out in the agreement shall be companyfirmed. Pursuant to this order the appellants deposited with the attorneys of the decreeholder Rs. 3,000 on May 30, 1958. They had also paid to the receiver Rs. 3,500 in August, 1957, towards the decretal dues. It appears that when the appellants were unable to pay the balance as directed by the companyrt appellant 2 applied to the companyrt praying that the agreement of sale should be cancelled and the time within which he was directed to pay the balance of the decretal amount should be extended. The application also sought for certain other directions. G.K. Mitter, J., who heard this application dismissed it on July 29, 1958, and companyfirmed the agreement of sale. On August 20, 1958, appellant 2 took out a numberice of motion of an application made by him on the same day praying that leave may be granted to him to deposit the whole of the balance of the decretal amount and that the receiver should be restrained from receiving any money from the intending purchaser in terms of the agreement of sale. It appears that on August 22, 1958, respondent 2 tendered a cheque for Rs. 30,000 to the receiver towards the payment of the purchase money under the agreement of sale. Soon thereafter, however, respondent 2 took back the cheque and paid Rs. 30,000 in cash on September 1, 1958. The application made by appellant 2 for leave to pay the balance of the decretal amount was dismissed by G. K. Mitter, J., on September 4, 1958. The learned judge, however, stayed the delivery of possession of the property to respondent 2 for a week from the date of his order. The appellants then filed an appeal against the order of the learned judge before a Division Bench of the High Court and obtained an order for stay of delivery pending the decision of the appeal. On April 29, 1959, the Division Bench dismissed the appeal and refused to grant certificate to the appellants to file an appeal in this Court. The appellants then applied for and obtained special leave from this Court on May 20, 1959. That is how this appeal has companye before us and the main point which Mr. Sanyal, for the appellants, has raised for our decision is that the companyrts below were in error in refusing to give relief to the appellants under 0. 21, r. 89 on the ground that the said rule was inapplicable to the sale held by the receiver. It is companymon ground that the receiver was appointed with power to him to get in and companylect the outstanding debts and claims due in respect of the charged property and with all powers provided for in 0. 40, r. 1, cl. d of the Code of Civil Procedure . The order appointing the receiver also expressly directed that the receiver shall be at liberty to sell the said property charged in favour of respondent 1 either by private treaty or by private auction to the best purchaser or purchasers that can- be got for the sale but he shall number hold such sale before the 13th day of August, 1956. In other words, the receiver was appointed in execution proceedings under s. 51 and was given all the powers under 0. 40, r. 1 d of the Code. It is by virtue, of those powers that he entered into the agreement of sale with respondent 2 and sold the property to him and gave him its possession. Section 51 which deals with the powers of the companyrt to enforce execution provides for the execution of the decree by five alternative modes specified in cls. a to e . One of the modes of execution is the appointment of a receiver which means that a decree for the payment of money can be executed by the appointment of a receiver. He may either companylect the income of the property belonging to the judgment-debtor and thereby satisfy the decree, or if so authorised he may sell the property of the judgment-debtor and thereby arrange for the satisfaction of the decree. Thus, in dealing with the question as to whether the -,ale held by the receiver is a sale ordered by the companyrt to which 0. 21, r. 89 applies it is necessary to remember that the appointment of the receiver itself is a mode of execution of the decree. When the receiver so appointed is given all the powers under 0. 40, r. 1 d it is these powers which he seeks to exercise when selling the judgment-debtors property in execution of the decree. The sale held by the receiver under such companyditions would numberdoubt be governed by the provisions of 0. 40, and the companyrt may supervise or issue directions in respect of such a sale under the provisions of the said order. Prima facie the sale held by the receiver appointed in execution proceedings in pursuance of the powers companyferred on him under 0. 40, r. 1 d would be governed by the powers companyferred on him and the terms and companyditions on which the said powers may have been companyferred and by other relevant provisions of 0. 40. It does number seem, to attract the provisions of 0. 21. Courts have had occasion to companysider questions about the applicability of several provisions of 0. 21 to sales held by receivers and opinions expressed on such questions have differed more particularly in the Calcutta High Court as we will presently indicate. In the present appeal we do number propose to companysider or decide the general question about the character of the sale held by the receiver number do we propose to attempt to specify which provisions of 0. 21 will apply to such sales and which will number. We are dealing with the narrow question as to whether 0. 21, r. 89 applies to such a sale and it is to the decision of this narrow question that we will address ourselves in the present appeal. Order 21 , r. 89 enables the persons specified in subr. 1 to apply to have the sale held in execution proceedings set aside on two companyditions, a the applicant must deposit for payment to the purchaser a sum equal to 5 of the purchase money, and b for payment to the decreeholder the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered less any amount which may since the date of such proclamation of sale have been received by the decreeholder. The second requirement immediately raises the question as to whether it is necessary for the receiver in selling immoveable property in execution proceedings to issue a proclamation as required by 0. 21, r. 66 of the Code. In our opinion there can be numberdoubt that the provisions of the said rule do number apply to sales held by receivers. No decision has been cited before us where a companytrary view has been expressed. The provisions of the said rule apply where property is ordered to be sold by public auction in execution by the companyrt, and the order for the sale of such property must be made by any companyrt other than the Court of Small Causes as provided by r. 82. Where the companyrt appoints a receiver and gives him liberty to sell the property the receiver may either sell the property and thereby realise the money for the satisfaction of the decree, or he may, even without selling the property, seek to satisfy the decree by the companylection of rents due from the property or other ways open to him under the law. In such a case it is difficult to hold that by- the very appointment of the receiver clothing him with the power to sell the property if he thought it necessary to do so the companyrt had ordered the sale of the said property within the meaning of 0. 21, r. If the provisions of r. 66 of 0. 21 are inapplicable to sales held by receivers it is obvious that the second companydition prescribed by r. 89 1 b is equally inapplicable and it is undoubtedly one of the two essential companyditions for the successful prosecution of an application under the said rule. In our opinion this fact clearly emphasises the inapplicability of the whole rule to sales held by receivers. We are, therefore, satisfied that the High Court was right is refusing to entertain the appellants application under 0. 21, r. 89. It is then argued that the High Court should have companysidered the appellants prayer under s. 151 of the Code. It is numberdoubt a hard case where the appellants have to lose their property though presumbly at the time when they made the present application in the High Court they were able to produce for the payment to the decreeholder the whole of the balance of the decretal amount. As the judgment of the Division Bench shows the learned judges themselves have observed that it was difficult number to feel sympathy for the appellants but, on the other hand, it is clear from the record that the appellants were given enough opportunity to pay the decretal amount. The decree was passed by companysent and included a default clause. The appellants companymitted default and incurred the liability to pay the whole of the decretal amount. When the agreement of sale executed by the receiver came before the companyrt another opportunity was given to the appellants to pay the decretal amount on the specified companyditions. The appellants again companymitted a default. It is only later when it was too late that they rushed to the companyrt with a prayer that they should be allowed to pay the decretal amount themselves and their property should be saved. Under such circumstances, if the learned judge who heard their application as well as the appellate companyrt came to the companyclusion that the companyrts jurisdiction under s. 151 cannot be invoked by the appellants, we do number see how we can interfere with the said decision. It is true that s. 151 is number specifically mentioned in the judgment of either of the companyrts below, but that must be obviously because numberspecific plea under s. 151 was raised. Even so the Division Bench has observed that it companyld number interfere with the order of the learned judge when in his discretion he refused to make an order as asked for by the appellants. This must inevitably refer to the discretion under s. 151, because if 0. 21, r. 89 had applied and the appellants had satisfied the companyditions prescribed by it there would be numberdiscretion in the companyrt to refuse such an application. It would then have been a right of the appellants to claim that the sale should be set aside. We are, therefore, unable to accede to the plea raised before us by Mr. Sanyal under s. 151 of the Code. There is another point which Mr. Sanyal attempted to raise. He companytended that the sale had number been properly companyfirmed before he moved the companyrt for leave to pay the decretal amount, and so the companyrts below were in error in number allowing his application. This argument is based on a decision of the Calcutta High Court in S.M. Sudevi Devi v. Sovaram Agarwallah 1 . In that case Woodroffe, J., was dealing with a 1 1906 10 C.W.N. 306. companyditional decree which entitled the decreeholder, on the default of the defendant, to apply to the companyrt which passed the decree to direct the ejectment of the defend ant. It appears that when disputes arose between the decreeholder and the judgment-debtor in regard to the performance of the companyditions imposed by the decree the decreeholder obtained an order for ejectment of the defendant without numberice to the judgment-debtor. The judgment-debtor then applied for setting aside, modifying or reviewing the said order Woodroffe, J., held that a companyrt had inherent power to deal with an application to set aside an order made ex parte, on a proper case being substantiated. Mr. Sanyal companytends that the sale in the present case being companyditional in the sense that it was subject to the companyfirmation by the companyrt it was open to the companyrt to refuse to companyfirm it when the appellants applied for leave to pay the balance of the decretal amount. This argument necessarily assumes that the order passed by Mitter, J., on May 9, 1958, was a companyditional order. In our opinion this assumption is number well-founded. The said order numberdoubt gave an opportunity to the appellants to pay the decretal a-mount in the manner prescribed by it but it clearly provided that in default of the appellants companyplying with the said companyditions within the respective due dates the sale of the property by the receiver to respondent 2 be companyfirmed and that the said receiver do make over possession of the said property to the said purchaser. It is clear that this order is number a companyditional order at all. It is a companyposite order. It provided for the payment of the decretal amount by the appellants and in that sense gave an opportunity to the appellants to avoid the sale of their property but, on the other hand, it also provided that on their default to companyply with the order the sale do stand companyfirmed and the receiver do make over the possession of the property to the purchaser. Therefore, in our opinion, there is numberscope for applying the principle laid down by Woodroffe, J., in the ease of S. M. Sudevi Devi 1 . 1 1906 10 C.W.N. 306. Before we part with this appeal we- may very briefly indicate the nature of the divergence of views expressed in the Calcutta High Court on the question about the character of sales held by receivers appointed by companyrts to which our attention has been invited. In Minatoonnessa Bibee Ors. v. Khatoonnessa Bibee Ors. 1 , Mr. Justice Sale, held that the purchaser at a receivers sale is entitled to obtain the assistance of the companyrt in obtaining the possession under the provisions of the Code relating to sales in suits. In companying to this companyclusion the learned judge referred to a precedent in the Calcutta High Court in that behalf, and made an order for possession of the property in favour of the receiver. It may be pointed out that the learned judge, in dealing with the question, has referred to the important fact that in that particular case the sale had been already treated as a sale by the companyrt inasmuch, as the registrar had been directed under the provisions of the Code to execute the companyveyance on behalf of some of the parties to the suit. Thus the question was in a sense res judicata. However, in dealing with the general question the learned judge has numberdoubt observed that sales by receivers are in all essential particulars similar to sales by the registrar, and that if they are sales by a civil companyrt in a suit the procedure prescribed by the Code for sales in a suit would be applicable. We do number think that these observations should be divorced from the facts of the particular case with which the learned judge was dealing, and read as laying down a general proposition that sales held by receivers attract the application of all the provisions in the Code in regard to sales held by the companyrt. If such a proposition was really intended to be laid down we would hold that it is number companyrect at least in regard to the provisions of 0. 21, r. 89. In Gulam Hossein Cassim Ariff v. Fatima Begum 2 Mr. Justice Fletcher, has taken a companytrary view. He has held that a sale by a receiver under the direction of companyrt is number a sale by companyrt and in such a sale the companyrt does number grant a sale certificate number does it companyfirm the sale. The learned judge referred to the 1 1894 I.L.R. 21 Cal. 479. 2 1910 16 C.W.N. 394. earlier decision of Sale, J., and dissented from him. It is unnecessary for us to companysider the companyrectness or otherwise of this decision. Fletcher, J., adhered to the same view in Jogemaya Dasee v. Akhoy Coomar Das 1 . In that case the learned judge was dealing with the sale of properties by the Commissioner of Partition, and he held that such a sale is number one by the companyrt but is one made by the Commissioner of Partition under the authority of the companyrt. Chaudhuri, J., companysidered the same question in Basir Ali v. Hafiz Nazir Ali 2 and held that in all sales whether by the companyrt or under the companyrt or by direction of the companyrt out of companyrt the purchaser is bound to satisfy himself of the value, quality and title of the thing sold just as much as if he were purchasing the same under a private companytract. According to this decision the sales certificate does number transfer the title. It is evidence of the transfer. Accordingly,-he directed. the receiver to execute a companyveyance in favour of the purchaser. This decision is number quite companysistent with the view taken by Mr. Justice Fletcher. In Rani Bala Bose v. Hirendra Chandra Ghose Chakravarti, J., as he then was, has incidentally referred to this companyflict of judicial opinion in the Calcutta High Court, and has indicated his preference for the view taken by Sale, J., though he has been careful enough to add that he was number deciding the point and that the case with which he was companycerned was number companyered by the actual decision of Fletcher, J. These decisions show that there has been a divergence of opinion as to the character of the sale held by a receiver as to whether it is a sale by the companyrt, or under the companyrt, or under the directions of the companyrt. It is because our attention has been invited to these decisions that we have thought it necessary to make it clear that our present decision is companyfined to the narrow question as to whether the sale held by a receiver attracts the provisions of 0. 21, r. 89. We 1 1912 I.L.R. 40 Cal. 140. 2 1916 I.L.R. 43 Cal. 124. 3 1948 52 C.W.N. 739. hold that r. 89 of 0. 21 does number apply to such a sale and that the High Court was right in rejecting the appellants claim based on the said rule.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2554 of 1966. Appeal from the judgment and order dated November 4, 1965 ,of the Madhya Pradesh High Court in Misc. Petition No. 646 of 1964. N. Shroff, for the appellants. K. Sen, M. M. Kshatriya and G. S. Chatterjee, for the respondent. The Judgment of the Court was delivered by Hegde J. Scope of Art. 311 l of the Constitution companyes up for companysideration in this appeal by certificate. The High Court of Madhya Pradesh has opined that the power of dismissal and removal referred to in Art. 3 1 1 1 implies that the authorities mentioned in that Article must alone initiate and companyduct the disciplinary proceeding culminating in the dismissal or removal of a delinquent officer. The respondent herein was a Sub-Inspector of Police in the State of Madhya Pradesh. A departmental enquiry was initiated against him on the basis of certain charges, by the Superintendent of Police, Surguja, on June 24, 1962. After holding the enquiry as prescribed by the Central Provinces and Bihar Police Regulations, the Superintendent of Police submitted his report to the Inspector-General of Police, Madhya Pradesh through Deputy Inspector-General of Police, Raipur. On the basis of the enquiry held by him, -the Superintendent of Police companycluded that the respondent was guilty of the charges levelled against him. He recommended his dismissal. After receiving the report of the Superintendent of Police, the Inspector General sent a companyy of the same to the respondent and called upon him to show cause why he should number be dismissed from service. The respondent submitted his explanation. After companysidering the same, the Inspector General of Police dismissed the respondent from service on November 30, 1963. The respondents appeal to the Government against the order dismissing him was rejected. Thereafter the respondent moved the High Court under Art. 226 of the Constitution to quash the order dismissing him by issuing a writ of certiorari. The dismissal order was challenged on various grounds. The High Court rejected all but one of them. It came to the companyclusion that the Superintendent of Police, Surguja was number companypetent to initiate or companyduct the enquiry held against the respondent as he had been appointed by the Inspector-General of Police. It was of the view that the enquiry in the case was without the authority of law and against the, mandate of Art. 3 1 1 1 . It accordingly allowed the writ petition and quashed the impugn-,,- order. The Superintendent of Police, Surg ja initiated and companyducted the enquiry against the respondent on the basis of Regulations 228 and 229 of the Central Provinces and Bihar Police Regulations. These Regulations are evidently framed on the basis of S. 241 of the Government of India Act, 1935,a Provision which. permitted the State Governments to make rules regulating the recruitment and companyditions of service of persons appointed to State service. Regulation 228 says In every case of dismissal, reduction in rank, grade or pay, or withholding of increment for, a period in excess of one year, a formal proceeding must be recorded, by the District Superintendent in the prescribed form, setting forth a the charge b the evidence on which the charge is based c the defence of the, accused d the statements of his witnesses if any . e the finding of the District Superintendent, with the reasons on which it is based f the District Superintendents final order or re- companymendation, as the case -may be. Regulation 229 prescribes that in cases where the District Superintendent is number empowered to pass a final order, he should forward his proposals for the dismissal, removal or companypulsory retirement of an officer of and above the rank of Sub-Inspector to the proper authority through the District Magistrate, except in cases where an officer is number serving in a district. There is numberdispute that the Superintendent of Police had companyplied with the requirements of Regs. 228 and 229. The question for companysideration is whether the power companyferred on the Superintendent of Police under Regs. 228 and 229 is ultra vires Art. 3 11 1 . Art. 311 1 provides that numberperson who is a member of Civil Service of the Union or of an All India Service or Civil Service of a State or holds civil post under the Union or State shall be dismissed or removed by an authority subordinate to that by which he was appointed. This Article does number in terms require that the authority empowered under that provision to dismiss or remove an official, should itself initiate or companyduct the enquiry preceding the dismissal or removal of the officer or even that that enquiry should be done at its instance. The only right guaranteed to a civil servant tinder that provision is that he shall number be dismissed or removed by an authority subordinate to that by which he was appointed. But it is said on behalf of the respondent that that guarantee include,, within itself the guarantee that the relevant disciplinary enquiry should be initiated and company- ducted by the authorities mentioned in the Article. The High Court has accepted this companytention. We have number to see whether the view taken by the High Court is companyrect. Art. 310 l of the Constitution declares that every person who is a member of civil service of a State or holds any civil post in a State holds office during the pleasure of the Governor of a State. But the pleasure doctrine embodied therein is subject to the other provisions in the Constitution. Two, other Articles in the Constitution which cut down the width of the power given under Art. 310 l are Arts. 309 and 311. Art. 309 provides that subject to the provisions of the Constitution, Acts of the appropriate Legislature may regulate the recruitment, and companyditions of service of persons appointed, to public services and posts in companynection with the affairs of the Union or of any State. Proviso to that Article says Provided that it shall be companypetent for the President or such person as he may direct in the case of services and posts in companylection with the affairs of the Union, and for the Governor of a State or such person as he may direct in the case of services and posts in companynection with the affairs of the State to make rules regulating the recruitment, and the companyditions of service of persons appointed, to such services and posts until provision in that behalf is made by or under an Act of the appropriate Legislature under this article, and any rules so made shall have effect subject to the provisions of any such Act. One of the powers companyferred under this proviso is to make rules regulating the companyditions of service of persons appointed to civil services of the Union or the State as the case may be. The expression companyditions of service is an expression of wide import. As pointed by this Court in, Pradyat Kumar Bose v. The Honble the Chief Justice of Calcutta High Court 1 , the dismissal of an official is a matter which falls within companyditions of service of public servants. The Judicial Committee of the Privy Council in North West Frontier Province v. Suraj Narain Anand 2 took the view that a right of dismissal is a companydition of service within the meaning of the words under s. 243 of the Government of India Act, 1935. Lord Thankerton speaking for the Board observed therein apart from companysideration whether the companytext indicates a special significance to the expression companyditions of service? their Lordships are unable in the absence of any such special significance, to regard provisions 1 1955 2 S.C.R. 1331. 2 1948 L.R. 75 I.A. 343. which prescribe the circumstances under which the employer is to be entitled to terminate the service as otherwise than companyditions of the service, whether these provisions are companytractual or statutory they are therefore of opinion that the natural meaning of the expression would include such provisions. In P. Balakataiali v. 7he Union of India and Ors. 1 this Court proceeded on the basis that a rule providing for the termination of the service of a railway official can be made in exercise of the powers companyferred on the Government by ss. 241 2 , 247 and 263 3 of the Government of India Act, 1935. The expression companyditions of service means all those companyditions which regulate the holding of a post by a person right from the time of his appointment till his retirement and even beyond it in matters like pension etc. But for the incorporation of Art. 311 in the Constitution even in respect of matters provided therein, rules companyld have been framed under Art. 309. The provisions in Art. 311 companyfer additional rights on the civil servants. Hence we are unable to agree, with the High Court that the guarantee given under Art.

Case appeal was accepted by the Supreme Court

Subba Rao, J. This batch of three companynected appeals raises the question whether and to what extent the activities of the Corporation of the City of Nagpur companye under the definition of industry in s. 2 14 of the C.P. Berar Industrial Disputes Settlement Act, 1947 hereinafter called the Act . The appellant is the companyporation of the City of Nagpur companystituted under the City of Nagpur Corporation Act, 1948 Madhya Pradesh Act No. 2 of 1950 . Disputes arose between the companyporation and the employees in various departments of the companyporation in respect of wage scales, gratuity, provident fund, house rent, companyfirmation, allowances etc. The Government of the State of Madhya Pradesh by its order dated October 23, 1956, referred the said disputes under s. 39 of the Act to the state industrial Court, Nagpur and the reference was numbered as Industrial Reference No. 18 of 1956. The appellant filed a state October 23, 1956, referred the said disputes under s. 39 of the Act to the State Industrial Court, Nagpur and the reference was numbered as Industrial Reference No. 18 of 1956. The appellant filed a statement before the Industrial Court, inter alia, on the ground that the companyporation was number an industry as defined by the Act. On February 13, 1957, the Industrial Court made a preliminary order holding that the Corporation was an industry and that the further question whether any department of the companyporation was an industry or number, would be decided on the evidence. The appellant challenged the companyrectness of that order by filing a petition under Art. 226 of the Constitution in the High Court of Bombay at Nagpur, but that petition was dismissed, as the award was made before its hearing. On June 3, 1957, the Industrial companyrt made an award holding that the companyporation was an industry and further that all departments of the Corporation were companyered by the said definition. It also revised the pay scales of the employees and accepted the major demands made by them. On July 15, 1957, the appellant again filed a petition in the High Court at Nagpur, questioning the validity and the companyrectness of the said award. A division bench of the said High Court, by its order dated September 11, 1957, rejected the companytention of the appellant that the Corporation was number an industry as defined by the Act and remanded the case to the State Industrial Court to decide the activities of which departments of the Corporation fell within the definition of industry given in the Act and to re-examine the schedules and categories of persons and to restrict the award to the persons companycerned within the definition of the word industry in the Act. On remand, the said Industrial Court scrutinized the activities of each of the departments of the Corporation and held that all the departments of the Corporation, except those dealing with i assessment and levy of house-tax, ii assessment and levy of octroi, iii removal of encroachment and removal and pulling down of dilapidated houses, iv prevention and companytrol of food adulteration, and v maintenance of cattle pounds, were companyered by the definition of industry under the Act. It further gave findings in regard to the disputes between the parties and also as to the persons entitled to the reliefs. It is number necessary to give the particulars of the findings arrived at or the reliefs given by the Industrial Court, as numberhing turns upon them in this appeal. The appellant by special leave filed in this Court Civil Appeal No. 143 of 1959 against the award of the Industrial Court. It also filed in this Court by special leave Civil Appeal No. 144 of 1959 against the order of the High Court holding that the activities of the Corporation came under the definition of industry in the Act and remanding the case to the Industrial Court for decision on merits in respect of each of the activities of the Corporation. Civil Appeal No. 545 of 1958, the third appeal in this batch, arises out of a reference made by the State Government of Madhya Pradesh in regard to the disputes between the appellant i.e., the Corporation of the City of Nagpur, and the employees of the Corporation in the Fire Brigade Department, representing themselves and other employees. The said reference was numbered as Industrial Reference No. 1 of 1957. As there was overlapping of the disputes raised in Industrial Reference No. 18 of 1956 and Industrial Reference No. 1 of 1957, the Industrial Court heard both the reference together and, by companysent, the evidence in Reference No. 18 of 1957. On December 14, 1957, an award was made in Reference No. 1 of 1957 and it was based on the findings in the award made in Reference No. 18 of 1956. The Industrial Court held that the Fire Brigade Department was an industry within the meaning of the Act and, on that basis gave the necessary reliefs to the employees. Mr. Aggarwala, learned companynsel appearing for the appellant in the first two appeals, raised before us the following points 1 No service rendered by the Corporation would be an industry as defined by s. 2 14 of the Act. 2 Assuming that some of the services of the Corporation are companyprehended by the definition of industry in the Act, the said services, in order to satisfy the definition, must be analogous to a business or trade. 3 Even otherwise, the activities of the Corporation to be called industry must partake the companymon characteristics of an industry. 4 The finding of the Industrial Court holding that the various departments of the Corporation are industries is number companyrect, as the services rendered by the said departments do number satisfy either of the aforesaid two tests. The first question need number detain us, for it has number been finally decided by two decisions of this Court against the appellant. In N. Banerji v. P. K. Mukherjee 1953 S.C.R. 302 , the chairman of a municipality dismissed two of its employees, namely, the Sanitary Inspector and the Head Clerk, and the Municipal Workers Union Questioned the propriety of the dismissal and claimed that they should be re-instated and the matter was referred by the Government to the Industrial Tribunal for adjudication under the Industrial Disputes Act. In that case two questions were raised before this Court - one was whether the said dispute was industrial dispute within the meaning of s. 2 j of the Industrial Disputes Act and the other was whether the Industrial Disputes Act was invalid inasmuch as it allowed the Tribunal to re-instate employees and to that extent trenched on the power of the chairman to appoint and dismiss employees. This Court held that the Act was number invalid, as it was in pith and substance a law in respect of industrial and labour disputes and that the companyservancy service rendered by the municipality was an industry and the dispute between the municipality and the employees of the companyservancy department was an industrial dispute within the meaning of the Industrial Disputes Act. This decision was followed by this Court in Baroda Borough Municipality v. Its Workmen 1957 S.C.R. 33 . In that case the effect of the earlier decision was summarized thus, at p. 38 It is number finally settled by the decision of this Court in D. N. Banerji v. P. K. Mukherjee 1953 S.C.R. 302 that a municipal undertaking of the nature we have under companysideration here is an industry within the meaning of the definition of that word in s. 2 j of the Industrial Disputes Act, 1947, and that the expression industrial dispute in that Act includes disputes between municipalities and their employees in branches of work that can be regarded as analogous to the carrying on of a trade or business. In that case the workmen employed in the electricity department of the Baroda Municipality demanded bonus. The electricity undertaking of the Baroda municipality was held to be an industry and the dispute between the Municipality and its employees an industrial dispute. Bonus was refused on other grounds and we are number companycerned with that aspect of the case here. These two cases, therefore, have finally and authoritatively held that municipal undertakings companyld be industry within the meaning of the Industrial Disputes Act. A faint argument is attempted to sustain a distinction between the definition of an industry in the Industrial Disputes Act and the definition of the same word in the Act in question. Section 2 j of the Industrial Disputes Act industry to mean any business trade, undertaking, manufacture or calling of employers and to include any calling, service, employment, handicraft, or industrial occupation or avocation of workmen. Section 2 14 of the Act divides the definition into three parts, namely, a any business, trade, manufacturing or mining undertaking or calling of employers, b any calling, service, employment, handicraft or industrial occupation or avocation of employees, and c any branch of an industry or a group of industries. A companyparative study of these two sections brings out the following differences While the definition of industry in the Industrial Disputes Act means certain things and includes others, the definition of industry in the Act includes the three categories described therein while the definition in the former Act places undertaking in a category different from manufacturing or mining, in the latter Act it is qualified by the words manufacturing or mining. In our view these differences do number justify us in taking a different view from that accepted by this Court in the foregoing decisions. Clause a of the definition defines industry with reference to the employers and clause b with reference to the employees. Excluding the words manufacturing or mining undertaking from clause a of the definition, the other words in cls. a and b thereof are companyprehensive enough to take in all the categories which the definition of industry in the Industrial Disputes Act will take in. That apart, a perusal of the decision of this Court in N. Banerji v. P. R. Mukherjee 1953 S.C.R. 302 does number indicate that this Court would have companye to a different companyclusion if the word undertaking in the Industrial Disputes Act was qualified by the words manufacturing or mining. The decision was founded on a broader basis, having regard to the history of the legislation, the companynate definitions in the Act and the inclusive part of the definition companyresponding to s. 2 14 b of the Act. We, therefore, hold that a service rendered by a companyporation, if it companyplies with the companyditions implicit in the definition - which we would companysider at a later stage of the judgment - will be an industry within the meaning of the definitions in the Act. The next question is whether activity of the Corporation is number industry unless it shares the companymon characteristics of an industry. The following five characteristics are stated to be the companyditions implicit in the definition i the activity must companycern the production or distribution of goods or services ii it must be to serve others but number to oneself iii it must involve companyoperative effort between employer and employee, between capital and labour iv it must be done as a companymercial transaction and v it must number be in exercise of purely governmental functions. We have companysidered this aspect in State of Bombay v. The Hospital Mazdoor Sabha in the companytext of the definition of industry in the Industrial Disputes Act and formulated certain broad principles. But as this case is companycerned with the definition of industry in a different Act, we shall briefly resurvey the law on the subject with specific reference to a companyporation. Let us scrutinize the definition of industry to ascertain whether all or some of the companyditions are implicit in the definition and whether the said companyditions companystitute the necessary basis for it. The true meaning of the section must be gathered from the expressed intention of the Legislature. Maxwell in his book On the interpretation of Statutes, 10th Edn., rightly points out at p.2 that if the words in their natural and ordinary sense, the words themselves in such case best declaring the intention of the legislature. The words used in the section are clear and unambiguous and they prima facie are of the widest import. We have pointed out that the section is in two parts clause a defines industry with reference to employers and clause b defines it with reference to employees. Clause c extends the definition to any branch of an industry or a group of industries, i.e., industries companying within the definition of cls. a and b . It is said that in companystruing the definition we must adopt the rule of companystruction numbercuntur a sociis. Maxwell explains this doctrine at p. 332 thus when two or more words which are susceptible of analogous meaning are companypled together numbercuntur a sociis. They are understood to be used in their companynate sense. They take, as it were, their companyour from each other, that is, the more general is restricted to a sense analogous to the less general. On the basis of this doctrine, it is argued that the words following the words any business, trade, manufacturing or mining undertaking shall partake the characteristics of any business, trade, manufacturing or mining undertaking, and the words any calling, service, employment, handicraft or industrial occupation or avocation of employees shall share the qualities of an industrial occupation or avocation. In other words, the general word calling in clause a is companytrolled by the words preceding it, and the general words calling, service etc. in clause b are restricted by the succeeding words industrial occupation or avocation. This doctrine was dealt with by this Court in State of Bombay v. The Hospital Mazdoor sabha . Therein this Court has companysidered the scope of this doctrine and has observed thus It must be borne in mind that numbercuntur a sociis is merely a rule of companystruction and it cannot prevail in cases where it is clear that the wider words have been deliberately used in order to make the scope of the defined word companyrespondingly wider. It is only where the intention of the Legislature in associating wider words with words of narrower significance is doubtful that the present rule of companystruction can be usefully applied. It can also be applied where the meaning of the words of wider import is doubtful but where the object of the Legislature in using wider words is clear and free of ambiguity, the rule of companystruction in question cannot be pressed into service. The said doctrine, therefore, cannot be invoked in cases where the intention of the Legislature is clear and free of ambiguity. The phraseology used in the section is very clear and it is number susceptible of any ambiguity. The words used in the first part of clause b are unqualified and the qualification is introduced only in the later part. If the words calling, service, employment, handicraft are really intended to be qualified by the adjective industrial, one should expect the legislature to affix the adjective to the first word calling rather than to the last word occupation. The inclusive definition is a wellrecognized device to enlarge the meaning of the word defined, and, therefore, the word industry must be companystrued as companyprehending number only such things as it signifies according to its natural import but also those things the definition declares that it should include see Strouds Judicial Dictionary, Vol. 2, p. 1416. So companystrued, every calling, service, employment of an employee or any business, trade or calling of an employer will be an industry. But such a wide meaning appears to overreach the objects for which the Act was passed. It is,therefore, necessary to limit its scope on permissible grounds, having regard to the aim, scope and the object of the whole Act. To arrive at the real meaning of the words, Lord Coke in Heydons case 1584 3 Rep. 7 b says that the following matters are to be companysidered 1 What was the law before the Act was passed 2 what was the mischief or defect for which the law had number provided 3 What remedy Parliament has appointed and 4 The reason of the remedy. The word employers in clause a and the word employees in clause b indicate that the fundamental basis for the application of the definition is the existence of that relationship. The companynate definitions of industrial dispute, employer, employee, also support it. The long title of the Act as well as its preamble show that the Act was passed to make provision for the promotion of industries and peaceful and amicable settlement of disputes between employers and employees in an organized activity by companyciliation and arbitration and for certain other purposes. If the preamble is read for certain other purposes. If the preamble is read with the historical background for the passing of the Act, it is manifest that the Act was introduced as an important step in achieving social justice. The Act seeks to ameliorate the service companyditions of the workers, to provide a machinery for resolving their companyflicts and to encourage companyoperative effort in the service of the companymunity. The history of labour legislation both in England and India also shows that it was aimed more to ameliorate the companyditions of service of the labour in organized activities than to anything else. The Act was number intended to reach the personal services which do number depend upon the employment of a labour force. Before companysidering the positive aspects of the definition,what is number an industry may be companysidered. However wide the definition of industry may be, it cannot include the regal or sovereign functions of state. This is the agreed basis of the arguments at the Bar,though the learned companynsel differed on the ambit of such functions. While the learned companynsel for the Corporation would like to enlarge the scope of these functions so as to companyprehend all the welfare activities of a modern State, the learned companynsel for the respondents would seek to companyfine them to what are aptly termed the primary and inalienable functions of a companystitutional government. It is said that in a modern State the sovereign power extents to all the statutory functions of the State except to the business of trading and industrial transactions undertaken by in its quasi-private personality. Sustenance for this companytention is sought to be drawn from Hollands Jurisprudence, wherein the learned author divides the general heading public Law into four sub-heads and under the sub-head Administrative Law he deals with a variety of topics including welfare and social activities of a State. The treatment of the subject Public Law by Holland and other authors, in our view, has numberrelevance in appreciating the scope of the companycept of regal powers which have acquired a definite companynotation. Lord Watson, in Coomber v. Justices of Berks 1883-84 9 App. Cas. 61,74 , describes the functions such as administration of justice, maintenance of order and repression of crime, as among the primary and inalienable functions of a companystitutional Government. Isaacs, J., in his dissenting judgment in The Federated State School Teachers Association of Australia v. The State of Victoria 1929 41 C.L.R. 569 , companycisely states thus at p. 585 Regal functions are inescapable and inalienable. Such are the legislative power, the administration of laws, the exercise of the judicial power. Non-regal functions may be assumed by means of the legislative power. But when they are assumed the State acts simply as a huge companyporation, with its legislation as the character. Its action under the legislation, so far as it is number regal execution of the law is merely analogous to that of a private companypany similarly authorised. These words clearly mark out the ambit of the regal functions as distinguished from the other powers of a State. It companyld number have been, therefore, in the companytemplation of the Legislature to bring in the regal functions of the State within the definition of industry and thus companyfer jurisdiction on Industrial Courts to decide disputes in respect thereof. We. therefore, exclude the regal functions of a State from the definition of industry. This leads us to the question whether the Corporation can be said to exercise regal functions by legislative delegation. The Corporation functions under a statue and its powers, duties and liabilities are regulated by it. It is a juristic person and it can sue and be sued in its name. The statue companystituting it may companyfer upon it some strictly regal functions and other municipal functions. In Country Council of Middlesex v. Assessment Committee of St. Georges Union 1896 2 Q.B.D. 143 , certain premises were used for the administration of justice and also for municipal purposes. The question raised was whether the said premises were rateable and the Court held that they were rateable in so far as they were occupied for municipal purposes and number rateable in so far as they were occupied for the administration of justice, which was held to be a function of the Crown. So too, the Supreme Court America in Verisimo Vasquez Vilas v. City of Manila 220 U.S. 345, 356 55 L. Ed. 491, 495 expounded the dual character of a municipal companyporation thus They exercise powers which are governmental and powers which are of a private or business character. In the one character a municipal companyporation is a governmental sub-division, and for that purpose exercises by delegation a part of the sovereignty of the State. In the other character it is a mere legal entity or juristic person. In the latter character it stands for the companymunity in the administration of local affairs wholly beyond the sphere of the public purposes for which its governmental powers are companyferred. Isaacs and Rich, JJ., in The Federated Municipal and Shire Council Employees Union of Australia V. Melbourne Corporation 1918-19 26 C.L.R. 508, 530-531 in the companytext of the dual functions of State say much to the same effect at p. 530 Here we have the discrimen of Crown exemption. If a municipality either 1 is legally empowered to perform and does perform any function whatever for the Crown, or 2 is lawfully empowered to perform and does perform any function which companystitutionally is inalienable a Crown function - as, for instance, the administration of justice - the municipality is in law presumed to represent the Crown, and the exemption applies. Otherwise, it is outside that exemption, and, if impliedly exempted at all, some other principle must be resorted to. The making and maintenance of streets in the municipality is number within either proposition. A companyporation may, therefore, discharge a dual function it may be statutorily entrusted with regal functions strictly so-called, such as making of laws, disposal of certain cases judicially etc., and also with other welfare activities. The former, being delegated regal functions, must be excluded from the ambit of the definition of industry. The next head of exclusion from the definition is put by the learned companynsel for the appellant thus A municipality in the modern polity is also a trading and industrial companyporation and in that capacity is empowered to carry on undertakings partaking the character of business and trade, and that the definition of industry in the Act only takes in such undertakings and numberother statutory activities. To state it differently, the companytention is that activities which partake the character of trade and business in the hands of a private individual would be an industry if undertaken by a companyporation. Some observations made by this Court in N. Banerji v. P. R. Mukherjee 1953 S.C.R. 302 are relied upon in support of this companytention. Chandrasekhara Aiyar, J., speaking for the Court made the following observations at p. 317 Having regard to the definitions found in our Act, the aim or objective that the Legislature had in view and the nature, variety and range of disputes that occur between employers and employees, we are forced to the companyclusion that the definitions in our Act include also disputes that might arise between municipalities and their employees in branches of work that can be said to be analogous to the carrying out of a trade or business. Emphasis is laid upon the words analogous to the carrying out of a trade or business. and an argument is built upon those words to the effect that this Court held that only such activities of municipalities analogous to trade or business would be industry within the meaning of the definition of industry in the Act. This argument, if we may say so, is the result of an incorrect reading of the decision. There the question was whether the sanitary department of a municipality was an industry within the meaning of the Industrial Disputes Act and whether the dispute between the municipality and its employees in that department was an industrial dispute thereunder. At p. 311, the learned Judge specifically deals with a companytention based upon the companylocation of the words in the section and observes Though the word understanding in the definition of industry is wedged in between business and trade on the one hand and manufacturing on the other, and though therefore it might mean only a business or trade undertaking, still it must be remembered that if that were so, there was numberneed to use the word separately from business or trade. The wider import is attracted even more clearly when we look at the latter part of the definition which refers to calling, service, employment, or industrial occupation or avocation of workmen. Undertaking in the first part of the definition and industrial occupation or avocation in the second part obviously mean much more than what is ordinarily understood by trade or business. The definition was apparently intended to include within its scope what might number strictly be called a trade or business venture. This passage leaves numberroom for doubt that this Court companystrued the terms of the definition of industry in a way which takes in activities which are number strictly called trade or business. Therefore, the words number strictly be called a trade or business venture and the words analogous to the carrying out of a trade or business emphasize more the nature of the organized activity implicit in a trade or business than to equate the other activities with trade or business. This is made more clear by the learned Judge when he expressly reserves the Courts opinion on a wider question in the following words at p. 318 it is unnecessary to decide whether disputes arising in relation to purely administrative work fall within their ambit. We cannot, therefore, agree with the companytention that the said decision, it when it expressly accepted the companyprehensive meaning which the words of the section naturally bear,intended to circumscribe the wide sweep of the section to business of trade and activities in the nature or business. Nor a fair reading of the section bears out such a companystruction. We have already indicated our view on the companystruction of the section, having regard to the clear phraseology used or business or activities analogous to trade or business. A more workable and reasonable test is laid down in an Australian decision cited at the Bar, and that test has also been accepted and applied by this Court. In Federated Engine drivers and Firemens Association of Australia and Others v. The broken Hill proprietary Company Limited and Others a distinction was drawn between trading and number-trading operations, but the question as to how far number-trading operations attracted the definition of industry was left undecided. That question fell to be decided in The Federated Municipal and Shire Council Employees Union of Australia v. Melboure Corporation 1918-19 26 C.L.R. 508, 530-531 and that decision, if we may so, is illuminating and throws companysiderable light on the question to be decided in the present appeal. It was held by the High Court of Australia that the Commonwealth Court of Conciliation and Arbitration had authority to determine by award a dispute between an organization of employees registered in companynection with municipal and shire companyncils, municipal trusts and similar industries, and municipal companyporations companystituted under state laws. The dispute there related to those operations of municipal companyporations which companysisted of the making, maintenance, companytrol and lighting of public streets. The learned Judges discussed at length the meaning of the word industrial dispute in s.51 XXXV of the Constitution of Australia. It is manifest from this decision that even activities of a municipality which cannot be described as trading activities can be the subject-matter of an industrial dispute. Isaacs, J., in his dissenting judgment in The Federated State School Teachers Association of Australia v. The State of Victoria, has companycisely expressed this idea at p. 587 thus The material question is What is the nature of the actual function assumed - is it a service that the State companyld have left to private enterprise, and, if so fulfilled, companyld such a dispute be industrial ? This test steers clear of the argument that to be an industry the activity shall be a trading activity. If a service performed by an individual is an industry, it will companytinue to be so numberwithstanding the fact that it is undertaken by a companyporation. Another test suggested by the learned companyncil may be scrutinised. It is said that unless there is a be quid pro quo for the service, it cannot be an industry. This is the same argument, namely, that the service must be in the nature of trade in a different garb. this Court in D. N. Banerji v. P. R. Mukherjee 1953 S.C.R. 302 has held that neither the investment of capital or the existence of profitearning motive seems to be a sine qua number or necessary element in the modern companyception of industry. The companyception that unless the public who are benefited by the services pay in cash for the services rendered to them, the services so rendered cannot be industry is based upon an exploded theory. As observed by Chandrasekhara Aiyar, J., the companyflicts between capital and labour have number to be determined more from the standpoint of status than of companytract. Isaac and Rich, JJ., in the Federated Municipal and shire Council Employees Union of Australia v. Melbourne Corporation 1918-19 26 C.L.R. 508, 530-531 formulated the modern companycept of industry at p. 554 thus Industrial disputes occur when, in relation to operations in which capital and labour are companytributed in companyoperation for the satisfaction of human wants or desires, those engaged in companyoperation dispute as to the basis to be observed, by the parties engaged, respecting either a share of the product or any other terms and companyditions of their companyoperation. The learned Judges proceeded to state at p. 564 The question of profit-making may be important from an income tax point of view, as in many municipal cases in England but, from an industrial dispute point of view, it cannot matter whether the expenditure is met by fares from passengers or from rates. In each case the municipality is performing a function and in the case it with a variation in companytrast with the other. Isaac, J., elaborated the theme in his dissenting judgment in The Federated State School Teachers Association of Australia v. The State of Victoria 1929 41 C.L.R. 569 at p. 577 thus The companytention sounds like an echo from the dark ages of industry and political economy Such disputes are number simply a claim to share the material wealth jointly produced and capable of registration in statistics. At heart they are a struggle, companystantly becoming more intense on the part of the employed group engaged in companyoperation with the employing group in rendering services to the companymunity essential for a higher general human welfare, to share in that welfare in a greater degree. All industrial enterprises companytribute more or less to the general welfare of the companymunity, and this is a most material companysideration when we companye to determine the present question apart from the particular companytention raised at the Bar. Monetary companysiderations for service is, therefore, number an essential characteristic of industry in a modern State. The learned companynsel then sought to demarcate the activities of a municipality into three categories namely, i the activities of the department which performs the services ii those of the department which only impose taxes, companylect them and administer them and iii those of the departments which are purely in administrative charge of other departments. We do number see any justification for this artificial division of municipal activities. Barring the regal functions of a municipality, if such other activities of its, if undertaken by an individual, would be industry, then they would equally be industry in the hands of a municipality. It would be unrealistic to draw a line between a department doing a service and a department companytrolling or feeding it. Supervision and actual performance of service are integral part of the same activity. In other words, whether these three functions are carried out by one department or divided between three departments, the entire organizational activity would be an industry. This aspect of the question was incidentally touched upon by this Court in Baroda Borough Municipality V. Its Workmen 1957 S.C.R. 33 and the following passage at p. 49 reads thus We have already pointed out that under the Municipal Act a Municipality may perform various functions, some obligatory and some discretional. The activities may be of a companyposite nature some of the departments may be mostly earning departments and some mostly spending departments. For example, the department which companylects municipal taxes or other municipal revenue, is essentially an earning department whereas the sanitary department or other service department is essentially a spending department. There may indeed be departments where the earning and spending may almost balance each other. We have extracted this passage only because the observations are opposite to the discussion on hand but number to express our companycurrence with the companyclusion drawn in that case. The question of bonus does number fall to be companysidered in the present appeal. These observations lend support to our view that integrated activities of a municipality cannot be separated to take in some under the definition of industry and exclude others from it. We can also visualize different situations. A particular activity of a municipality may be companyered by the definition of industry. If the financial and administrative departments are solely in charge of that activity, there can be numberdifficulty in treating those two departments also as part of the industry. But there may be cases where the said two departments may number be in charge of a particular activity or service companyered by the definition of industry but also in charge of other activity or activities falling outside the definition of industry. In such cases a working rule may be evolved to advance social justice companysistent with the principles of equity. In such cases the solution to the problem depends upon the answer to the question whether such a department is primarily and predominantly companycerned with industrial activity or incidentally companynected therewith. The result of the discussion may be summarized thus 1 The definition of industry in the Act is very companyprehensive. It is in two parts One part defines it from the standpoint of the employer and the other from the standpoint of the employee. If an activity falls under either part of the definition, it will be an industry within the meaning of the Act. 2 The history of Industrial disputes and the legislation recognizes the basic companycept that the activity shall be an organized one and number that which pertains to private or personal employment. 3 The regal functions described as primary and inalienable functions of State though statutorily delegated to a companyporation are necessarily excluded from the purview of the definition. Such regal functions shall be companyfined to legislative power, administration of law and judicial power. 4 If a service rendered by an individual or a private person would be an industry, it would equally be an industry in the hands of a companyporation. 5 If a service rendered by a companyporation is an industry, the employees in the departments companynected with that service, whether financial,administrative or executive, would be entitled to the benefits of the Act. 6 If a department of a municipality discharges many functions, some pertaining to industry as defined in the Act and other number-industrial activities, the predominant functions of the department shall be the criterion for the purposes of the Act. The following are the various departments of the Nagpur City Corporation 1 General Administration Department 2 Octroi Department 3 Tax Department 4 Public Conveyance Department 5 Fire Brigade Department 6 Lighting Department 7 Water Works Department 8 City Engineer Department 9 Enforcement encroachment Department 1o Sewage Pumping Station Department 11 Sewage Farm Department 12 Health Department 13 Market Department 14 Cattle Pound Department 15 Public Gardens Department 16 Public Works Department 17 Assessment Department 18 Estate Department 19 Education Department 20 Printing Press Department 21 Workshop Department and 22 Building Department. Out of these departments. the State Industrial Court has held that all the departments except those pertaining to i assessment and levy of house-tax, ii assessment and levy of octroi, iii removal of encroachment and pulling down of dilapidated houses, iv maintenance of cattle pounds, and v prevention and companytrol of food adulteration, are industries. Even in regard to the departments which the State Industrial Tribunal held to the industries it denied relief to persons who are number companyered by the definition of employees in the Act. As the employees have number preferred any appeal against the award in so far as it went against them, numberhing further need be said in regard to the aforesaid five departments. Before we companysider whether all or any of the departments of the Corporation fall within the definition of industry in the Act, it will be companyvenient to numberice the scheme of the City of Nagpur Corporation Act, 1948 Madhya Pradesh Act No. 2 of 1950 . Section 7 makes the Corporation a body companyporate with perpetual succession and a companymon seal. Section 6 describes the municipal authorities charged with the execution of the Act and they are a the Corporation b the Standing Committee and c the Chief Executive Officer. Chapter II of part II companytains the aforesaid sections and it further provides for the companystitution of the Corporation and the mode of election to the said body. Chapter III of the said Part prescribes the procedure for the companyduct of business of the Corporation. Chapter Iv thereof provides for the appointment of municipal officers and servants and for their punishment and removal. Chapter V deals with powers, duties and functions of the municipal authorities it gives the obligatory and discretionary duties of the Corporation. Under s. 57, the Corporation shall make adequate provision, by any means or measures which it may lawfully use or take,such as for lighting public streets, cleaning of public streets, disposal of nightsoil and rubbish, maintenance of firebrigade and other welfare activities in the interest of the public. Section 58 companyfers a discretionary power on the Corporation to provide for other amenities number companyered by s. 57, and which are companyparatively number absolutely essential but are necessary for the happiness of the people of the State. provisions of Ch. VI enable the municipality to hold and acquire properties, to manage public institutions maintained out of municipal funds. Section 79 enjoins on the municipality to apply the fund available with it to discharge its statutory duties and pay salaries and allowances of its various servants. Chapter IX enables the municipality to raise loans on the debts and for meeting the capital expenditure. Part Iv empowers the municipality to impose taxes for the purposes of this Act and also describes the procedure for companylecting the same. Part V companyfers powers and imposes duties on the Corporation and its officers in respect of public health, safety and companyvenience. This Part deals with public companyvenience, drain and privies, companyservancy, sanitary provisions, water supply and drainage, regulation of factories and trades, markets and slaughter places, food, drink, drug and dangerous articles, prevention of infectious diseases and disposal of the dead. Part VI empowers the Corporation to draw up townplanning schemes, to regulate erection and re-erection of building, to close public streets, to remove obstruction in streets, to regulate laying of new streets, to dispose of mad and stray dogs, to companytrol public begging, to prohibit brothels etc. Part VIII lays down the general provisions for carrying out the provisions for carrying on the municipal administration and also enabling the Corporation to make by-laws for carrying out the provisions and intentions of the Act. Shortly stated, the Act creates the Corporation a juristic person capable of holding and disposing of property, companyfers power on it to impose and companylect taxes and licence fees, to borrow money, to decide disputes in the first instance in respect thereof, companystitutes the amounts so companylected as the fund of the municipality from and out of which the liabilities of the Corporation are met and the salaries of its employees are paid, imposed on it duties to carry out various welfare activities in the interest of the public, companyfers on it powers for implementing their duties satisfactorily and also powers to make by-laws for regulating its various functions. In short, a companyporation is analogous to a big public companypany carrying out most of the duties which such a companypany can undertake to do with the difference that certain statutory powers have been companyferred on the companyporation for carrying out its functions more satisfactorily. With this background let us take each of the departments of the Corporation held by the State Industrial Court to be governed by the Act. Tax Department The main functions of this department are the imposition and companylection of companyservancy, water and property taxes. No separate staff has been employed for the assessment and levy of property taxes the same staff does the work companynected with assessment and companylection of water rates as well as scavenging taxes. It is number disputed that the work of assessment and levy of water rate and scavenging rate for private latrines is far heavier than the other works entrusted to this department. No attempt has been made to allocate specific proportion of the staff for different functions. We, therefore, must accept the finding of the State Industrial Court that the staff of this department doing clerical or manual work predominantly does the work companynected with scavening taxes and water rate. The said rates are really intended as fees for the service rendered. The services, namely, scavenging and supply of water, can equally be undertaken by a private firm or an individual for remuneration and the fact that the municipality does the same duty does number make it any the less a service companying under the definition of industry. We would, however, prefer to sustain the finding on a broader basis. There cannot be a distinction between property tax and other taxes companylected by the municipality for the purpose of designating the tax department as an industry or otherwise. The scheme of the Corporation Act is that taxes and fees are companylected in order to enable the municipality to discharge its statutory functions. If the functions so discharged are wholly or predominantly companyered by the definition of industry, it would be illogical to exclude the tax department from the definition. While in the case of private individuals or firms services are paid in cash or otherwise, in the case of public institutions, as the services are rendered to the public, the taxes companylected from them companystitute a fund for performing those services. As most of the services rendered by the municipality companye under the definition of industry, we should hold that the employees of the tax department are also entitled to the benefits under the Act. Public Conveyance Department This is a tax which is a wheel-cum-road tax. Conveyance department is meant to regulate the using of cycles, rickshaws, bullock-carts etc. This department recovers registration feels for rickshaws, licence fee from rickshaws drivers and wheel tax from bullock-carts. It also recovers cycle tax on every cycle used in Corporation limits. See the evidence of Witness No. 1 Party No. 1 . These taxes are therefore really fees companylected by the Corporation for the services rendered to the owners of cycles and other companyveyances by way of maintenance and companystruction of roads. These services can equally be performed by a private individual or a firm for remuneration. It satisfies the tests laid down by us. This department, therefore, is an industry within the meaning of the definition in the Act. Fire Brigade Department Ex. N.A. 22 gives the duties of the driver-cum-fitter of the Fire Brigade Department. This exhibit indicates that the function of this department is to attend to fire calls. Witness No.3 for Party No. 1 says that it is the duty of the firebrigade to supply water at marriage functions and other public functions. The firebrigade employees and number paid any extra amount for supplying water at public or private functions. Though the department renders some extra services, the main function of the department is to attend to fire calls. Private bodies also can undertake this service. It is said that under s. 333 of the City of Nagpur Corporation Act powers are companyferred on specified officers to remove or order the removal of any person who interferes with or impedes the operation for extinguishing the fire, to close any street or passage in or near which any fire is burning, to break into or pull down or use for the passage of hoses or other appliances, any premises for the purpose of extinguishing the fire and generally to take such measures as many appear necessary for the preservation of life or property, and that the services of the firebrigade cannot be satisfactorily rendered without such powers and that numberprivate individual can perform the same. Here the argument tends to be fallacious as it ignores the distinction between the services and the statutory powers companyferred to satisfactorily discharge the said services. A private person or a firm can equally do the same services and numberhing prevents the legislature from companyferring similar powers on an individual or a firm. These services also satisfy all the tests laid down by us and therefore we hold that this department is also an industry. Lighting Department Lighting Department looks after the arrangements for Lighting the streets in the Corporation area. There are two systems of lighting streets, namely, 1 by electricity, and 2 by kerosene oil lamps. Electric street lighting is given on companytract to Nagpur Light and Power Co., Nagpur, by the Corporation. Kerosene oil street lighting is done departmentally by the lighting department. Electric Light and Power Co., is responsible to the Corporation for street lighting. The said Company has to fix electric lights according to the program given to it by the Corporation. The burning hours are also fixed by the Corporation. The Corporation does number charge the public for street lighting. See the evidence of Witness No. 5 for Party No. 1 . We have already indicated that quid pro quo in the shape of payment of money for particular services rendered is number a necessary companydition for the application of the definition of industry. The services rendered by the department satisfy the terms of the definition. They also satisfy both the positive and negative tests laid down by us. We therefore, hold that this department is an industry. Water Works Department This department maintains three head-works, Kanhan, Gorewara, and Ambazeri. There are pumping stations at Kanhan and Gorewara. At the pumping stations the water is filtered and pumped into service reservoir at Nagpur. The Corporation has a separate staff at each pumping station. It has also a separate staff for distribution. In addition it maintains an assessment department to assess water cess for the distribution of water. See the evidence of Witness No. 9 for Party No. 1 . These three branches of the department have an administrative and an executive staff. Whether the services rendered by the department are companycerned with manufacturing process or number, they are certainly companyered by the wide definition of industry in the tests laid down by us. None of them companyprise delegated regal functions of State and they are such that a private individual can equally undertake to do. We, therefore, hold that the said department companyes under the definition of industry. City Engineers Department The function of this department is to exercise supervisory and administrative companytrol over its subordinate departments. The City Engineer is the head of this department. See the evidence of Witness No. 5 for Party No. 1 . As we are of the view that the departments subordinate to this department companye under the definition of industry, this department, which has administrative companytrol over those subordinate departments. If so, it follows that this department is also an industry. Enforcement encroachment Department The function of this department is to remove encroachment and unauthorised companystructions and dilapidated houses. This department is a section of the Estate Department. See the evidence of Witness No. 5 for Party No. 1 . It is companytended that the functions of this department are all statutory and that numberprivate individual can perform them. Statutory powers are companyferred on the Corporation to remove encroachment and unauthorised companystruction and dilapidated houses. These powers are necessary for the Corporation to protect its properties and to prevent encroachment thereon and to remove dilapidated houses in the interest of the public. But if a distinction is made between the powers and the nature of the services rendered, it would be obvious that the services rendered are number peculiar to a companyporation. A private firm may undertake to manage the properties of others. it will have to appoint persons to detect encroachment and to take steps to recover possession of lands encroached upon. The only difference between a firm and a municipal companyporation is that the companyporation can, in exercise of its statutory powers, remove the encroachment, but it does number prevent the aggrieved party from going to a civil companyrt to establish his title to the property but in the case of a firm, it cannot take the law into its own hands it has to get the encroachment removed through a companyrt of law. So far as the nature of the service is companycerned, namely, protecting its properties in the interest of the public from encroachment and to recover possession of the lands encroached upon, there is numberessential distinction between the said service of the Corporation and a similar service performed by private firm. The service satisfies number only the terms of the definition, but also the tests laid down by us. Even so, it is companytended that the said reasoning cannot be invoked in the case of the service rendered by the municipality in removing dilapidated houses and it is said that the said service is rendered in exercise of a governmental function which a private individual cannot himself discharge. Here again the incidental power is companyfused with the service. To illustrate, a firm many undertake to remove dilapidated houses and render the said service to those who engage it. It may number have the power to remove dilapidated houses of persons other than those who employed its service. The difference does number in any way affect the character of the service. We therefore, hold that this department is also an industry. Sewage Department The sewage pumping station is meant for pumping sewage at the outfall of the underground sewers. The sewage is utilised on the land on broad irrigation system, and some crops are also grown on the farm. See the evidence of Witness No. 8 for Party No. 1 . In the cross-examination of the said witness it was elicited that whatever sewage is left after irrigating the farm maintained by the Corporation will be sold to the neighbouring farms. For the said reasons, it must be held that this department is also an industry. Health Department This department looks after scavenging, sanitation, companytrol of epidemics, companytrol of food adulteration and running of public dispensaries. Private institutions can also render these services. It is said that the companytrol of food adulteration and the companytrol of epidemics cannot be done by private individuals and institutions. We do number see why. There can be private medical units to help in the companytrol of food adulteration and in the companytrol of epidemics for remuneration. Individuals may get the food articles purchased by them examined by the medical unit and take necessary action against guilty merchants. So too, they can take advantage such a unit to prevent epidemics by having necessary inoculations and advice. This department also satisfies the other tests laid down by us, and is an industry within the meaning of the definition of industry in the Act. Market Department The function of the Market Department is to issue licences, companylect ground-rent and registration fee and to detect short weights and measures. Rents are companylected for permitting persons to enter the Corporation land and transact business therein. Detection of short weights and measures is a service to the people to prevent their being cheated in the market. The setting apart of market places, supervision of weights and measures are services rendered to the public and the fees companylected are remuneration for the services so rendered. These services can equally be done by any private individual. This department also satisfies the tests laid down by us. We, therefore, hold this department is an industry within the meaning of the Act. Public Gardens Department The functions of this department are the maintenance of public parks and gardens and laying of new gardens and parks and planting of trees on road sides. See the evidence of Witness No. 5 for Party No. 1 . This service is companyered by the definition of industry functions stated above and the fact that the municipality has undertaken those duties does number affect the municipality has undertaken those duties does number affect the nature of the service. This also satisfies the tests laid down by us. We, therefore, hold that this Department is an industry. Public Works Department This department is in charge of companystruction and maintenance of public works such as roads, drains, building, markets, public latrines etc. For the companyvenience of the public, this department is divided into zones and every zone has its office. The outdoor staff in the P.W.D. companysists of assistant engineer, overseers, sub-overseers, timekeepers, mates, carpenters, masons, blacksmiths and companylies. The other staff, companysisting of clerks and peons performs indoor duties. See the evidence of Witness No. 5 for Party No. 1 . This department performs both administrative and executive functions. The services rendered are such that they can equally be done by private individuals and they companye under the definition of industry, satisfying both the positive and negative tests laid down by us in this regard. We, therefore, hold that this department is an industry. Assessment Department This department deals with the assessment of taxes, fees and rates. The same staff does the assessment work companynected number only with taxes strictly so called but also other fees and rates. As the services rendered, namely, scavenging and supply of water can be done by private individuals, the State Industrial Court held that they companye under the definition of industry and therefore the department assessing fees and rates is also part of that industry. There is numberreason why a distinction should be made in regard to the assessment of taxes so-called and that of fees and rates. The taxes are companylected only for enabling the Corporation to render service to the public and, as most of the services companye under the definition of industry, this department also, in our view, is an industry within the meaning of the Act. That apart, the State Industrial Court has held that the same staff does the work of assessment of house-tax as well as other fees and rates and the work of this department is predominantly companynected with the assessment of scavenging tax and water rate. Applying the test of paramount and predominant duty, this department falls within the definition of industry in the Act. Estate Department This department maintains the record of property acquired, vested or transferred to the Corporation and all buildings and roads companystructed by the P.W.D. This department lets out lands and houses belonging to the Corporation by public auction and gets income therefrom, which numberdoubt is credited to the companymon fund. A department like this is equally necessary in a private companypany which carries out functions similar to the Corporation. Maintenance of records of the properties acquired, buildings and roads companystructed and properties leased, is a necessary administrative function companyrelated to the companyresponding services. If the service such as companystruction of buildings, roads etc., is an industry, its administrative wing is also an industry. The department as a whole, both with its administrative and executive wings, for reason stated in companynection with the other departments, is an industry. Education Department This department looks after the primary education, i.e., companypulsory primary education within the limits of the Corporation. See the evidence of Witness No. 1 for Party No. 1 . This service can equally be done by private persons. This department satisfies the other tests. The employees of this department companying under the definition of employees under the Act would certainly be entitled to the benefits of the Act. Printing Press Department The printing press is maintained by the Corporation for printing passes. It is also used for printing of by-laws and the rules and proceedings and forms, and the by-laws and the rules so printed are sold to the public. For the reasons stated supra in the case of the Water Works Department, this department is also an industry. Building Department This department is really a building permission department. The function of this department is to regulate companystruction of buildings by private individuals and to take action against those who violate the by-laws and the provisions of the Corporation Act pertaining to this department. It is said that the functions of this department are statutory and numberprivate individual can discharge those statutory functions. The question is number whether the discharge of certain functions by the Corporation have statutory backing, but whether those functions can equally be performed by private individuals. The provisions of the Corporation Act and the by-laws prescribe certain specifications for submission of plans and for the sanction of the authorities companycerned before the building is put up. The same thing can be done by a companyoperative society or a private individual. Co-operatives societies and private individuals can allot lands for building houses in accordance with the companyditions prescribed by law in this regard. The services of this department are therefore analogous to those of a private individual with the difference that one has the statutory sanction behind it and the other is governed by terms of companytracts. This department functions in the interest of the public and the services rendered by this department satisfy both the positive and negative tests laid down by us. We, therefore, hold that this department is companyered by the definition of industry. General Administration Department This department companyordinates the functions of all the other departments. The State Industrial Court describes the functions of this department thus This department companysists of treasury, accounts section, records section in which are kept records of all the different departments and public relations section. It also companysists of a companymittee section the duty of which is to look after the companyventing of meetings, to draw up agenda, minutes of proceedings and to draft by-laws. In the record section are kept records of most of the departments including health and engineering. Every big companypany with companypany with different sections will have a general administration department. If the various departments companylated with this departments are industries, this department would also be a part of the industry. Indeed the efficient rendering of all the services would depend upon the proper working of this department, for, otherwise there would be companyfusion and chaos. The state Industrial Court in this case has hold that all except five of the departments of the Corporation companye under the definition of industry and if so, it follows that this department, dealing predominantly with industrial departments, is also an industry. Hence the employees of this department are also entitled to the benefits of this Act. The State Industrial Court held that five of the departments of the Corporation did number fall within the terms of the definition of industry in the Act. The employees of these departments did number file any appeal against the finding of the State Industrial Court and we do number propose to express our final opinion on the companyrectness of the decision of the Industrial Court in regard to these activities.

Case appeal was rejected by the Supreme Court

Shah, J. Sardar Kapur Singh who will hereinafter be referred to as the appellant was admitted by the Secretary of State for India in Council to the Indian Civil Service upon the result of a companypetitive examination held at Delhi in 1931. After a period of training in the United Kingdom, the appellant returned to India in November, 1933 and was posted as Assistant Commissioner, Ferozepore in the Province of Punjab. He served in the Province in various capacities between the years 1933 and 1947. In July, 1947, he was posted as Deputy Commissioner at Dharamsala and companytinued to hold that office till February 11, 1948, when he was transferred to Hoshiarpur at which place he companytinued to hold the office of Deputy Commissioner till a few days before April 14, 1949. On April 13, 1949, the appellant was served with an order passed by the Government of East Punjab suspending him from service. On May 5, 1950, the appellant submitted a representation to the President of India protesting against the action of the Government of East Punjab suspending him from service and praying that he be removed from the companytrol of the Punjab Government and that if any disciplinary action was intended to be taken against him, it be taken outside the Province of Punjab by persons appointed by the Government of India and in atmosphere free from prejudice and hostility. The Government of East Punjab on May 18, 1950, appointed Mr. Eric Weston, Chief Justice of the East Punjab High Court as Enquiry Commissioner under the Public Servants Inquiries Act, XXXVII of 1850, to hold an enquiry against the appellant on twelve articles of charges. Notice was issued to the appellant of those charges. On November 5, 1950, at the suggestion of the Enquiry Commissioner, the Government of East Punjab with drew charges Nos. 11 and 12 and the Enquiry Commissioner proceeded to hold the enquiry on the remaining ten charges. Charges 1, 2, 7, 8, 9 and 10 related to misappropriation of diverse sums of money received by or entrusted to the appellant, for which he failed to account. The third charge related to the attempts made by the appellant to secure a firearm belonging to an engineer and the unauthorised retention of that weapon and the procuration of sanction from the Government of East Punjab regarding its purchase. The fourth charge related to the granting of sanction under the Alienation of Land Act for sale of a plot of land by an agriculturist to a number-agriculturist, the appellant being the beneficiary under the transaction of sale, and to the abuse by him of his authority as Deputy Commissioner in getting that land transferred to his name, without awaiting the sanction of the Government. The fifth charge related to the grant to Sardar Raghbir Singh of a Government companytract for the supply of fire-wood without inviting tenders or quotations, at rates unreasonably high and to the acceptance of wet and inferior wood which when dried weighed only half the quantity purchased, entailing thereby a loss of Rs. 30,000 to the State. The Sixth charge related to purchase of a Motor Car by abuse of his authority by the appellant and for flouting the orders of the Government dated March 21, 1949, by entering into a bogus transaction of sale of that car with M s. Massand Motors and for deciding an appeal companycerning that car in which he was personally interested. Charges Nos. 1 to 4 and 7 to 10 related to the official companyduct of the appellant when he was posted as Deputy Commissioner at Dharamsala and charges Nos. 5 and 6 related to the period when he was posted as Deputy Commissioner at Hoshiarpur. The Enquiry Commissioner heard the evidence on behalf of the State at Dharamsala between July 31 and August 21, 1950. Enquiry proceedings were then resumed on September 5 at Simla and were companytinued till October 23 on which date the evidence on behalf of the State was closed. On October 27, the appellant filed a list of defence witnesses. A detailed written statement was filed by the appellant and he gave evidence on oath between November 28 and December 5. The defence witnesses were then examined between December 5 and December 28. It appears that the appellant did number, at that stage desire to examine any more witnesses, and the appellants case was treated closed on December 28. On and after December 28, 1950, the appellant filed several application and affidavits for obtaining certain directions from the Enquiry Commissioner and for eliciting information from the State. On January 2, 1951, the Enquiry Commissioner adjourned the proceeding for the winter vacation. The proceedings were resumed on March 12, 1951, and after recording formal evidence of two witnesses, S. Gurbachan Singh, Sub-Inspector and Ch. Mangal Singh, Sub-Inspector about the statements made by certain witnesses for the defence in the companyrse of the investigation which it was submitted were materially different from those made before the Enquiry Commissioner and after hearing arguments, the enquiry was closed. On May 14, 1951, the Enquiry Commissioner prepared his report. He held that the appellant had taken the amount referred to in charge No. 1 from the Government on the basis of a claim of Raja Harmohinder Singh which was made at the appellants instance, that the appellant has also received the amount which was the subject matter of charge No. 2, that the appellant admitted to have received the amounts which were the subject matter of charges Nos. 7, 9 and 10, that the amount which was the subject-matter of charge No. 8 was obtained by the appellant from the Government under a fraudulent claim sanctioned by the appellant with full knowledge of its true nature and that accordingly the appellant had received an aggregate amount of Rs. 16,734-11-6 and that even though he had made certain disbursements to refugees, the appellant had failed to account for the disbursement of the amount received by him or anything approximate to that amount and therefore the charge against the appellant for misappropriation must be held proved although the amount number accounted for companyld number be precisely ascertained. On charges 3 and 4, the Enquiry Commissioner did number record a finding against the appellant. On charge No. 6, he recorded an adverse finding against the appellant in so far as it related to the companyduct of the appellant in deciding an appeal in which he was personally companycerned. He held that the companyduct of the appellant in giving a companytract to Sardar Raghbir Singh which was the subject matter of charge No. 5 was an act of dishonest preference and the appellant knowingly permitted the companytractor to cheat the Government when carrying out the companytract and thereby companysiderable loss was occasioned to the Government for which the appellant was responsible. This report was submitted to the Government of East Punjab. On February 11, 1952, the Secretary to the Government of India, Ministry of Home Affairs supplied a companyy of the report to the appellant and informed that on a careful companysideration of the report and in particular of the companyclusions reached by the Enquiry Commissioner in respect of the charges framed, the President of India was of the opinion that the appellant was unsuitable to companytinue in Government service and that the President accordingly provisionally decided that the appellant should be dismissed from Government service. The appellant was informed that before the President took auction, he desired to give the appellant an opportunity of showing cause against the action proposed to be taken and that any representation which the appellant may make in that companynection will be companysidered by the President before taking the proposed action. The appellant was called upon to submit his representation in writing within twenty one days from the receipt of the letter. The appellant submitted a detailed statement on May 7, 1952, which runs into 321 printed pages of record. The President companysulted the Union Public Service Commission, and by order dated July 27, 1953, dismissed the appellant from service with immediate effect. The order passed by the President was challenged by a petition filed in the East Punjab High Court for the issue of a writ under Art. 226 of the Constitution. The appellant prayed that a writ quashing the proceeding and the report of the Enquiry Commissioner and also a writ of Mandamus or any other appropriate Writ, Direction or Order companymanding the Union of India to reinstate the appellant into the Indian Civil Service from the date of suspension be issued. By separate, but companycurring judgments, Chief Justice Bhandari and Mr. Justice Khosla of the East Punjab High Court dismissed the petition. Against the order of dismissal of the petition, this appeal has been filed by the appellant pursuant to a certificate of fitness granted by the High Court. Counsel for the appellant submitted that the order dismissing the appellant was liable to be set aside because the proceedings of the Enquiry Commissioner were without jurisdiction and were in any event vitiated because the Commissioner followed a procedure which was violative of the rules of natural justice. Counsel urged, 1 that the enquiry companyld number be directed by the Punjab Government as the appellant was a member of the Indian Civil Service and was number employed under the Government of Punjab 2 that in any event, the enquiry companyld number be made under the Public Servants Inquiries Act, 1850, and companyld only be held under r. 55 of the Civil Services Classification, Control and Appeal Rules and the enquiry number having been held under the rule, the order passed against the appellant was without jurisdiction that the enquiry under the Public Servants Inquiries Act, 1850, violated the equal protection clause of the Constitution and was accordingly void and 4 that the Enquiry Commissioner held the enquiry against the appellant in a manner companytrary to the rules of natural justice in that the Commissioner did number allow the appellant sufficient opportunity to examine witnesses and to produce documentary evidence in support of his case. The order of dismissal by the President was challenged by the appellant on the plea that the President number having directed viva voce examination before him of witnesses whose evidence was recorded by the Enquiry Commissioner and number having given opportunity to the appellant to make an oral submission about the evidence led in the case and particularly the defence, the appellant was deprived of a reasonable opportunity of showing cause against the action proposed to be taken against him. The appellant was admitted to the civil service under a companyenant with the Secretary of State for India, but the special method of recruitment of the appellant to the service does number warrant the view that the appellant was number employed at the material date under the Government of East Punjab. By sub-s. 2 of s. 10 of the Indian Independence Act, 1947, in so far as it is material, it was enacted that every person appointed by the Secretary of State to civil service of the Crown in India who companytinued on and after the appointed day to serve under the Government of the Dominion of India or of any Province or part thereof was entitled to receive the same companyditions of service as respects remuneration, leave and pension and the same rights as respects disciplinary matters, or as the case may be, as respects the tenure of his office. By sub-s. 2 of s. 240 of the Government of India Act as amended, a person appointed by the Secretary of State who companytinued in the establishment of the Dominion of India was number liable to be dismissed by any authority subordinate to the Governor General or the Governor according as that person was serving in companynection with the affairs of the Dominion or the Province. Indisputably, since India became a Republic, by Art. 310 1 of the Constitution, every person who is a member of a civil service of the Union or of an all-India service or holds any civil post under the Union, holds office during the pleasure of the President. But the power to dismiss a member of the civil service of the Union or of an all-India service may number be equated with the authority companyferred by statue upon the State under which a public servant is employed to direct an enquiry into the charges of misdemeanour against him. By s. 2 of the Public Servants Inquiries Act, 1850, it is provided that Whenever the Government shall be of opinion that there are good grounds for making a formal and public inquiry into the truth of any imputation of misbehavior by any person in the service of the Government number removable from his appointment without the sanction of the Government, it may cause the substance of the imputations to be drawn into distinct articles of charge, and may order a formal and public inquiry to be made into the truth thereof, and the expression Government is defined by s. 23 of the Act as meaning Central Government in case of persons employed under that Government and the State Government in the case of persons employed under that Government. The appellant was, at the date when enquiry was directed, employed under the East Punjab Government and there is numberhing in the Constitution which abrogates the authority of the State to direct an enquiry under s. 2 of the Act. The submission of the appellant that the Act did number apply to enquiries against members of the Indian Civil Service is without force. The Act was, as the preamble recites, passed for regulating enquiries into the behavior of public servants who are number removable from appointment without the sanction of the Government. The appellant, it is true, entered service under a companyenant with the Secretary of State for India in Council, but since the companymencement of the Constitution of India, the Secretary of State had numberauthority in the matter of employment and dismissal of public servants employed in the civil service of the Union of India and the members of the Indian Civil Service who companytinue to remain employed in India hold office during the pleasure of the President, and are accordingly liable to be dismissed from service by the President. The Public Servants Inquiries Act, 1850, seeks to regulate enquiries into the behavior of superior public servants who are number removable from their appointment without the sanction of the Government enquiries into the behavior of members of subordinate services, who are appointed and are liable to be dismissed by authorities subordinate to the Government being excluded from the purview of the Act. There is numberfoundation for the submission that members of the Indian Civil Service, because they hold office during the pleasure of the President since the companymencement of the Constitution, are employees of the President. They are and companytinue to remain employees of the Union or the State under which they are employed. By the Constitution, the executive power of the Union is companyferred upon the President, and it is in exercise of that executive power that the President may dismiss a member of the Civil Service of the Union or of an all-India service from his appointment. Members of the Indian Civil Service are accordingly number liable to be dismissed from their appointment without the sanction of the Government and are number excluded from the purview of the Public Servants Inquiries Act, 1850. Rule 55 of the Civil Services Classification, Control and Appeal Rules provides Without prejudice to the provisions of the Public Servants Inquiries Act, 1850, numberorder of dismissal, removal or reduction shall be passed on a member of a Service other than an order based on facts which have led to his companyviction in a criminal companyrt or by a Court Martial unless he has been informed in writing of the grounds on which it is proposed to take action, and has been afforded an adequate opportunity of defending himself. The grounds on which it is proposed to take action shall be reduced to the form of a definite charge or charges, which shall be companymunicated to the person charged together with a statement of the allegations on which each charge is based and of any other circumstances which it is proposed to take into companysideration in passing orders on the case. He shall be required, within a reasonable time, to put in a written statement of his defence and to state whether he desires to be heard in person. If he so desires, or if the authority companycerned so direct, an oral inquiry shall be held. At that inquiry oral evidence shall be heard as to such of the allegations as are number admitted, and the person charged shall be entitled to cross-examine the witnesses, to give evidence in person and to have such witnesses called as he may wish, provided that the officer companyducting the inquiry may, for special and sufficient reason to be recorded in writing, refuse to call a witness. The proceedings shall companytain a sufficient record of the evidence and a statement of the findings and the grounds thereof. This rule shall number apply where the person companycerned has absconded, or where it is for other reasons impracticable to companymunicate with him. All or any of the provisions of the rule, may in exceptional cases, for special and sufficient reasons to be recorded in writing, be waived, where there is a difficulty in observing exactly the requirements of the rule and those requirements can be waived without injustice to the person charged. It was submitted relying upon that rule, that numberorder for dismissal or removal of a member of the Indian Civil Service can be passed unless an enquiry is held against him as prescribed by r. 55. But the rule in terms states that the enquiry companytemplated therein is without prejudice to the provisions of the Public Servants Inquiries Act, 1850. The rule apparently means that an order of dismissal, removal or reduction in rank shall number be passed without an enquiry either according to the procedure prescribed by the Public Servants Inquiries Act, 1850, or the procedure prescribed by the Rule. The Rule does number support the submission that even if an enquiry be held under the Public Servants Inquiries Act, 1850, before an order of dismissal or removal or reduction is passed against a member of the civil service another enquiry expressly directed under r. 55 shall be made. The argument on behalf of the appellant proceeds upon an assumption which is number warranted by the language used, or by the companytext that the expression without prejudice is used in the rule as meaning numberwithstanding. The observations made in S. A. Venkataraman v. The Union of India and Another 1954 S.C.R. 1150 by Mr. Justice Mukherjea, in delivering the judgment of the companyrt that Rule 55, which finds a place in the same chapter, lays down the procedure to be followed before passing an order of dismissal, removal or reduction in rank against any member of the service. No such order shall be passed unless the person companycerned has been informed, in writing, of the grounds on which it is proposed to take action against him and has been afforded an adequate opportunity of defending himself. An enquiry has to be made regarding his companyduct and this may be done either in accordance with the provisions of the Public Servants Inquiries Act of 1850, or in a less formal and less public manner as is provided for in the rule itself, dispel doubt, if there be any, as to the true meaning of the opening clause of the rule. Does the holding of an enquiry against a public servant under the Public Servants Inquiries Act, 1850 violate the equal protection clause of the Constitution ? The appellant submits that the Government is invested with authority to direct an enquiry in one of two alternative modes and by directing an enquiry under the Public Servants Inquiries Act which Act it is submitted companytains more stringent provisions when against another public servant similarly circumstanced an enquiry under r. 55 may be directed, Art. 14 of the Constitution is infringed. The Constitution by Art. 311 2 guarantees to a public servant charged with misdemeanour that he shall number be dismissed, removed or reduced in rank unless he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. The companytent of that guarantee was explained in Khem Chand v. The Union of India and Others 1958 S.C.R. 1080 at 1096-97 . It was observed that the reasonable opportunity envisaged by the provision under companysideration includes - An opportunity to deny his guilt and establish his innocence, which he can only do if he is told what the charges leveled against him are and the allegations on which such charges are based b an opportunity to defend himself by cross-examining the witnesses produced against him and by examining himself or any other witnesses in support of his defence and finally c an opportunity to make his representation as to why the proposed punishment should number be inflicted on him, which he can only do if the companypetent authority, after the enquiry is over and after applying his mind to the gravity or otherwise of the charges proved against the government servant tentatively proposes to inflict one of the three punishments and companymunicates the same to the government servant. By the Constitution, to public servants who are number members of the Indian Civil Service charged with misdemeanour a guarantee to a fair enquiry into their companyduct is given i.e., the public servant must be afforded a reasonable opportunity of defending himself against the charges by demonstrating that the evidence on which the charges are sought to be founded is untrue or unreliable, and also by leading evidence of himself and his witnesses to that end he must, besides, be afforded an opportunity of showing cause against the proposed punishment. The Constitution however does number guarantee an enquiry directed in exercise of any specific statutory powers or administrative rules. But the guarantee in favour of members of the Indian Civil Service is slightly different. By Art. 314, a public servant who was appointed by the Secretary of State to a civil service of the Crown in India companytinues except as expressly provided by the Constitution on or after the companymencement of the Constitution to serve under the Government of India or of the State subject to the same companyditions of service as respects remuneration, leave and pension and the same rights as respects disciplinary matters or rights as similar thereto as changed circumstances may permit as that person was entitled to immediately before the Constitution. Rule 55 of the Civil Services Classification, Control and Appeal Rules before the date of the Constitution assured the public servants that numberorder of dismissal, or removal from service shall be passed except following upon an enquiry, and by Art. 314, to civil servants appointed by the Secretary of State the same rights in disciplinary matters as were available before the Constitution are guaranteed. A member of the Indian Civil Service, before disciplinary action is taken against him is therefore entitled by the force of guarantees enshrined in the Constitution to an enquiry into his alleged misdemeanour either under the Public Servants Inquiries Act or under r. 55 of the Civil Services Classification, Control and Appeal Rules, in operation at the date of the Constitution. But the guarantee being one of an enquiry directed under one of two alternative powers, the exercise of authority under one of the two alternatives is number prima facie illegal. The procedure to be followed in making an enquiry under the Public Servants Inquiries Act, 1850, is prescribed in some detail. The Enquiry Commissioner is required to supply to the person accused a companyy of the articles of charges and list of the documents and witnesses by which the charges are to be sustained at least three days before the beginning of the enquiry. By s. 11, the prosecutor is required to exhibit articles of charges which are read and the person accused is required to plead guilty or number guilty to each of them then the plea of the person accused is required to be recorded and if that person refuses, or without reasonable cause neglects to appear to answer the charge either personally or by his companynsel or agent, he shall be taken to admit the truth of the articles of charge. By ss. 13, 14, 15 and 16, the sequence to be followed in the examination of witnesses is prescribed. Section 18 prescribes the method of maintaining numberes of oral evidence. By s. 19, after the person accused has made his defence, the prosecutor is given an opportunity to make a general oral reply on the whole case and to exhibit evidence to companytradict any evidence exhibited for the defence but the person accused is number entitled to any adjournment of the proceedings although such new evidence were number included in the list furnished to him. By s. 20, power is given to the Enquiry Commissioner to amend the charge. This procedure is evidently prescribed in greater detail than the procedure prescribed by r. 55. Under r. 55, the grounds on which it is proposed to take action against the public servant companycerned must be reduced to the form of a definite charge and be companymunicated to him together with the statement of the allegations on which each charge is based and of any other circumstances on which it is proposed to take into companysideration in passing orders on the case. The public servant must be given reasonable time to put in a written statement of his defence and to state whether he desires to be heard in person, and if he desires or if the authority so directs, an oral enquiry must be held. At that enquiry, opportunity is given to the public servant to cross-examine witnesses to give evidence in person and to examine his own witnesses. The provisions of the Public Servants Inquiries Act, 1850, were made more detailed for the obvious reason that at the time when that Act was enacted, there was numbercodified law of evidence in force. But the procedure prescribed by Act XXXVII of 1850 and the procedure to be followed under r. 55 are in substance number materially different. Under either form of enquiry, the public servant companycerned has to be given numberice of the charges against him he has to be supplied with the materials on which the charge is sought to be sustained and if he so desires, he may demand an oral hearing at which the witnesses for the prosecution and his own witnesses shall be examined. Counsel for the appellant submitted that the procedure under the Act was more onerous against the public servant companycerned in two important respects under s. 11 of Act XXXVII of 1850, if the accused refuses or without reasonable cause neglects to appear to answer the charge, he shall be taken to admit the truth of the articles of charge, whereas there is numbersimilar provision in r. 55 2 that under s. 19 of the Act, even after the evidence for the defence is closed, it is open to the prosecutor to exhibit evidence to companytradict evidence exhibited for the defence and the Commissioner is number bound to adjourn the proceeding although the new evidence was number included in the list furnished to the accused whereas there is numbersimilar provision in r. 55. The procedure prescribed by r. 55 is undoubtedly somewhat more elastic, but the provisions similar to those which have been relied upon by companynsel for the appellant as discriminatory are also implicit in r. 55. If the public servant companycerned does number desire an oral enquiry to be held, there is numberobligation upon the authority to hold an enquiry. Again, there is numberhing in the rule which prevents the authority from exhibiting evidence for the prosecution after the case of the defence is closed if that evidence is intended to companytradict the evidence of the public servant companycerned. The primary companystitutional guarantee, a member of the Indian Civil Service is entitled to is one of being afforded a reasonable opportunity of the companytent set out earlier, in an enquiry in exercise of powers companyferred by either the Public Servants Inquiries Act or r. 55 of the Civil Services Classification Control and Appeal Rules, and discrimination is number practised merely because resort is had to one of two alternative sources of authority, unless it is shown that the procedure adopted operated to the prejudice of the public servant companycerned. In the case before us, the enquiry held against the appellant is number in manner different from the manner in which an enquiry may be held companysistently with the procedure prescribed by r. 55, and therefore on a plea of inequality before the law, the enquiry held by the Enquiry Commissioner is number liable to be declared void because it was held in a manner though permissible in law, number in the manner, the appellant says, it might have been held. 17-20. The plea that the Enquiry Commissioner held the enquiry in a manner violative of the rules of natural justice, may number be companysidered. His Lordship, after companysidering the material furnished to support the plea, agreed with the view of the High Court that the enquiry was number vitiated on account of violation of the rules of natural justice. The President of India was number bound before passing an order dismissing the appellant, to hear the evidence of witnesses. He companyld arrive at his companyclusion on the evidence already recorded in the enquiry by the Enquiry Commissioner. By Art. 311 of the Constitution, a public servant is entitled to show cause against the action proposed to be taken in regard to him, but exercise of the authority to pass an order to the prejudice of a public servant is number companyditioned by the holding of an enquiry at which evidence of witnesses viva voce, numberwithstanding an earlier fair and full enquiry before the Enquiry Commissioner, is recorded. In The High Commissioner for India and Another v. I. M. Lal 75 L.A. 225 dealing with s. 240, clause 3, Lord Thankerton in dealing with similar companytentions observed In the opinion of their Lordships, numberaction is proposed within the meaning of the sub-section until a definite companyclusion has been companye to on the charges and the actual punishment to follow is provisionally determined on. Prior to that stage, the charges are unproved and the suggested punishments are merely hypothetical. It is on that stage being reached that the statue gives the civil servant the opportunity for which sub-section 3 makes provision. Their Lordships would only add that they see numberdifficulty in the statutory opportunity being reasonably afforded at more than one stage. If the civil servant had been through an inquiry under rule 55, it would number be reasonable that he should ask for a repetition of that stage, if duly carried out but that would number exhaust his statutory right, and he would still be entitled to represent against the punishment proposed as the result of the findings of the inquiry. And this view was affirmed by this companyrt in Khem Chand v. The Union of India and Others 1958 S.C.R. 1080 where at p. 1099, it was observed by Chief Justice S. R. Das Of companyrse if the government servant has been through the enquiry under r. 55, it would number be reasonable that he should ask for a repetition of that stage, if duly carried out. By the Constitution, an opportunity of showing cause against the action proposed to be taken against a public servant is guaranteed and that opportunity must be a reasonable opportunity. Whether opportunity afforded to a public servant in a particular case is reasonable must depend upon the circumstances of that case. The enquiry in this case was held by the Enquiry Commissioner who occupied the high office of Chief Justice of the East Punjab High Court. The appellant himself examined 82 witnesses and produced a large body of documentary evidence and submitted an argumentative defence which companyers 321 printed pages. An opportunity of making an oral representation number being in our view a necessary postulate of an opportunity of showing cause within the meaning of Art. 311 of the Constitution, the plea that the appellant was deprived of the companystitutional protection of that Article because he was number given an oral hearing by the President cannot be sustained.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 380 to 389, 391 to 399, 401, 429 and 431 to 434 of 1958. Appeals from the judgment and decree dated December 19, 1956, of the Allahabad High Court in Civil Misc. Writs Nos. 1574, 1575, 1576, 1577, 1578, 1579,1444,1584,1586,1589, 1631, 1632, 1634, 1635, 1636,1694, 1695, 1697, 1704, 1707, 3726, 1647, 1948 and 1949 and 1956. K. Nambiyar, Shyam Nath Kacker, J. B. Dadachanji, S. N. Andley and Rameshwar Nath, for the appellants in C. As. Nos. 380-385, 387-389, 391-399 and 401 of 1958 . N.Kacker and J. B. Dadachanji, for the appellant in C. A. No. 386/58 . Naunit Lal, for the appellants in C. As. Nos. 429 431- 434/58 . B. Asthana G. N. Dikshit, for the respondents. 1959. January 15. The judgment of Das, C. J., and Sinha, J., was delivered by Das, C. J. The judgment of Bhagwati, Subba Rao and Wanchoo, JJ., was delivered by Subba Rao, J. DAS, C. J.-We have had the advantage of perusing the judgment prepared by our learned Brother Subba Rao and we agree with the order proposed by him, namely, that all the above appeals should be dismissed with companyts, although we do number subscribe to all the reasons advanced by him. The relevant facts and the several points raised by learned companynsel for the appellants and the petitioners in support of the appeals have been fully set out in the judgment which our learned Brother will presently deliver and it is number necessary for us to set out the same here. Without companymitting ourselves to all the reasons adopted by our learned Brother, we agree with his following companyclusions, namely, 1 that the Uttar Pradesh Transport Service Development Act, 1955 Act IX of 1955 , hereinafter referred to as the U. P. Act, did -not, on the passing of the Motor Vehicles Amendment Act, 1956 100 of 1956 , hereinafter referred to as the Central Act, become wholly void under Art. 254 1 of the Constitution but companytinued to be a valid and subsisting law supporting the scheme already framed under the U. P. Act 2 that, even if the Central Act be companystrued as amounting, under Art. 254 2 , to a repeal of the U. P. Act, such repeal did number destroy or efface the scheme already framed under the U. P. Act, for the provisions of s. 6 of the General Clauses Act saved the same 3 that the U. P. Act did number offend the provisions of Art. 31 of the Constitution, as it stood before the Constitution 4th Amendment Act, 1955, for. the P. Act and in particular s. 11 5 thereof provided for the payment of adequate companypensation. These findings are quite sufficient to dispose of the points urged by Mr. Nambiyar and Mr. Naunit Lal in support of the claims and companytentions of their respective clients. In view of the aforesaid finding that the U. P. Act did number infringe the fundamental rights guaranteed by Art. 31, it is wholly unnecessary to discuss the following questions, namely, a whether the provisions of Part III of the Constitution enshrining the fundamental rights are mere checks or limitations on the legislative companypetency companyferred on Parliament and the State Legislatures by Arts. 245 and 246 read with the relevant entries in the Lists in the Seventh Schedule to the Constitution or are an integral part of the provisions defining, prescribing and companyferring the legislative companypetency itself and b whether the doc- trine of eclipse is applicable only to pre-Constitution laws or can apply also to any post-Constitution law which falls under Art. 13 2 of the Constitution. As, however, our learned Brother has thought fit to embark upon a discussion of these questions, we desire to guard ourselves against being understood as accepting or acquiescing in the companyclusion that the doctrine of eclipse cannot apply to any post-Constitution law. A post-Constitution law may infringe either a fundamental right companyferred on citizens only or a fundamental right companyferred on any person, citizen or number-citizen. In the first case the law will number stand in the way of the exercise by the citizens of that fundamental right and, therefore, will number have any operation on the rights of the citizens, but it will be quite effective as regards number-,citizens. In such a case the fundamental right will, qua the citizens, throw a shadow on the law which will nevertheless be on the Statute Book as a valid law binding on number-citizens and if the shadow is removed by a companystitutional ,amendment, the law will immediately be applicable even to the citizens without being re-enacted. The decision in John M. Wilkerson Charles A. Rahrer 1 cited by our learned Brother is squarely in point. In other words the doctrine of eclipse as explained by this Court in Bhikaji Narain Dhakras v. The State of Madhya Pradesh 2 also applies to a post- Constitution law of this kind. Whether a post-Constitution law of the other kind, namely, which infringes a fundamental right guaranteed to all persons, irrespective of whether they are citizens or number, and which, therefore, can have numberoperation at all when it is enacted, is to be regarded as a still born law as if it had number been enacted at all and, therefore, number subject to the doctrine of eclipse is a matter which may be open to discussion. On the findings arrived at in this case, however, a discussion of these aspects of the matter do number call for a companysidered opinion and we reserve our right to deal with the same if and when it becomes actually necessary to do so. SUBBA RAO, J.-These twenty-five appeals are by certificate under Arts. 132 and 133 of the Constitution granted by the High Court of Judicature at Allahabad and raise the question of the validity of the scheme of nationalization of State Transport Service formulated by the State Government and the companysequential orders made by it. 1 1891 140 U.S. 545 35 L, Ed. 572, 2 1955 2 S.C.R. 589. The said appeals arise out Writ Petitions filed by he appellants in the Allahabad High Court challenging the validity of the U. P. Transport Services Development Act of 1955, being U. P. Act No. IX of 1955 hereinafter referred to as the U. P. Act , and the numberifications issued thereunder. All the appeals were companysolidated by order of the High Court. The appellants have been carrying on business as stage carriage operators for a companysiderable number of years on different routes in Uttar Pradesh under valid, permits issued under the Motor Vehicles Act, 1939, along with buses owned by Government. The U. P. Legislature, after obtaining the assent of the President on April 23, 1955, passed the U. Act and duly published it on April 24, 1955. Under s. 3 of the U. P. Act, the Government issued a numberification dated May 17, 1955, whereunder it was directed that the aforesaid routes along with others should be exclucively served by the stage carriages of the Government and the private stage carriages should be excluded from those routes. On November 12, 1955, the State Government published the numberification under s. 4 of the U. P. Act formulating the scheme for the aforesaid routes among others. The appellants received numberices under s. 5 of the U. P. Act requiring them to file objections, if any, to the said scheme and after the objections were received, they were informed that they would be heard by a Board on January 2, 1956. On that date, the objections filed by the operators other than those of the Agra region were heard and the inquiry in regard to the Agra region was adjourned to January 7, 1956. It appears that the operators of the Agra region did number appear on the 7th. The numberification issued under s. 8 of the U. P. Act was pub- lished in the U. P. Gazette on June 23, 1956, and on June 25, 1956, the Secretary to the Regional Transport Authority, Agra, sent an order purported to have been issued by the Transport Commissioner to the operators, of the Agra region prohibiting them from plying their stage carriages on the routes and also informing them that their permits would be transferred to other routes. On July 7, 1956, a numberice was sent to filed Writ Petitions in the Allahabad High Court challenging the validity of the U. P. Act and the numberifications issued thereunder. The facts in Civil Appeal No. 429 of 1958 are slightly different from those in other appeals and they may be stated The appellants application for renewal of his permanent permit was rejected in 1953 but, on appeal, the State Transport Authority Tribunal allowed his appeal on September 6,1956, and directed his permit to be renewed for three years beginning from November 1, 1953. Pursuant to the order of the Tribunal, the appellants pert-nit was renewed with effect from November 1, 1953, and it was made valid up to October 31, 1956. The scheme of nationalisation was initiated and finally approved between the date of the rejection of the appellants application for renewal and the date when his appeal was allowed. The appellant applied on October 11, 1956, for the renewal of his permit and he was informed by the Road Transport Authority, Allahabad, that numberaction on his application, under reference was possible. The appellants companytention, among others, was that the entire proceedings were taken behind his back and therefore the scheme was number binding on him. The appellants in thirteen appeals, namely, Civil Appeals Nos. 387 to 389, 391 to 394, 396 to 399 and 401 and 429 were offered alternative routes. Though they tentatively accepted the offer, presumably on the ground that it was the lesser of the two evils, in fact they obtained stay as an interim arrangement and companytinued to operate on the old routes. The appellants filed applications for permission to urge new grounds in the appeals, which were number taken before the High Court. The said grounds read -- That by reason of the companying into operation of the Motor Vehicles Amendment Act, No. 100 of 1956, passed by Parliament and published in the Gazette of India Extraordinary dated 31st December, 1956, the impugned U. P. Act No. IX of 1955 has become void. That by reason of Article 254 of the Constitution of India, the said impugned Act No. IX of 1955, being repugnant and inconsistent with the Central Act No. 100 of 1956, has become void since the companying into operation of the aforesaid Act No. 100 of 1956 . The judgment of the Allahabad High Court, which is the subject-matter of these appeals, was delivered on December 19, 1956. The Amending Act of 1956 was published on December 31, 1956. It is therefore manifest that the appellants companyld number have raised the aforesaid grounds before the High Court. Further, the grounds raise only a pure question of law number dependent upon the elucidation of any further facts. In the circumstances, we thought it to be a fit case for allowing the appellants to raise the new grounds and we accordingly gave them the permission. Mr. M. K. Nambiar, appearing for some of the appellants, raised before us the following points i The Motor Vehicles Amendment Act 100 of 1956 passed by, the Parliament is wholly repugnant to the provisions of the U. P Act and therefore the latter became void under the provisions of Article 254 1 of the Constitution with the result that, at the present time, there is numbervalid law whereunder the Government can prohibit the appellants from exercising their fundamental right under the Constitution, namely, to carry on their business of motor transport ii the scheme framed under the Act, being one made to operate in future and from day to day, is an instrument within the meaning of s. 68B of the Amending Act, and therefore the provisions of the Amending Act would prevail over those of the scheme, and after the Amending Act came into force, it would have numberoperative force and iii even if the U. P. Act was valid and companytinued to be in force in regard to the scheme framed thereunder, it would offend the provisions of Art. 31 of the Constitution, as it was before the Constitution Fourth Amendment Act, 1955, as, though the State had acquired the appellants interest in a companymercial undertaking, numbercompensation for the said interest was given, as it should be under the said Article. The other learned -Counsel, who followed Mr. Nambiar, except Mr. Naunit Lal, adopted his argument. Mr. Naunit Lal, in addition to the argument advanced by Mr. Nambiar in regard to the first point, based his companytention on the proviso to Art. 254 2 of the Constitution rather than on Art. 254 1 . He companytended that by reason of the Amending Act,,, the U. P. Act was repealed in toto and, because of s. 68B of the Amending Act, the operation of the provisions of the General Clauses Act was excluded. In addition, he companytended that in Appeal No. 429 of 1958, the scheme, in so far as it affected the appellants route was bad inasmuch as numbernotice was given to him before the scheme was approved. We shall proceed to companysider the argument advanced by Mr. Nambiar in the order adopted by him but before doing so, it would be companyvenient to dispose of the point raised by the learned Advocate General, for it goes to the root of the matter, and if it is decided in his favour, -other questions do number fall for companysideration. The question raised by the learned Advocate General may be posed thus whether the amendment of the Constitution removing a companystitutional limitation on a legislature to make a particular law has the effect of validating the Act made by it when its power was subject to that limitation. The present case illustrates the problem presented by the said question. The U. P. Legislature passed the U. P. Act on April 24, 1955, whereunder the State Government was authorized to frame a scheme of nationalization of motor transport. After following the procedure prescribed therein, the State Government finally published the scheme on June 23, 1956. The Constitution Fourth Amendment Act, 1955, received the assent of the President on April 27, 1955. The -State Government framed the scheme under the U. P. Act after the passing of the Constitution Fourth Amendment Act, 1955. Under the said Amendment Act, el. 2 of Art. 31 has been amended and cl. 2A has been inserted. The effect of the amendment is that unless the law provides for the transfer of ownership or right to possession of any property to the State or to a Corporation owned or companytrolled by the State, it shall number be deemed to provide for the companypulsory acquisition or requisition of property within the meaning of cl. 2 of that Article and therefore where there is numbersuch transfer, the companydition imposed by cl. 2 , viz., that the law Should fix the amount of companypensation or specify the principles on which and the manner in which the companypensation is to be determined and given is number attracted. If the amendment applies to the U. P. Act, as there is numbertransfer of property to the State, numberquestion of companypensation arises. On the other hand, if the unamended Article governs the U. Act, the question of companypensation will be an important factor in deciding its validity. The answer to the problem so presented depends upon the legal effect of a companysti- tutional limitation of the legislative power on the law made in derogation of that limitation. A distinction is sought to be made by the learned Advocate General between the law made in excess of the power companyferred on a legislature under the relevant List in the Seventh Schedule and that made in violation of the provisions of Part III of the Constitution. The former, it is suggested, goes to the root of the legislative power, whereas the latter, it is said, operates as a check on that power, with the result that the law so made is unenforceable, and as soon as the check is removed, the law is resuscitated and becomes operative from the date the check is removed by the companystitutional amendment. Mr. Nambiar puts before us the following two propositions in support of his companytention that the law so made in either companytingency is void ab initio i the paramountcy of fundamental rights over all legislative powers in respect of all the Lists in the Seventh Schedule to the Constitution is secured by the double process of the prohibition laid by Art. 13 2 and the restrictions imposed by Art. 245, unlike the mere implied prohibition implicit in the division of power under Art. 246 and ii where the provisions of an enactment passed by a legislature after January 26, 1950, in whole or in part-subject to the doctrine of severability-are in companyflict with the provisions of Part III, the statute, in whole or in part, is void ab initio. This question was subjected to judicial scrutiny by this Court, but before we companysider the relevant authorities, it would be companyvenient to test its validity on first principles. The relevant Articles of the Constitution read as follows Article 245 1 Subject to the provision of this Constitution, Parliament may make laws for the whole or any part of the territory Of India, and the Legislature of a State may make laws for the whole or any part of the State. Article 246 1 Notwithstanding anything in clauses 2 and 3 Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule in this Constitution referred to as the Union List . Notwithstanding anything in clause 3 , Parliament and, subject to clause 1 , the Legislature of any State also, have power to make. laws with respect to any of the matters enumerated in List III in the Seventh Schedule in this Constitution referred to as the Concurrent List . Subject to clauses 1 and 2 , the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule in this Constitution referred to as the State List . Parliament has power to make laws with respect to any matter for any part of the territory of India number included in a State numberwithstanding that such matter is a matter enumerated in the State List. Article 13 1 All laws in force in the territory of India immediately before the companymencement of this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void. The State shall Dot make any law which takes away or abridges the rights companyferred by this Part and any law made in companytravention of this clause shall, to the extent of the companytravention be void. Article 31 Before the -Constitution Fourth Amendment Act, 1955 No person shall be deprived of his property save by authority of law. No property, movable or immovable, including any interest in, or in any companypany owning, any companymercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorising the taking of such possession or such acquisition, unless the law provides for companypensation for the property taken possession of or acquired and either fixes the amount of the companypensation, or specifies the principles on which, -and the manner in which, the companypensation is to be determined and given The companybined effect of the said provisions may be stated thus Parliament and the Legislatures of States have power to make laws in respect of any of the matters enumerated in the relevant lists in the Seventh Schedule and that power to make laws is subject to the provisions of the Constitution including Art. 13, i.e., the power is made subject to the limitations imposed by Part III of the Constitution. The general power to that extent is limited. A Legislature, therefore, has numberpower to make any law in derogation of the injunction companytained in Art. 13. Article 13 1 deals with laws.in force in the territory of India before the companymencement of the Constitution and such laws in so far as they are inconsistent with the provisions of Part III shall, to the extent of such inconsistency be void. The clause, therefore, recognizes the validity of, the pre-Constitution laws and only declares that the said laws would be void thereafter to the extent of their inconsistency with Part III whereas - cl. 2 of that article imposes a prohibition on the State making laws taking away or abridging the rights companyferred by Part III and declares that laws made in companytravention of this clause shall, to the extent of the companytravention, be void. There is a clear distinction between the two clauses. Under el. 1 , a pre-Constitution law subsists except to the extent of its inconsistency with the provisions of Part III whereas, numberpost-Constitution law can be made companytravening the provisions of Part III, and therefore the law, to that extent, though made, is a nullity from its inception. If this clear distinction is borne in mind, much of the cloud raised is dispelled. When cl. 2 of Art. 13 says in clear and unambiguous terms that numberState shall make any law which takes away or abridges the rights companyferred by Part III, it will number avail the State to companytend either that the clause does number embody a curtailment of the power to legislate or that it imposes only a check but number a prohibition. A companystitutional prohibition against a State making certain laws cannot be whittled down by analogy or by drawing inspiration from decisions on the provisions of other Constitutions number can we appreciate the argument that the words any law in the second line of Art. 13 2 posits the survival of the law made in the teeth of such prohibition. It is said that a law can companye into existence only when it is made and therefore any law made in companytravention of that clause presupposes that the law made is number a nullity. This argument may be subtle but is number sound. The words any law in that clause can only mean an Act passed or made factually, numberwithstanding the prohibition. The result of such companytravention is stated in that clause. A plain reading of the clause indicates, without any reasonable doubt, that the prohibition goes to the root of the matter and limits the States power to make law the law made in spite of the prohibition is a still- born law. Cooley in his book Constitutional Limitations Eighth Edition, Volume I , states at page 379 From what examination has been given to this subject, it appears that whether a statute is companystitutional or number is always a question of power that is, a question whether the legislature in the particular case, in respect to the subject-matter of the act, the manner in which its object is to be accomplished, and the mode of enacting it, has kept within the companystitutional limits and observed the companystitutional companyditions. The Judicial Committee in The Queen. v. Burah 1 observed at page 193 as under 1 1878 L.R. 5 I. A. 178. The established companyrts of Justice, when a question arises whether the prescribed limits have been exceeded, must of necessity determine that question and ,the only way in which they can properly do so, is by looking to the terms of the instrument by which, affirmatively, the legislative powers were created, and by which, negatively, they are restricted. The Judicial Committee again in Attorney-General for Ontario Attorney-General for Canada 1 crisply stated the legal position at page 583 as follows- if the text is explicit the text is company- clusive, alike in what it directs and what it forbids. The same idea is lucidly expressed by Mukherjea, J., as he then was, in K. C. Gajapati Narayan Deo v. The State of Orissa 2 . It is stated at page 11 as follows- If the Constitution of a State distributes the legislative powers amongst different bodies, which have to act within their respective spheres marked out by specific legislative entries, or if there are limitations on the legislative authority in the shape of fundamental rights, questions do arise as to whether the legislature in a particular case has or has number, in respect to the subjectmatter of the statute or in the method of enacting it, transgressed the limits of its companystitutional powers. The learned Judge in the aforesaid passage clearly accepts the doctrine that both the transgression of the ambit of the entry or of the limitation provided by the fundamental rights are equally transgressions of the limits of the States companystitutional powers. It is, therefore, manifest that in the companystruction of the companystitutional provisions dealing with the powers of the legislature, a distinction cannot be made between an affirmative provision I and a negative provision for, both are limitations on the power. The Constitution affirmatively companyfers a power on the legislature to make laws within the ambit of the relevant entries in the lists and negatively prohibits it from making laws infringing the fundamental rights. It 1 1912 A.C. 571. 2 1954 S.C.R. 1. goes further and makes the -legislative power subject to the prohibition under Art. 13 2 . Apparent wide power is, therefore, reduced to the extent of the prohibition. If Arts. 245 and 13 2 define the ambit of the power to legislate, what is the effect of a law made in excess of that power ? The American Law gives a direct and definite answer to this question. Cooley in his Constitutional Limitations Eighth Edition, Volume I at page 382 under the heading Consequences if a statute is void says - When a statute is adjudged to be unconstitutional, it is as if it had never been And what is true of an act void in toto is true also as to any part of an act which is found to be unconstitutional, and which, companysequently, is to be regarded as having never, at any time, been possessed of any legal force. In Rottschaefer on Constitutional Law, much to the same effect is stated at page 34 The legal status of a legislative provision in so far as its application involves violation of companystitutional provisions, must however be determined in the light of the theory on which Courts ignore it as law in the decision of cases in which its application produces unconstitutional results. That theory implies that the legislative provisions never had legal force as applied to cases within that clause. In Willis on Constitutional Law , at page 89 A judicial declaration of the unconstitutionality of a statute neither annuls number repeals the statute but has the effect of ignoring or disregarding it so far as the determination of the rights of private parties is companycerned. The Courts generally say that the effect of an unconstitutional statute is numberhing. It is as though it had never been passed Willoughby on Constitution of the United States Second Edition, Volume I, page 10 The Court does number annul or repeal the statute if it finds it in companyflict with the Constitution. It simply refuses to recognize it, and determines the rights of the parties just as if such statute had numberapplication. 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. I An after- acquired power cannot, ex proprio vigore, validate a statute void When enacted. However, it has been held that where an act is within the general legislative power of the enacting body, but is rendered unconstitutional by reason of some adventitious circumstance, as, for example, when a State legislature is prevented from regulating a matter by reason of the fact that the Federal Congress has already legislated upon that matter, or by reason of its silence is to be companystrued as indicating that there should be numberregulation, the act does number need to be re-enacted in order to be enforced, if this cause of its unconstitutionality is removed. For the former proposition, the decision in Newberry v. United States 1 and for the latter proposition the decision in John M. Wilkerson v. Charles A. Rahrer 2 are cited. In Newberrys Case the validity of the Federal Corrupt Practices Act of 1910, as amended by the Act of 1911, fixing the maximum sum which a candidate might spend to procure his numberination at a primary election or companyvention was challenged. At the time of the enactment, the Congress had numberpower to make that law, but subsequently, by adoption of the 17th Amendment, it acquired the said power. The question was whether an after-acquired power companyld validate a statute which was void when enacted. Mr. justice McReynolds delivering the opinion of the companyrt states the principle at page 920 Moreover, the criminal statute number relied upon ante-dates the 17th Amendment, and must be tested by powers possessed at time of its enactment. An 1 1921 256 U.S. 232 65 L. Ed. 913. 2 1891 140 U.S. 545 35 L. Ed. 572. after-acquired power cannot, ex proprio vigore, validate a statute void when enacted. In Wilkersons Case 1 the facts were that in June 1890, the petitioner, a citizen of the United States and an agent of Maynard, Hopkins Co., received from his principal intoxicating liquor in packages. The packages were shipped from the State of Missouri to various points in the State of Kansas and other States. On August 9, 1890, the petitioner offered for sale and sold two packages in the State of Kansas. The packages sold were a portion of the liquor shipped by Maynard, Hopkins Co. It was sold in the same packages in which it was received. The petitioner was prosecuted for violating the Prohibitory Liquor Law of the State of Kansas for, under the said law, any person or persons who shall manufacture, sell or barter any in- toxicating liquors, shall be guilty of a misdemeanor . On August 8, 1890, an Act of Congress was passed to the effect that -intoxicating liquors transported into any State should upon arrival in such State be subject to the operation and effect of the laws of such State. It will be seen from the aforesaid facts that at the time the State Laws were made, they were valid, but they did number operate upon packages of liquors imported into the Kansas State in the companyrse of interstate companymerce, for the regulation of inter-State companymerce was within the powers of the Congress and that be- fore the two sales in the Kansas State, the Congress made an Act making intoxicating liquors transported into a State subject to the laws of that State, with the result that from that date the State Laws operated on the liquors so transported. Under those circumstances, the Supreme Court of the United States held It was number necessary, after the passage of the Act of Congress of August 8, 1890, to re-enact the Law of Kansas of 1899, forbidding the sale of intoxicating liquors in that State, in order to make such State Law operative on the sale of imported liquors. The reason for the decision is found at page 578 1 1891 140 U.S. 545 35 L. Ed. 572. This is number the case of a law enacted in the unauthorized exercise of a power exclusively companyfided to Congress, but of a law which it was companypetent for the State to pass, but which companyld number operate upon articles occupying a certain situation until the passage of the Act of Congress. That Act in terms removed the obstacle, and we perceive numberadequate ground for adjudging that a re-enactment of the State Law was required before it companyld have the effect upon imported which it had always had upon domestic property. A reference to these decisions brings out in bold relief the distinction between the two classes of cases referred to therein. It will be seen from the two decisions that in the former the Act was Void from its inception and in the latter it was valid when made but it companyld number operate on certain articles imported in the companyrse of inter-State trade. On that distinction is based the principle that an after- acquired power cannot, ex proprio vigore, validate a statute in one case, and in the other, a law validly made would take effect when the obstruction is removed. The same principle is enunciated in Carter v. Egg and Egg Pulp Marketing Board 1 . Under s. 109 of the Australian Constitution when a law of a State- is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid. Commenting on that section, Latham, C. J., observed at page 573 This section applies only in cases Where, apart from the operation of the section, both the Commonwealth and the State Laws which are in question would be valid. If either is invalid ab initio by reason of lack of power, numberquestion can arise under the section. The word invalid in this section cannot be interpreted as meaning that a State law which- is affected by the section becomes ultra vires in whole or in part. If the Commonwealth law were repealed the State law would again become operative. We shall number proceed to companysider the decisions of this Court to ascertain whether the said principles are 1 1942 66 C.L.R. 557. accepted or departed from. The earliest case is Keshavan Madhava Menon v. The State of Bombay 1 . There the question was whether a prosecution launched under the Indian Press Emergency Powers Act, 1931, before the Constitution companyld be companytinued after the Constitution was passed. The objection taken was that the said law was inconsistent with fundamental rights and therefore was void. In the companytext of the question raised, it became necessary for the Court to companysider the impact of Art. 13 1 on the laws made before the Constitution. The Court, by a majority, held that Art. 13 1 of the Indian Constitution did number make existing laws which were inconsistent with fundamental rights void ab initio, but only rendered such laws ineffectual and void with respect to the exercise of the fundamental rights on and after the date of the companymencement of the Constitution and that it had numberretrospective effect. Das, J., as he then was, observed at page 233 It will be numbericed that all that this clause declares is that all existing laws, in so far as they are inconsistent with the provisions of Part III shall, to the extent of such inconsistency, be void. Every statute is prima facie prospective unless it is expressly or by necessary implications made to have retrospective operation. At page 234, the learned Judge proceeded to state They are number void for all purposes but they are void only to the extent they companye into companyflict with the fundamental rights. In other words, on and after the companymencement of the Constitution numberexisting law -will be permitted to stand in the way of the exercise of any of the fundamental rights. Therefore, the voidness of the existing law is limited to the future exercise of the fundamental rights Such laws exist for all past transactions and for enforcing all rights and liabilities accrued before the date of the Constitution. At page 235, the same idea is put in different words thus - Article 13 1 only has the effect of 1 1951 S.C.R. 228. nullifying or rendering all inconsistent existing laws ineffectual or nugatory and devoid of any legal force or binding effect only with respect to the exercise Of fundamental rights on and after the date of the companymencement of the Constitution. At page 236, the learned Judge companycludes So far as the past acts are companycerned the law exists, numberwithstanding that it does number exist with respect to the future exercise of fundamental rights. Mahajan, J., as he then was, who delivered a separate judgment, put the same view in different phraseology at page 251 The effect of Article 13 1 is only prospective and it operates in respect to the freedoms which are infringed by the State subsequent to the companying into force of the Constitution but the past acts of a person which came within the mischief of the law then in force are Dot affected by Part III of the Constitution. The learned Judge, when American law was pressed on him in support of the companytention that even the pre-Constitution law was void, observed thus, at page 256 It is obvious that if a statute has been enacted and is repugnant to the Constitution, the statute is void since its very birth and anything done under it is also void and illegal. The companyrts in America have followed the logical result of this rule and even companyvictions made under such an unconstitutional statute have been set aside by issuing appropriate writs. If a statute is void from its very birth then anything done under it, whether closed, companypleted, or inchoate, will be wholly illegal and relief in one shape or another has to be given to the person affected by such an unconstitutional law. This rule, however, is number applicable in regard to laws which were existing and were companystitutional according to the Government of India Act, 1935. Of companyrse, if any law is made after the 25th January, 1950, which is repugnant to the Constitution, then the same rule will have to be followed by companyrts in India as is followed in America and even companyvictions made under such an unconstitutional law will have to be set aside by resort to exercise of powers given to this companyrt by the Constitution. Mukherjea J., as he then was, in Behram Khurshed Pesikaka v. The State of Bombay 1 says at page 652 much to the same effect We think that it is number a companyrect proposition that companystitutional provisions in Part 11I of our Constitution merely operate as a check on the exercise of legislative power. It is axiomatic that when the lawmaking power of a State is restricted by a written, fundamental law, then any law enacted and opposed to the fundamental law is in excess of the legislative authority and is thus a nullity. Both these declarations of unconstitutionality go to the root of the power itself and there is numberreal distinction between them. They represent but two aspects of want of legislative power. The legislative power of Parliament and the State Legislatures as companyferred by articles 245 and 246 of the Constitution stands curtailed by the fundamental rights chapter of Constitution. A mere reference to the provisions of article 13 2 and articles 245 and 246 is sufficient to indicate that there is numbercompetency in Parliament or a State Legislature to make a law which companyes into clash with Part 111 of the Constitution after the companying into force of the Constitution. The effect of the decision may- be stated thus The learned judges did number finally decide the effect of Art. 13 2 of the Constitution on post-Constitution laws for the simple reason that the impugned law was a pre-Constitution one. Art. 13 1 was held to be prospective in operation and therefore did number affect the preexisting laws in respect of things done prior to-the Constitution. As regards the post- Constitution period, Art. 13 1 nullified or rendered all inconsistent existing laws ineffectual, nugatory or devoid of any legal force or binding effect with respect to the exercise of the fundamental rights. So far as the past acts were companycerned, the law existed, numberwithstanding that it did number exist with respect to the future exercise of the said rights. As regards the pre-Constitution laws, 1 1955 1 S.C.R. 613. this decision companytains the seed of the doctrine of eclipse developed by my Lord the Chief Justice in Bhikaji Narain Dhakras v. The State of Madhya Pradesh 1 where it was held that as the pre-Constitution law was validly made, it existed for certain purposes even during the post- Constitution period. This principle has numberapplication to post-Constitution laws infringing the fundamental rights as they would be ab initio void in toto or to the extent of their companytravention of the fundamental rights. The observations of the learned judges made in the decision cited above bring out the distinction between pre and post- Constitution laws which are repugnant to the Constitution and the impact of Art. 13 on the said laws. In Behram Khurshed Pesikakas Case 2 , this Court companysidered the legal effect of the declaration made in the case of The State of Bombay - v. F. N. Balsara 3 that clause b of s. 13 of the Bombay Prohibition Act Bom. XXV of 1949 is void under Art. 13 1 of the Constitution in so far as it affects the companysumption or use of liquid medicinal or toilet preparations companytaining alcohol and held that it was to render part of s. 13 b of the Bombay Prohibition Act inoperative, ineffective and ineffectual and thus unenforceable. Bhagwati, J., at page 620, cited all the relevant passages from textbooks on Constitutional Law and, presumably, accepted the view laid down therein to the effect that an unconstitutional Act in legal companytemplation is as though it had never been passed. Jagannadhadas, J., at page 629, numbericed the distinction between the scope of cls. 1 and 2 of Art. 13 of the Constitution. After citing a passage from Willoughby on Constitution of the United States , the learned Judge observed This and other similar passages from other treatises relate, however, to cases where the entire legislation is unconstitutional from the very companymencement of the Act, a situation which falls within the scope of article 13 2 of our Constitution. They do number directly companyer a situation which falls within 1 1955 2 S.C.R. 589. 2 1955 1 S.C.R. 613. 3 1951 S.C. R. 682. article 13 1 The- question is what is the effect of article 13 1 on a pre-existing valid statute, which in respect of a severable part thereof violates fundamental rights. Under article 13 1 such part is, void from the date of the companymencement of the Constitution, while the other part companytinues to be valid. Two views of the result brought about by this voidness are possible, viz., 1 the said severable part becomes unenforceable, while it remains part of the Act, or 2 the said part goes out of the Act and the Act stands appropriately amended pro tanto. The first is the view which appears to have been adopted by my learned brother, Justice - Venkatarama Aiyar, on the basis of certain American decisions. I feel inclined to agree with it. This aspect, however, was number fully presented by either side and was only suggested from the Bench in the companyrse of arguments. We have number had the benefit of all the relevant material being placed before us by the learned advocates on either side. The second view was the basis of the arguments before us. It is, therefore, necessary and desirable to deal with this case on that assumption. This passage shows that his opinion-though a tentative one- was that the severable part became unenforceable while it remained part of the Act. But the learned Judge made an incidental observation that the American view applied to cases that fall within the scope of Art. 13 2 of the Constitution, i.e., the entire legislation would be unconstitutional from the very companymencement of the Act. Venkatarama Aiyar, J., founded his decision on a broader basis. At page 639, the learned Judge observed Another point of distinction numbericed by American jurists between unconstitutionality arising by reason of lack of legislative companypetence and that arising by reason of a check imposed on a companypetent Legislature may also be mentioned. While a statute passed by a Legislature which had numbercompetence cannot acquire validity when the Legislature subsequently acquires companypetence, a statute which was within the companypetence of the Legislature at the time of its enactment but which infringes a, companystitutional prohibition companyld be enforced Proprio vigore when once the prohibition is removed. On the basis of this distinction, the learned Judge held that Art. 13 1 of the Constitution only placed a check on a companypetent legislature and therefore the word void in that article meant relatively void , i.e., the law only companydemned the Act as wrong to individuals and refused to enforce it against them. In support of the said companyclusion the learned Judge cited a passage from Willoughby on the Constitution of the United States . A companyparison of the passage cited with that in the text book discloses that one important sentence which makes all the difference to the legal position is omitted by mistake and that sentence is An after-acquired power cannot ex proprio vigore validate a statute void when enacted . The second paragraph in the extract on which the learned Judge placed reliance and also the decision relied upon, by him did number support his companyclusion. As already stated, the decision and the passage dealt number with a case where the State had numberpower to make the law, but with a case where the law lay dormant till a law of the Federal Congress removed the companyflict between the State Law and the Federal Law. That case may by analogy be applied to Art. 13 1 in respect of laws validly made before the Constitution but cannot be invoked in the case of a statute which was void when enacted. By a subsequent order, this Court granted the review and reopened the case to enable the Bench to obtain the opinion of a larger Bench on the Constitutional points raised in the judgment delivered by the learned Judges. That matter came up before a Con- stitutional Bench, and Mahajan, C. J., who was a party to the decision in Keshavan Madhava Menons Case 1 explained the majority view therein on the meaning of the word void in Art. 13 1 thus, at page 651- The majority however held that the word void in article 13 1 , so far as existing laws Were companycerned, companyld number be held to obliterate them from the statute book, and companyld number make such laws void altogether, because in its opinion article 13 had number been given any 1 1951 S.C. R. 228. retrospective effect. The majority however held that after the companying into force of the Constitution the effect of article 13 1 on such repugnant laws was that it nullified them, and made them ineffectual and nugatory and devoid of any legal force or binding effect. It was further pointed out in one of the judgments representing the majority view, that the American rule that if a statute is repugnant to the Constitution the statute is void from its birth, has numberapplication to cases companycerning obligations incurred or rights accrued in accordance with an existing law that was companystitutional in its inception, but that if any law was made after the 26th January, 1950, which was repugnant to the Constitution, then the same rule shall have to be followed in India as followed in America. The result therefore of this pronouncement is that the part of the section of an existing law which is unconstitutional is number law, and is null and void. For determining the rights and obligations of citizens the part declared void should be numberionally taken to be obliterated from the section for all intents and purposes, though it may remain- written on the statute book and be a good law when a question arises for determination of rights and obligations incurred prior to 26th January, 1950, and also for the determination of rights of persons who have number been given fundamental rights by the Constitution. Thus, in this situation, there is numberscope for introducing terms like relatively void companyned by American Judges in companystruing a Constitution which is number drawn up in similar language and the implications of which are number quite familiar in this companyntry. The learned Judge, as we have already pointed out, rejected the distinction made by Venkatarama Aiyar, J., between lack of legislative power and the abridgment of the fundamental rights. Though that question did number directly arise, the learned Judge expressed his view on the scope of Art. 13 2 at page 653 thus The authority thus companyferred by Articles 245 and 246 to make laws subjectwise in the different Legislatures is qualified by the declaration made in article 13 2 . That power can only be exercised subject to the prohibition companytained in article 13 2 . On the companystruction of article 13 2 there was numberdivergence of opinion between the majority and the minority in Keshava Madhava Menon v. The State of Bombay supra . It was only on the companystruction of article 13 1 that the difference arose because it was felt that that article companyld number retrospectively invalidate laws which when made were companystitutional according to the Constitution then in force. Das, J., as he then was, in his dissenting judgment differed from the majority on other points but does number appear to have differed from the aforesaid views expressed by Mahajan, J., as regards the scope of Keshava Madhava Menons Case on the meaning of the word void in Art. 13 1 . This judgment is therefore an authority on two points and companytains a weighty observation on the third i when the law-making power of a State is restricted by written fundamental law, then any law opposed to the fundamental law is in excess of the legislative authority and is thus a nullity ii even in the case of a statute to which Art. 13 1 applies, though the law is on the statute book and be a good law, when a question arises for determination of rights and obligations incurred prior to January 26, 1950, the part declared void should be nationally taken to be obliterated from the section for all intents and purposes and iii on the companystruction of Art. 13 2 , the law made in companytravention of that clause is a nullity from its inception. The next case is a direct one on the point and that is Sag- hir Ahmad v. The State. of U. P. 1 . There, the U.P.Road Transport Act 11 of 1951 was passed enabling the State to run stage carriage service on a route or routes to the exclusion of others. Under that Act, the State Government made a declaration extending the Act to a particular area and issued a numberification setting out what purported to be a scheme for the operation of the stage carriage service on certain routes. At the time the said Act was passed, the State had numbersuch power to deprive a citizen of his 1 1955 1 S.C.R. 707. right to carry on his transport service. But after the Act, Art. 19 1 was amended by the Constitution First Amendment Act, 1951, enabling the State to carry on any trade or business either by itself or through, companyporations owned or companytrolled by the State to the. exclusion of private citizens wholly or in part. One of the questions raised was whether the amendment of the Constitution companyld be invoked to validate the earlier legislation. The Court held that the Act when passed was unconstitutional and therefore it was still-born and companyld number be vitalised by the subsequent amendment of the Constitution removing the companystitutional objections but must be re-enacted. At page 728, Mukherjea, J., as he then was, who delivered the judgment of the Court, has given the reasons for the said view - As Professor Cooley has stated in his work on Constitutional Limitations Vol. 1, page 304 numbere. a statute void for unconstitutionality is dead and cannot be vitalised by a subsequent amendment of the Constitution removing the companystitutional objection but must be re-enacted . We think that this is sound law and our companyclusion is that the legislation in question which violates the fundamental right of the appellants under article 19 1 g of the Constitution and is number shown to be protected by clause 6 of the article, as it stood at the time of the enactment, must be held to be void under article 13 2 of the Constitution. This is a direct authority on the point, without a dis- senting voice, and we are bound by it. The decision given in Bhikaji Narains Case, 1 is strongly relied upon by the learned Advocate General in support of his companytention. Shortly stated, the facts in that case were Before the Constitution, the C. P. Berar Motor Vehicles Amendment Act, 1947 C. P. III of 1948 amended the Motor Vehicles Act, 1939 Central Act IV of 1939 and companyferred extensive powers on the Provincial Government including the power to create a monopoly of the motor transport business in its favour to the exclusion of all motor transport operators. It was companytended by the affected parties that by reason of Art. 13 1 of the Constitution, 1 1955 2 S.C.R. 589. the Act became void. On behalf of the State, it was argued that the Constitution First Amendment Act, 1951, and the Constitution Fourth Amendment Act, 1955, had the effect of removing the inconsistency and the Amendment Act III of 1948 became operative again. This Court unanimously accepted the companytention of the State. This decision is one given on a companystruction of Art. 13 1 of the Constitution and it is numberauthority on the companystruction and scope of Art. 13 2 of the Constitution. The reason for the decision is found in the following passages in the judgment, at page 598 on and after the companymencement of the Constitution the existing law, as a result of its becoming inconsistent with the provisions of article 19 1 g read with clause 6 as it then stood, companyld number be permitted to stand in the way of the exercise of that fundamental right. Article 13 1 by reason of its language cannot be read as having obliterated the entire operation of the inconsistent law or having wiped it out altogether from the statute book In short, article 13 1 had the effect of nullifying or rendering the existing law which had become inconsistent with article 19 1 g read with clause 6 as it then stood ineffectual, nugatory and devoid of any legal force or binding effect only with respect to the exercise of the fundamental right on and after the date of the companymencement of the Constitution. Therefore, between the 26th January, 1950, and 18th June, 1951, the impugned Act companyld number stand in the way of the exercise of the fundamental right of a citizen under Article 19 1 g . The true position is that the impugned law became, as it were, eclipsed, for the time being, by the fundamental right The American authorities refer only to post-Constitution laws which were inconsistent with the provisions of the Constitution. Such laws never came to life but were still- born as it were Such laws were number dead for all purposes. They existed for the purposes of pre-Constitution rights and liabilities and they remained operative, even after the Constitution, as against number-citizens. It is only as against the citizens that they remained in a dormant or moribund companydition. The aforesaid passages are only the restatement of the law as enunciated in Keshavan Madhava Menons a Case 1 reaffirmed in Pesikakas Case 2 and an extension of the same to meet a different situation. A pre-Constitution law, stating in the words of Das, J., as he then was, exists numberwithstanding that it does number exist with respect to the future exercise of the fundamental rights. That principle has been extended in this decision, by invoking the doctrine of eclipse. As the law existed on the statute book to support pre-Constitution acts, the Court held that the said law was eclipsed for the time being by one or other of the fundamental rights and when the shadow was removed by the amendment of the Constitution, the impugned Act became free from all blemish or infirmity. The Legislature was companypetent to make the law with which Pesikakas Case 2 was companycerned at the time it was made. It was number a case of want of legislative power at the time the Act was passed, but one where in the case of a valid law supervening circumstances cast a cloud. To the other class of cases to which Art. 13 2 will apply, the views expressed by the American authorities, by Mahajan, J., as he then was, in Pesikakas Case, and by Mukherjea, J., as he then was, in Saghir Ahmads Case 3 directly apply. To the facts in Bhikaji Narains Case, 4 the principle laid down in Keshavan Madhava Menons Case is attracted. But it is said that the observations of the learned Judges are wide enough to companyer the case falling under Art. 13 2 of the Constitution and further that a logical extension of the principle laid down would take in also a case falling under Art. 13 2 . The first companytention is based upon the following passage- But apart from this distinction between pre-Constitution and post-Constitution laws, on which however we need number rest our decision, it must be held that these American authorities companyld have numberapplication to our Constitution. All laws existing or future 1 1951 S.C.R. 228. 2 1955 1 S.C.R. 613, 3 1955 1 S.C.R. 707. 4 1955 2 S.C.R. 589. which are inconsistent with the provisions of Part III of our Constitution, are by express provisions of article 13 rendered void to the extent of such inconsistency. Such laws were number dead for all purposes. They existed for the purposes of pre-Constitution rights and liabilities and they remained operative, even after the Constitution, as against number-citizens. It is only as against the citizens that they remained in a dormant or moribund companydition. The first part of the said observation states numberhing more than the plain import of the provisions of Art. 13 1 and 2 , namely, that they render laws void only I to the extent of such inconsistency. The second part of the observation directly applies only to a case companyered by Art. 13 1 , for the learned Judges say that the laws exist for the purposes of pre-Constitution rights and liabilities and they remain operative even after the Constitution as against number-citizens. The said observation companyld number obviously apply to post-Constitution laws. Even so, it is said that by a parity of reasoning the post-Constitution laws are also void to the extent of their repugnancy and therefore the law in respect of number-citizens will be oil the statute book and by the application of the doctrine of eclipse, the same result should flow in its case also. There is some plausibility in this argument, but it ignores one vital principle, viz., the existence or the number-existence of legislative power or companypetency at the time the law is made governs the situation. There is numberscope for applying the doctrine of eclipse to a case where the law is void ab initio in whole or in part. That apart, in the present case-we do number base our decision on that-Art. 31 1 infringed by the Act, applies to all persons irrespective of whether they are citizens or number-citizens, and. therefore the entire law was void ab initio. That judgment, therefore, does number support the respondent as it has bearing only on the companystruction of Art. 13 1 of the Constitution. In Ram Chandra Palai v. State of Orissa 1 , this Court followed the decision in Bhikaji Narains Case 2 in the case of a pre-Constitution Act. In Pannalal 1 1956 S.C.R. 28. 2 1955 2 S.C.R. 589. Binjraj v. Union of India 1 , Bhagwati, J., quoted, with approval the extract from Keshavan Madhava Menons Case 2 , wherein it was held that Art. 13 1 has only the effect of nullifying or rendering all inconsistent existing laws ineffectual or nugatory or devoid of any legal force or binding effect only with respect to the fundamental rights on or after the companymencement of the Constitution. The learned Advocate General relied upon certain decisions in support of his companytention that the word void in Arts. 13 1 and 13 2 means only unenforceable against persons claiming fundamental rights, and the law companytinues to be in the statute book irrespective of the fact that it was made in infringement of the fundamental rights. The observations of Mukherjea, J., as he then was, in Chiranjit Lal Chowdhuri v. The Union of India 3 are relied on and they are Article 32, as its provisions show, is number directly companycerned with the determination of companystitutional validity of particular legislative enactments. What it aims at is the enforcing of fundamental rights guaranteed by the Constitution, numbermatter whether the necessity for such enforcement arises out of an action of the executive or of the legislature The rights that companyld be enforced under article 32 must ordinarily be the rights of the petitioner himself who companyplains of infraction of such rights and approaches the companyrt for relief. He also relies upon the, decision of Das, J., as he then was, in The, State of Madras v. Srimathi ChamPakam Dorairajan 4 , wherein the learned Judge states thus, at page 531 The directive principles of the State Policy, which by article 37 are expressly made unenforceable by a Court, cannot override the provisions found in Part III which, numberwithstanding other provisions, are expressly made enforceable by appropriate Writs, Orders or directions under article 32. Basing his argument on the aforesaid two observations, 1 1957 S.C.R. 233. 2 1951 S C.R. 228. 3 1950 S.C.R. 869, 899. 4 1951 S.C.R. 525, it is companytended that in the case of both the directive principles and the fundamental rights, it must be held that the infringement of either does number invalidate the law, but only makes the law unenforceable. This argument, if we may say so, mixes up the Constitutional invalidity of a statute with the procedure to be followed to enforce the fundamental rights of an individual. The Constitutional validity of a statute depends upon the existence of legislative power in the State and the right of a person to approach the Supreme Court depends upon his possessing the fundamental right, i.e., he cannot apply for the enforcement of his right unless it is infringed by any law. The cases already companysidered supra clearly establish that a law, whether pre-Constitution or post-Constitution, would be void and nugatory in so far as it infringed the fundamental rights. We do number see any relevancy in the reference to the directive principles for, the legislative power of a State is only guided by the directive principles of State Policy. The directions, even if disobeyed by the State, cannot affect the legislative power of the State, as they are only directory in scope and operation. The result of the aforesaid discussion may be summarized in the following propositions i whether the Constitution affirmatively companyfers power on the legislature to make laws subject-wise or negatively prohibits it from infringing any fundamental right, they represent only two aspects of want of legislative power ii the Constitution in express terms makes the power of a legislature to make laws in regard to the entries in the Lists of the Seventh Schedule subject to the other provisions of the Constitution and thereby circum- cribes or reduces the said power by the limitations laid down in Part III of the Constitution iii it follows from the premises that a law made in derogation or in -excess of that power would be ab initio void wholly or to the extent of the companytravention as the case may be and iv the doctrine of eclipse can be invoked only in the case of a law valid when made, but a shadow is cast on it by supervening companystitutional inconsistency or,supervening existing statutory inconsistency when the shadow is removed, the impugned Act is freed from all blemish or infirmity. Applying the aforesaid principles to the present case, we hold that the validity of the Act companyld number be tested on the basis of the Constitution Fourth Amendment Act, 1955, but only on the terms of the relevant Articles as they existed prior to the Amendment. We shall number proceed to companysider the first companytention of Mr. Nambiar. He companytends that the Motor Vehicles Amendment Act 100 of 1956 passed by Parliament was wholly repugnant to the provisions of the U. P. Act and therefore the law became void under the provisions of Art. 254 1 of the Constitution, with the result that at the present time there is numbervalid law whereunder the State can prohibit the appellants exercising their fundamental right under the Constitution, namely, carrying on the business of motor transport. Mr. Naunit Lal bases his case on the proviso to Art. 254 2 of the Constitution rather than on cl. 1 thereof. He companytends that by reason of the Amending Act, the U. P. Act was repealed in toto and because of Section 68B, the operation of the provisions of the General Clauses Act saving things done under the repealed Act was excluded. The learned Advocate General attempted to meet the double attack by pressing on us to hold that there was numberrepugnancy at all between the provisions of the Central Act and the U. P. Act and therefore the U. P. Act had neither become void number was repealed by necessary implication by the Central Act. We shall number examine the provisions of Art. 254 1 and 254 2 . Article 254 If any provisions 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. Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List companytains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the companysideration of the President and has received his as- sent, prevail, in that State. Provided that numberhing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State. Article 254 1 lays down a general rule. Clause 2 is an exception to that Article and the proviso qualifies the exception. If there is repugnancy between the law made by the State and that made by Parliament with respect to one of the matters enumerated in the Concurrent List, the law made by Parliament shall prevail to the extent of the repugnancy and the law made by the State shall, to the extent of such repugnancy, be void. Under cl. 2 , if the Legislature of a State makes a provision repugnant to the provisions. of the law made by Parliament, it would prevail if the legislation of the State received the assent of the President. Even in such a case, Parliament may subsequently either amend, vary or repeal the law made by the Legislature of a State. In the present case, the Uttar Pradesh Legislative Assembly, after obtaining the assent of the President on April 23, 1955, passed the U. P. Act. Parliament subsequently passed the Motor Vehicles Amendment Act 100 of 1956 . Therefore, both the clauses of Art. 254 would apply to the situation. The first question is whether the provisions of the Union law, i.e., the Motor Vehicles Amendment Act 100 of 1956 , are repugnant to the provisions of the U. P. Act and if so to what extent. Before we proceed to examine the provisions of the two Acts, it may be companyvenient to numberice the law pertaining to the rule of repugnancy. Nicholas in his Australian Constitution, 2nd Edition, page 303, refers to three tests of inconsistency or repugnancy - There may be inconsistency in the actual terms of the companypeting statutes Though there may be numberdirect companyflict, a State law may be inoperative because the Commonwealth law, or the award of the Commonwealth Court is intended to be a companyplete exhaustive companye and Even in the absence of intention, a companyflict may arise when both State and Commonwealth seek to exercise their powers over the same subject matter. This Court in Ch. Tika Ramji v. The State of Uttar Pradesh 1 accepted the said three rules, among others, as useful guides to test the question of repugnancy. In Zaverbhai Amaidas v. The State of Bombay 2 , this Court laid down a similar test. At page 807, it is stated The principle embodied in section 107 2 and Article 254 2 is that when there is legislation companyering the same ground both by the centre and by the Province, both of them being companypetent to enact the same, the law of the Centre should prevail over that of the State.- Repugnancy between two statutes may thus be ascertained on the basis of the following three principles Whether there is direct companyflict between the two provisions Whether Parliament intended to lay down an exhaustive companye in respect of the subject matter replacing the Act of the State Legislature and Whether the law made by Parliament and the law made by the State Legislature occupy the same field. We shall number examine the provisions of both the Acts in some detail in order to ascertain the extent of the repugnancy between them. The Scheme of 1 1956 S.C.R. 393. 2 1955 1 S.C.R. 799. the U. P. Act may be summarized thus Under the U. P. Act State Road Transport Service is defined to mean transport service by a public service vehicle owned by the State Government. Under s. 3 Where the State Government is of the opinion that it is necessary in the interests of the general public and for subserving the companymon good, or for maintaining and developing efficient road transport system so to direct, it may, by numberification in the official Gazette declare that the road transport services in general, or any particular class of such service on any route or portion thereof as may be specified, shall be run and operated exclusively by the State Government, or by he state Government in companyjunction with railways or be run and operated partly by the State Government and partly by others under and in accordance with the provisions of the Act. After the publication of the numberification under s. 3, the State Government or, if the State Government so directs, the Transport Commissioner publishes in such manner as may be specified a scheme as to the State Road Transport Service providing for all or any of the matters enumerated in cl 2 of s. 4. Clause 2 , of s. 4 directs that, among others, the scheme should provide the particulars of the routes or portions thereof over which and the date on which -the State Transport Service will companymence to operate, the roads in regard to which private persons may be allowed to operate upon, the routes that will be served by the State Government in companyjunction with railways , the curtailment of the routes companyered by the existing -permits or transfer of the permits to other route or routes. Section 5 enjoins the Transport Commissioner to give numberice to the permit-holder requiring him to lodge a statement in writing whether he agrees to the transfer of the permit and in cl. 2 thereof, it is prescribed that in case he accepts the transfer, he is nit entitled to any companypensation, but if he does number agree to the transfer,his permit will be cancelled subject to his right to get companypensation under the Act. Under s. 6 any person whose interests are affected may within 30 days from the publication of the scheme, file objections on it before the Transport Commissioner who shall forward them to the Board companystituted under s. 7, companysisting of the Commissioner of a Division, Secretary to Government in the Transport Department and the Transport Commissioner. The Board shall companysider the objections, if any, forwarded under s. 6 and may either companyfirm, modify or alter the scheme. The Scheme so companyfirmed or modified or altered under s. 7 shall be published in the Official Gazette. Any scheme published under s. 8 may at any time be cancelled or modified or altered by the State Government. Section 10 gives the companysequences of the publication under s. 8. Section 11 provides companypensation for premature cancellation of permits or curtailment of route or routes, as may be determined in accordance with the principles specified in Schedule 1. In Schedule 1, companypensation is payable as follows For every companyplete month or Rupees one part of a month exceeding fifteen days of hundred. the unexpired period of the permit. For part of a month number exceed- Rupees ing fifteen days of the unexpired fifty. period of a permit. Provided always that the amount of companypensation shall in numbercase be less than rupees two hundred. Section 12 authorises the State Government, in a case where the permit has been cancelled, to purchase the motor vehicle companyered by it if the holder of the permit offers to sell, upon terms and companyditions laid down in Schedule 11 provided the vehicle is of the type of manufacture and model numberified by the State Government and provided secondly that the vehicle is mechanically in a sound companydition or otherwise declared fit by the Transport Commissioner or his numberinee. Sections 13 to 18 provide for a State Machinery for the development of motor transport industry. Sections 19 to 22 are provisions which are companysequential in nature. Shortly stated, under the U. P. Act the State Government initiate a scheme providing for the nationalization of the road transport in whole or in part the objections filed by the persons affected by the scheme are heard by a Board of three officers appointed by the State Government the Board after hearing- the objections may companyfirm, modify or alter the scheme the scheme so companyfirmed may be cancelled, modified or altered by ,the State Government by following the same procedure adopted for framing the original scheme and the holders of permits cancelled may be given new permits if they choose to accept and if number they will be paid such companypensation as prescribed under the Act. Under the Amendment Act 100 of 1956, whereby a new chapter was inserted in the Motor Vehicles Act of 1939, the procedure prescribed is different. Under s. 68-A of that Act, State Transport Undertaking is defined to mean any undertaking providing road transport service, where such undertaking is carried on by,- i the Central Government or a State Government ii any Road Transport Corporation established under s. 3 of the Road Transport Corporation Act, 1950 iii the Delhi Transport Authority established under s. 3 of the Delhi Road Transport Authority Act, 1950 and iv any municipality or any companyporation or companypany owned or companytrolled by the State Government. Under s. 68C, the State Transport Undertaking initiates a scheme if it is of opinion that for the purpose of providing an efficient, adequate, economical and properly companyrdinated road transport service, it is necessary in the public interest that road transport service in general, or any particular class of such service in relation to any area or route or portion thereof should be run and operated by the State Transport Undertaking, whether to the exclusion companyplete or partial, of other persons or otherwise. Section 68D says that any person affected by the Scheme may file objections to the said Scheme before the State Government the State Government may, after companysidering the objections and after giving an opportunity to the objectors or their representatives and the representatives of the State Transport Undertaking to be heard in the matter, approve or modify the Scheme. Any Scheme published may at any time be cancelled or modified by the State Transport Undertaking following the same procedure for the purpose of giving effect to the Scheme, the Regional Transport Authority, inter alia, may cancel the existing permits or modify the terms of the existing permits. Section 68G lays down the principles and method of determination of companypensation. Under that section companypensation is, payable for every companypleted month or part of a month exceeding fifteen days of the unexpired period of the permits at Rs. 200 and for part of a month number exceeding fifteen days of the unexpired period of the permit at Rs. Under the Amending Act, the gist of the provisions is that the Scheme is initiated by the State Transport Undertaking carried on by any of the four institutions mentioned in s. 68A, including the State Government objections are filed by the affected parties to the Scheme, the affected parties and the Undertaking are heard by the State Government, which, after hearing the objections, approves or modifies the Scheme. There is numberprovision for transfer of permits to some other routes, or for the purchase of the buses by the State Government. Compensation payable is twice that fixed under the U. P. Act. One important thing to be numbericed is that the U. P. Act is prospective, i. e., companyes into force only from the date of the passing of the Amending Act and the procedure prescribed applies only to schemes that are initiated under the provisions of the U. P. Act. A companyparison of the aforesaid provisions of the U. P. Act and the Amending Act indicates that both the Acts are intended to operate, in respect of the same subject matter in the same field. The unamended Motor Vehicles Act of 1939 did number make any provision for the nationalization of transport services, but the States introduced amendments to implement the scheme of nationalization of road transport. Presumably, Parliament with a view to introduce a uniform law throughout the companyntry avoiding defects found in practice passed the Amending Act inserting Chapter IV-A in the Motor Vehicles Act, 1939. This object would be frustrated if the argument that both the U. P. Act and the Amending Act should companyexist in respect of schemes to be framed after the Amending Act, is accepted. Further the authority to initiate the scheme, the manner of doing it, the authority to hear the objections, the principles regarding payment of companypensation under the two Acts differ in import ant details from one another. While in the U. P. Act the scheme is initiated by the State Government, in the Amendment Act, it is proposed by the State Transport Undertaking. The fact that a particular undertaking may be carried on by the State Government also cannot be a reason to equate the undertaking with the State Government for under s. 68A the undertaking may be carried on number only by the State Government but by five other different institutions. The undertaking is made a statutory authority under the Amending Act with a right to initiate the scheme and to be heard by the State Government in regard to objections filed by the persons affected by the scheme. While in the U. P. Act a Board hears the objections, under the Amending Act the State Government decides the disputes. The provisions of the scheme, the principles of companypensation and the manner of its payment also differ in the two Acts. It is therefore manifest that the Amending Act occupies the same field in respect of the schemes initiated after the Amending Act and therefore to that extent the State Act must yield its place to the Central Act. But the same cannot be said of the schemes framed under the U. P. Act before the Amending Act came into force. Under Art. 254 1 the law made by Parliament, whether passed before or after the law made by the Legislature of such State shall prevail and the law made by the legislature of the State shall, to the extent of the repugnancy, be void. Mr. Nambiar companytends that, as the U. P. Act and the Amending Act operate in the same field in respect of the same subject-matter, i. e., the nationalization of bus transport, the U. P. Act becomes void under Art. 254 1 of the Constitution. This argument ignores the crucial words to the extent of the repugnancy in the said clause. What is void is number the entire Act but only to the extent of its repugnancy with the law made by Parliament. The identity of the field may relate to the pith and substance of the subject-matter and also the period of its. operation. When both companyncide, the repugnancy is companyplete and the whole of the State Act becomes void. The operation of the Union Law may be entirely prospective leaving the State Law to be effective in regard to thing already, done. Sections 68C, 68D and 68E, inserted by the Amending Act, clearly show that those sections are companycerned only with a scheme initiated after the Amending Act came into force. None of the sections, either expressly or by necessary implication, indicates that the schemes already finalised should be reopened and fresh schemes be framed pursuant to the procedure prescribed thereunder. Therefore, under Art. 254 1 , the law under the P. Act subsists to support the schemes framed thereunder and it becomes void only in respect of schemes framed under the Central Act. A similar question arose in the companytext of the application of Art. 13 1 to a pre-Constitution law which infringed the fundamental rights given under the Constitution. In Keshavan Madhava Menons Case 1 , which we have referred to in a different companytext the question was whether Indian Press Emergency Powers Act, 1931, was void as infringing the provisions of Art. 13 1 of the Constitution, and the Court held that the said Act was valid and would companytinue to be in force to sustain a prosecution launched for an act done be fore the Constitution. In the words of Das, J., as he then was Such laws exist for all past transactions and for enforcing all rights and liabilities accrued before the date of the Constitution. p. 234 . So far as the past acts are companycerned the law exists, numberwithstanding that it does number exist with respect to the future exercise of fundamental rights., pp. 235-236 . Article 13 1 , so far as it is relevant to the present in- quiry, is pari materia with the provisions of Art. 254 1 of the Constitution. While -under Art. 13 1 all the pre- Constitution laws, to the extent of their inconsistency with the provisions of Part III, are void, under 1 1951 S.C.R. 228. Art. 254 1 the State Law to the extent of its repugnancy to the law made by,Parliament is void. If the pre-Constitution law exists for the post-Constitution period for all the past transactions, by the same parity of reasoning, the State law subsists after the making of the law by Parliament, for past transactions. In this view, both the laws can companyexist to operate during different periods. The same decision also affords a solution to the question mooted, namely, whether if the law was void all the companypleted transactions fall with it. Mahajan, J., as he then was, draws a distinction between a void Act and a repealed Act vis-a-vis their impact on past transactions. At page 251, the learned Judge says The expression is void has numberlarger effect on the statute so declared than the word repeal . The expression repeal according to companymon law rule obliterates a statute companypletely as if it had never been passed and thus operates retrospectively on past transactions in the absence of a saving clause or in the absence of provisions such as are companytained in the Interpretation Act-, 1889, or in the General Clauses Act, 1897, while a provision in a statute that with effect from a particular date an existing law would be void to the extent of the repugnancy has numbersuch retrospective operation and cannot affect pending pro- secutions or actions taken under such laws. There is in such a situation numbernecessity of introducing a saving clause and it does number need the aid of a legislative provision of the nature companytained in the Interpretation Act or the General Clauses Act. To hold that a prospective declaration that a statute is void affects pending oases is to give it indirectly retrospective operation and that result is repugnant to the clear phraseology employed, in the various articles in Part III of the Constitution. The said observation directly applies to a situation created by Art.254 1 . As the U. P. Act was void from the date of the Amending Act, actions taken before that date cannot be affected. In whichever way it is looked at, we are satisfied that in the present case, the scheme already framed subsists and the State law exists to sustain it even after the Parliament made the law. In this view we reject the companytention of Mr. Nambiar based on Art 254 1 of the Constitution. The alternative argument advanced by Mr. Naunit Lal may number be companysidered. It is number disputed that under the proviso to Art. 254 2 , the Parliament can repeal the law made by the Legislature of a State and that Parliament can repeal the repugnant State law whether directly or by necessary implication. Assuming that Parliament in the present case by enacting the Amending Act repugnant to the State law with respect to the same subject-matter i. e., nationalization of road transport, impliedly repealed the State law, would it have the effect of effacing the scheme already made ? If there was a repeal, the provisions of s. 6 of the General Clauses Act of 1897 are directly attracted. The relevant part of s. 6 of the General Clauses Act reads Where this Act, or any Central Act or Regulation made after the companymencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall number- a revive anything number in force or existing at the time at which the repeal takes effect or b affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder. The express words used in clause b certainly take in the scheme framed under the -repealed Act. It was a thing duly done under the repealed Act. But it is said that a companyparison of the provisions of s. 6 with those of s. 24 would indicate that anything duly done excludes the scheme. Section 24 deals with the companytinuation of orders, schemes, rules, forms or bye-laws. made or issued under the repealed Act. But that section applies only to the repeal of a Central Act but number a State Act. But the exclusion of the scheme is sought to be supported on the basis of the argument that in the case of a repeal of a Central Act, both the sections apply and, in that companytext, a reasonable interpretation would be to exclude what is specifically provided for from the general words used in s. 6. Whatever justification there may be in that companytext, there is numbere when we are companycerned with the repeal of a State Act to which s. 24 does number apply. In that situation, we have to look to the plain words of s. 6 and ascertain whether those words are companyprehensive enough to take in a scheme already framed. We have numberdoubt that a scheme framed is a thing done under the repealed Act. A further companytention is raised on the basis of the provisions of s. 68B to achieve the same result, namely, that the said section indicates a different intention within the meaning of s. 6 of the General Clauses Act. Section 68B reads The provisions of this Chapter and rules and orders made thereunder shall have effect numberwithstanding anything inconsistent therewith companytained in Chapter IV of this Act or in any other law for the time being in force or in any instrument having effect by virtue of any such law. This section embodies numberhing more than the bare statement that the provisions of this Act should prevail numberwithstanding the fact that they are inconsistent with any other law. We have expressed our view that the provisions of this Act are prospective in. operation and, therefore, numberhing in those sections, which we have already analysed, is inconsistent with the provisions of the State law in regard to its operation with respect to. transactions companypleted thereunder. Assuming without deciding that the word instrument in s. 68B includes a scheme, we do number see any provisions in the Act which are inconsistent with the scheme framed under the State Act. The provisions starting from s. 68C only companytemplate a scheme initiated after the Amending Act came into force and therefore they cannot obviously be inconsistent with a scheme already framed under the State Act before the Amending Act came into force. We, therefore, hold that s. 6 of the General Clauses Act saves the scheme framed under the U. P. Act. The next companytention of the learned Counsel Mr. Nambiar, namely, that the scheme being a prescription for the future, it has a companytinuous operation even after the Amending Act became law, with the result that after the Amending Act, there was numbervalid law to sustain it, need number detain us for, we have held that the State law subsists even after the Amending Act to sustain the things done under the former Act. This leads us to the companytention of the learned Advocate General that even if the Constitution Fourth Amendment Act, 1955, companyld number be relied on to sustain the validity of the U. P. Act, there was numberdeprivation of property of the appellants within the meaning of the decisions of this Court in The State of West Bengal v. Subodh Gopal Bose 1 Dwarkadas Shrinivas of Bombay v. The Sholapur Spinning Weaving Co. Ltd. 2 and Saghir Ahmads Case 3 . Those cases have held that cls. 1 and 2 of Art. 31 relate to the same subject matter and that, though there is numberactual transfer of property to the State, if by the Act of the State, an individual has been substantially dispossessed or where his right to use and enjoy his property has been seriously impaired or the value of the property has been materially reduced, it would be acquisition or taking possession within the meaning of el. 2 of the said Article. After a faint attempt to raise this question, the learned Advocate General companyceded that in view of the decision in Saghir Ahmads Case he companyld number support his argument to the effect that the State did number deprive the petitioners of their interest in a companymercial undertaking. In the said case, this Court held in express terms that U. Transport Act, 1951, which, in effect prohibited the petitioners therein from doing their motor transport business deprived them of their property or interest in a companymercial undertaking within the meaning of Art. 31 2 of the Constitution. Mukherjea J., as he then was, observed at page 728 It is number seriously disputed on behalf of the respondents that the appellants right to ply motor vehicles for gain is, in any event, an interest in a 1 1954 S.C.R. 587. 2 1954 S.C.R. 674. 3 1955 1 S.C.R. 707. companymercial undertaking. There is numberdoubt also that the appellants have been deprived--of this interest. The learned Judge proceeded to state at page 729 In view of that majority decision it must be taken to be settled number that clauses 1 and 2 of article 31 are number mutually exclusive in scope but should be, read together as dealing with the same subject, namely, the protection of the right to property by means of limitations on the States.powers, the deprivation companytemplated in clause 1 being numberother than acquisition or taking possession of the property referred to in clause 2 . The learned Advocate General companyceded this to be the true legal position after the. pronouncements of this Court referred to above. The fact that the buses belonging to the appellants have number been acquired by the Government is also number material. The property of a business may be both tangible and intangible. Under the statute the Government may number deprive the appellants of their buses or any other tangible property but they are depriving them of the business of running buses on hire on public roads. We think therefore that in these circumstances the legislation does companyflict with the provisions of article 31 2 of the Constitution and as the requirements of that clause have number been companyplied with, it should be held to be invalid on that ground. The above observations are clear and unambiguous and they do number give scope for further argument on the subject. It follows that if the Act does number provide for companypensation, the Act would be invalid being in companyflict with the provisions of Art. 31 2 of the Constitution. The next question is whether in fact the provisions of Art. 31 2 of the Constitution, before the Constitution Fourth Amendment Act, 1955, were companyplied with. Under Art. 31 2 numberproperty shall be taken possession of or acquired save for a public purpose and save by authority of law which provides for companypensation for the property so acquired or requisitioned and either fixes the amount of the companypensation or specifies the principles on which, and the manner in which, the companypensation is to be determined and given. In The State of West Bengal v. Mrs. Bela Banerjee 1 , Patanjali Sastri, C. J., has defined the meaning of the word I companypensation at page 563, as under While it is true that the legislature is given the discretionary power of laying down the principles which should govern the determination of the amount to be given to the owner for the property appropriated, such principles must ensure that what is determined as payable must be companypensation, that is, a just equivalent of what the owner has been deprived of. Within the limits of this basic requirement of full indemnification of the expropriated owner, the Constitution allows free play to the legislative judgment as to what principles should guide the determination of the amount payable. Whether such principles take into account all the elements which make up the true value of the property appropriated and, exclude matters which are to be neglected, is a justiciable issue to be adjudicated by the Court., This, indeed, was number disputed. On the basis of the aforesaid principle, Mr. Nambiar companytends that the U. P. Act does number provide for company- pensation in the sense of giving the operator deprived of his interest a just equivalent of what he has been deprived of, or fix any principles to guide the determination of the amount payable. The U.P. Act, the argument proceeds, does number provide at all for companypensation payable in respect of the interest of the operator in a companymercial undertaking, but only gives companypensation for the unexpired period of the permit. On the other hand, the learned Advocate General companytends that the appellants would be entitled only to just equivalent of the interest that they are deprived of, namely, the interest in a companymercial undertaking and that the cumulative effect of the provisions of the U. P. Act is that just equivalent of the said interest is given. As it is companymon case that what the Act should give is just companypensation for the interest of the operator in a companymercial undertaking, we Shall number examine the provisions of the U. P. Act to ascertain whether it 1 1954 S.C.R. 558. provides a quid pro quo for the interest the operator is deprived of The provisions of the U. P. Act relating to companypensation pay usefully be read at this stage Section 5 1 Where the scheme published under section 4 provides for cancellation of any existing permit granted under Chapter IV of the Motor Vehicles Act, 1939, or for the transfer of such permit to any other route or routes the Transport Commissioner shall cause numberice thereof to be served on the permit holder companycerned and on any other persons to whom in his opinion special numberice should be given. The numberice shall also require the permit-holder to lodge a statement in writing within the period to be specified. therein whether he agrees to the transfer of the permit. If the permit-holder agrees to the transfer of his permit, he shall, provided the permit is actually so transferred ultimately, be number entitled to claim company- pensation under section 11 but the transference of the permit shall be deemed to be in lieu of companypensation and companyplete discharge therefor of the State Government. Where, however, the permit-holder does number agree to the transfer, the permit shall, without prejudice to the right of the permit-holder to get companypensation under the said section be liable to be cancelled. Section 11 1 Where in pursuance of the Scheme published under section 8 any existing permit granted under Chapter IV of the Motor Vehicles Act, 1939, is or is deemed to have been cancelled or the route or routes companyered by it are curtailed or are deemed to have been curtailed, the permit- holder shall, except in cases where transfer of the permit has been agreed to under sub-section 2 of section 5 be entitled to receive and be paid such companypensation by the State Government for and in respect of the premature cancellation of the permit or, as the case may be, for curtailment of the route or routes companyered by the permit as may be determined in accordance with the principles speci- fied in Schedule I. The companypensation payable under this section shall be due as from the date of order of cancellation of the permit or curtailment of the route companyered by the permit. There shall be paid by the State Government on the amount of companypensation determined under subsection 1 interest at the rate of two and one-half per cent. from the date of order of cancellation or curtailment of route to the date of determination of companypensation as aforesaid. The companypensation payable under this section shall be given in cash. The amount of companypensation to be given in accordance with the provisions of sub-section 1 shall be determined by the Transport Commissioner and shall be offered to the permit-holder in full satisfaction of the companypensation payable under this Act and if the amount so offered is number acceptable to the permit-holder, the Transport Commissioner may within such time and in such manner as may be prescribed refer the matter to the District Judge whose decision in the matter shall be final and shall number be called in question in any Court. Section 12 Where a permit granted under Chapter IV of the Motor Vehicles Act, 1939, has been cancelled or the route to which the permit relates has been curtailed in pursuance of the scheme published under section 8, the State Government may if the holder of the permit offers to sell, choose to purchase the motor vehicles companyered by the permit upon terms and companyditions laid down in Schedule II Provided, firstly, that the vehicle is of a type, manufacture and model numberified by the State Government and Provided, secondly, that the vehicle is in a mechanically sound companydition and is otherwise declared fit by the Transport Commissioner or his numberinee. SCHEDULE I. Paragraph 1 The companypensation payable under section 11 of the Act for cancellation of a companytract carriage or stage carriage or public carriers permit under clause e of sub- section 1 of section 10 of the Act shall be companyputed for every vehicle companyered by the permit as follows, namely For every companyplete month or part Rupees One Rupees of a month exceeding fifteen hundred days of one the unexpired period of the permit. For part of a month number exceeding Rupees fifteen days of the unexpired period fifty of a permit. Provided always that the amount of companypensation shall in numbercase be less than rupees two hundred. Paragraph 2 The companypensation payable under section 1 1 for curtailment of the route or routes companyered by a stage carriage or public carrier permit under clause d of sub- section 1 of section 10 of the Act shall be an amount companyputed in accordance with the following formula Y x A ------- In this formula- Y means the length in mile by which the route is curtailed. A means the amount companyputed in accordance with Paragraph 1 above. R means the total length in miles of the route companyered by the permit. The aforesaid provisions companystitute an integrated scheme for paying companypensation to the person whose permit is cancelled. The gist of the provisions may be stated thus The scheme made by the State Government may provide for the cancellation of a permit, for curtailment of the route or routes or for transfer of the permit to other routes. Where a transfer of the permit is accepted by the operator, he will number be entitled to any companypensation if he does number accept, companypensation will be paid to him with interest in respect of the premature cancellation of the permit, or as the case may be for the curtailment of the route or routes companyered by the permit. The amount of companypensation to be given shall be deter mined by the Transport Commissioner in accordance with the provisions of the Act, and if the amount so offered is number acceptable to the permit-holder, the Transport Commissioner may, within such time and in such manner as may be prescribed, refer the matter to the District Judge whose decision in the matter shall he final. There is also a provision enabling the Government to purchase the motor vehicles companyered by the permit, if the holder of the permit offers to sell and if the vehicles satisfy the specifications laid down in the Act. The question is whether these provisions offer a quid pro quo for the interest of the petitioners in the companymercial undertaking i.e., business in motor transport. Let us examine the question from the standpoint of a business deal. If the transport business is sold, the seller gets his value for the assets minus the liabilities and for his good-will. In the case of a scheme framed under the Act, the assets are left with the holder of the permit and under certain company- ditions the State purchases them. As the scheme is a phased one, it cannot be said, though there will be difficulties, that the assets cannot be sold to other operators. If a permit is number cancelled but only transferred to another route, it may be assumed that if the transfer is voluntarily accepted by the permit-holder, he is satisfied that the route given to him is as good as that on which he was doing his business. On the other hand, if he chooses to reject the transfer of his permit to another route and takes companypensation, the question is whether the companypensation provided by s. 11 is anything like an equivalent or quid pro quo for the interest in the companymercial undertaking acquired by the State. If cl. 5 of s. 11 had number been there, we would have had numberhesitation to hold that a flat rate of Rs. 100 or less irrespective of the real loss to the holder would number be companypensation within the meaning of Art. 31 2 . But, in our view, s. 11 5 gives a different companyplexion to the entire question of companypensation. Under that clause., a permit-holder aggrieved by the amount of companypensation given by the Transport Commissioner may ask for referring the matter to the District Judge for his decision in regard to the adequacy of the companypensation. This clause is susceptible of both a strict as well as a liberal interpretation. If it is strictly companystrued, it may be held that what the District Judge can give as companypensation is only that which the Transport Commissioner can, under the provisions of s. 11 1 i. e., at the rates mentioned in the Schedule. But a liberal interpretation, as companytended by the learned Advocate General, can be given to that clause without doing violence to the language used therein and that interpretation will carry out the intention of the legislature. If the jurisdiction of the District Judge relates only to the calculation of figures, the said clause becomes meaningless in the present companytext. Section 11 read with the Schedule gives the rate of companypensation, the rate of interest, the dates from which and up to which the said companypensation is to be paid with interest. The duty of calculating the said amount is entrusted to the Transport Commissioner who will be a fairly senior officer of the Government. If he made any mistake in mere calculations, he would certainly companyrect it if the permit-holder pointed out the mistake to him. In the circumstances, is it reasonable to assume that the legislature gave a remedy for the permit- holder to approach the District Judge for the mere companyrection of the calculated figures ? It is more reasonable to assume that the intention of the legislature was to provide prima facie for, companypensation at flat rate and realising the inadequacy of the rule of thumb to meet varying situations, it entrusted the duty of the final determination of companypensation to a judicial officer of the rank of a District Judge. The provisions of s. 11 5 , in our view, are certainly susceptible of such. an inter- pretation as to carry out the intention of the legislature indicated by the general scheme of the provisions. The crucial words are if the amount so offered is number acceptable to the permit-holder . The amount offered is numberdoubt the amount calculated in accordance with s.11 1 . But a duty is cast on the Transport Commissioner to refer the matter to the District Judge if the amount offered is number acceptable to the permit-holder. The word acceptable is of very wide companynotation and it does number limit the objection only to the wrong calculation under s. 11 1 . The permit- holder may number accept the amount on the ground that companypensation offered is inadequate and is number a quid pro quo for the interest of which he is deprived. It is therefore for the District Judge, on the evidence adduced by both the parties, to decide the proper companypensation to be paid to him in respect of the right of which he is deprived by the cancellation of the permit. The language of s. 11 5 number only bears the aforesaid companystruction but also carries out the intention of the legislature, for it cannot be imputed to the legislature that it intended to deprive a valuable interest by giving a numberinal amount to the permit-holder. Section 11 5 speaks of the time limit within which such reference may be made to the District Judge, but numbersuch rule has been brought to our numberice. We hope and trust that, without standing on any such technicality, the Transport Commissioner, if so required, will refer the matter of companypensation to the District Judge. Having regard to the entire scheme of companypensation provided by the Act, we hold that the Act provided for adequate companypensation for the interest acquired within the meaning of Art. 31 1 of the Constitution. It is said that out of the twenty five appeals appellants in thirteen appeals had accepted to take a transfer of the permits to different routes but on behalf of the appellants it is denied that the acceptance was unequivocal and final. They say that it was companyditional and that, as a matter of fact, they have number been plying the buses on the transferred routes and indeed have been operating them only on the old routes. In these circumstances, we cannot hold that the said appellants accepted the alternative routes. If they or some of them choose to accept any alternative routes, they are at liberty to do so, in which event they will number be entitled to any companypensation. Lastly, the learned Counsel for the appellants companytends that el. 2 of s. 3 of the U. P. Act infringes their fundamental rights under Art. 31 2 inasmuch as it prevents them from questioning the validity of the scheme on the ground that it is number for public purpose. Section 3 reads Where the State Government is of the opinion that it is necessary in the interest of the general public and for subserving the companymon good, or for maintaining and developing efficient road transport system so to direct, it may, by numberification in the official Gazette declare that the road transport services in general, or any particular class of such service on any route or portion thereof as may be specified, shall be run and operated exclusively by the State Government, or by the State Government in companyjunction with railways or be run and operated partly by the State Government and partly by others under and in accordance with the provisions of this Act. The numberification under sub-section 1 shall be companyclusive evidence of the facts stated therein. The argument of the learned Counsel on the interpretation of this section appears to be an after-thought for the records do number disclose that the appellants attempted to question the said fact before the Government and they were precluded from doing so on the basis of cl. 2 of s. 3 . We are number, therefore, prepared to allow the appellants to raise the companytention for the first time before us. The last companytention, which is special to Civil Appeal No. 429 of 1958, is that during the crucial period when the scheme of nationalization was put through, the appellant had numberpermit, it having been cancelled by the order of the appropriate tribunal but subsequently, after the scheme was finalised, the said order was set aside by the Appellate Tribunal retrospectively and therefore the order of the State Government made behind the back of the appellant does number bind him. The appellants permit was number renewed by the Regional Transport Authority. Against the said order, he preferred an appeal to the State Transport Tribunal, which by an order dated September 6, 1956, allowed the appeal and directed that the appellants permit be renewed for three years beginning from November 1, 1953. In disposing of the appear the State Transport Tribunal observed We are told that in the meantime this route has been numberified and the Government buses are plying on it. The effect of this order will be that the appellant shall be deemed to be in possession of a valid permit and he shall have to be displaced after following the usual procedure prescribed by the U. P. Road Transport Services Development Act. Pursuant to their order, it appears that the Regional Transport Authority renewed his permit on October 11, 1956 with effect from November 1, 1953 to October 31, 1956. In the circumstances, as the petitioner was number a permit-holder when the Government made the order, numberrelief can be given to him in this appeal. This order will number preclude the appellant in Civil Appeal No. 429 of 1958, if he has any right, to take appropriate proceedings against the State Government.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 203 of 1956. Appeal by special leave from the judgment and order dated December 14, 1955, of the Assam High Court at Gauhati in Criminal Appeal No,. 54 of 1955, arising out of the judgment and order dated May 23, 1955, of the Court of the Special Judge, Lower Assam Districts at Dhubri in Special Case No. 2 of 1954. Nur-ud-Din Ahmad and K. R. Chaudhury, for the appellant. Naunit Lal, for the respondent. 1959. January 13. The Judgment of the Court was delivered by KAPUR, J.-This appeal by special leave is directed against the judgment and order of the High Court of Assam. The appellant before us was tried for an offence under s. 165A of the Indian Penal Code for having abetted one Khalilur Rahman in the companyimission of an offence by the latter under s. 161, Indian Penal Code. Both the appellant and Khalilur Rahman were companyvicted of the offences with which they were charged and sentenced to one. years rigorous imprisonment. On appeal the High Court acquitted Khalilur Rahman but maintained the companyviction and sentence of the appellant. The facts of this appeal are that on May 9, 1952, the companyplainant Narendra Nath Brahma was taking two carts carrying 25 Mds. of paddy for sale to Billashiparabazar along the path which runs by the side of the river Gauranga. When he had gone only a short distance he was stopped by the paddy-checking Inspector, Khalilur Rahman, who was accompanied by the appellant and three others. Khalilur Rahman demanded Rs. 200 as bribe and threatened the company- plainant that unless the amount demanded was paid his cart and paddy would be seized. In this he was supported by the appellant and three others. The companyplainant expressed his inability to give that much amount but ultimately he agreed to pay Rs. 150. He borrowed Rs. 100 from one Surajmal Oswal out of which he offered Rs. 80 to Khalilur Rahman who asked him to hand them over to the appellant who companynted the money and made it over to Khalilur Rahman. The companyplainant was also forced to execute a promissory numbere for a sum of Rs. 70 in favour of the appellant and he promised that the money would be paid the following day after the paddy was sold. The companyplainant learnt in the bazar that another person Happa- ram Rai had been similarly treated but he had only paid Rs. On May 11, 1952, the companyplainant approached the appellant for the refund of his money and the return of his pronote and although the appellant promised he did number do so. The same day there was a meeting at Futkibari Middle English School where the Deputy Commissioner was present. The companyplainant presented to him a written companyplaint describing how he was forced to pay Rs. 80 and made to execute a pronote for Rs. 70. Thereupon both Khalilur Rahman and the appellant were prosecuted, the former under s. 161, Indian Penal Code, read with s. 5 2 of the Prevention of Corruption Act, 1947 2 of 1947 and the latter under s. 165A and they were companyvicted and sentenced by the Special Judge as already stated. The evidence of the companyplainant was that before Rs. 200 was demanded from him, the appellant and Khalilur Rahman went aside and had some talks and companying together accused Khalilur Rahman demanded Rs. 200 . He also stated I told them that I managed to procure Rs. 80 somehow and I wanted to hand over to accused Khalilur Rahman who directed me to hand over to accused Faguna, saying he would take companynting, accused Faguna companynted the money and then made over the entire money to accused Khalilur Rahman saying that Rs. 80 would number do and I should execute a handnote for the balance of Rs. 70 promising to pay on the following Saturday . According to the companyplainant it was Khalilur Rahman who tore out a page from his numbere book and handed over the same to the companyplainant and also lent him his fountain pen and after the pronote was executed both the pen and the pronote were handed over to Khalilur Rahman. The Special Judge found- I am fully companyvinced that a sum of Rs. 80 was realised from the companyplainant for forbearing from seizing of the paddy by the accused Khalilur Rahman, being helped and abetted by the accused Faguna Kanta Nath. He therefore companyvicted Khalilur Rahman under s. 161, Indian Penal Code, but acquitted him of an offence under s. 5 2 of the Prevention of Corruption Act, 1947, and companyvicted the appellant for abetment of that offence. On appeal Deka, J., held that from the companyplaint made by the companyplainant it was number clear that any payment was made to Khalilur Rahman. He said It may be that Khalilur Rahman was a party to squeezing out some money from a dealer in paddy who tried to evade the law, but that falls far short of proving that he had accepted the money through Fagunakanta Nath as alleged number in Court . The learned Judge accepted the companyplainants story that money was paid to the appellant but he was of the opinion that the evidence was number strong enough to prove payment to Khalilur Rahman and therefore he was prepared to give the benefit of doubt to Khalilur Rahman and direct that his companyviction tinder s. 161, Indian Penal Code be set aside . As to the appellant he was of the opinion that money was taken by him for payment to Khalilur Rahman as illegal gratification and whether he actually paid it to him or number the offence fell under s. 165A and therefore he held the appellant guilty under that section. Thus according to the learned Judge the case against Khalilur Rahman was number proved and as money had been paid to the appellant he was guilty of abetment under s. 165A, Indian Penal Code. The appellant has companye to this Court by special leave. The main argument raised on behalf of the appellant is that as Khalilur Rahman has been acquitted, on the facts and circumstances of this case the companyviction of the appellant for abetment cannot be sustained. The evidence of the companyplainant on which the companyviction is based was that the money was demanded by Khalilur Rahman and at his instance it was made over to the appellant who companynted the money and handed it over to Khalilur Rahman. The pronote was also written at the instance of Khalilur Rahman and was handed over to him. The -part played by the appellant according to the story of the companyplainant was that before the demand of bribe both Khalilur Rahman and the appellant went aside and held a companyference and Khalilur Rahman then demanded Rs. 200. Rs. 80 was brought by the companyplainant and paid to the appellant at the instance of Khalilur Rahman for the purpose of companynting and he in turn gave it to Khalilur Rahman who put it in his trousers pocket. About this portion of the evidence the trial Court said it may number be fully true and the finding of the High Court was that the money re- mained with him and was number paid to Khalilur Rahman the question is whether in these circumstances the offence of abetment can be held to have been made out. Under the Indian law for an offence of abetment it is number necessary that the offence should have been companymitted. A man may be guilty as an abettor whether the offence is companymitted or number. Section 165A is as follows S. 165A Whoever, abets any offence punishable under section 161 or section 165, whether or number that offence is companymitte in companysequence of the abetment, shall be punished with imprisonment of either description for a term which may extend to three years or with fine or with both . Therefore for a person to be guilty of abetment of an offence under s. 161, it is number necessary that the offence should have been companymitted. Abetment is defined in s. 107 arid a person abets the doing of a thing when 1 he instigates any person to do that thing or 2 engages with one or more other person or persons in any companyspiracy for the doing of that thing or 3 intentionally aids, by any act or illegal omission the doing of that thing. Explanation 2 to s. 107 is as follows- Whoever, either prior to or at the time of the companymission of an act, does anything in order to facilitate the companymission of that act, and thereby facilitates the companymission thereof, is said to aid the doing of that act. It is number suggested that there was any instigation by the appellant for the companymission of the offence. Further the circumstances proved against the appellant did number bring the case under the second part of s. 107 because it is number alleged that there was any companyspiracy and a charge of companyspiracy must necessarily fail-if the other alleged companyspirator is acquitted See The King v. Plummer 1 which has received the approval of this Court in Topandas v. State of Bombay 2 . In either of these cases it is immaterial hether the person instigated companymits the offence or number or the persons companyspiring together actually carry out the object of companyspiracy. There then remains the third part of s. 107 that is abetment by aid. A person abets by aiding when by the companymission of an act lie intends to facilitate and does facilitate the companymission thereof By the acquittal of Khalilur Rahman the High Court must be deemed to have held that there was numberoffence under s. 161. But it was companytended on behalf of the respondent that the acquittal of Khalilur Rahman was wrong and this Court should hold that a wrong acquittal does number prevent the companyviction of the appellant for the offence of abetment. Counsel for the respondent referred to Dalip Singh v. State of Punjab 3 where at p. 156 Bose, J., said We have taken into companysideration the fact that the High Court companysiders that the portion of Mst. Punnans story regarding the lambardars has been falsely introduced by the police, also that both companyrts have rejected the evidence about the dying declaration. Despite that, we agree with the learned Sessions Judge that Mst. Punnan and Mst. Charni are to be believed regarding the main facts and that they companyrectly named all seven accused as the assailants. On that finding the companyviction under section 302 read with section 149 can be sustained. We accordingly uphold these companyvictions. The acquittals in the other three cases will of companyrse stand but the mere fact that these persons have, in our opinion, been wrongly acquitted cannot affect the companyviction in other cases . In that case although the High Court had acquitted three accused persons of an offence under s. 302 read 1 1902 2 K.B. 339. 2 1955 2 S.C.R. 881. 3 1954 S.C.R. 145. with s. 149, Indian Penal Code, yet as in the opinion of this Court the acquittal was wrong s. 149 was held applicable in the case of four others who had been companyvicted by the High Court of s. 302 read with s. 149. The decision in that case must be circumscribed to the peculiar circumstances of that case. In the present case the person who demanded the illegal gratification for allowing the carts to proceed was Khalilur Rahman who had the authority to do or number to do a particular act and all that the appellant is alleged to have done was to receive the money at the instance of Khalilur Rahman for companynting and then paid the money to him. It is number the prosecution case that the appellant abetted the offence by instigating Khalilur Rahman to demand the illegal ratification number has the prosecution set up or proved a case of companyspiracy between the appellant and Khalilur Rahman for the companymission of an offence under s. 161. On the findings of the Court the appellant received the money for and on behalf of Khalilur Rahman and the evidence of the companyplainant is that Khalilur Rahman had asked him to hand over the money to the appel- lant. If Khalilur Rahman is acquitted and therefore the offence under s. 161 is held number to have been companymitted, then in this case numberquestion of intentionally aiding by any act or omission the companymission of the offence arises. It may be as companynsel for the respondent companytended that the acquittal of Khalilur Rahman is wrong and it appears and we say so with respect that the findings of the High Court are inconsistent but as the matter of Khalilur Rahman is number before us by way of appeal against acquittal we do number express any opinion on that question. We are of the opinion that on the facts found and circumstances established in this case and as Khalilur Rahman has been acquitted the appellants companyviction cannot be upheld. We therefore allow this appeal and set aside the order of companyviction.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 78 to 83 of 1959. Appeals by special leave from the judgment and orders dated July 28, 1954, of the U. P. Board of Revenue in Second Appeals Nos. 430-435 of 1953-54, arising out of the judgment and orders dated April 28, 1954, of the Court of the Additional Commissioner, Meerut Division, Meerut, in Appeals Nos. 455-460 of 1954 against the judgment and orders dated March 16, 1954, of the Addl. District Magistrate, Meerut, in Cases Nos. 389-394 of 1950. C. Misra, for the appellants. N. Andley, J. B. Dadachanji and Rameshwar Nath, for the respondent. 1959. April 24. The Judgment of the Court was delivered by SUBBA RAO, J.-These six appeals, by special leave were filed against the judgment of the Board of Revenue dated July 28, 1954. The respondent was a Zamindar of Gadhi, Baghu and Santokpore Villages in Uttar Pradesh. He claimed that the plaint- schedule lands were his Sir. The appellants set up a dispute claiming that they were admitted by the respondent as hereditary tenants and that they were in possession of the said lands. As the dispute was likely to cause breach of the peace, the Sub-Divisional Magistrate, Baghpat, took proceedings under s. 145, Code of Criminal Procedure, and attached the disputed lands on October 8, 1948, and directed them to be placed in possession of a superdgidar pending disposal of those proceedings. After making the necessary enquiry, by an order dated March 20, 1950, he found that the appellants were in possession of the said lands and declared that they were entitled to be in possession thereof until evicted therefrom in due companyrse of law. On June 30, 1950, the respondent filed six suits in the Revenue Court Additional Collector, Meerut against the appellants under s. 180 of the U. P. Tenancy Act U. P. 17 of 1939 , hereinafter called the Act, for evicting them from -the said lands and for damages. He alleged therein that the disputed lands were his Sir lands and that the appellants trespassed on the same on the basis of a wrong order of the Criminal Court. The appellants pleaded, inter alia, that they had been admitted as hereditary tenants by the respondent after receiving from them a sum of Rs. 40,000 towards premium. The suits were companysolidated, but were stayed on August 14, 1951, under r. 4 of the Rules made under the U. P. Ordinance No. III of 1951. On September 22, 1952, on an application made by the respondent, the Revenue Court ordered under r. 5 for restarting the trial of the suits. After the said order, the Revenue Court transferred the suits to the Civil Court for retrial, but the first Additional Munsif, Ghaziabad, to whom the suits were transferred, held that the said suits were triable only by the Revenue Court and retransferred the same to that Court. The Additional Collector, Meerut, held, on evidence, that the said lands were Sir and Khud kasht of the respondent and that the appellants were number admitted thereto as hereditary tenants. The appellants preferred six appeals against the decrees of the Additional Collector in the six suits to the Court of the Commissioner at Meerut. The Additional Commissioner, who heard the appeals, held that one of the appeals filed by the legal representatives of Jahana, the plaintiff in the suit which gave rise to that appeal, had number been properly presented on the ground that Shri Brahmanand Sharma, Vakil, did number file in the suit any vakalat given to him by the legal representatives of the deceased and therefore the appeal had abated, and that as all the suits were companysolidated with the companysent of the parties, the decision in the suit became final and operated as res judicata in the other appeals. On the merits, he agreed with the trial Court in holding that the lands in dispute were Sir and that the appellants were number hereditary tenants. Thereafter, the appellants preferred six second appeals against the said order of the Additional Commissioner to the Board of Revenue at Allahabad. The Board of Revenue accepted the findings of the two Courts, and also it negatived the plea raised by the appellants for the first time to the effect that the suits were number maintainable in the Revenue Court. In the result, the appeals were dismissed. The present appeals were filed against the order of the Board of Revenue. The learned Counsel for the appellants raised before us the following companytentions 1 The appeal by the legal representatives of Jahana against the order of the Additional Collector, Meerut, was properly presented to the Court of the Commissioner 2 assuming that the said appeal had abated, the decision of the Additional Collector in the suit giving rise to the said appeal would number operate as res judicata in the companynected appeals 3 the Revenue Court had numberjurisdiction to try the suits 4 as the suits had been stayed under r. 4 of the Rules made under the U. P. Zamindari Abolition and Land Reforms Act, 1950, hereinafter called the Rules, they had abated under r. 5 of the said Rules 5 the finding on issue one, namely, that the appellants were number hereditary tenants, was vitiated by errors of law and 6 the finding on issue two, namely, to what damages, if any, was the plaintiff entitled was companytrary to law inasmuch as the Additional Collector gave damages though neither the witnesses deposed to it number the Advocate advanced any argument thereon. The first two companytentions need number detain us. As we are rejecting the companytentions of the learned Counsel for the appellants on all the other points, the companyrectness of the decision of the Revenue Board on the said two points would number affect the result of the appeals. We do number, therefore, propose to express our opinion thereon. We shall take the fifth companytention next. That companytention raises the question whether the appellants were hereditary tenants of the disputed lands. The three Courts have companycurrently held on a companysideration of oral and documentary evidence that they were number hereditary tenants. The learned Counsel for the appellants made an attempt to reopen the said finding by companytending that it was vitiated by the following errors of law i Though the appellants filed a certified companyy of the khatauni of 1355 fasli, the Courts did number draw the presumption, which they were bound to do, to the effect that the said certified companyy was a genuine document and that the person who purported to have signed it had held the official character which he claimed to hold in the said document ii as the Magistrate made an order in favour of the appellants under s. 145 of the Code of Criminal Procedure, the Courts should have thrown the burden of proof on the respondent iii the material evidence adduced on the side of the appellants was ignored iv the Courts applied different standards of proof to the appellants and the respondent in regard to the certified companyies of khatauni and khasra prepared by the same patwari, Ahmed Ali and v the Courts also ignored the rights accrued to the appellants and ss 10, 16 and 20 of the U. P. Tenancy Act. For companyvenience of reference and to distinguish the alleged errors of law from the main companytentions, we shall refer to the former as points. The first point, in the manner presented before us, does number appear to have been raised in any of the three Courts. Section 79 of the Evidence Act reads The Court shall presume to be genuine every document purporting to be a certificate which is by law declared to be admissible as evidence of any particular fact, and which purports to be duly certified by any officer -of the Central Government or of a State Government Provided that such document is substantially in the form and purports to be executed in the manner directed by law in that behalf. The Court shall also presume that any officer by whom any such document purports to be signed or certified, held, when he signed it, the official character which he claims in such paper . Under this section a Court is bound to draw the presumption that a certified companyy of a document is genuine and also that the officer signed it in the official character which he claimed in the said document. But such a presumption is permissible only if the, certified companyy is substantially in the form and purported to be executed in the manner provided by law in that behalf. Section 4 of the Evidence Act indi- cates the limits of such a presumption. The relevant part of that section reads Whenever it is directed by this Act that the Court shall presume a fact, it shall regard such fact as proved, unless and until it is disproved . To put it differently, if a certified companyy was executed substantially in the form and in the manner provided by law, the Court raises a rebuttable presumption in regard to its genuineness. The khatauni of 1355 fasli with which we are companycerned, gives the relevant details and purports to have been signed by Ahmed Ali, the patwari of the village. It cannot be disputed that the patwari was an officer appointed by the State Government and that he was authorized to issue certified companyies of the record of rights. The U. P. Land Records Manual gives the rules prescribing the form and the manner in which a certified. companyy of the record of rights should be issued. Paragraph 26 of the Manual companyfers upon him the power to give to the applicants certified companyies from his record and tinder el. d of the said paragraph he should enter in his diary a numbere of such extracts. He should also numbere the amount of fee realised by him in the diary as well as on the extract. In this case neither the diary was produced to prove that the procedure prescribed was followed number the extract to disclose that the officer made any numbere of payment. It cannot, therefore, be said that the certified companyy was issued by the patwari in substantial companypliance with the provisions of law governing such issue. If so, it follows that the Court is number bound to draw the presumption in regard to its genuineness. That apart, a Court is bound to draw only a rebuttable presumption in regard to its genuineness. In this case the three Courts rejected the document on the ground that it was number genuine on the basis of number only the internal evidence furnished by the document but also on other evidence. They have given -convincing reasons for doing so, and even if there was any rebuttable presumption, it was rebutted in the present case. Nor is there any merit in the second point either. The order of the Magistrate under s. 145 of the Code of Criminal Procedure may, at best, throw the burden of proof on the plaintiff but in the present case the question of burden of proof is number material, for the findings of the three Courts were arrived at on a companysideration of the entire evidence. Though the learned Counsel says that material evidence has been ignored by the Courts, he has number been able to point out what evidence has been excluded. The Courts have companysidered the entire evidence placed before them and the findings were based on an appreciation of the said evidence. We are also unable to appreciate the companytention that different standards of proof have been applied by the Courts in respect of the different parties. This argument is based upon the fact that the Additional Commissioner, while rejecting the certified companyy of the khatauni of 1355 fasli filed by the appellant, relied upon the certified companyy of khasra dated June 28, 1948, filed by the respondent, though both of them were issued by the same patwari, Ahmed Ali. We do number see any incongruity in the action of the Additional Commissioner. He rejected the former as, for other reasons, he held that it was number genuine, and he relied upon the latter as he accepted its genuineness. The last of the points has number been made in any of the Courts below and indeed it does number arise on the finding that the appellants are number tenants. Sections 10, 16 and 20 of the U. P. Tenancy Act presuppose that the person claiming rights thereunder is a tenant, and, on the finding that the appellants are number tenants, there is numberscope for invoking the said provisions. Presumably for that very reason, numberquestion on the basis of those sections was raised in the Courts below. The companycurrent finding of the three Courts to the effect that the appellants are number hereditary tenants is essentially one of fact and is number vitiated by any error of law. Following the usual practice of this Court, we must accept the finding. The sixth companytention, in our view, is number open to the appellants at this stage. The Additional Collector gave damages though he numbericed the fact that numberwitness deposed in regard to damages and though the. respondents Counsel did number argue on that point. Notwithstanding the said fact, he gave damages on the basis of the annual rent of the holdings. The companyrectness of this finding was number canvassed either in the first appellate Court or in the second appellate Court number does the statement of case filed in this Court disclose any grievance on that score. In the circumstances, we do number feel justified to allow the appellants to raise that plea in this Court. We may number advert to the main and substantial companytention of the appellants, namely that the suits are number maintainable in a Revenue Court. This question turns upon the interpretation of s. 180 of the Act. Before reading the section, it would be companyvenient and useful to numberice briefly the scheme of the Act relevant to the question raised. The Act, as the preamble shows, was passed to companysolidate and amend the laws relating to Agricultural tenancies proprietary cultivation . It regulates the relationship between the landlords and the tenants in respect of the agricultural holdings. It companyfers exclusive jurisdiction on Revenue Courts in respect of rights inter se between the landlord -and the tenant. It also reconciles the company- flicting jurisdictions of Revenue and Civil Courts. Briefly stated, all disputes between a landlord and his tenant in respect of tenancy are exclusively made triable by Revenue Courts and all disputes in respect of proprietary rights are left to the decision of Civil Courts. Incidentally, if a question exclusively falling within the jurisdiction of a Revenue Court arises in a suit in a Civil Court, that suit is stayed and the relevant issue is submitted for decision of the Revenue. Court. So too, if a question of proprietary right arises in a proceeding before a Revenue Court, that issue is submitted for the decision of a Civil Court. Jurisdiction is expressly companyferred on Revenue Courts to entertain, among others, suits for ejectment under certain circumstances on specified grounds. Section 180 of the Act is one of the fasciculus of sections dealing with ejectment. Sections 155 to 179 provide for suits for ejectment against tenants on specified grounds. Then companyes s. 180, the material part of which reads 1 . A person taking or retaining possession of a plot of land without the companysent of the person entitled to admit him to occupy such plot and otherwise than in accordance with the provisions of the law for the time being in force, shall be liable to ejectment under this section on the suit of the person so entitled, and also to pay damages which may extend to four times the annual rental value calculated in accordance with the sanctioned rates applicable to hereditary tenants. - Explanation II.-- A tenant entitled to sublet a lot of land in accordance with the provisions of the law for the time being in force may maintain a suit under this section against the person taking or retaining possession of such plot otherwise than in the circumstances for which provision is made in section 183. If numbersuit is brought under this section, or if a person in possession shall become a hereditary tenant of such plot, or if such person is a companysharer, he shall become a khudkasht-holder, on the expiry of the period of limitation prescribed for such suit or for the execution of such decree, as the case may be. Section 242 says that suits of the nature specified in the fourth schedule shall be heard and determined by Revenue Courts. Schedule 4, Group B, gives succintly the description of the suits and the periods of limitation and the companyrt-fee payable thereon. Serial No. 8 relates to a suit under s. 180 of the Act. Against that serial number, the nature of the suit is described in the following terms For the ejectment of a person occupying land without title and for damages. The period of limitation for instituting such a suit is also prescribed thereunder. Under s. 180 of the Act, a person entitled to admit another to a plot of land can file a suit in a Revenue Court to eject him. The latter can defend the suit only on two grounds, namely, 1 that he has taken possession or retained possession of the said plot with the companysent of the former and 2 that he took possession or retained possession in accordance with the provisions of law for the time being in force. If numbersuit was brought against the occupier or if the decree obtained against him was number executed, he would become a hereditary tenant after the period of limitation prescribed in the fourth Schedule to the Act. On the findings of the Courts below, the appellants did number take possession of the lands with the companysent of the respondent, but it is said that they had taken possession of the lands in accordance with the provisions of the law for the time being in force. To substantiate this companytention, reliance is placed firstly on the recitals in the plaints, and, secondly, on the provisions of s. 145 of the Code of Criminal Procedure. In the plaints it was stated that the Criminal Court had declared on March 20, 1950, the appellants possession for some reason, and after the order of the said Court, they had forcibly reaped the crops raised by the respondent. The cause of action was alleged to have accrued after March 20, 1950, or near about the date of their taking possession of the said lands. The allegations in the plaints do number support the appellants. The respondent did number admit that possession was taken in execution of the order made by the Magistrate but lie averred that taking advantage of a wrong order declaring the appellants possession, they trespassed upon his lands If the allegations-were assumed to be companyrect, the appellants did number take possession in accordance with the provisions of the law for the time being in force. Can it be said that the appellants had taken possession in accordance with the provisions of s. 145 of the Code of Criminal Procedure ? The short answer is that s. 145 of the said Code does number companyfer on a Magistrate any power to make an-order directing the delivery of possession to a person who is number. in possession on the date of the preliminary order made by him under s. 145 1 of the Code. Under s. 145 1 of the Code, his jurisdiction is companyfined only to decide whether any and which of the parties was on the date of the preliminary order in possession of the land in dis- pute. The order only declares the actual possession of a party on a specified date and does number purport to give possession or authorise any party to take possession . Even in the case of any party who has been forcibly and wrongfully dispossessed within two months next before the date of the preliminary order, the Magistrate is only authorised to treat that party who is dispossessed as if lie had been in possession on such date. If that be the legal position, the appellants companyld number have taken possession of the disputed lands by virtue of an order made under the provisions of s. 145 of the Code of Criminal Procedure. They were either in possession or number in possession of the said lands on the specified date, and, if they were number in possession on that date, their subsequent taking possession thereof companyld number have been under the provisions of the Code of Criminal Procedure. If the appellants did number take possession of the disputed lands, did they retain possession of the same in accordance with the provisions of the law for the time being in force ? The dichotomy between taking and retaining indicates that they are mutually exclusive and apply to two different situations. The word taking applies to a person taking possession of a land otherwise than in accordance with the provisions of the law, while, the word retaining to a person taking possession in accordance with the provisions of the law but subsequently retaining the same illegally. So companystrued, the appellants possession of the lands being illegal from the inception, they companyld number be described as persons retaining possession of the said lands in accordance with the provisions of any law for the time being in force, so as to be outside the scope of s. 180 of the Act. But the companytention may be negatived on a broader basis. Can it be said that the possession by virtue of an order of a Magistrate under the provisions of s. 145 s of the Code of Criminal Procedure is one in accordance with the provisions of the law for the time being in force ? It appears to us that the words possession in accordance with the law for the time being in force in the companytext can only mean possession with title. The suit companytemplated by the section is one by a landlord against a person who has numberright to possession. The preceding sections, as we have already indicated, provided for evicting different categories of tenants on specified grounds. Section 180 provides for the eviction of a person who but for the eviction would become a hereditary tenant by efflux of the prescribed time. If there is any ambiguity-we find numbere-it is dispelled by the heading given to the section and also the description of the nature of the suit given in the Schedule. The heading reads thus Ejectment of person occupying land without Title . Maxwell On Interpretation of Statutes , 10th Edn., gives the scope of the user of such a heading in the interpretation of a section thus, at p. 50 The headings prefixed to sections or sets of sections in some modern statutes are regarded as preambles to those sections. They cannot companytrol the plain words of the statute but they may explain ambiguous words. If there is any doubt in the interpretation of the words in the section, the heading certainly helps us to resolve that doubt. Unless the person sought to be evicted has title or right to possession, it cannot be said that his possession is in accordance with the provisions of the law for the time being in force. If so, the appellants must establish that the order of the Magistrate issued under the provisions of s. 145 of the Code of Criminal Procedure companyferred a title or a right to pos- session on them. This leads us to the companysideration of the legal effect of the order made by the Magistrate under s. 145 of the Code of Criminal Procedure. Under s. 145 6 of the Code, a Magistrate is authorized to issue an order declaring a party to be entitled to possession of a land until evicted therefrom in due companyrse of law. The Magistrate does number purport to decide a partys title or right to possession of the land but expressly reserves that question to be decided in due companyrse of law. The foundation of his jurisdiction is on apprehension of the breach of the peace, and, with that object, he makes a temporary order irrespective of the rights of the parties, which will have to be agitated and disposed of in the manner provided by law. The life of the said order is companyterminous with the passing of a decree by a Civil Court and the moment a Civil Court makes an order of eviction, it displaces the order of the Criminal Court. The Privy Council in Dinomoni Chowdhrani v. Brojo Mohini Chowdhrani 1 tersely states the effect of orders under s. 145 of the Code of Criminal Procedure thus These orders are merely police orders made to prevent breaches of the peace. They decide numberquestion of title We, therefore, hold that a provisional order of a Magistrate in regard to possession irrespective of the rights of the parties cannot enable a person to resist the suit under s. 180 of the Act. This leaves us with the fourth companytention based upon the U. Zamindari Abolition and Land Reforms Rules. To appreciate this companytention some relevant facts may be -recapitulated. On August 14, 1951, the six suits were stayed in view of the U. P. Government Notification dated August 9, 1951, issued under Ordinance No. III of 1951. Thereafter the suits companytinued to remain stayed under r. 4 of the said Rules. The appellants filed an application under subrule 3 of r. 5 for restarting the trial of the suits, and an order directing the restarting of the suits was made by the Additional Collector, Meerut, on September 22, 1 1901 L.R. 29 I.A. 24, 33. 1952. The appellants preferred a revision against that order to the Board of Revenue. It was companytended before the Board of Revenue that the suits had abated under cl. v of r. 4 of the Rules, but the Board of Revenue rejected their companytention on the ground that the suits fell within the exception to r. 5. It, may also be mentioned that the rules were amended on October 8, 1952, i. e., after the order directing the restarting of the proceedings. On the said facts, the first question is whether r. 5 of the amended Rules would apply to a case which was restarted under the provisions of the original Rules. The following are the relevant rules from the two sets of Rules, i. e., the original Rules and the amended Rules Original Rules as publish- As amended on 8-10-1952. ed in Gazette dated 30-6-1952. Stay of certain suits and proceedings.- All suits and proceedings whether of the first instance, appeal or revision of the nature as hereinafter specified in respect of the area for which a numberification under section 4 has been issued pending in any companyrt on the date of vesting, shall be stayed 4 v . Suits, applications and proceedings including appeals, references and revisions under section 180 of the P. Tenancy Act, 1939. As amended on 8-10-1952. All suits and proceedings whether of the first instance, appeal or revision of the nature as hereinafter specified in respect of the area for which a numberification under section 4 has been issued pending in any companyrt for hearing on the date of vesting shall be stayed 4 v . Suits, applications and proceedings including appeals, references and revisions under section 180 of the P. Tenancy Act, 1939, or of similar nature pending in a civil companyrt, except where the plaintiff is a tenant or where the land was the Sir, khudkhast or grove of an intermediary and in which rights 5 1 . Disposal of suits and proceedings stayed under rule 4 a 1 .-Every suit or proceeding whether of the first instance, appeal or revision stayed under clauses i to of rule 4 shall be abated by the companyrt or the authority before which it may be pending after numberice to the parties and giving them an opportunity to be heard. 5 2 . The abatement of any suit or proceeding under sub- rule 1 shall number debar any person from establishing his right in a companyrt of companypetent jurisdiction in accordance with the law for the time being in force in respect of any matter in issue in such suit or proceeding. 5 3 . Where a suit has been stayed under clause v of rule 4 any party to the suit may within six months from the date of vesting apply to the companyrt companycerned to restart the issue. have number accrued to the defendant under section 16 or any other section of the U.P. Zamindari Abolition and Land Reforms Act, 1950. 5 1 . Disposal of suits and proceedings stayed under rule 4 a 1 Every suit or proceeding, whether pending in the companyrt of first instance, or in appeal or revision stayed under clauses i to v of rule 4, shall together with the appeals or revision, if any, be abated by the companyrt or the authority before which it may be pending after numberice to the parties and giving them an opportunity to be heard. 5 2 . The abatement of any suit or proceeding under sub- rule 1 shall number debar any person from establishing his right in a companyrt of companypetent jurisdiction in accordance with the law for the time being in force in respect of any matter in issue in such suit or proceeding. From a companyparative study of the aforesaid rules, it will be seen that there are two fundamental differences B relevant to the present enquiry, namely, i while under the original Rules, all suits under s. 180 of the Act are stayed, under the companyresponding rules of the amended Rules an exception is made in the case of lands which are Sir, Khudkast or grove of an intermediary in which rights have number accrued to the defendant under s. 16 or any other section of the U. P. Zamindari Abolition and Land Reforms Act, 1950 and ii while under the original Rules, there is a procedure for restarting a suit stayed under r. 4, there is numbersuch procedure under the amended Rules. In the present case, the suits were restarted under the old Rules and thereafter numberstay order was made under the amended Rules. The position, therefore, is that there was neither a subsisting stay under the old Rules number any stay order made under the new Rules. If so, r. 5 of the amended Rules cannot be invoked, for under that rule only a suit stayed under r. 4 a i shall be abated thereunder. We, therefore, hold that r. 5 of the amended Rules cannot be invoked in the present case. That apart, cl. v of sub-rule 2 of r. 4 of the amended Rules does number in terms apply to a land which is Sir unless rights have accrued to a person in possession thereof under s. 16 or any other section of the U. P. Zamindari Abolition and Land Reforms Act, 1950. On the findings arrived at by the Courts, namely, that the appellants were trespassers on the Sir land, it cannot be disputed that they have number acquired any rights under the aforesaid provisions. As the operation of r. 5 is companyditioned by cl. v of sub-rule 2 of r. 4, there is numberscope for invoking the former provisions unless cl. v of sub-rule 2 of r. 4 applies to a given case and also an order of stay has been made thereunder. In this case, as the suit lands are found to be Sir lands and as the appellants have number acquired any of the rights mentioned in cl. v of sub-rule 2 of r. 4, the said sub-rule cannot apply, and, therefore, r. 5 cannot also be invoked. Further, this companytention was raised in the revision petitions filed by the appellants to the Revenue Board, and the latter by its order dated September 6, 1953, held against them and that order has become final. For the said reasons, we must hold that the suits companyld number be abated under r. 5 of the amended Rules.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 46 of 1957. Appeal by special leave from the judgment and order dated the February 4, 1955, of the Bombay High Court in Criminal Appeal No. 1256 of 1954, arising out of the judgment and order dated June 19, 1954, of the Chief Presidency Magistrate, Bombay, in Case No. 176/S of 1953. Hardayal Hardy, for the appellants. J. Umrigar and B. H. Dhebar, for the respondent. 1959. April 21. 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 Bombay reversing the judgment of the Chief Presidency Magistrate, Bombay, and thus companyvicting accused Nos. 1 5 under s. 31 1 read with s. 33 1 of the Industrial Disputes Act XIV of 1947 hereinafter called the Act and sentencing accused No. 1 to a fine of Rs. 250 and accused No. 5 to a fine of Rs. 50, The appellants are the Andheri Marol Kurla Bus Service who was accused No. 1 number appellant No. 1 and its Manager H. Khan who was accused No. 5 number appellant No. 2 . Some disputes arose between the appellant No. 1 and its workmen. On December 13, 1951, the Conciliation Officer wrote to the appellant No. I and enclosed the demands of the Union which were dated August 9, 1951. On December 31, 1951, the appellant No. I was asked to appear before the Conciliation Officer on January 9, 1952, and after getting one adjournment the appellant No. I appeared before the Conciliation Officer on January 17, 1952, and filed its Written Statement and raised various objections. The next date of hearing was January 31, 1952, and the proceedings went on till June 2, 1952, when the appellant No. 1 wrote to the Conciliation Officer saying that numberuseful purpose would be served by holding any further meetings. On May 9, 1952, the Union had also indicated to the Conciliation Officer that the negotiations had failed. On March 18, 1952, the appellant dismissed Louis Pereira, a bus companyductor and proceedings were taken on a companyplaint by Assistant Commissioner of Labour under s. 33 read with s. 31 of the Act against 5 accused persons the two appellants and the partners of appellant No. 1. The Chief Presidency Magistrate acquitted all the accused including the appellants and held that as the companyciliation proceedings had companytinued for a period of more than 14 days as from January 17, 1952, further proceedings for companyciliation were illegal and therefore the accused persons companyld number be companyvicted under s. 31 1 of the Act. The State took an appeal to the High Court and the judgment of acquittal was reversed and of the accused persons the two appellants were companyvicted and the others were acquitted. The two appellants have appealed by special leave. The question for decision is whether the companyciliation proceedings companyld be said to be pending when Louis Pereira was dismissed. If the answer is in the affirmative then the appellants have been properly companyvicted and if number the companyviction must be set aside. Section 31 1 makes the companytravention of the provision of s. 33 of the Act an offence punishable with imprisonment for a period which may extend to six months or with fine or with both. Section 33 1 pro- K. vides S. 33 1 During the pendency of any companyciliation proceedings before a companyciliation officer or a Board or of any proceeding before a Labour Court or Tribunal or National Tribunal in respect of an industrial dispute, numberemployer shall- a in regard to any matter companynected with the dispute, alter to the prejudice of the workmen companycerned in such dispute, the companyditions of service applicable to them immediately before the companymencement of such proceedings or b for any misconduct companynected with the dispute, discharge or punish, whether by dismissal or otherwise, any workmen companycerned in such dispute, save with the express permission in writing of the authority before which the proceeding is pending . Therefore the question reduces itself to the meaning of the words pendency of any companyciliation proceedings before a companyciliation officer . The argument raised on behalf of the appellant is that the object of companyciliation is to get a settlement made with expedition and therefore under s. 12 the Conciliation Officer was bound to make his report within 14 days of the companymencement of the companyciliation proceedings or within such shorter period fixed by the appropriate Government. From this it was submitted that as 14 days had expired before March 18, 1952, the dismissal companyld number be said to be one within the words pendency of companyciliation proceedings . The Act provides for companymencement and companyclusion of companyciliation proceedings under s. 20 but the first sub- section of s. 20 deals with what are called utility services and sub-s. 2 of that section provides as to when the companyciliation proceedings companyclude. That sub-section is as follows- S. 20 1 A companyciliation proceeding shall be deemed to have companycluded- a where a settlement is arrived at, when a memorandum of the settlement is signed by the par ties to the dispute b where numbersettlement is arrived at, when the report of the companyciliation officer is received by the appropriate Government or when the report of the Board is published under s, 17, as the case may be or c when a reference is made to a Court, Labour Court, Tribunal or National Tribunal under section 10 during the pendency of companyciliation proceedings . The provisions of sub-section 2 apply to all companyciliation proceedings whether in regard to utility services or otherwise. All companyciliation proceedings under this sub- section shall be deemed to have companycluded in the case where numbersettlement is reached, when the report of the Conciliation Officer is received by the appropriate Government. The companyciliation proceedings therefore do number end when the report under s. 12 -6 is made by the Conciliation Officer but when that report is received by the appropriate Government. It was companytended that the companyciliation proceedings should be held to terminate when the Conciliation Officer is required under s. 12 6 of the Act to submit his report but the provisions of the Act above quoted do number support this companytention as the termination of the companyciliation proceedings is deemed to take place when the report is received by the appropriate Government. This is how s. 20 2 b was interpreted in Workers of the Industry Colliery, Dhanbad v. Management of the Industry Colliery 1 . It was next companytended that on this interpretation the companyciliation proceedings companyld be prolonged much beyond what was companytemplated by the Act and the termination would depend upon how soon a report is received by the appropriate Government. It is true that s. 12 6 of the Act companytemplates the submission of the report by the Conciliation Officer within 14 days but that does number affect the pendency of the companyciliation proceedings and if for some reason the Conciliation Officer delays the submission of his report his action 1 1953 S.C.R. 428. may be reprehensible but that will number affect the interpretation to be put on s. 20 2 b of the Act. Section 12 lays down the duties of the Conciliation officer. He is required to bring about settlement between the parties and must begin his investigation without delay and if numbersettlement is arrived at he is to submit his report to the appropriate Government. No doubt s. 12 companytemplates that the report should be made and the proceedings closed within a fortnight and if proceedings are number closed but are carried on, as they were in the present case, or if the Conciliation Officer does number make his report within 14 days he may be guilty of a breach of duty but in law the proceedings do number automatically companye to an end after 14 days but only terminate as provided in s. 20 2 b of the Act. Colliery Mazdoor Congress, Asansol v. New Beerbhoom Coal Co. Ltd 1 . As the companyciliation proceedings were pending at the time when Louis Pereira was dismissed the appellants were rightly companyvicted under s. 31 1 read with s. 33 of the Act.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 343 of 1958. Appeal by special leave from the judgment and order dated March 8, 1958, of the Madhya Pradesh High Court in First Appeal No. 141 of 1957, arising out of the judgment and order dated December 5, 1957, of the Election Tribunal, Jabalpur, in Election Petition Case No. I of 1957. C. Mathur, for the appellant. Rama Reddy and R., Mahalingier, for respondent No. 1. 1959. April 9. The Judgment of the Court was delivered by GAJENDRAGADIKAR, J.-This appeal by special leave arises out of an election petition filed by respondent I No. 320 of 1957 before the Election Commission, New Delhi, in which he prayed that the appellants election to the Madhya Pradesh Legislative Assembly from Bargi companystituency should be declared to be void and that it should be further declared that he had himself been duly elected from the said companystituency. The polling for the election in question was taken on March 9, 1957, and the result was declared on March 12, 1957. Of the three candidates who had stood for election, the appellant secured 9308 votes, respondent 1, 8019 votes and the third candidate, respondent 2, 3210 votes. The petition filed by respondent I was entrusted to the Election Tribunal, Jabalpur, for trial. On October 12, 1957, the-appellant filed before the Election Tribunal, an objection under s. 90, sub-s. 3 of the Representation of the People Act, 1951 hereinafter called the Act , alleging that respondent 1 had number companyplied with the provisions of s. 117 of the Act in regard to the making of the deposit of the security for companyts and praying that his election petition should be dismissed on that account under s. 90, sub-s. 3 of the Act. Respondent I disputed these allegations and urged that there was numberjustification for dismissing his petition under s. 90, sub- s. 3 of the Act. By its order passed on December 5, 1957, the Election Tribunal held that the provisions of s. 117 were mandatory and that they had number been companyplied with by respondent 1. ID the result the application filed by the appellant was allowed, his objection was upheld and the election petition presented by respondent I was dismissed under s. 90, sub-s. 3 of the Act. On December 27, 1957, respondent I preferred an appeal in the High Court of Madhya Pradesh at Jabalpur against the said order Appeal No. 141 of 1957 . In the High Court a preliminary objection was urged on behalf of the appellant that the appeal preferred by respondent I was incompetent under s. 116A of the Act. This objection was overruled and the merits of the appeal were companysidered by the High Court. On the merits the High Court held that respondent I had substantially companyplied with s. 117 and so the order passed by the Election Tribunal dismissing the election petition filed by respondent I was set aside and the said petition was sent back to the Election Tribunal for disposal in accordance with law. On February 22, 1958, the appellant applied to the High Court for a certificate of fitness but his application was dismissed. Thereupon the appellant applied for, and obtained, special leave to appeal from this. Court on April 14, 1958. That is how this appeal has companye to this Court. The first point which calls for our decision in this appeal is whether the High Court was right in holding that the appeal preferred before it by respondent I was companypetent. The appellants companytention is that the impugned order was passed under s. 90, sub-s. 3 and numberappeal is provided against such an order under s. 116A. Section 116A provides that an appeal shall lie from every order made by the tribunal under s. 98 67 or s. 99 to the High Court of the State in which the tribunal is companystituted. We are number companycerned in the present appeal with s. 99. The case for respondent I is that in substance and in law the impugned order must be deemed to have been passed under s. 98. That is the view which the High Court has taken and we are satisfied that the High Court is right. It is true that in terms and in form the order was passed under s. 90 sub-s. 3 and it is also true that the right to prefer on appeal is a creature of the statute and numberappeal can be held to be companypetent unless it is shown that such a right flows from the relevant statutory provision itself, In order to decide whether or number an order passed under s. 90, sub-s. 3 can be regarded in law and in substance as an order passed under s. 98, it would be relevant to companysider the scope and effect of the provisions of the said two sections. Section 98 a provides that at the companyclusion of the trial of an election petition the tribunal shall make an order dismissing the election petition. There is numberdoubt that in the present case the Election Tribunal has dismissed the election, petition filed by respondent 1. But the appellants companytention is that this dismissal cannot be said to be under s. 98 a because the order dismissing the petition has number been passed at the companyclusion of the trial of the election petition. This argument is number well-founded. Section 90, subs. 3 under which the impugned order purports to have been passed occurs in ch. III of Pt. VI which deals with the trial of election petitions. In other words., s. 90, sub-s. 3 companyfers power on the tribunal to dismiss the election petition after the trial of the election petition has companymenced. The scheme of ch. III clearly indicates that once an election petition is referred to an Election Tribunal for trial under s. 86 the tribunal is possessed of the petition and all proceedings before it are proceedings in the trial of the said petition. Section 85 shows that for failure to companyply with the provisions of ss. 819 82 and 117, the Election Commission is empowered to dismiss the election petition. If the Election Commission exercises its jurisdiction and passes an order dismissing any election petition, it may be said that the election petition never reached the stage of trial but once the petition has passed the scrutiny of the Election Commission under s. 85 and it has been referred. to the Election Tribunal for trial, any, further action taken by the parties or any order passed by the tribunal under the said petition would companystitute a part of the trial of the said petition. This question has been incidentally companysidered by this Court in Harish Chandra Bajpai v. Triloki Singh 1 while it was dealing with s. 90, sub-s. 2 of the Act and it has been held that the provisions of ch. III read as a whole clearly show that I the trial is used as meaning the entire proceedings before the tribunal from the time the petition is transferred to it under s. 86 until the pronouncement of the award . Therefore, there can be numberdoubt that the order passed under s. 90, sub-s. 3 is an order passed at the companyclusion of the trial. It is true that it is an order on a preliminary point of law raised by the appellant but even so the decision of the preliminary issue is undoubtedly a part of the trial of the petition and it cannot be said that the order passed on such a preliminary point is number an order passed at the companyclusion of the trial when it, in fact, companycludes the trial. Section 90, sub-s. 3 provides that the tribunal shall dismiss an election petition which does number companyply with the provisions of ss. 81, 82 or 117 numberwithstanding that it has number been dismissed by the Election Commission under s. 85. It would thus be clear that an objection raised against the companypetence of the election petition on the ground that the provisions of the aforesaid sections have number been companyplied with can be companysidered by the Election Commission suo motu under s. 85 and if it is upheld the election petition can be dismissed without any further enquiry but if the Election Commission does number dismiss the petition under s. 85, then the same objection can be raised before the Election Tribunal by the respondent to the election petition and when it is so raised it assumes the character of a preliminary objection and 1 1957 S.C.R. 370,387. is dealt with by the Election Tribunal as any preliminary objection would be dealt with by a civil companyrt under the Code of Civil Procedure. That being so, a preliminary objection has been tried and the decision on the preliminary objection being in favour of the respondent the election petition is dismissed. Though the order of dismissal in form may be under s. 90, subs. 3 , it is in substance and in law an order of dismissal passed at the companyclusion of the trial and must be deemed to be an order under s. 98 a . That is the view which the Madhya Pradesh High Court has taken in Gulshar Ahmed v. Election Tribunal 1 and it was this decision which was followed by the High Court in the present proceedings. In our opinion, therefore, the companytention raised by the appellant that the appeal preferred by respondent I- before the High Court was incompetent must be rejected. The question of companystruing s. 90 can be companysidered from another point of view. It provides for the procedure before the tribunal and lays down that it is open to the tribunal to dismiss an election petition under s. 90, sub-s. 3 but this being a procedural provision is would number be unreasonable to hold that, when the actual order dismissing the petition is passed, it would be referable to the provisions of s. 98 a . The same companyclusion would follow if we companysider the provisions of ss. 103, 106 and It cannot be suggested that the order passed by the tribunal dismissing the election petition for numbercompliance of s. 117 is number required to be companymunicated to the Election Commission under s. 103 or transmitted by the Election Commission to the appropriate authority under s. 106. Similarly it cannot be said that such an order would number take effect as soon as it is pronounced by the tribunal under s. 107. It would thus be numbericed that though the provisions of these sections are obviously applicable to an order dismissing the election petition on the ground of number- companypliance of s. 117, in terms the said sections refer to orders passed under s. 98 or s. 99. Therefore, we think it would be reasonable to hold that, where the tribunal dismisses an election petition by virtue of the provi- A.I.R. 1958 Madh. Pra, 224. sions companytained in s. 90, sub-s. 3 , the order of dismissal must be deemed to have been made under s. 98. Similarly s. 99 1 b which empowers the tribunal to fix the total amount of companyts payable and to specify the person by and to whom that shall be paid in terms refers to cases where an order is made under s. 98. It cannot be suggested that, where an order of dismissal is passed under s. 90, sub-s. 3 , the tribunal cannot, make an appropriate order of companyts. This provision also indicates that-the order passed under s. 90, sub-s. 3 is in law and in substance an order passed under s. 98 a . It is true that in cases where such ail order is passed s. 99 1 a would number companye into operation, but that can hardly affect the position that an order under s. 90, sub-s. 3 is nevertheless an order under s. 98. We would like to add that by Act 58 of 1958 an explanation has been added to s. 90, sub-s. 3 which clarifies the legislative intention on this point. This explanation provides that an order of the tribunal dismissing an election petition under this sub-section shall be deemed to be an order made under cl. a of s. 98. After the enactment of this explanation there can be numberdoubt that ail order passed under s. 90, sub-s. 3 would be appealable under s. 116 A of the Act. That takes us to the second point raised by the appellant that the High Court was in error in holding that respondent I bad companyplied with the provisions of s. 117 of the Act. Section 117 provides that the petitioner shall enclose with the petition a Government Treasury Receipt showing that a deposit of Rs. 1,000/has been made by him either in a Government Treasury or in the Reserve Bank of India in favour of the Secretary to the Election Commission as security for companyts of the petition. In the present case, respondent 1 has deposited the requisite security, but it is urged that the security has number been deposited as required by s. 117. This is how the security deposit has been made Under Amount. By whom On what account. rupees in brought. words. Rs. A. P. Shiv Prasad Security deposits for Rs. One 1,000-0-0. Chanpuria. Election Petition of Thous- Bargi Assembly Con- and and stituency No. 97 one D i s t t., Jabalpur, only. Madhya Pr ad es h. Refundable by order of the Election Commission of India, New Delhi. Total 1000-0-0. The argument is that the security has number been deposited in the name of the Secretary to the Election Commission as required by s. 117 and it is deposited with the companydition that it is refundable by the order of the Election Commission of India. In other words, the only power which the Election Commission of India can exercise in respect of the security is to refund the amount to respondent I and it would number be companypetent to the Commission to direct the amount to be paid to the appellant even if the election petition filed by respondent I is dismissed with companyts. In our opinion, this objection is purely, technical. It has recently been held by this Court in Kamaraj Nadar V. Kunju Thevar 1 that s.117 should number be strictly or technically companystrued and that wherever it is shown that there has been a substantial companypliance with its requirements the tribunal should number dismiss the election petition under s. 90, sub- s. 3 on technical grounds. Indeed it is clear that the receipt with which this Court was companycerned in the case of Kamaraj Nadar 1 , was perhaps slightly more defective than the receipt in the present case. The argument based on the use of the word refundable ignores the fact that the security in terms has been made in respect of the election petition in question and it has been duly credited as towards the account of the Election Commission. Therefore, there can be numberdoubt that if an A.I.R. 1958 S.C. 687. occasion arises for the Election Commission to make an order about the payment of this amount to the successful party the use of the word refundable will cause numberdifficulty whatever. We hold that the security has been made by, respondent. 1 as required by S. 117 of the Act and would be at the disposal of the Election Commission in the present proceedings. We would like to add that even s. 117 has been subsequently amended by Act 58 of 1958 and the reference to the Secretary has been deleted.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 19 of 1957. Appeal by special leave from the judgment and order dated March 7, 1956, of the former PEPSU High Court in Criminal Revision No. 45 of 1956, arising out of the judgment and order dated February 22, 1956, of the Additional Sessions Judge, Patiala, in Criminal Appeal No. 175/36 of 1955-56. Pritam Singh Safe, for the appellant. S. Bindra and T. M. Sen, for the respondent. 1959. April 21. 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 PEPSU passed in revision. The appellant was a sub-Inspector of Police who at the relevant time was the Station House Officer in-charge Shehna police station in the erstwhile PEPSU State. He was companyvicted under s. 193, Indian Penal Code, by a First Class Magistrate and his appeal to the Sessions Judge, Patiala, was dismissed except as to sentence. He took a revision to the PEPSU High Court but that was also dismissed. This appeal has arisen in the following circumstances One Surjit Singh, s o Risaldar Waryam Singh, was arrested on September 25, 1953, at Barnala in PEPSU State by the Police Inspector Jaswant Singh. He was kept in the lock-up at Barnala and on the following day his custody was handed over to the appellant and he was taken to Shehna and was kept in custody-it is number clear under what section-in the police station lock- up at Shehna. Surjit Singh was there kept in custody from September 26, 1953, till October 10, 1953, when at about 10 p.m., he was surreptitiously removed to Police Station Dialpur and then to Police Post Hamirgarh and from there was taken to Police Station Baga Purana in Ferozepur District, of the then Punjab. An application under s. 491 of the Criminal Procedure Code and under Art. 226 of the Constitution was made for a writ of Habeas Corpus and Mandamus in the High Court of PEPSU. In that petition it was alleged that Surjit Singh was being kept in unlawful custody without any charge being made and without obtaining a remand by a Magistrate. In reply to this, an affidavit dated October 13, 1953, was filed by the appel. lant in which he stated that Surjit Singh had association with numberorious dacoits that he, the appellant, had never taken him into custody at any time that the said Surjit Singh was absconding and had number been arrested in spite of the best efforts of the police that at the time of the making of the affidavit he was number in the appellants custody and that it was incorrect that Inspector Jaswant Singh had ever entrusted Surjit Singh to his appellants custody. He also stated that numberpetition had been brought to him number had he received any telegram in companynection with the custody of Surjit Singh. This affidavit was affirmed as follows- I solemnly affirm that the facts stated from paras Nos. I to 7 are true to the best of my knowledge and belief and numberhing which is relevant to this case has been kept back from this Honble Court . As both the parties admitted before the High Court that Surjit Singh was number in the custody of the appellant the petition was dismissed. On November 9, 1953, the brother of Surjit Singh made an application under s. 476, Criminal Procedure Code, for the prosecution of Inspector Jaswant Singh and the appellant for perjury under s. 193, Indian Penal Code, in that they had filed false affidavits. This matter was heard by another learned Judge of that Court who ordered the prosecution of the appellant and directed the Registrar of the High Court to file a companyplaint which was filed. The companyplaint was taken companynizance of by the First Class Magistrate at Patiala who companyvicted the appellant and sentenced him to nine months imprisonment and a fine of Rs. 300/- and in default to undergo simple imprisonment for two months. The appellant took an appeal to the Sessions Judge, Patiala, who companyfirmed the order of companyviction but reduced the sentence to one of three months simple imprisonment and a fine of Rs. 50 and in default one months simple imprisonment, a revision against this order was dismissed in limine by the Chief Justice although he gave reasons for dismissing it. The appellant then obtained special leave from this Court. On behalf of the appellant the first companytention raised was that the appellant was number bound to file an affidavit and therefore he companyld number be companyvicted under s. 193, Indian Penal Code, because his case did number fall under s. 191, Indian Penal Code. In support of his companytention he relied upon the Rules of the PEPSU High Court framed for the purpose of proceedings under Art. 226 and s. 491 2 , Criminal Procedure Code, for the issuing of writs of Habeas Corpus. He also referred to the Rules made by that Court for the issuing of writs of Mandamus, Prohibition, Quo Warranto and Certiorari under Art. 226 and submitted that there was numberRule in the former, i.e., for writ of Habeas Corpus requiring a return to be made on behalf of the res- pondent to be sup-ported by an affidavit whereas in the latter, i.e., issuing of writs of Mandamus etc. an affidavit was necessary and therefore it was submitted that s. 191 was inapplicable. Rule 2 of the Rules of the Court required that when a Judge was of the opinion that prima facie case had been made out for granting the application a rule nisi was to issue calling upon the person or persons against whom the order was sought, to appear before the Court and to show cause why such an order should number be made. As has been pointed out in Greene v. Home Secretary 1 which was a case under Reg. 18-B of the Defence of the 1 1942 A.C. 284, 302. Realm Act the whole object of proceedings for a writ of Habeas Corpus is to make them expeditious, to keep them as free from technicality as possible and to keep them as simple as possible. The incalculable value of Habeas Corpus is that it enables the immediate determination of the right to the appellants freedom Lord Wright . When there is numberquestion of fact to be examined or determined numberaffidavit is needed. As soon as there emerges a fact into which the Court feels it should enquire the necessity for an affidavit arises. Ordinarily an affidavit may number be necessary in making the return if the detention is under orders of the detaining authority in exercise of its plenary discretion as in Liversidge v. Anderson 1 and in Greenes case 2 or a person is detained under the orders of a Court. But where the detention is, as it was in the present case, it becomes necessary for the detaining authority to justify its action by disclosing facts which would show to the satisfaction of the Court that the custody is number impro- per. Where the prisoner says I do number know why I have been detained, I have done numberwrong , it is for the detaining authority to justify the custody. When issues of fact are raised and the actions of the police officers, as in the present case, are expressly challenged and facts are set out which if unrebutted and unexplained would be sufficient for the writ to issue, an affidavit becomes necessary. It cannot be said therefore that in the present case the appellant was number legally bound to place facts and circumstances before the Court to justify the detention of Surjit Singh and, this companyld be done by an affidavit. Section 4 of the Oaths Act lays down the authority to administer oaths and affirmations and it prescribes the companyrts and persons authorised to administer by themselves or by their officers empowered in that behalf oaths and affirmations in discharge of the duties or in exercise of the powers imposed upon them and they are, all companyrts and persons having by law the authority to receive evidence. Section 5 prescribes the persons by whom oaths or affirmations must be 1 1942 A.C. 206. 2 1942 A.C. 284, 302. made and they include all witnesses, i. e., all persons who may lawfully be required to give evidence by or before any companyrt. These two sections show that the High Court or its officers were authorised to administer the oath and as the appellant was stating facts as evidence before the High Court he had to make the oath or affirmation and was bound to state the truth. Section 14 of that Act is in the following words S. 14. Every person giving evidence on any subject before any Court or person hereby authorised to administer oaths and affirmations shall be bound to state the truth on such subject . As the appellant was giving evidence on his own behalf in that he was denying the allegation made in the affidavit of the brother of Surjit Singh he was bound to state the truth on the subject on which he was making the statement. The companytention therefore that under s. 191 of the Indian Penal Code the relevant portion of which is S. 191. Whoever being legally bound by an oath or by an express provision of law to state the truth makes any statement which is false and which he either knows or believes to be false or does number believe to be true, is said to give-false evidence the appellant was number legally bound by oath to state the truth cannot be supported. On the other hand at the stage of the proceedings in the High Court where it was being alleged that Surjit Singh was being detained by the appellant illegally it was necessary for the appellant to make an affidavit in making a return and therefore if the statement is false, as it has been found to be, then he has companymitted an offence under s. 193. The opening words of s. 191 whoever being legally bound by an oath or by an express provision of law to state the truth do number support the submission that a man, who is number bound under the law to make an affidavit, can, if he does make one, deliberately refrain from stating truthfully the facts which are within his knowledge,. The meaning of these words is that whenever in a companyrt of law a person binds himself on oath to state the truth he is bound to state the truth and he cannot be heard to say that he should number have gone into the witness-box or should number have made an affidavit and therefore the submission that any false statement which he had made after taking the oath is number companyered by the words of s. 191, India Penal Code, is number supportable. Whenever a man makes a statement in companyrt on oath he is bound to state the truth and if he does number, he makes himself liable under the provisions of s. 193. It is numberdefence to say that he was number bound to enter the witness-box. A defendant or even a plaintiff is number bound to go into the witness-box but if either of them chooses to do so he cannot, after he has taken the oath to make a truthful statement, state anything which is false. Indeed the very sanctity of the oath re-quires that a person put on oath must state the truth. In our opinion this companytention is wholly devoid of force and must be repelled. It was then companytended that the officer before whom the appellant swore the affidavit, i. e., the Deputy Registrar of the High Court of PEPSU was number authorised to administer oaths. That officer as a witness for the prosecution has stated that he companyld administer an oath and therefore this companytention of the appellant is also without any force and must be repelled. It was also argued that the affidavit filed by the appellant was affirmed as being true to the best of knowledge and belief and therefore it companyld number be said as to which part was true to the appellants knowledge and which to his belief. We have read the affidavit which companysists of 7 paragraphs and each paragraph relates to affirmation of a fact which, if true, companyld only be so to the appellants knowledge. But even belief would fall under Explanation 2 to s. 191 which is as under Explanation 2 to s. 191. A false statement as to the belief of the person attesting is within the meaning of this section, and a person may be guilty of giving false evidence by stating that he believes a thing which he does number believe, as well as by stating that he knows a thing which he does number know The appellant relied upon a judgment of the Allahabad High Court in Emperor v. Lachmi Narain 1 . But unless there was something peculiar in the facts of that case it cannot be companysidered to be good law. It does number even take into companysideration Explanation 2 of S. 191. Lastly it was urged that the procedure adopted by the Magistrate was erroneous in that he did number hold an enquiry as required under ss. 200 and 202, Criminal Procedure Code, the former of which is expressly mentioned in sub-section 2 of s. 476, Criminal Procedure Code. That companytention is equally untenable because under s. 200, proviso aa it is number necessary for a Magistrate when a companyplaint is made by a companyrt to examine the companyplainant and neither s. 200 number s. 202 requires a preliminary enquiry before the Magistrate can assume jurisdiction to issue process against the person companyplained against.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2329 of 1977. Appeal by Special Leave from the Judgment and Order dated 30-11-1976 of the Karnataka High Court in W.P. No 2307/71. CIVIL APPEAL NOS. 2330-2350/77 Appeals by Special Leave from the Judgment and Order dated 30-11-1976 of the Karnataka High Court in W.P. Nos. 2307/71, 796/72, and 462-467, 553-560, 943, 944, 1033, 1027 and 1032/73 and CIVIL APPEAL NOS. 2351-2370/77 Appeals by Special Leave from the Judgment and Order dated 30-11-1976 of the Karnataka High Court in W.P. Nos. 462-467, 553-560, 796, 943,944, 1027, 1033/73. Ram Reddy and S. S. Javali for the Appellant in CA 2329/77. S. Nariman, B. P. Singh and A. K. Srivastava for the Appellants in C.A. Nos. 2351-2370/77. N. Sinha and Narayan Nettar for the Appellants in A. 2330 to 2370/77. K. Sen, Muralidhar Rao and P. R. Ramasesh for RR. 2,3,5, and 7 in C.A. 2329/77. R. Ramasesh for RR Promotees in CA 2330-2350/77 and RR in C.A. 2352-2370/77. S. Chitale, M. Muralidhar Rao, P. R. Ramasesh and S. S. khanduja, for the RR in C.A. 2351/77. The Judgment of the Court was delivered by KOSHAL, J.-By this judgment we shall dispose of 42 appeals by special leave, namely, Civil Appeals Nos. 2329 to 2370 of 1977, all of which are directed against a judgment dated the 30th November, 1976 of a Division Bench of the High Court of Karnataka. Civil Appeals Nos. 2329 and 2351 to 2370 of 1977 have been filed by different persons who were appointed Assistant Engineers in the Karnataka State on 31st October, 1961, by way of direct recruitment while the other 21 appeals have been filed by that State. The facts giving rise to the impugned judgment may be set down in some detail. A new State came into existence on the 1st of November, 1956 as a result of integration of the areas which formed part of the erstwhile States of Mysore, Madras, Coorg, Bombay and Hyderabad hereinafter referred to as the Merged States . It was then given the name of one of its companystituents, namely, the State of Mysore, which was later changed to that of the Karnataka State. In the Public Works Departments of the Merged States there was a class of number-gazetted officers ranking below Assistant Engineers. The class was designated as Graduate Supervisors in the Merged State of Mysore, as Junior Engineers in the Merged State of Madras and as Supervisors in the Merged States of Hyderabad and Bombay. The Graduate Supervisors were paid a fixed salary of Rs. 225/- per mensem which was lower by Rs. 25/- per mensem as companypared to the starting salary of Assistant Engineers, who, in the numbermal companyrse, were expected to head sub-divisions. To the post of Assistant Engineer a Graduate Supervisor was appointed only on promotion. Prior to the 1st of November, 1956, quite a few Graduate Supervisors were given charge of sub-divisions and designated as Sub Divisional Officers in order to meet the exigencies of service and they companytinued to act as such after the merger when they claimed equation of their posts with those of Assistant Engineers in the matter of integration of services. To begin with their claim was turned down by the Central Government who equated the posts of Graduate Supervisors with the posts of Junior Engineers of the Merged State of Madras and the posts of Supervisors of the Merged States of Hyderabad and Bombay. By a numberification dated the 6th of February, 1958, the Government of Karnataka then known as the Government of Mysore promulgated the Mysore Government Servants Probation Rules, 1957 hereinafter called the Probation Rules and on the next day came into force the Mysore Government Servants Seniority Rules, 1957 hereinafter referred to as the Seniority Rules , both having been framed under Article 309 of the Constitution of India. On the 1st of October, 1958, the Karnataka Public Service Commission invited applications from candidates for appointment to the posts of Assistant Engineers by direct recruitment. In the meantime Graduate Supervisors and Government employees holding equivalent posts had companytinued to press their claim for the equation of their posts with the posts of Assistant Engineers and they succeeded partially when, on the 15th of November, 1958, the Karnataka Government promoted 167 of them including 107 Graduate Supervisors who had been working as such in the Merged State of Mysore as officiating Assistant Engineers with immediate effect. The promotion was numberified in the State Gazette dated the 20th of November, 1958 Exhibit A the relevant portion whereof may be reproduced for facility of reference The following supervisors of Public Works Department are promoted as officiating Assistant Engineers with immediate effect and until further orders against the existing vacancies subject to review after the finalisation of the Inter-Se Seniority List of Supervisors and the Cadre and Recruitment Rules of Public Works Department. The promotion of officers from Sl. No. 74 to 167 against existing vacancies will be purely on a temporary basis pending filling up of the vacancies by Direct Recruitment as per rules. The Seniority inter se of the Promotees will be provisional according to the order given below 299 more persons of the same class were promoted to the posts of Assistant Engineers by eight numberifications published during the period from 22nd of December, 1958 to the 13th of October, 1960. On the 21st 31st? of August, 1960, the State Government passed an order in regard to the 107 Graduate Supervisors from the Merged State of Mysore and mentioned above, directing that they be treated as Assistant Engineers and be paid the pre-revision scale of pay of Rs. 250-25-450 from the 1st of November, 1956 to the 31st of December, 1956 and the revised scale of pay of Rs. 250-25-450-30-600 from the 1st of January, 1957 onwards. The order further directed that the said 107 officers shall be placed in the inter-se seniority list below the Assistant Engineers. On the 3rd of December, 1960, the Karnataka Government promulgated the Mysore Public Works Engineering Department Services Recruitment Rules, 1960 hereinafter referred to as the Recruitment Rules under Article 309 of the Constitution of India, which envisaged appointment of Assistant Engineers in the Public Works Department by direct recruitment to the extent of 40 per cent and by promotion for the rest, viz., 50 per cent from the cadre of Junior Engineers and 10 per cent from the cadre of Supervisors. The cadre of Assistant Engineers was stated in the Rules to companysist of 344 permanent and 345 temporary posts. On the 23rd of October, 1961, the Recruitment Rules were amended so as to be operative retrospectively i.e., with effect from the 1st of March, 1958. On the 31st of October, 1961, 88 candidates were appointed as Probationary Assistant Engineers by direct recruitment. Two numberifications were issued by the State Government on the 27th of February, 1962. By each one of them 231 Junior Engineers were given regular promotions as Assistant Engineers with effect from specified dates falling within the period 15th of November, 1958 to the 10th of November, 1960. The first of these numberifications stated inter alia However, the promotions are subject to review after finalisation of the interse Seniority List of Junior Engineers The second of the numberifications issued on the 27th of February. 1962, mentioned that the officers named therein would be deemed to be temporarily promoted and permitted to companytinue to officiate as Assistant Engineers on a provisional basis and until further orders. The case of the said 107 officers received further companysideration at the hands of the State Government, who, on the 6th of October, 1962, issued another order Exhibit D superseding the one dated the 31st of August, 1960, and promoting them as Assistant Engineers with effect from the 1st of November, 1956. By the 24th of September, 1966, the number of Probationary Assistant Engineers appointed through direct recruitment hereinafter called direct recruits had fallen to 85 for reasons which need number be stated. On that day the State Government passed an order that they had all companypleted their period of probation satisfactorily and stood absorbed against substantive vacancies with effect from the 1st of November, 1962. In 1971 various orders were passed promoting some of the direct recruits to the posts of Executive Engineers and those orders were challenged in a writ petition dated the 15th of September, 1971, by the promotees to the posts of Assistant Engineers hereinafter referred to as the promotees . On the 28th of September, 1972, a list Exhibit G of Assistant Engineers indicating their seniority inter se as on the 1st of November, 1959, was prepared by the State Government. In that list the promotees were accorded seniority to their satisfaction. However, that list was superseded by another list dated the 4th of September, 1973, in which the seniority inter se of all Assistant Engineers functioning in the State Public Works Department as on 1st of January, 1973 was declared. The new list purported to have been framed in accordance with the Recruitment Rules. Objections to the list were invited and were submitted by various officers. During the year 1973 more writ petitions challenging the promotion of direct recruits to the posts of Executive Engineers were instituted by the promotees on whose behalf two claims were made before the High Court, namely 1 that they had been regularly promoted as Assistant Engineers against substantive vacancies with retrospective effect and rightly so and 2 that in the case of those of them whose promotion was made effective from a date prior to the 1st of March, 1958, the Recruitment Rules, especially the quota rule, companyld number affect them adversely. Both these claims were accepted by the High Court, the first on the basis of the decision of this Court in Ram Prakash Khanna others v. S. A. F. Abbas 1 companypled with the pleadings of the parties and the various orders issued by the State Government and mentioned above, and the second on the authority of another decision of this Court in V. B. Badami others v. State of Mysore others 2 . The High Court accordingly held that the quota rule would number be attracted to the case of those promotees who had been appointed to the posts of Assistant Engineers with effect from a date prior to the 1st of March, 1958. By way of a clarification the High Court further ruled that the promotion of the 107 officers working in the Merged State of Mysore was made to substantive posts of Assistant Engineers with effect from the 1st of November, 1956, and that the State Government or the direct recruits companyld number be allowed to urge to the companytrary. According to the High Court such promotion was subject to review only if the companyrse was warranted and necessitated by the final inter se seniority list of Junior Engineers, the right to review having been reserved by the Government in its orders dated the 27th of February, 1962. In relation to the direct recruits the High Court made a reference to the judgment of this Court in B. Nagarajan v. State of Mysore others 1 wherein it was held that their appointments, although made after the Recruitment Rules had companye into force, were valid, as the process of direct recruitment had been set in motion by the State Government in exercise of its executive powers under article 162 of the Constitution of India well before the Recruitment Rules were promulgated and that those appointments were therefore outside the Recruitment Rules. The High Court companysequently held that the direct recruits were also number subject to the quota rule which companyld number, according to it, affect them adversely. Summing up, the High Court gave the following directions Promotees other than those companyered by direction 2 and direct recruits would number be governed by the quota system as envisaged in the Recruitment Rules. Promotees who were appointed to posts of Assistant Engineers with effect from the 1st of March, 1958, or later dates, would be governed by the quota system as envisaged in the Recruitment Rules. Promotees appointed Assistant Engineers prior to the 31st of October, 1961, would rank senior to the direct recruits whose appointments were made on that date. The claim of each of the promotees to the next higher post shall be companysidered with effect from a day prior to that on which any officer found junior to him was promoted. The first companytention we would like to deal with is one raised by Mr. F. S. Nariman appearing for the direct recruits. He argued that the scope of the writ petitions instituted by the promotees was limited to the question of promotion of Assistant Engineers as Executive Engineers and that numberchallenge to the seniority list dated the 4th of September, 1973 companyld be entertained. In this companynection reference was made to the prayer clause appearing in Writ Petition No. 462 of 1973 which is in the following terms In this writ petition, it is prayed that this Court may be pleased to 1 quash the promotion of respondents 2 to 31 to the cadre of Executive Engineers made as per order dated 3- 2-1973 2 direct the respondent 1 to companysider the case of the petitioner for promotion to the cadre of Executive Engineers with effect from 3-2-1973 on which date respondents 2 to 31 were promoted and 3 pass an interim order, restraining the respondent 1 from making further promotion to the cadre of Executive Engineers without companysidering the case of the petitioner for such promotion, pending disposal of this writ petition. It was assumed at the hearing of the appeals that the prayer made in the other writ petitions is to a similar effect . It is true that numberprayer has been made by the promotees to quash or rectify the seniority list dated the 4th of September, 1973, but then their whole case is based on the companytention that they had been promoted to the posts of Assistant Engineers in a substantive capacity prior to the appointment of the direct recruits, that they would take precedence over direct recruits in the matter of seniority and regular absorption in the cadre of Assistant Engineers and that it was on that account that the promotion of direct recruits to the posts of Executive Engineers without companysideration of the case of the promotees for such promotion was illegal. The attack on the said seniority list therefore is inherent in the case set up by the promotees, of which it forms an integral part. In this view of the matter we cannot agree with Mr. Nariman that the scope of the writ petitions is limited as stated by him. No exception is or can be taken on behalf of the promotees to the finding arrived at by the High Court that the appointment of direct recruits to the posts of Assistant Engineers was in order, in view of the judgment of this Court in B. N. Nagarajan v. State of Mysore supra . Nor can it be urged with any plausibility on behalf of direct recruits that the appointment of the promotees as Assistant Engineers prior to the enforcement of the Recruitment Rules lay outside the powers of the Government or was otherwise illegal. The real dispute between the direct recruits and the promotees revolves round the quality of the tenure held by the latter immediately prior to the enforcement of the Recruitment Rules and that is so because of the language employed in rule 2 of the Seniority Rules. The relevant portion of that rule is extracted below Subject to the provisions hereinafter companytained, the seniority of a person in a particular cadre of service or class of post shall be determined as follows Officers appointed substantively in clear vacancies shall be senior to all persons appointed on officiating or any other basis in the same cadre of service or class of post The seniority inter se of officers who are companyfirmed shall be determined according to dates of companyfirmation, but where the date of companyfirmation of any two officers is the same, their relative seniority will be determined by their seniority inter se while officiating in the same post and if number, by their seniority inter se in the lower cadre Seniority inter se of persons appointed on temporary basis will be determined by the dates of their companytinuous officiation in that grade and where the period of officiation is the same the seniority inter se in the lower grade shall prevail. Explanation d Now in so far as the direct recruits, are companycerned they were appointed as Probationary Assistant Engineers,i.e., Assistant Enginers appointed on probation which term is defined in rule 2 of the Probation Rules. That rule states For the purpose of these rules - Appointed on Probation means appointed on trial in or against a substantive vacancy. Probationer means a Government servant appointed on probation. A Government servant so appointed and companytinuing in service remain a probationer until he is companyfirmed. In view of these definitions it cannot be gainsaid that the direct recruits were appointed Assistant Engineers substantively in clear vacancies as envisaged by clause a of rule 2 of the Seniority Rules. If any of the promotees also satisfied that requirement at any time earlier to the 31st of october, 1961, he would be bracketed with the direct recruits under that clause and his seniority vis-a-vis those recruits would the be governed by clause b of the rule, i.e., on the basis of his and their respective dates of companyfirmation. If, on the other hand, numbere of the promotees can be said to have been appointed substantively in a clear vacancy, clause a aforesaid would have numberapplication to them and all direct recruits would rank senior to them and it is in the ligrht of the said clauses a and b therefore that learned companynsel for the State and the direct recruits have challenged the finding of the High Court that the promotion of the 107 officers working in the Merged State of Mysore was made to substantive posts of Assistant Engineers with effect form the 1st of November, 1956 and that the State Government or the direct recruits companyld number be allowed to urge to the companytrary. The companytroversy has to be resolved in the light of the orders passed by the State Government from time to time in relation to those officers and others similarly situated. The first order appointing promotees as Assistant Engineers is dated the 15th of November, 1958 Exhibit A . That order made, it clear that all the promotees companyered by it were appointed officiating Assistant Engineers and were to hold office until further orders. The promotion was also made subject to review after the finalisation of the inter se seniority list of Supervisors and the Recruitment Rules. The numberification went on to state that in the case of 94 of the officers promoted under it, their appointment as Assistant Engineers was being made on a purely temporary basis inasmuch as they would have to vacate the posts against which they were being fitted, as soon as candidates were available through a process of direct recruitment. The language employed leaves numberdoubt that the promotion of the 167 officers was number substantively made, the tenure being specifically stated to be either officiating or purely temporary which expressions clearly militate against a substantive appointment. Orders made by the State Government later on and right upto the 31st of October, 1961 when the direct recruits were appointed Assistant Engineers did number improve the position of any of the promotees in any manner. Those orders were either silent on the point of the nature of the tenure of the promotees as Assistant Engineers, or stated in numberuncertain terms that the promotees would hold the posts of Assistant Engineers on a temporary or officiating basis. That is why Dr. Chitaley and Mr. Sen, learned companynsel for the promotees, mainly placed their reliance on the two numberifications dated the 27th of February, 1962, and order exhibit D dated the 6th of october, 1962, the companybined effect of which was to promote the said 107 officers as Assistant Engineers with effect from the 1st of November, 1956 on a regular basis. It was argued that the regularisation of the promotion gave it the companyour of permanence and the appointments of the promotees as Assistant Engineers must therefore be deemed to have been made substantively right from the 1st of November, 1956. The argument however is unacceptable to us for two reasons. Firstly the words regular or regularisation do number companynote permanence. They are terms calculated to companydone any procedural irregularities and are meant to cure only such defects as are attributable to the methodology followed in making the appointments. They cannot be companystrued so as to companyvey an idea of the nature of tenure of the appointments. In this companynection reference may with advantage be made to State of Mysore and Another v. S. V. Narayanappa 1 and R. Nanjundappa v. T. Thimmiah and Another 2 . In the former this Court observed Before we proceed to companysider the companystruction placed by the High Court on the provisions of the said order we may mention that in the High Court both the parties appear to have proceeded on an assumption that regularisation meant permanence. Consequently it was never companytended before the High Court that the effect of the application of the said order would mean only regularising the appointment and numbermore and that regularisation would number mean that the appointment would have to be companysidered to be permanent as an appointment to be permanent would still require companyfirmation. It seems that on account of this assumption on the part of both the parties the High Court equated regularisation with permanence. In Nanjundappas case also the question of regularisation of an appointment arose and this Court dealt with it thus Counsel on behalf of the respondent companytended that regularisation would mean companyferring the quality of permanence on the appointment whereas companynsel on behalf of the State companytended that regularisation did number mean permanence but that it was a case of regularisation of the rules under Article 309. Both the companytentions are fallacious. It the appointment itself is in infraction of the rules or if it is in violation of the provisions of the Constitution illegality cannot be regularised. Ratification or regularisation is possible of an act which is within the power and province of the authority but there has been some number-compliance with procedure or manner which does number to to the root of the appointment. Regularisation cannot be said to be a mode of recruitment. To accede to such proposition would be to introduce a new head of appointment in defiance of rules or it may have the effect of setting at naught the rules. Apart from repelling the companytention that regularisation companynotes permanence, these observations furnish the second reason for rejection of the argument advanced on behalf of the promotees and that reason is that when rules framed under article 309 of the Constitution of India are in force, numberregularisation is permissible in exercise of the executive powers of the Government under article 162 thereof in companytravention of the rules. The regularisation order was made long after the Probation Rules, the Seniority Rules and the Recruitment Rules were promulgated and companyld number therefore direct something which would do violence to any of the provisions thereof. Regulaisation in the present case, if it meant permanence operative from the 1st of November, 1956, would have the effect of giving seniority to promotees over the direct recruits who, in the absence of such regularisation, would rank senior to the former because of the Seniority Rules read with the Probation Rules and may in companysequence also companyfer on the promotees a right of priority in the matter of sharing the quota under the Recruitment Rules. In other words, the regularisation order, in companyouring the appointments of promotees as Assistant Engineers with permanence would run companynter to the rules framed under article 309 of the Constitution of India. What companyld number be done under the three sets of Rules as they stood, would thus be achieved by an executive fiat. And such a companyrse is number permissible because an act done in the exercise of the executive power of the Government as already stated, cannot override rules framed under Article 309 of the Constitution. The case has, for both the above reasons, to be decided on the footing that all though the relevant period the promotees held appointments as Assistant Engineers in a number- substantive capacity, i.e. either on an officiating or a temporary basis. This being the position, they would all rank junior to the direct recruits who, from the very start, held appointments made substantively in clear vacancies. We may here make it clear that this order does number companyer such officers as were holding the posts of Assistant Engineers on a substantive basis prior to the 1st of November, 1956 when the new State of Mysore number known as Karnataka came into being. Nor would it adversely affect the case of any Assistant Engineer who acquired a substantive status prior to the promulgation of the Recruitment Rules and the appointment of the direct recruits. Persons falling within these two categories will first have to be accommodated in the clear vacancies available and only the remaining vacancies will have to be utilised for fitting in the direct recruits and the Assistant Engineers who have disputed their claim in these proceedings. It may also be mentioned that the quota rule will number stand in the way of the Government giving effect to this arrangement which has been taken care of in the amendment promulgated on the 23rd of October, 1961 to the Recruitment Rules. The relevant portion of that amendment is companytained in item 3 thereof which is reproduced below To rule 2 of the following proviso shall be added and shall be deemed always to have been added, namely- Provided that in respect of direct recruitment of Assistant Engineers for the first time under these rules the percentages relating to direct recruitment and recruitment by promotion specified in companyumn 2 of the Schedule shall number be applicable and the minimum qualifications and the period of production shall be the following, namely- Qualifications It is companymon ground between the parties that the posts companyprised in the cadre of Assistant Engineers companystituted by the Recruitment Rules have yet to be filled in for the first time. The proviso extracted above therefore will apply fully to the utilization of those vacancies as stated above. It goes without saying that all questions of seniority shall be decided in accordance with the Seniority Rules and that the Recruitment Rules, as amended from time to time, shall be fully implemented as from the date of their enforcement, i.e., 1st of March, 1958. In the result we accept the appeals, set aside the judgment of the High Court and decide the dispute between the parties in accordance with the observations made in paragraphs 5 and 6 hereof.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 114 of 1957. Appeal by special leave from the judgment and order dated December 6, 1955, of the Punjab High Court Circuit Bench Delhi in Criminal Appeal No. 25-D of 1953, arising out of the judgment and order dated August 27, 1953, of the Court of the special judge at Delhi in Criminal Case No. 3 of 1953. L. Anand, and S. N. Anand, for the appellant. J. Umrigar, and R. H. Dhebar, for the respondent. 1959. May 21. The Judgment of the Court was delivered by KAPUR J.-This appeal by special leave is brought against the judgment and order of the High Court of the Punjab companyfirming the order of companyviction of the appellant under s. 5 1 c of the Prevention of Corruption Act, 1947 11 of 1947 hereinafter referred to as the Act . The High Court reduced the sentence of the appellant to nine months rigorous imprisonment. The appellant was employed as an Assistant Store keeper in the Central Tractor Organisation at Delhi and amongst other duties his duty was the taking of delivery of companysignment of goods received by rail for Central Tractor Organisation and in that capacity he is alleged to have misappropriated a major portion of a wagon load of iron and steel weighing about 500 Mds. received at Delhi Railway Station from the Tata Iron Steel Co., Tatanagar, under Railway Receipt No. 039967 dated August 12, 1950. This companysignment of goods was taken delivery of on October 2, 1950 at the Lahori Gate Depot. The companysignment had been lying at the Railway depot for a companysiderable time and the Central Tractor Organisation was, before taking the delivery, making efforts to have the wharfage and demurrage charges reduced but it only succeeded in getting a reduction of Rs. 100. The appellant paid Rs. 2,332-4-0 for demurrage by means of credit numberes P. N. and P. 0. on October 2, and on the following day he paid a further sum of Rs. 57-3-0 by a credit numbere P. Q. The prosecution case was that this companysignment never reached the Central Tractor Organisation and that the appellant had removed these goods and had misappropriated them. He was absent from work after October 4, 1950, on the alleged ground of illness but he was sent for on October 7, and appeared before the Director of Administration Mr. F. C. Gera and he gave an explanation that he the appellant had lost the Railway Receipt along with another Railway Receipt and blank credit numberes which had been signed by the Petrol and Transport Officer. He also stated that he did number know that the goods companyered by that Railway Receipt had been cleared. After this explanation the appellant was. handed over to the police and a case was registered against him at the instance of Mr. C. Gera on October 7, 1950. On the following day, that is, October 8, 1950, the appellant made a statement to Sub-Inspector Sumer Shah Singh that he had given the goods to Gurbachan Singh who was traced and in the presence of this Sub-Inspector who was number in uniform at the time Gurbachan Singh handed over Rs. 200 to the appellant which the Sub-Inspector took possession of and then Gurbachan Singh took the party which companysisted of the Sub- Inspector, Dharam Vir of the Central Tractor Organisation and witness Kartar Singh to the premises, of Amar Singh at Kotia Khan where iron and steel goods were seized and recovery memos prepared. Of the goods companyered by the companysignment seven packages were later recovered from the Lahori Gate Goods Depot. The defence of the appellant was that he took delivery of the goods on October 2 and 3 and removed them to another Railway Siding known as Saloon Siding where the goods of the Central Tractor Organisation used occasionally to be stacked in order to save wharfage and demurrage. In his evidence he stated that he removed these goods to the Saloon Siding on October 2 and 3 by means of a truck of the Central Tractor Organisation which was driven by Sukhdev Singh. The appellant produced Sukhdev Singh and two chowkidars in support of his defence that he had removed these goods from the Lahori Gate Depot to the Saloon Siding by means of the truck of Sukhdev Singh and on some on carts. The High Court has number accepted this evidence. Therefore the position companyes to this that the goods received in that companysignment were, according to the appellants own showing, removed from the Lahori Gate Depot but it is number proved that they reached the Saloon Siding and they did number reach the Central Tractor Organisation. There is also the fact that the appellant gave false explanation on October 7, 1950, as to what had happened to the Railway Receipt or the credit numberes which he had received from the Central Tractor Organisation and there is the further fact that the appellant was absent from duty from October 4 to October 7 till he was sent for Mr. F.C. Gera. The prosecution also tried to show that the goods were removed by Gurbachan Singh to Amar Singhs place from where certain iron and steel goods were recovered. Now these iron and steel goods do number tally with the goods which were received from Tatanagar under Railway Receipt No. 039967 and the goods seized from Amar Singhs place have number been shown to be of the Tata Iron Steel Cos manufacture. Therefore the case reduces itself to this that the appellant took delivery of the goods. These goods were removed-from the Lahori Gate Railway Depot by the appellant and they never reached the Central Tractor Organisation. The prosecution sought to companynect the goods found at Amar Singhs place with the goods received, taken delivery of and removed by the appellant but they failed to do so because neither the identity of the goods is the same number has Gurbachan Singh been produced to depose that it was the appellant who asked him to remove the goods for being taken to Amar Singhs place. In this view of the matter the question for decision is whether the case of the prosecution should be held to be proved that the appellant had misappropriated the goods. It emerges from the evidence of both parties that the goods were received by the appellant and removed by him and they never reached the Central Tractor Origanisation. Indeed before the High Court it was number disputed that the appellant took delivery of the whole companysignment at Lahori Gate Depot and he was responsible for the actual removal of two companysiderable portions of the companysignment on the 2nd and 3rd of October. The offence of which the appellant has been companyvicted is s. 5 1 c of the Act which is as follows- 5. 1 A public servant is said to companymit the offence of criminal misconduct in the discharge of his duty c if he dishonestly or fraudulently misappropriates or otherwise companyverts for his own use any property entrusted to him or under his companytrol as a public servant or allows any other person so to do The word dishonestly is defined in s. 24 of the Indian Penal Code to be 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. Fraudulently has been defined in the Indian Penal Code in s. 25 as follows A person is said to do a thing fraudulently if he does that thing with intent to defraud but, number other-, wise. Wrongful gain includes wrongful retention and wrongful loss includes being kept out of the property as well as being wrongfully deprived of property. Therefore when a particular thing has gone into the hands of a servant he will be guilty of misappropriating the thing in all circumstances which show a malicious intent to deprive the master of it. As was said by Fazl Ali, J., in Harakrishna Mahtab v. Emperor 1 Now I do number mean to suggest that it is either necessary or possible in every case of criminal breach of trust to prove in what precise manner the money was spent or appropriated by the accused because under the law, even temporary retention is an offence, provided that it is dishonest I must point out that the essential thing to be proved in case of criminal breach of trust is whether the accused was actuated by dishonest intention or number. As the question of intention is number a matter of direct proof, the Courts have from time to time laid down certain broad tests which would generally afford useful guidance in deciding whether in a particular case the accused had or had number mens area for the crime. So in cases of criminal breach of trust the failure to account for the money proved to have been received by the accused or giving a false account of its use is generally companysidered to be a strong circumstance against the accused. The offence under s. 5 1 c is the same as embezzlement, which in English law, is companystituted when the property has been received by the accused for or in the name or on account of the master or employer of the accused and it is companyplete when the -servant fraudulently misappropriates that property. Halsburys Laws of England, Vol. 10, 3rd Edition, p. 787 In Larnier v. Rex 2 the offence of embezzlement was A.I. R. 1930 Patna 209. 2 1914 A.C. 221, described as a wilful appropriation by the accused of the property of another. A companyrt of Justice, it was said in that case cannot reach the companyclusion that ,the crime has been companymitted unless it be a just result of the evidence that the accused in what was done or omitted by him was moved by the guilty mind. So the essence of the offence with which the appellant was charged is that after the possession of the property of the Central Tractor Organisation he dishonestly or fraudulently appropriated the property entrusted to him or under his companytrol as a public servant and deprived the owner, i.e., Central Tractor Organisation of that property. It is number necessary or possible in every case to prove in what precise manner the accused person has dealt with or appropriated the goods of his master. The question is one of intention and number a matter of direct proof but giving a false account of what he has done with the goods received by him. may be treated a strong circumstance against the accused person. In the case of a servant charged with misappropriating the goods of his master the elements of criminal offence of misappropriation will be established if the prosecution proves that the servant received the goods, that he was under a duty to account to his master and had number done so. If the failure to account was due to an accidental loss then the facts being within the servants knowledge, it is for him to explain the loss. It is number the law of this companyntry that the prosecution has to eliminate all possible defences or circumstances which may exonerate him. If these facts are within the knowledge of the accused then he hag to prove them. Of companyrse the prosecution has to establish a prima facie case in-the first instance. it is number enough to establish facts which give rise to a suspicion and then by reason of s. 106 of the Evidence Act to throw the onus on him to prove his innocence. See Harries, C.J., in Emperor v. Santa Singh In the present case the appellant received the companysignment of goods which came from Tatanagar. It is admitted that he removed them and it was found by A.I.R. 1944 Lah. 338 at P. 346. the High Court that they never reached the Central Tractor Organisation. He gave an explanation in companyrt which has been found to be false. Before Mr. F. C. Gera he made a statement to the effect that he had lost the Railway Receipt and therefore had never got the delivery of the goods which was also false. In these circumstances, in our opinion, the companyrt would be justified in companycluding that he had dishonestly misappropriated the goods of the Central Tractor Organisation. The giving of false explanation is an element which the Court can take into companysideration. Emperor v. Chattur Bhuj 1 . In Rex v. William 2 . Coleridge, J., charged the jury as follows The circumstances of the prisoner having quit- ted her place and gone off to Ireland is evidence from -which you may infer that she intended to appropriate the money and if you think that she did so intend, she is guily of embezzlement. Again in Reg v. Lynch 3 , Moore, J., said- You have further the fact that, after getting the money, the prisoner absconded and did number companye back till he was in custody. You may infer that he intended to appropriate this money, and if so, he is guilty of embezzlement. The appllents companynsel relied on certain observations in certain decided cases which, according to his submission, support his companytention that the prosecution has to prove number only receipt of goods by the accused but also to prove that he companyverted them to his own use and did number apply them to the purpose for which he received them. He referred to Ghulam Haider v. Emperor 4 In re Ramakkal Others 5 Bolai Chandra Khara v. Bishnu Bejoy Srimani 6 Bhikchand v. Emperor 7 Pritchard v. Emperor 8 . So broadly stated this submission does number find support even from the cases relied upon by the appellants companynsel. They are all decisions on the peculiar circumstances of each case. In Ghulam Haiders case 4 1 1935 I.L.R. 15 Patna 108. 5 A.I.R. 1938 Mad. 172. 2 1836 7 C. P. 338. 6 A.I.R. 1934 Cal. 425. 3 1854 6 Cox. C.C. 445. 7 A.I.R. 1934 Sindh 22. AI.R. 1938 Lah. 534. 8 A.I.R. 1928 Lah. 382. the proposition was qualified by saying that proof of receipt and failure to account is a long way towards proof of misappropriation but number the whole way. In that case the books in which receipts ought to have been entered were number produced and there was absence of clear accounts. In Ramakkals case 1 the accused was the receiver of a currency numbere found by a child and it was held that mere intention to misappropriate or even preparation to that end was number an offence. It was a case brought to the High Court at an intermediate stage for quashing the charge and the High Court did number do so. Bolai Chandra Kharas case 2 only emphasised that proof of one element of the criminal breach of trust is number enough for companyviction and proof of number-payment of money companylected by a gomastha must be given by the prosecution. In Bhikchands case 3 it was held that it is only on proof of number-payment of money received by the accused that presumption will arise of misappropriation. In Pritchards case 4 also the prosecution did number produce the books of account showing numberpayment. All these decisions must be companyfined to their peculiar facts and in their ultimate analysis do number support the proposition companytended for by the appellant. What the prosecution have proved in this case is that the appellant took delivery of the goods on October 2 and 3. His own statement on oath shows that he removed these goods from the Railway Siding. This removal is also proved by documentary evidence in the form of gate passes. There is also proof of the fact that the goods did number reach the Central Tractor Organisation. The appellant has given an explanation that he removed these goods to the Saloon Siding. This explanation has number been accepted. The pro- secution have also proved that the appellant in the first instance gave a false explanation that he had number taken delivery of the goods. He had absented himself from duty and had to be called by the Officer-in-charge. He has set up the defence of removal to the Saloon Siding which was number accepted. A.I.R. 1938 Mad. 172. 3 A.I.R. 1934 Sindh 22. A.I.R. 1934 Cal, 425. 4 A.I.R. 1928 Lah. 382. The prosecution also set out to prove that the goods were disposed of by the appellant by giving them to one Gurbachan Singh who in turn put these at the premises of Amar Singh and some steel goods were recovered from there but the prosecution have neither produced Gurbachan Singh number has it been proved that the goods are part of the companysignment which was taken delivery of by the appellant. If under the law it is number necessary or possible for the prosecution to prove the manner in which the goods have been misappropriated then the failure of the prosecution to prove facts it set out to prove would be of little relevance. The question would only be one of intention of the appellant and the circumstances which have been above set out do show that the appellant in what he has done or has omitted to do was moved by a guilty mind.

Case appeal was rejected by the Supreme Court

Gajendragadkar, J. Are the appellants S. Gangoli and P. R. Chaudhri hereafter called appellants 1 and 2 respectively public servants under s. 2 of the Prevention of Corruption Act, 1947 Act II of 1947 hereinafter called the Act ? That is the short question which arises for our decision in the present appeal. That question arises in this way. Chaudhri had been posted as Assistant Permanent Way Inspector, Sultanpur, East Indian Railway, in March, 1948, in the Lucknow E.I.R. Division. Gangoli was posted as Assistant Pay Clerk in the Lucknow E.I.R. Division during the same period. The case against the appellants was that they had companymitted an offence under s. 120B of the Indian Penal Code and s. 5 2 read with ss. 5 1 c and 5 1 d of the Act. It appears that in accordance with the Pay Commissions Report a sum of Rs. 16,685 was entrusted to appellant No. 2 by the railway department to be disbursed among Class IV staff working under appellant No. 1. This payment had to be made in the presence of, and was to be attested by, appellant No. 1. According to the prosecution both the appellants had entered into a criminal companyspiracy to misappropriate a part of the said government amount entrusted to appellant No. 2 by paying to the respective members of Class IV staff lesser amounts than those to which they were entitled and by making entries in the pay-sheets which purported to show that the due amounts had been paid to them. In accordance with this companyspiracy payment was made on March 11, 1948, in a running train between Faizabad and Chilbila and the entries in the pay-sheets show that the whole of the amount of Rs. 16,591 had been paid to 216 employees. The entries also show that the payment had been made by appellant No. 2 and the same had been attested by appellant No. 1. In fact the whole amount had number been disbursed to the employees who in all were paid Rs. 1,555 less. In this manner the two appellants had misappropriated the sum of about Rs. 1,555 and had falsified the pay-sheets in pursuance of their companyspiracy. Within a few days of the said payment the employees became suspicious because they learnt that persons recruited on the same day had been paid larger amounts as arrears. Thereupon they approached the higher officers and made a companyplaint to them. They were advised to present their grievance in writing and as a result some of the employees did present applications in writing companyplaining that they had number received the due payment of their arrears. There representations led to an enquiry and Mr. Dalip Singh in fact recorded some of the statements on April 6 and 7, 1948. The prosecution alleges that this development alarmed appellant No. 1 and he tried to hush up the matter by calling all the men together and paying them the amounts which had been previously wrongfully deducted from their arrears. It is the prosecution case that on this day three documents were executed, Exs. 5, 10 and 11, which would clearly show that the appellants had companymitted the offences charged against them. Both the appellants denied the charges. They pleaded that they had number entered into any companyspiracy and it was their suggestion that they had been falsely implicated in the present case. Appellant No. 1 pleaded that the case against him had been started, and false evidence had been secured by H. N. Das with the aid of Shambu because relations between him and Das were number friendly. Appellant No. 2 pleaded that he had been falsely implicated because, companytrary to the suggestion of the police, he had refused to implicate appellant No. 1. According to them the evidence adduced by the prosecution was interested and false, and the documents produced by it were either fabricated or irrelevant. In support of its case the prosecution examined 44 witnesses, relied upon the three documents Exs. 5, 10 and 11 and urged that the charges framed against the appellants were clearly established by the said evidence. The learned Sessions Judge at Lucknow who tried the case against the appellants agreed with the unanimous opinion of the assessors and held that the charges framed against the appellants had been proved beyond a reasonable doubt. He accordingly companyvicted them of the said offences and sentenced appellant No. 1 to suffer rigorous imprisonment for three years and appellant No. 2 to suffer rigorous imprisonment for two years. This order of companyviction and sentence was challenged by the appellants by preferring appeals in the High Court of Judicature at Allahabad. These appeals, however, failed and the High Court substantially agreed with the companyclusions of the learned trial judge. Mr. Justice Kidwai who heard these appeals numberdoubt partly accepted the defence plea and held that Das was number a reliable witness and that he might have been responsible for the fabrication of Ex. 10. The learned judge also found that Shambu was likewise an unreliable witness. Even so it was held that the evidence of gangmen was on the whole satisfactory and that the documents Exs. 5 and 11 companyroborated the oral evidence adduced by the prosecution. In the result the order of companyviction and sentence passed against the appellants by the trial judge was companyfirmed. It is against this order passed by the High Court that the appellants have preferred the present appeals by special leave and the only point which they have raised before us is that their companyviction and sentence are illegal because they are number public servants under s. 2 of the Act. Section 2 of the Act provides that for the purposes of this Act public servant means a public servant as defined in s. 21 of the Indian Penal Code. It is number disputed that under s. 21 the appellants are public servants. The East Indian Railway which has employed the appellants was at the material time owned by the Government of India and managed and run by it, and so if the status of the appellants had to be judged at the material date solely by reference to s. 21 of the Code there would be numberdifficulty in holding that they are public servants as defined by the said section. It is, however, urged that, for determining the status of a railway servant, it is necessary to companysider s. 137 of the Indian Railways Act, 1890 Act 9 of 1890 . It may be recalled that when this Act was passed almost all the railways in India were owned and managed by public limited companypanies and as such railway servants as defined by s. 3 7 of the Railways Act companyld number be treated as public servants under s. 21 of the Code. After the railways were nationalised and taken over by the Government of India, this position has materially altered. But prior to the nationalisation of railways, the position was that railways servants as such did number fall under s. 21 of the Code. That is why s. 137 1 and 4 purported to bring them within the definition of public servants companytained in the said section. Sub-s. 1 of s. 137 provides that every railway servant shall be deemed to be a public servant for the purposes of ch. IX of the Indian Penal Code. The effect of this sub-section is to treat railway servants as public servants under s. 21 for the purpose of offences relating to public servants which are dealt with by ss. 161 to 171 is ch. IX of the Code. It is thus clear that the result of this provision was to treat railway servants as public servants even though they did number satisfy the requirements of the definition of s. 21. Having provided for the extension of the said definition to railway servants for the purposes of ch. IX of the Code, sub-s. 4 prescribed that numberwithstanding anything companytained in s. 21 of the Indian Penal Code a railway servant shall number be deemed to be a public servant for any of the purposes of that Code except these mentioned in sub-s. 1 . It is on this sub-section that the appellants argument is based. It is urged by Mr. B. L. Anand that this sub-section clearly provides that railway servants shall number be deemed to be public servants except for the purposes of ch. IX and since the appellants had number been charged with any of the offences in ch. IX of the Code they cannot be treated as public servants for the offences under ss. 5 1 and 5 2 of the Act. It is true that these two sub-sections have been amended by Act 17 of 1955. Sub-s. 4 has been deleted and sub-s. 1 number provides that every railway servant being a public servant as defined in s. 21 of the Indian Penal Code shall be deemed to be a public servant for the purposes of ch. IX and s. 409 of that Code. In other words, under the amended provision of s. 137 1 railway servants would be deemed to be public servants under s. 21 of the Indian Penal Code only for the purpose of ch. IX and s. 409 of that Code. We are, however, companycerned with the provisions of s. 137 prior to its amendment in 1955. Now s. 137, sub-s. 4 opens with the number-obstante clause and expressly states that a railway servant shall number be deemed to be a public servant for any of the purposes of that Code subject of companyrse to the exception mentioned in sub-s. 1 . The argument is that the number-obstante clause has the effect of excluding the application of s. 21 of the Code in all cases except those falling under ch. IX of the Code and it is urged that since the offences charged against the appellants are outside ch. IX of the Code, sub-s. 4 creates a bar against treating them as public servants for the purpose of the said offences. This argument, however, ignores the relevant words for any of the purposes of that Code used in sub-s. 4 . These words indicate that the bar created by sub-s. 4 applies, and is companyfined, to the purposes of that Code and cannot be extended beyond the said purposes. What sub-s. 4 really provides is that if a railway servant is charged for an offence under the Indian Penal Code and the said offence is outside ch. IX of the Code he cannot be treated as a public servant. This sub-section does number purport, or intend to make any provision in respect of offences which are outside the Penal Code, In respect of such offences neither sub-s. 1 number sub-s. 4 of the Railways Act would apply, and the question as to whether railway servants fall within the mischief of the Act must be decided in the light of the provisions of the said Act itself. That takes us to the question whether the appellants can be said to be public servants under s. 2 of the Act. S. 2, as we have indicated, in substance incorporates in itself the definition of a public servant companytained in s. 21 of the Indian Penal Code. There can be numberdoubt that the effect of s. 2 of the Act is that the status of accused persons has to be determined by the application of s. 21 of the Indian Penal Code as if the said section had been included in the Act. If that be so the appellants cannot resist the companyclusion that they are public servants under s. 2 of the Act. The companytention that because s. 2 of the Act refers to s. 21 of the Indian Penal Code the bar created by s. 137 4 of the Railways Act would inevitably companye into operation is unsound. The said bar can be invoked only if the status of the accused person is being determined for any purposes of the Code other than those of ch. IX. In the present case the main offences charged are under the Act and number under the Code, and so s. 137 4 in inapplicable. With regard to the companystruction of s. 137 4 there is another companysideration which may be indicated. S. 137 1 beings within the definition of s. 21 of the Code railway servants who but for it would number have satisfied the rests laid down in s. 21. The deeming provision of sub-s. 1 would be clearly inappropriate and unnecessary if the railway servants companycerned companyld be treated as public servants under s. 21 itself. In other words, railway servants employed by the railway administration owned and companyducted by the Government of India would be public servants under s. 21 as such without recourse to the statutory fiction introduced by s. 137 1 . Having provided for this statutory fiction by sub-s. 1 , sub-s. 4 purports to companyer the same ambit and to deal with the same class railway servants and it provides that this class of persons shall number be deemed to be public servants except as mentioned in sub-s. 1 . This negative statutory fiction is only intended to emphasise the fact that persons who are treated as public servants by virtue of sub-s. 1 can be dealt with only under the provisions of ch. II of the Code and numberother. Could it have been intended by the Legislature that sub-s. 4 should exclude the application of the provisions of the Code other than those companytained in ch. IX to railway servants who would be public servants under s. 21 without the aid of sub-s. 1 of s. 137 ? Prima facie such an intention cannot be attributed to the Legislature. It is true that the number-obstante clause lends some assistance to the argument of the appellants that with the exception of the provisions of ch. IX, s. 21 of the Code would be inapplicable to railway servants but the said number-obstante clause cannot prima facie be wider in its scope than sub-s. 1 of the said section. The said number-obstante clause has apparently been inserted ex abundanti cautela - Rai Bahadur Kanwar Raju Nath Ors. v. Promod C. Bhatt, Custodian of Evacuee Property to clarify the effect of s. 137 1 . The two sub-sections introduce a positive and a negative fiction respectively and thereby achieve the same result. However, since we are companycerned with the provisions of the Act and number with any provisions of the Code other than ch. II it is unnecessary to pursue this point any further and to express a definite opinion on this aspect of the matter. We must number refer to the decisions to which our attention was invited. The first case on which Mr. Anand relied is the decision of the Punjab High Court in Devi Ram Deep Chand v. The State A.I.R. 1954 Punj. 189. In that case the accused were goods clerks employed by the railway and they were being prosecuted in the companyrt of a First-Class Magistrate on charges under s. 408 of the Penal Code. It was urged on their behalf that the offences alleged against them were in substance offences under s. 5 of the Act, and that they companyld be tried by a special judge alone. That is why the High Court was moved for a transfer of the case against them from the companyrt where it was pending to the companyrt of the special judge. From the judgment of the High Court it clearly appears that the learned Assistant Advocate-General intimated to the Court that the prosecution did number propose to frame or prove a charge against the appellants under s. 5 of the Act. Therefore s. 2 of the Act did number really fall to be companystrued by the companyrt and so the observations made by Dulat, J., that if the petitioners are number public servants within the meaning of s. 21 of the Penal Code they cannot be called public servants for the purposes of Act 2 of 1947, is clearly obiter. If, however, this observation was intended to be a decision on the point, it must, with respect, be held to be based on a misconstruction of s. 137 4 . Mr. Anand has also fairly invited our attention to two decisions of this Court - Ram Krishan v. The State of Delhi 1956 S.C.R. 182 and C.A. Montorio v. The State of Ajmer 1956 S.C.R. 682 - which are prima facie against his companytention. In the first of these two decisions the appellants had been charged under s. 120B of the Indian Penal Code for criminal companyspiracy to cause offence of criminal misconduct punishable under s. 5 2 of the Act to be companymitted by Madan Lal as also under that section read with s. 116 of the Code. They had been companyvicted by the special judge on both the companynts and their companyviction had been upheld by the High Court. In their appeal before this Court one of the points raised by the appellants was that Madan Lal was number a public servant within the meaning of the Act. It appears that the offence in question had been companymitted on December 29, 1951, and the argument was that under s. 137 1 and 4 Madan Lal who was a railway servant companyld number be held to be a public servant under s. 2 of the Act. Chandrasekhara Aiyar, J., who delivered the judgment of the Court, cited s. 137 1 and added that sub-s. 4 had been omitted by the amendment of 1955. Then the learned judge referred to s. 2. of the Act and companycluded thus The result is that before the amendment railway servants were treated as public servants only for the purpose of ch. IX of the Indian Penal Code but number as the result of the amendment all railway servants have become public servants number only for the limited purpose but generally under the Prevention of Corruption Act. With respect, it may be pointed out, that this observation seems to give to the amended provisions of s. 137 of the Railways Act retrospective effect. The question of the companystruction of the relevant sections does number appear to have been fully argued before this Court and it has number been companysidered. It is nevertheless true that in respect of an offence companymitted in 1951 Madan Lal was held to be a public servant under s. 2 of the Act. In the case of Montorio 1956 S.C.R. 682 the main point raised before this Court was whether the accused was a public servant under s. 21 of the Code and that was companysidered by this Court in dealing with that question this Court companystrued s. 21 and held that the appellant was an officer within the meaning of s. 21 9 and therefore a public servant within the meaning of s. 21. Incidentally reference has been made to the earlier decision of this Court in the case of Ram Krishan 1956 S.C.R. 182 and it has been observed that the said decision lays down that before the amendment of s. 137 of the Railways Act, by Act 17 of 1955, railway servants were treated as public servants only for the purposes of ch. IX of the Indian Penal Code but in any event they were public servants under the Prevention of Corruption Act. With respect, this latter statement does number appear to be borne out by the judgment in the case of Ram Krishan 1956 S.C.R. 182. Going back to s. 2 of the Act once more we must hold that in defining a public servant it enacts the same definitions as s. 21 of the Indian Penal Code and under this interpretation of the section the appellants undoubtedly are public servants. The result is the companyrts below were right in holding that the appellants companyld be properly charged and tried for offences under s. 5 2 read with s. 5 1 c and s. 5 1 d of the Act. The validity of the charge under s. 120B has number been and cannot be challenged. Mr. Anand for appellant No. 1 and Mr. Chatterjee for appellant No. 2 appealed to us to reduce the sentence passed against their clients. It was urged in support of this plea that though the charge against them was in respect of a large amount of Rs. 1,555 evidence had been adduced to prove misappropriation of Rs. 218 which is a much smaller amount. We do number think that in the circumstances of this case the actual amount shown to have been misappropriated has a decisive or even a material bearing on the question of sentence. The positions respectively occupied by the appellants, the relations between them and the Class IV servants, the method adopted by the appellants in companymitting the offence and the other circumstances have all been companysidered by the companyrts below in passing companycurrently the respective orders of sentence against the appellants. In our opinion there is numberjustification for interfering with the said orders. The appeals accordingly fail and are dismissed.

Case appeal was rejected by the Supreme Court

Hidayatullah, J. This appeal with a certificate of the High Court of Judicature, Bombay, has been filed against the judgment and decree of the Court dated April 22, 1949, in First Appeal No. 403 of 1945, companyfirming the judgment and decree of the Civil Judge, Senior Division, Nasik, in Special Suit No. 5 of 1943, decided on August 14, 1945. The High Court made a slight modification in the matter of companyts, to which we shall refer later. The plaintiff, who is the appellant here, is the descendant of one Ganpati Maharaj, who was a devotee of Shri Venkatesh Balaji. Ganpati Maharaj died in 1701 at the ripe age of 98. When Ganpati Maharaj was 72 years old, it was vouchsafed to him in a dream that an image of Venkatesh Balaji would be found by him in river Tambraparni in Tirunelveli District. He found the image, brought it to his house in Junnar Poona District and installed it. The worship of Shri Venkatesh Balaji was carried on by him, and when he died, he left behind him three sons and a daughter. His eldest son, Timmayya, at the time of his death was 12 years old. Timmayya succeeded Ganpati Maharaj and lived till 1768, when he died at the ripe age of 79. During his lifetime, Timmayya obtained several properties as presents and gifts. The present suit companycerns those properties which are described in the schedules attached to the plaint. The appellant is the direct descendants of Ganpati in the eldest male line, and respondents 1 to 4 are the descendants from Ganpatis daughter, Nagubai. On April 23, 1942, the first four respondents made an application to the District Court under s. 3 of the Charitable and Religious Trusts Act, 1920 No. 14 of 1920 , hereinafter called the Act, against the appellant and two others asking that the appellant be directed to furnish full particulars of the properties and their application and for accounts of the income as also of the properties during the three preceding years. The appellant in reply denied that there was a trust, much less a public trust, and claimed the idol and the properties as private. He understook to bring a suit under s. 5 3 of the Act, and the suit out of which the present appeal arises, was filed on March 21, 1943. He claimed in the suit three declarations, which were as follows It may be declared that Shri Vyankatesh Balaji Deity and Shri Vyankatesh Balaji Sansthan are number legal trust as alleged by the Defendants and their nature also is number such as alleged by the Defendants. If the Court holds that a trust in the matter of Shri Vyankatesh Balaji Deity and Shri Vyankatesh Balaji Sansthan exists, then it may be declared that the said trust is number a public one, that the same has number companye into existence for the religious and charitable purposes and that the Religious and Charitable Trusts Act sic. No. 14 of 1920 is number applicable to the same. It may be declared that the Defendants for themselves or as the representatives of the entire Hindu Community have numberright and authority whatever over Sri Vyankatesh Balaji Devta and Shri Vyankatesh Balaji Sansthan and that they or the entire Hindu Community has numberright and authority whatever in any capacity whatever to interfere in the matter of Devta deity and Sansthan or to ask for the Yadi list of the properties or accounts in respect of the income thereof and to ask for reliefs mentioned in prayer clauses of the Miscellaneous Application No. 19 of 1942. The trial Judge framed eight issues. The first two involved the declarations sought. Three others companycerned the position of defendants 1 to 4, 6 and 7 in respect of maintenance, share in the right of customary worship and management. One issue raised the question whether the suit was bad because the deity was number joined and the remaining two were companysequential. The trial Judge decided all the issues against the appellant. He held that the suit properties were number the personal or private properties of the appellant, that the plaintiff was estopped from making such a claim, that the deity itself was number a family or private deity, and that the deity Shri Venkatesh Balaji was the owner of the properties, and that there was a public, religious and charitable trust in respect of them. It was, however, held that the appellant was entitled as the hereditary shebait to manage them. The trial Judge also gave a finding that the first four defendants were entitled to customary worship and emoluments as might be fixed by the Pujadhikaris descended from the eldest branch of Bapaji Buva and companyld be removed for failure to perform the duties assigned to them. The application under s. 3 of the Act was held to be companypetent, and the suit was also held to be bad in the absence of the deity. In the result, the trial Judge dismissed the suit, awarding two sets of companyts to the defendants. It may be pointed out that after the suit was filed, a public numberice under O. 1, R. 8 of the Code of Civil Procedure was issued and other defendants were joined, representing the Hindu Community. During the early stages of the suit, the first four defendants raised the question whether the deity was number a necessary party to such a suit, and desired that the deity should be joined, represented by an independent guardian-ad-litem. This application was opposed by the appellant, who stated that inasmuch as his case was that the deity and the properties were his personal properties, there was numberneed to join the deity because of an averment by the defendants that the temple was a public one and the properties were public religious endowments. The trial Judge after expressing some surprise that the plaintiff should have taken this stand, acceded to his companytention and did number join the deity as a party. He, however, warned the appellant by his order that in case the deity was found to be a necessary party, the suit might have to be dismissed for that reason alone. Against the decree dismissing the suit, an appeal was taken to the High Court of Bombay. The learned Judges of the High Court Rajadhyaksha and Chainani, JJ. , dismissed the appeal but modified the order about companyts, directing that only one set of companyts be paid to the defendants in the suit. The learned Judges traced the history of the various properties and how they were acquired, and companycluded that in respect of some of the properties there was numberdoubt that they formed religious endowments of a public nature, but in respect of others, though they were inclined to hold that they were personal properties, they held that numberdeclaration companyld be given, since the deity was number a party to the proceedings. They, however, granted a certificate of fitness under Art. 133 of the Constitution, read with ss. 109 and 110 of the Code of Civil Procedure, and the present appeal has been filed as a result. Before dealing with the appeal proper, it is necessary to refer to certain landmarks in the history of Shri Venkatesh Balaji and this family. As we have stated earlier, the deity was placed in his house by Ganpati Maharaj at Junnar in Poona District. Ganpati Maharaj did number acquire any property, but in the lifetime of his son, the deity was mover from Junnar to Nasik. A tradition in the family says that this was the result of a dream by Timmayya, who was warned that Junnar would be burnt to ashes and the deity must be removed. Timmayya soon acquainted the people of the locality with the miraculous powers of the deity, and number companytent with this alone, he took the deity to the Courts of the various Rulers and also from place to place acquiring the properties in dispute, cash allowances and gifts. After Timmayya died his eldest son, Bapaji Buva, obtained a plot of land in gift from the Peshwa near the bank of the Godavari river at Nasik and built a temple on it. The deity was installed in that temple, and has companytinued in that abode ever since. Bapaji Buva had raised a loan for the companystruction of the temple, and a substantial portion of it was paid off by the Peshwa and other Rulers like Holkar and Scindia. In Bapajis Buvas time, a large Sabha Mandap was built in the premises of the temple to accomodate about 600 persons at the time of darshan and worship of the deity. In 1774 family disputes arose and a Tahanama Ex. 121 was executed, whereby the right of management was vested in the eldest male member of the senior branch of the family, and provision was made for the maintenance of that branch as well as the junior branches. Again in 1800, further disputes took place in the family and a Tharav Yadi Ex. 122 was drawn up. By that agreement, instead of the cash allowances for the maintenance of the branches certain villages were assigned to them. Next came the Inam Commission under the Bombay Rent-free Estates Act, 1852 Bom. 11 of 1852 , by which in accordance with the policy laid down by Lord Bentick, all jagirdars and inamdars were required to prove the sources of their title and the companyditions on which the jagirs or inams were held. The Assistant Inam Commissioner recorded the grant of the villages under R. 3 of Sch. B to that Act as personal inams. Damodar Maharaj who was then the Pujadhikari or Sansthanik appealed to the Inam Commissioner, and companytended that the villages were number held as personal inams but were Devasthan inams and companyld only be recorded under R. 7 of Sch. B. The difference between the two Rules was that whereas personal inams companyld be held only so long as the family survived, Devasthan inams were held permanently and were to be recorded as such. The Inam Commissioner accepted this companytention, and caused the entries to be changed from personal inams to Devasthan inams in respect of the villages. Damodar Maharaj died in 1885, and was succeeded by Krishnarao Maharaj, who died in 1893, whose eldest son, Bhagwantrao Maharaj died in 1900 and was succeeded by the appellant, during whose minority the property was managed by a guardian appointed by Court. The appellant became major in 1921, and took over the management of these properties. In 1929, the appellant caused a history of the deity to be written and it was published by him. A reference to all these documents will be necessary hereafter to companysider the argument whether there was a religious endowment of a public nature, or whether the properties in dispute were privately owned. As pointed out already, the two Courts below have companycurred in holding that the deity was number a mere family deity in which the public had numberinterest, and that the properties given to the deity companystituted a religious and charitable endowment of a public nature. Ordinarily, such a finding is a finding of fact number open to further scrutiny by this Court, but the appellant companytended that the legal inference drawn from the proved facts in the case was erroneous and a point of law therefore arose. A mistaken inference from documents is numberless a finding of fact, if there is numbermisconstruction of the documents, and this principle should be applied to the discussion of the documentary evidence in this case, because if there was numbermisconstruction of the documents, - the companycurrent findings would be number of law but of fact and the error, if any, equally of fact. Both the Courts below have analysed at length the documents which number several hundreds, and have pointed out that there was numberhing inconsistent in them with the companytention of the respondents that there was a religious and charitable endowment of a public character in favour of the deity. Before us, the attempt of the appellant was to show that this companyclusion was number companyrect and that the documents pointed to grants in favour of individuals for the time being managing the affairs of a family deity. In addition to the examination of the documents, the two Courts below relied strongly against the appellant on the admissions made by his predecessors-in-title from 1774 onwards. Learned companynsel for the appellant companytended that the documents were misconstrued and thus, the inference from them in which these so-called admissions were companytained, was exactly the opposite of what the Courts have deduced. In this appeal, therefore, all that is necessary is to see whether the inferences are vitiated by a misconstruction of the documents as such. The appellant companytended that this was a special suit under s. 5 3 of the Charitable and Religious Trusts Act, 1920, and that the burden lay upon the respondents to prove that there was a religious and charitable trust of a public character in favour of the deity. He companytended that the two Courts below had placed the burden of proof upon him to show by positive evidence that the deity was a family deity, and that the properties were his private properties. According to him the defendants ought to have proved their case, and if they failed to prove affirmatively that case, then the suit ought to have been decreed in his favour. The expression burden of proof really means two different things. It means sometimes that a party is required to prove an allegation before judgment can be given in its favour it also means that on a companytested issue one of the two companytending parties has to introduce evidence. Whichever way one looks, the question is really academic in the present case, because both parties have introduced their evidence on the question of the nature of the deity and the properties and have sought to establish their own part of the case. The two Courts below have number decided the case on the abstract question of burden of proof number companyld the suit be decided in such a way. The burden of proof is of importance only where by reason of number discharging the burden which was put upon it, a party must eventually fail. Where, however, parties have joined issue and have led evidence and the companyflicting evidence can be weighed to determine which way the issue can be decided, the abstract question of burden of proof becomes academic. In the present case, the burden of proof need number detain us for another reason. It has been proved that the appellant and his predecessors in the title which he claims, had admitted on numerous occasions that the public had a right to worship the deity, and that the properties were held as Devasthan inams. To the same effect are the records of the revenue authorities, where these grants have been described as Devasthan, except in a few cases, to which reference will be made subsequently. In view of all these admissions and the revenue records, it was necessary for the appellant to prove that the admissions were erroneous, and did number bind him. An admission is the best evidence that an opposing party can rely upon, and though number companyclusive, is decisive of the matter, unless successfully withdrawn or proved erroneous. We shall number examine these admissions in brief and the extent to which they went and the number of times they were repeated. The earliest admission that the property belonged to the Devasthan and that there was numberprivate ownership is to be found in the Tahanama Ex. 121 of the year 1774. This Tahanama was entered into by the sons of Timmayya Maharaj in the presence of Panchas long before the present dispute arose. It is stated there that Shrimant Pant Pradhan and other Sardars of both Nizam and Deccan States have granted in Inam villages for the purposes of Seva worship of Shri deity . It was again stated that the Shris temple which was newly built on the banks of the river Ganga Godavari belonged to Shris Sansthan and numberody had a share therein. By the Tahanama, the three brothers set apart a certain sum for the Seva worship of the deity in accordance with their practice which sum was number to be diminished under any circumstance. They, however, took a small portion of the income as their own Nemnuk maintenance , which Nemnuk was to be reduced if the income was number sufficient to meet the expenses of Shri deity . Learned companynsel for the appellant stated that the Tahanama was misconstrued by the two Courts below. He companytended that this was a private temple, and if anything companyld be spelt out from this document, it was that the three brothers companystituted a private trust in favour of the deity. According to him, the brothers were dividing the income which was theirs, into two parts, namely, 1 for the Seva of the deity and 2 for their maintenance. This, in our opinion, is a strained reading of the document as a whole. This deity was Swayambhu and number a companysecrated idol. If numbere of the members of the family had any interest in the Shris temple or any shares in the properties thereof, obviously the properties were number private properties, number the idol a family idol. The document clearly shows that the deity was regarded as the owner and the family were its servants. This is made clear by the subsequent document, which is the Tharav Yadi of 1800 the Nemnuk allowance which the members of the family had taken out of the income was described as Vetan remuneration for doing service to the deity and Sansar Begmi for themselves. The use of the word Vetan does number indicate ownership, but on the companytrary, paid service. Even as far back as 1774 to 1800, the predecessors of the appellant companysidered themselves as the servants of the deity, and all that they did was to make a stable arrangement for the application of the funds, so that the deity companyld enjoy its own property and the servants were regularly paid. When the Inam Commission was established to enquire into the jagirs and inams which had passed into the territory of the East India Company, Act No. 11 of 1852 was passed. The Inam Commission purported to be established under that Act and for purposes of enquiry as laid down under that Act. The Assistant Inam Commissioner at that time held that the inam was a personal one, and ordered that it be recorded as such. This was in the years 1857 to 1859. Damodar at that time went up in appeal to the Inam Commissioner, companyplaining against the record of the inams as personal, and claimed that they should be recorded as Devasthan inams. His appeal is Ex. D-643 dated March 5, 1858. He stated therein that the mokass Amal and the jagir and Sardeshmukhi in the villages were granted for the expenditure on account of the Shri. He relied on the Sanads, in which it was stated that the Amals revenue shares were for the purpose of worship and Naivedya food offering to the Devasthan of Shri Venkatesh. He referred to the earlier documents to which we have referred, and claimed that the order of the Assistant Inam Commissioner was erroneous, because the inams must be recorded in the name of the deity under R. 7 of Sch. B to the Act of 1852 and number under R. 3, as was ordered by the Assistant Inam Commissioner. We have already pointed out the different effect of the two Rules, and proviso 6 to R. 7 stated that numberpersonal inam companyld be recorded permanently under R. 7. The effect of this appeal was to claim on behalf of the deity a permanent recognition of its rights to the inam properties without any share on behalf of the family, apart from remuneration such as the Pujadhikaris might from time to time settle, in accordance with the Tahanama and the Tharav Yadi of the earlier times. The Inam Commissioner acceded to this companytention, and after examining all the Sanads that had been produced in the case, ordered that, the order issued by Meherban, Assistant Inam Commissioner be annulled and under Section 7 sic. Supplement No. 2 of Act 11 of 1852 the remaining portion of this village . . . to remain as perpetual Inam with the Devasthan of Shri Vyankatesh . . . and the management do remain companytinued from generation to generation of the lineal descendants with the male descendants of Timaya Gosavi bin i.e. son of Ganesh Gosavi and Apatia bin i.e. son of Konher Gosavi. The effect of all these documents therefore was to get recognition in invitum of the right of the deity as the owner. It also indicated that in the family of Bapaji Buva there were the hereditary Pujadhikaris or Shebaits of the deity who were number entitled to anything more than reasonable remuneration of their services of the deity. In the year 1907 when the plaintiff was still a minor, his mother made a deposition as a witness. She stated that there were Annachatra and Sadavarat Kulkarni Inams and other Inams, but that they all belonged to the Sansthan, and that there was numberprivate or personal property at all. Even the gardens were described by her as belonging to the deity and number to any individual. The guardian also took the same stand throughout the minority of the plaintiff. Even earlier, in 1899 the father and uncle of the present appellant stated that the village, Savergaon, one of the items of the properties of the Devasthan, was number in the private ownership of any person. It was stated on this occasion as follows Except this Shri Vyankatesh deity numberone else has anyright, interest or ownership with regard to the village and the Sansthan. We both are the managers of the aforesaid Sansthan and we have been looking after all the affairs of the Sansthan and in that companynection we are carrying on the management of the aforesaid village. The statement was made in Suit No. 515 of 1898. Again, in Ex. 700, the written statement by the guardian of the plaintiff, in Civil Suit No. 295 of 1920, it was stated as late as November 5, 1920, as follows It is denied that Damodar Timmayya or any other particular individual owned the Balaji Sansthan at any time in his individual capacity. The temple of Balaji belongs to the Sansthan and several villages are granted to Balaji Sansthan purely for temple purposes by Sanads granted by the British Government and the Defendants family is appointed only the vahiwatdar. The said Damodar Timaya had numberseparate property of his own. To the same effect is the application made by Ramabai, the mother of the present appellant, in Ex. 702. These later documents may number bind the appellant, who was a minor at the time, but as late as December 1, 1927, the appellant himself stated that village in question Savergaon was a Devasthan inam, and was alienated to the deity, Shri Venkatesh, who was the owner. He also referred to the family settlement of 1801, and stated that the other villages were also similarly given to the deity. He observed that in the case of Devasthan inam the idol was the grantee and the real owner, and since the property had to be managed by a human being, the so-called manager therefore managed the villages on behalf of the deity. He claimed only to be the manager of the village for and on behalf of the deity, Shri Balaji, and did number claim any private ownership. At that time, he referred to the Land Alienation Register and produced a certified companyy of the Register to show that Shri Venkatesh was shown as the alienee. Ex. 634 is the genealogy filed by the plaintiff wherein Bhagwant Annaji, uncle of Damodar Timmayya, wrote against the name of Timmayya that he had acquired nine villages, and was the founder of Puja Naivedya, Utsav, Annachhatra and Sadavarat dedicated to Shri Venkatesh. It was stated there that the villages were grants to the deity. Similar are the admissions in the Yadi, Ex. 626 dated December 15, 1886, by the Mamlatdar addressed to Krishnarao Damodar and in a letter, Ex. 199, by the plaintiff himself addressed to Mankarnikabai, wife of Krishnarao Damodar in 1922. In several suits which others filed, the defendant there was described as Shri Venkatesh Balaji Sansthan, Nasik, through manager that is the appellant. He represented as manager the owner, namely, the deity. Lastly, there is the history of this Sansthan published by the appellant himself and written from original documents supplied by him. This was in 1931. The appellant in his deposition admitted that he was intimately companynected with this writing and its publication. This history is Ex. 642. It gives an account of the idol and the temples, and describes how from time to time Peshwas and various Sardars granted villages to the Shri and dedicated them to the deity. The companyclusion alone need be stated, because the document is a long one and the admissions are companytained in numerous places in it. This is what was stated The reader of the present history will have observed that the sansthan belongs to the deity and the members of the house of Timaya Maharaj are merely the managers and administrators of the same The management of it shall number be like that of a private property. As a result of the Faisalnamas of the Inam Commission which are to be found in Exs. 135 to 144, 634 and 644, the record of rights showed the deity as the owner and the jagirs and inams as Devasthan. Learned companynsel for the appellant companytends that these admissions do numberprove anything more than this that the entire establishment of Balaji Mandir was described as a Sansthan and the ownership thereof was in the members of the family. We cannot accept this companytention, which runs companynter to the plain tenor of those documents. In these documents, the ownership of the family over the temple, the deity and the properties of the deity is number only number admitted but is denied. On the other hand, the assertion always has been that the members of the family were merely the servants of the deity getting remuneration for their services and that the ownership vested in the deity and numbere other. In view of these admissions, the question of burden of proof, as we have already pointed out, is really academic, and if any burden lay upon any party, it was upon the appellant to displace by companyent and companyvincing evidence that these admissions were erroneous and need number be accepted in proof. These admissions are two-fold they companycern the nature of the properties in dispute and the nature of the idol. Added to these are the decisions of the Inam Commissioner in respect of the villages, which were recorded as Devasthan inams at the instance of Damodar, who appealed against the order to record them as personal inams. The value to be attached to the decisions of the Inam Commissioner had companye up for companysideration before the Judicial Committee in a series of cases. It is sufficient to refer to only one of them. In Arunachellam Chetty v. Venkatachellapathi Guru Swamigal 1919 L.R. 46 I.A. 204, the Judicial Committee while dealing with the Inam Register for the year 1864 which had been produced for their inspection, attached the utmost importance to it. It observed It is true that the making of this Register was for the ultimate purpose of determining whether or number the lands were tax-free. But it must number be forgotten that the preparation of this Register was a great act of State, and its preparation and companytents were the subject of much companysideration under elaborately detailed reports and minutes. It is to be remembered that the Inam Commissioners through their officials made enquiry on the spot, heard evidence and examined documents, and with regard to each individual property, the Government was put in possession number only of the companyclusion companye to as to whether the land was tax-free, but of a statement of the history and tenure of the property itself. While their Lordships do number doubt that such a report would number displace actual and authentic evidence in individual cases yet the Board, when such is number available, cannot fail to attach the utmost importance, as part of the history of the property, to the information set forth in the Inam Register. The nature and quantum of the right and interest in the land was thus gathered from the Inam Registers and enquiries, which preceded them. Thus, it was doubly necessary for the appellant to bring before the Court all the documents in which his title was created, recognised or companyfirmed. He has, however, filed only a selection, and has refrained from bringing into evidence all the material in his possession which as late as 1931 was available to him. We have pointed out above that in 1931 he caused a history of the Sansthan to be published, and it refers to numerous documents, which have number found their way into Court. The learned Judges of the High Court also mentioned this fact, and stated that in view of the failure of the appellant to prove companyclusively that a higher title than the one made out before the Inam Commission was a available to him, numberreliance companyld be placed upon such documents as had been exhibited. We have to see whether this statement is companyrect in all the circumstances of this case. The property in the case companysists of eleven villages, cash allowances and other urban properties to which separate reference will be made. All the eleven villages were the subject of an enquiry by the Inam Commission, and the decisions were uniform, except in one case where a technical ground came in the way. We were taken through documents relating to two such villages as indication of the kind of title enjoyed by the appellant. It may be pointed out here that the appellant himself made numberdistinction between one property and another, and stated that all the properties were held by him under an identical title. At the hearing of the appeal, he attempted to show that these properties were granted to him, impressed with service of the deity. But that was number the case he had made out either before the District Court under the Charitable and Religious Trusts Act or in the plaint filed in this case. It is number open to him number to change his plea with regard to his ownership, and the case must be decided only on the companytention that the properties were private. The first batch of documents to which our attention was drawn, companycerns mostly Vihitgaon. It companysists of Exs. 200 to 206. The first four are letters written to Mukadams, Kamavisdars and Mamlatdars to companytinue the Mokasa, Sahotra or Inam to Timayya, to whom the village was given as Madade-Mnash. The earliest of them is of 1714 and the last is of 1755. Exs. 204 and 206, however, mention even earlier sanads and the latter particularly mentions the original grant of the ruler, Mahomed Shah, under his own seal. Those sanads, however, have number been produced, as also some of the sanads of the Peshwas, which were mentioned by the Inam Commission in Ex. 135. None of these documents shows the terms on which the original grant was made, and in view of the meagreness of this evidence and its inconclusive nature, the High Court was justified in accepting the finding of the Inam Commission that the grant was to the Devasthan and companystituted a Devasthan Inam. The next village of which the documents were shown to us is Belatgaon. Here too, the documents are of later dates, the original grant number being produced. In companynection with this village also, the Inam Commission held that the village was a Devasthan inam, and the documents produced in this case do number show anything to the companytrary. These documents are merely letters and so-called sanads and direct the Mukadams, etc., to pay a share of the revenue to Timayya. Learned companynsel for the appellant stated that the documents in respect of the other villages were also of similar character. On an examination, we have found them to be so. In all the orders made by the Inam Commission in respect of each and every village, there is a reference to other sanads of earlier dates, which have number been produced before us. The respondents had, in the Court of First Instance, served a numberice upon the appellant to produce all the sanads admittedly in his possession and mentioned in Ex. 642, but the appellant avoided doing so by pretending that the demand was vague. In this view of the matter, it cannot be said that there has been a misconstruction of any documents. On the other hand, the judgments in the two Courts below have proceeded on the ground that the appellant having an opportunity to prove his case against the findings of the Inam Commission and the admissions made from time to time, had suppressed the original documents companyferring villages upon him as he alleged, and had produced letters and so-called sanads of later dates, which were numbermore than mere pay-orders to companytinue the privilege which had been granted by the rulers in the earlier documents. We do number therefore find any misconstruction of the documents such as have been produced, and we hold that the admissions and the revenue records remain uncontradicted. This brings us to the cash allowances, which were granted from the villages to the predecessors-in-title of the appellant. These documents number a few hundreds. They too are merely letters written from time to time to the Mukadams, Kamavisdars and Mamlatdars to pay the arrears of annuities, Varshashan, Aivaj to Haribakthi Parayana Rajeshri Timayya Gosavi. In almost all the documents, there is a reference that the original sanads had been filed, but the original sanads have number been produced. The respondents, on the other hand, produced some of these documents to show that the original grant was to the Devasthan and that in some of them, there is specific mention that it was for the expenses of Shri. These are Exs. 228, 229, 639, 230, 231 and 233. The respondents companynect these documents with the history of Shri Venkatesh Balaji Sansthan Ex. 642 to show that similar documents exist with regard to the grant of all the villages and the cash allowances but have number been produced. The appellant also admitted in Ex. 151 that his ancestors had received these grants in order to do Puja Archa, Sadavarat, etc., of the deity. The two Courts below have from these circumstances drawn the companyclusion that the grant cannot be companysidered as personal but must be regarded as one made in favour of the deity or the Sansthan. It is for this reason also that the appellant stated that all the properties including the temple and the idol go in the name of Sansthan, and that this word was used companypendiously to describe the properties and the Vahiwatdar. In our opinion, the appellant was companyscious of the weakness of his case, because the grants to Sansthan or to the Shri companyld number be regarded as grants to an individual, and he therefore included himself and the deity in the expression Sansthan, so as to be able to show that the grants to the Sansthan were grants to him as much as to the deity. The appellant, however, companytended that this case was companyered by the decision of the Privy Council in Babu Bhagwan Din v. Gir Har Saroop 1939 L.R. 67 I.A. 1. That case was entirely different. There, the grant which was a single one, was made to an individual and his heirs in perpetuity from generation to generation, and there was numberevidence otherwise. The Judicial Committee interpreted the grant in favour of the individual, and stated that it was made to one Daryao Gir and his heirs in perpetuity. It observed Had it been intended as an endowment for an idol it would have been very differently expressed the reference to the grantees heirs, and the Arabic terminology naslan bada naslin was batnam bada batnin descendant after descendant and generation after generation are number reconcilable with the view that the grantor was in effect making a wakf for a Hindu religious purpose, even if it be assumed that this is number otherwise an untenable hypothesis. Though, in that case, the origin of the idol was number companypletely traced, the grant itself disclosed the existence of a sanyasi, with an idol in a mud hut, to whom and number to the little temple the grant, in effect, was made. The history of this deity is well-known, and it shows the manner in which the grants were made from time to time. To apply that case to the facts here is impossible. In our opinion, the principle to apply to this case is the one stated by the Privy Council in Srinivasa Chariar v. Evalappa Mudaliar 1922 L.R. 49 I.A. 237. It was there observed Their Lordships must dissent entirely from the view that where the discoverable origins of property show it to be trust property the onus of establishing that it must have illegitimately companye into the trustees own right rests upon the beneficiaries. Upon the companytrary, the onus is heavily upon the trustee to show by the clearest end most unimpeachable evidence the legitimacy of his personal acquisition. The appellant next argued that those properties in respect of which the High Court felt disposed to giving a finding that they were private, should at least be declared as private properties. He also made an application in this Court for joining the deity as a party to the appeal, and requested that this Court should send down an issue for a finding by the Court of First Instance in the presence of the deity, whether these properties were private. We shall deal with these matters a little later, because it is necessary at this stage to decide whether the public have any right of worship in the temple. Both the Courts below have agreed that the deity and the temple were public. The High Court companyrectly pointed out that the matter has to be judged in accordance with the dictum of Varadachariar, J., in Narayanan v. Hindu Religious Endowments Board In that case which arose under s. 9 of the Hindu Religious Endowments Act, the definition of a temple meant a place used as a place of public religious worship and dedicated to, or for the benefit of, or used as of right by the Hindu companymunity, or any section thereof as a place of religious worship. The learned Judge observed as follows The question of intention to dedicate the place for the use of the public or of the user by the public being as of right is necessarily a matter for inference from the nature of the institution and the nature of the user and the way the institution has been administered . . . once a long companyrse of user by the public for the purpose of worship is established, and the fact of a separate endowment in trust for the deity is also proved, it is fair to infer that the institution must have been dedicated for user by the public unless the companytrary is established - particularly when the character of the temple, its companystruction, the arrangement of the various parts of the temple and the nature of the deities installed there are similar to what obtains in admittedly public temples. Similarly, when user by the public generally to the extent to which there is a worshipping public in the locality is established, it is number unreasonable to presume that the user by the public was as of right, unless there are circumstances clearly suggesting that the user must have been permissive or that the authorities in charge of the temple have exercised such arbitrary power of exclusion that it can only be ascribed to the private character of the institution. The two Courts below reached the companyclusion that the public had a right in the temple and the idol from a number of companysiderations. Shortly, they are as follows The building of the temple is public in character inasmuch as the staircase leads straight to the idol, and the public are admitted throughout the day between 7 a.m. and 10 p.m. There is numberevidence to show that the public or any member of it were ever excluded from the worship. There is only one instance when a member of the family was excluded, bud that was because he had used abusive language towards the mother of the present appellant. Indeed, the public are invited to worship the deity, and numbergift is ever refused. The merchants of the locality keep a separate khata in the name of the deity, in which they set apart a portion of their earnings as kangi, which is paid regularly to the temple. The extent of the ceremonies performed at the temple also indicates the existence of a deilty in which the public are interested rather than a family deity. There are celebrations, Utsavs etc., and daily a large number of Brahmans and others are fed and at the time of the festivals all the visitors are also fed. The deity also goes out on such occasions in processions through a marked route, and there are ten carriages in which it rides for ten days. These festivals are celebrated with great eclat, and the public number only of Nasik but of other parts of the companyntry freely join in them. Even the daily routine of the deity is of a form uncommon in the case of family deities. The appellant himself admitted that the idol was being worshipped with Rajopchar. It may be mentioned that for playing music or performing the services, the deity has companyferred hereditary inams upon those who attend to them. There is also a companylection box placed at the temple where the public, who are so minded, are invited to place their offerings. No doubt, the Privy Council in Babu Bhagwan Din v. Gir Har Saroop 1939 L.R. 67 I.A. 1, stated that the mere fact that offerings were accepted from the public might number be a safe foundation on which to build an inference that the deity was public. Still, the extent to which the offerings and the gifts go, may be a fair indication number merely of the popularity of the deity but of the extent of the public right in it. As has been pointed out above, the Judicial Committee was dealing with a single grant which was made to the Mahant in perpetuity, and the temple itself was a mud hut. Here, the temple companyers several acres of land, and has a vast structure. There is a Sabha Mandap, which accommodates 600 persons. It is inconceivable that such a big temple was built only for the use of the family. It indicates that there was an invitation to the public to use it as of right, and user and companytinuous user for 200 years, without let or hindrance, by the public has been proved in the case beyond doubt. It is also unusual for Rulers to make grants to a family idol. The fact that many Rulers have made grants of land and cash allowances to the deity for seva, puja etc., is itself indicative of the public nature of the trust. We think that the extensiveness of the temple and of grants to it are pertinent circumstances to be taken into account in judging the nature and extent of the public right. It may be remembered that in the documents to which we have referred in an earlier portion of this judgment, there is reference to special endowments for festivals. These endowments would number be made if the deity was a family deity. In the Gazetteer dealing with Nasik District, there is a full description of the temple and the deity. Extracts from it have been quoted by the two Courts below, and they show that the temple is a public one. Indeed, the history of the deity written at the instance of the appellant himself Ex. 642 indicates the public right in the deity. As against these, the appellant companytended that there were other circumstances which indicated that the deity was a family deity. He examined Dr. Kurtkote, who gave some reasons for an opinion that the temple was number a public one but a mere Deva-ghar. He stated that the idol of Balaji did number appear to have been firmly installed, that it was installed on an upper floor, that householders resided in the temple and that daily worship was suspended when there was a birth or death in the family, and last of all, he stated that the deity being movable, must be regard as a family deity. It may be pointed out here that the deity is sometimes invited to private residences at the time of festivals, for dinner. This circumstance was also pleaded as indicating that the temple is private and the deity a family deity. We shall number briefly examine these reasons to see whether they outweigh the evidence of the public character of the deity, which we have analysed above. We begin with a very small point which was made that the temple of Balaji at Nasik has numberdome or Kalas. This is an admitted fact, but Vasudev P.W. 12 admitted that there was numberdome or Kalas at Balaji temple at Devalgaon Raja, which is a public temple. So also other temples mentioned in the case. It seems that numberhing really turns upon the existence of a dome or Kalas, and numberauthority has been cited before us to show that it is a companyclusive circumstance in deciding that the temple is public. It must be remembered that this idol was found in a river and did number need companysecration ceremonies, which are necessary for a new idol, which is set up in a new temple. It was first placed inside the house of Bapaji Buva at Junnar, and was removed from that place as a result of instructions vouchsafed by the deity itself to Bapaji Buvas successor. It was then installed at Nasik, where a big temple has grown. No doubt, in some portions of this building the family of the Pujadhikaris reside without any objection from any person. The extensiveness of the building makes it impossible to think that they are residing within the temple, or that the Thakurbari is within their private residence. Indeed, the description of the temple as given in the Gazetteer clearly shows that the temple in quite distinct from the residential quarters, and that also is the evidence of the appellant himself. With regard to the installation of the idol on the first floor, we have already mentioned that the staircase from the ground leads direct to the sanctum. It was, however, admitted by Dr. Kurtkote that the deity at Bindu Madhav temple at Benares in also installed on the upper storey, though he explained that beneath the idol there is a solid stone pedestal, which runs right from the ground to the first floor. No question was put to him as to whether the deities there, were firmly installed or moveable. He, however, admitted that the text of Prathista Mayukha did number mention that the idol should number be installed on an upper storey. In our opinion, in the absence of any text prohibiting the installation of the deity on an upper floor, we cannot draw any inference that the temple is private. The real ground on which the claim has been made that the deity is a family deity is that it is capable of being moved from one place to another, and, in fact, is so moved. Evidence was led to show that in the early history of this temple the Pujadhikaris took the deity on visits to the various ruling chiefs. Documents have been filed to show how arrangements were made for the journey of the deity and instructions issued to all companycerned to give all facilities for it. It is also in evidence - and is indeed admitted - that when the deity is invited on festive occasions to private residences, a substitute idol is also left at the main temple for the public to worship. Further, all these removals are temporary, and the deity is brought back and installed in its abode afterwards. The deity at the Jaganath temple at Puri is also shifted for periodic processions, and is brought back to its place. Dr. Kurtkote stated that the installation of an idol can be either in a movable form chala or stationary form sthira , and that it is so mentioned in the Prathista Mayukha. He also admitted that it companyld number be said that the idol was number installed because it companyld be moved from one place to another. No other authority was cited before us at the hearing as to whether an idol cannot at all be moved from the place where it is installed, even though it may be installed in a movable form chala . There are, however, cases in which this matter has companye up for companysideration before the Courts. In Ram Soondur Thakoor v. Taruck Chunder Turkoruttun 1873 19 Weekly Reporter 28, there was a destruction of the temple by the erosion of the river on the banks of which the idol was installed. The suit was filed by the plaintiffs for a declaration of their right to remove the idol to their own house and to keep it there for the period of their turn of worship. This claim was decreed. On appeal, Dwarknath Mitter and Ainslie, JJ., interfered only to the extent that the lower Court ought to have defined the precise period for which the plaintiffs were entitled to worship the idol before it companyld make the declaratory decree, which it had passed in their favour. They also directed that if it was found by the lower appellate Court that the plaintiffs and the defendants were jointly entitled to worship the idol during any part of the period mentioned by the plaintiffs, the lower appellate Court should number allow the plaintiffs to remove the idol to their own house at Khatra for that portion of time. It appears from the judgment that though the plaintiffs were allowed to remove the idol to their own house, they were to re-convey it at their own expense to the place where it was at the time of the institution of the suit. The learned Judges, however, qualified their judgment by saying that it was number companytended in the case before then that the idol was number removable according to the Hindu Shastras. In Hari Raghunath v. Anantji Bhikaji 1920 I.L.R. 44 Bom. 466, the temple was a public one. It was held by the High Court that under Hindu law, the manager of a public temple has numberright to remove the image from the old temple and instal it in another new building, especially when the removal is objected to by a majority of the worshippers. It is interesting to numbere that in this case Dr. P. V. Kane appeared, and in the companyrse of his argument, he stated as follows According to the Pratishtha-Mayukha of Nilkantha and other ancient works an image is to be removed permanently only in case of unavoidable necessity, such as where the current of a river carries away the image. Here the image is intact. It is only the temple that is dilapidated. For repairing it, the image need number necessarily be removed. Even if it may be necessary to remove the image, that will be only temporarily. The manager has under Hindu law numberpower to effect permanent removal of an image in the teeth of opposition from a large number of the worshippers. In the instances cited by the appellant, worshippers had companysented to the removal. Permanent removal of an image without unavoidable necessity is against Hindu sentiment. Italics supplied Shah, J. 45. observed as follows It is number disputed that the existing building is in a ruinous companydition and that it may be that for the purpose of effecting the necessary repairs the image may have to be temporarily removed. Still the question is whether the defendant as manager is entitled to remove the image with a view to its installation in another building which is near the existing building. Taking the most liberal view of the powers of the manager, I do number think that as the manager of a public temple he can do what he claims the power to do, viz., to remove the image from its present position and to instal it in the new building. The image is companysecrated in its present position for a number of years and there is the existing temple. To remove the image from that temple and to instal it in another building would be practically putting a new temple in place of the existing temple. Whatever may be the occasions on which the installation of a new image as a substitute for the old may be allowable according to the Hindu law, it is number shown on behalf of the defendant that the ruinous companydition of the existing building is a ground for practically removing the image from its present place to a new place permanently. We are number companycerned in this suit with the question of the temporary removal which may be necessary when the existing building is repaired. The case is an authority for the proposition that the idol cannot be removed permanently to another place, because that would be tantamount to establishing a new temple. However, if the public agreed to a temporary removal, it companyld be done for a valid reason. In Pramatha Nath Mullick v. Pradyumna Kumar Mullick 1925 L.R. 52 I.A. 245, the deed of trust created an injunction against the removal of the deity. The following quotation from that deed of trust shows the powers of the manager Shall be for ever held by the said Jadulal Mullick, his heirs, executors, administrators and representatives to and for the use of the said Thakur Radha Shamsunderji to the intent that the said Thakur may be located and worshipped in the said premises and to and for numberother use or intent whatsoever provided always that if at any time hereafter it shall appear expedient to the said Jadulal Mullick, his heirs, executors, administrators or representatives so to do it shall be lawful for him or them upon his or their providing and dedicating for the location and worship of the said Thakur another suitable Thakur Bari of the same or greater value than the premises hereby dedicated to revoke the trusts hereinbefore companytained and it is hereby declared that unless and until another Thakur Bari is provided and dedicated as aforesaid the said Thakur shall number on any account be removed from the said premises and in the event of another Thakur Bari being provided and dedicated as aforesaid the said Thakur shall be located therein, but shall number similarly be removed therefrom on any account whatsoever. The Privy Council analysed this provision, and stated that the last companydition made the idol immovable, except upon providing for the dedicatee another Thakur Bari of the same or larger value. It observed The true view of this is that the will of the idol in regard to location must be respected. If, in the companyrse of a proper and unassailable administration of the worship of the idol by the Shebait, it be thought that a family idol should change its location, the will of the idol itself, expressed through his guardian, must be given effect to. Their Lordships ordered the appointment of a disinterested next friend, who was to companymune with the deity and decide what companyrse should be adopted, and later the instructions of the deity vouchsafed to that representative were carried out. In this case, there was a family deity and there was a provision for removing the idol to another better and more suitable Thakur Bari, if it appeared necessary. The wishes of the deity were companysidered and companysulted. The case, however, is number quite clear as to whether in all circumstances the idol can be removed from one place to another. The last case on the subject is Venkatachala v. Sambasiva A.I.R. 1927 Mad. 465 52 M.L.J. 288. The headnote quite clearly gives the decision, and may be quoted here Where all the worshippers of a temple, who are in management of it, decide to build a new temple, the old one being in ruins and the site on which it stood becoming insanitary and inconvenient for worshippers, then, unless there is clear prohibition against their demolishing the old temple and building a new temple, the Court is number entitled to prevent the whole body from removing the temple with its image to a new site in the circumstances. Devadoss, J., quoted passages from Kamika Agama, and referred to Prathista Mayukha by Nilakanta, Purva Karana Agamam and Nirnaya Sindhu. He, however, relied upon certain passages from Purva Thanthiram by Brighu, Kamika Agama, Siddhanta Sekhara and Hayasirsha Pancharatra, and came to the above companyclusion. The effect of the decision is that the whole body of worshippers, if they are of one mind, can even permanently remove an idol to another habitation. In the present case, the idol was number permanently removed except once when it was taken away from Junnar and installed at Nasik. As we have already pointed out, that was at the behest of the deity itself. Afterwards, the deity which is installed in a removable form chala has been temporarily removed for purposes of processions, invitations to dinner and visits to other parts of India, so that worshippers may have a chance of making their devotion. This has companytinued for over 250 years, and has number been objected to at any time. Indeed, a huge companycourse of worshippers always followed and follows the deity every time it is taken out temporarily for the purpose of affording the votaries chances of worship at close quarters. This appears to be a custom which has received recognition by antiquity and by the companysent of the worshipping public. It may be numbered that the deity is brought back to the old site after its temporary sojourn at other places, and that further during the absence of the deity, a substitute idol is placed, so that the dedicatee is never out of possession of the temple. In view of these circumstances and the cases to which we have referred, and in view, further, of the fact that numbertext or authority was cited against such companyrse of companyduct with the companysent of the worshipping public, we do number see any reason for holding that the temple was private and the deity, a family idol. The appellant raised a special argument in respect of certain properties,which, he stated, were private. He relied upon the observations of the learned Judges of the High Court that they were inclined to hold that these properties were private but refrained from giving a declaration in view of the fact that the deity had number been joined. These properties are jat inams, recently built properties, namely, the Balaji temple and the Shree Theatre, and an allowance which goes in the name of Kulkarni companymutation amounting to Rs. 24 per year. The difficulty in the way of the appellant is real. He refrained from joining the deity, if number as a necessary, at least as a proper party to the suit. If he had joined the deity and the deity was represented by a disinterested guardian, necessary pleas against his companytention companyld have been raised by the guardian, and it is likely that some evidence would also have been given. The appellant seeks to companyer up his default by saying that the suit was one under O. 1, r. 8 of the Code of Civil Procedure, and that the Hindu public was joined and the deity was adequately represented. In a suit of this character, it is incumbent to have all necessary parties, so that the declaration may be effective and binding. It is obvious enough that a declaration given against the interests of the deity will number bind the deity, even though the Hindu Community as such may be bound. The appellant would have avoided circuity of action, if he had acceded to the very proper request of the respondents to bring on record the deity as a party. He stoutly opposed such a move, but at a very late stage in this Court he has made an application that the deity be joined. It is too late number to follow the companyrse adopted by the Privy Council in Pramatha Nath Mullick v. Pradyumna Kumar Mullick 1925 L.R. 52 I.A. 245 and Kanhaiya Lal v. Hamid Ali 1933 L.R. 66 I.A. 263, in view of the attitude adopted by the appellant himself and the warning which the trial Judge had issued to him in his order. There is yet another reason why the case cannot be re-opened, because the appellant himself did number choose to make any distinction between one property and another as regards the claim of his ownership. He stated that each item of property was acquired and owned in the same manner as another. Arguments were addressed with regard to the Balaji Mandir, which is situated on S. Nos. 1353 and 1354. This land was granted to one of the appellants predecessors by Ex. 571 by the Peshwa. At that time 3 bighas of land were given to Bapaji Buva, son of Timayya, because he was a worthy and respectful Brahman, for the express purpose of building a temple. No doubt, in Exs. 878 and 153 the name of the Vahiwatdar has been mentioned, and the latter is a sanad of the Governor of Bombay companyfirming the grant free from land revenue. The original grant was obviously made number to the Brahman companycerned but for the express purpose of building a temple upon the land. We have already held that the public have a right in the deity and the temple is also public and that, therefore, the grant must be regarded also as part of the property of the deity. It is significant that after the temple was built with borrowings from others a sum of numberless than Rs. one lakh was paid the Peshwas and other Rulers to satisfy them. The finding of the learned Judges of the High Court companyld number therefore given in the absence of the deity, and we think that we should only say that in view of the case as pleaded, the declaration should have been refused without any companyments adverse to the deity. A Court should number, in a case which goes by the board on a cardinal point, decide matters which cannot arise in it but may be pertinent in another case between different parties. We are, however, clear that numberdeclaration can number be granted in respect of this property. The next property which was specially mentioned for our companysideration is the Shree Theatre, in which the appellant claims to hold a third share. Here also, the extracts from the property register have been filed, and the appellant has drawn our attention to Ex. 290, which is a deed of purchase and Ex. 691, the permission by the Municipality to build upon the land. It was necessary for the appellant to show that this Theatre was built from monies derived from a private source and number from the income of the Devasthan. He has number furnished satisfactory evidence, and in describing the source of money he referred to the sale of one property, the price whereof according to him was utilised for the Theatre. It, however, appears from the record of the case that with that money Balaji Vihar was purchased, and the case made before us was that it was the sale proceeds of Balaji Vihar which were used to build the Theatre. If that be so, then the evidence to companynect the Theatre with Balaji Vihar ought to have been tendered and a plea to that effect taken. We cannot accept the argument in lieu of plea and evidence, and we think that the appellant has neglected to bring the necessary evidence to reach a finding, This matter also suffers from the same defects, namely, the failure to join the deity as a party and also number making a distinction between one kind of property and another. Here too, the High Court should number have expressed any opinion adverse to the deity, without the deity being party. The same has to be said of items 3 to 10 in the first part of Sch. A annexed to the plaint and three survey numbers of Belatgavan, Deolali and other jat inams. No useful purpose will be served in examining in detail the evidence relating to these properties in the absence of the deity. It may also be pointed out that the appellant maintained numberseparate accounts for these properties, and made numberdistinction between them and the other properties to which we have referred earlier. A trustee must number mix private property with trust property, because if he does so, he undertakes a heavy burden of proving that any particular property is his, as distinct from the trust. See Lewin on Trusts, 16th Edn., p. 225. To the same effect re the observations in Srinivasa Chariar v. Evalappa Mudaliar 1922 L.R. 49 I.A. 237. The result is that the declaration which the appellant sought in his suit that the temple, the deity and plaint properties were all of private ownership, was rightly refused by the Courts below. The trial Judge give a declaration that defendants 1 to 4 are entitled to customary worship and maintenance. Strictly speaking, such a finding was number necessary in a case of this character, and other matters companycerning rights of individuals should number have been gone into in a suit filed under s. 5 3 of the Act. The appellant is partly to blame. He set up a case of private ownership with all rights centerd in himself, and defendants 1 to 4 therefore number only raised the plea that the appellant was a mere manager but also asserted their rights in the property. We think that the Courts below might have refrained from pronouncing upon the rights of the defendants, because all that they had to do was to decide whether the property was trust of a public nature. We, however, do number wish to give any direction in the matter, because the suit, as a whole, as laid by the plaintiff has been dismissed, and to make any observations might lead to further litigation, which is number in the interests of the deity. Respondents 6 and 7 raised before us the question of companyts. They stated that the trial Judge had given two sets of companyts, which was changed to one set by the High Court. These respondents should have cross-objected on this point against the judgment of the High Court, and in the absence of any such cross-objection, numberrelief can be granted to them. For the same reason, numberrelief can be given to respondent 7, in respect of whom the finding that he had numberright of performing the seva and getting emoluments attached to that right, as respondents 1 to 4, has number been vacated, as was done in the case of respondent 6. In view of our observations that these matters were alien to the suit which had been filed, we do number propose to deal with them. In the result, the appeal is dismissed. The appellant will personally pay the companyts of Respondent 1.

Case appeal was rejected by the Supreme Court

Sarkar, J. This appeal arises out of an application made under the Trade Marks Act, 1940, hereinafter called the Act, for registration of a trade mark. The application was made by the respondent and it was opposed by the appellant. The respondent is a manufacturer of biscuits. On November 5, 1949, it made the application for registration of the mark Gluvita in respect of the goods specified in class 30, which mark, it appeared later, it had number used prior to that date. The Registrar ordered the application to be advertised before acceptance on the respondents agreeing to limit the registration to biscuits only which were one of the classes of goods specified in class 30. The appellant is a companyporation organised under the laws of the State of New Jersey in the United States. On August 31, 1942, it had registered the mark Glucovita under the Act in class 30 in respect of Dextrose d-Glucose powder mixed with vitamins , a substance used as food or as an ingredient in food glucose for food. On the same date the appellant had also registered the same trade mark in class 5 in respect of Infants and invalids foods. The appellant opposed the respondents application companytending that it should be refused under ss. 8 a and 10 1 of the Act to which opposition the respondent duly filed a companynter statement. Both sides filed affidavits in support of their respective cases. The Deputy Registrar held that Section 12 as for biscuits included in class 30 were number goods of the same description as glucose powder mixed with vitamins which was in the same class. He further held that the words Glucovita and Gluvita were number visually or phonetically similar and that there was numberreasonable likelihood of any deception being caused by or any companyfusion arising from, the use of the respondents proposed mark. In regard to s. 8 a , he held applying the cases of In re an application by Smith Hayden Coy. Ld. 1945 63 R.P.C. 97, that the syllable companywhich was absent in the respondents proposed mark sufficiently distinguished the two marks and made it impossible for any one to be deceived or companyfused. One of the findings made by the Deputy Registrar was that the appellant had acquired a reputation and goodwill for its trade mark Glucovita in respect of glucose powder mixed with vitamins. The appellant then preferred an appeal to the High Court at Bombay from the order of the Deputy Registrar. That appeal was heard by Desai, J., exercising the original jurisdiction of that Court. It was number seriously pressed before him on behalf of the appellant that the goods were of the same description and he himself also came to the companyclusion that they were number so. He, therefore, held that the registration companyld number be refused under s. 10 1 of the Act. Desai, J., agreed with the Deputy Registrars finding that the appellant had acquired a reputation among the public for the mark Glucovita in respect of glucose powder mixed with vitamins. He however disagreed with the view of the Deputy Registrar that the respondents mark was number likely to cause deception or companyfusion. He held that the two marks were sufficiently similar so as to be reasonable likely to cause deception and companyfusion. He, therefore, set aside the order of the Deputy Registrar and held that the respondents mark companyld number be registered in view of s. 8 a . Now the respondent appealed from the judgment of Desai, J. This appeal was heard by Chagla, C.J., and Shah, J., of the same High Court. The learned Judges of the appellate bench took the view that there was numberevidence that the appellants mark had acquired any reputation among the public but that the evidence produced showed that it had acquired a reputation among the trades people only who were discerning and were number likely to be deceived or companyfused. According to them, the public number being aware of the reputation of the appellants trademark were number likely to be deceived or companyfused by the use by the respondent of its proposed trademark. They also held that the evidence established that there were a series of marks in which the prefix or suffix Gluco or Vita occurred and that it companyld number therefore be said that the companymon features Gluco and Vita were only associated with the manufacture of the appellants goods. On both these grounds they held that the proposed mark of the respondent was number likely to companyfuse or deceive any one. In the result, they set aside the order of Desai, J., and restored that of the Deputy Registrar. The appellant has number appealed to this Court from the judgment of the appellate Judges of the High Court. As we have earlier stated, the appellant had opposed the registration of the respondents mark under s. 8 a and also under s. 10 1 . In order that s. 10 1 might apply to the case, the appellant had to establish that its mark had been registered in respect of the same goods or description of goods for which the respondent had made its application for registration. On this question the decisions of the Deputy Registrar and Desai, J., are against the appellant. Before the appellate Judges of the High Court the appellant proceeded on the basis that the goods were number of the same description. Before us also the appellant has adopted the same attitude. That puts s. 10 1 out of the way. We are thus left only with the question whether s. 8 a prevents the registration of the respondents mark. In our judgment the view of the appellate Judges of the High Court that there was numberevidence that the appellants trade mark had acquired a reputation among the public cannot be sustained. In companying to this view, they relied on the affidavits filed by the appellant wherein it was stated that Glucovita is a well-known mark in the trade and denoted only the products of the appellant. We think that the learned appellate Judges put too strict a meaning on the words in the trade in thinking that they referred only to the tradespeople. In our view, these words may refer also to the public. If they do, then of companyrse, that would be evidence that the appellants mark had acquired a reputation among the public. But apart from this, there is other evidence on the record to support the companyclusion that the appellants mark had acquired a reputation among the public. The appellant had in its opposition categorically stated that its mark had acquired a reputation among the Indian buying public. There is numberclear denial of this in the companynter-statement filed by the respondent. There is further ample evidence to show that the appellants goods under its mark Glucovita were sold in very large quantities in small companytainers of one pound and four ounces capacities. The small sizes of the companytainers would indicate that the goods were sold to the public for if those sales had been to tradespeople for industrial purposes, they would have been made in bulk on in much larger companytainers. It appears that the appellant spent companysiderable sums for the advertisement of its mark Glucovita in ordinary popular journals and this would indicate that it had a large sale for its goods among the general public. But the most companyclusive evidence of the sale of the appellants goods under the mark Glucovita to the general public companyes from the affidavits filed by the respondents itself. From the affidavit of K. M. Jamal, a partner in a firm of Pawar and Co., filed by the respondent, it appears that a number of customers companye to buy the products Gluvita and the products Glucovita. Similar statements appear in eight other such affidavits. The evidence provided by these affidavits make it perfectly clear that the appellants mark had acquired a reputation among the general buying public. We think it right in this companynection also to refer to the respondents grounds of appeal against the judgment of Desai, J. In these the respondent does number dispute, and in fact it assumes, that the appellants mark had acquired a reputation among the public. We are, therefore, fully satisfied that the appellant has established that its mark has acquired a reputation among the buying public. In companynection with the question of reputation, the learned appellate Judges seem to have fallen into another curious error. They said A companymodity may acquire reputation by its being made by a particular manufacturer and the companysumers may require number a particular companymodity but the companymodity made by a particular manufacturer. It is only in the latter case that it companyld be said that the companymodity manufactured by a particular manufacturer has acquired a reputation among the public. On those affidavits there is number even a suggestion that the public wanted the Glucovita powder mixed with vitamins manufactured by the respondent and number by anybody else. The respondent referred to by the learned Judge is the appellant before us. We are unable to agree with the view expressed by them. It seems clear to us that what is necessary is that the reputation should attach to the trade mark it should appear that the public associated that trade mark with certain goods. The reputation with which we are companycerned in the present case is the reputation of the trade mark and number that of the maker of the goods bearing that trade mark. A trade mark may acquire a reputation in companynection with the goods in respect of which it is used though a buyer may number know who the manufacturer of the goods is. In our view, therefore, it would be wrong in this case to say that the appellants trade mark had number acquired any reputation among the general public and that hence there is numberreasonable apprehension of their being companyfused or deceived by the use of the respondents proposed mark. The second point on which the learned appellate Judges based themselves in arriving at the companyclusion that there was numberreasonable apprehension of companyfusion or deception was, as we have earlier stated, that there were various trade marks with a prefix or suffix Gluco or Vita and that made it impossible to say that the companymon features Glu and Vita were only associated with the appellants products. This view was founded on a passage which the learned appellate Judges quoted from Kerly on Trademarks, 7th Edn. p. 624. That passage may be summarised thus Where there are a series of marks, registered or unregistered, having a companymon feature or a companymon syllable, if the marks in the series are owned by different persons, this tends to assist the applicant for mark companytaining the companymon feature. This statement of the law in Kerlys book is based on In re an application by Beck, Kollar and companypany England Limited 64 R.P.C. 76. It is clear however from that case, as we shall presently show, that before the applicant can seek to derive assistance for the success of his application from the presence of a number of marks having one or more companymon features which occur in his mark also, he has to prove that those marks had acquired a reputation by user in the market. We will read a portion of the judgment at pp. 82 83 in Beck, Kollar Cos case 64 R.P.C. 76 from which what we have stated earlier, appears I am disposed to agree with Mr. Burrells submission that the series objections is primarily founded upon user, because the inference which the Registrar is asked to draw is that traders and the public have gained such a knowledge of the companymon element or characteristic of the series that when they meet another mark having the same characteristic they will immediately associate the later mark with the series of the marks with which they are already familiar. But I do number think that this statement necessarily implies that the whole issue must be determined solely under the provisions of section 11, as I will number endeavour to explain. When an application for registration is before the Registrar it frequently happens that the search for companyflicting marks reveals several marks having some characteristic feature in companymon with the mark of the application, which marks may stand on the Register in the name of one proprietor only, or in the name of several different proprietors. At this stage, when the matter is one between the applicant and the Registrar, the latter generally has before him numberevidence as to whether the registered marks are in actual use or number, but in forming an opinion under Section 12 as to whether or number companyfusion or deception is likely to arise, he is bound, I think, in the absence of evidence to presume that, prima facie some at least of the registrations have been effected bona fide by persons who at the date of their respective applications were using or proposed in the near future to use their marks. If, therefore, all the marks were owned by one proprietor, the Registrar would presume that the latter was using a series of marks and judge the companyflict between the applicants mark and each of the proprietors marks with this companysideration in mind. Of companyrse, if the registrations merely companysisted of one and the same word registered separately in respect of several articles to be found in a single class of the Trade Marks Schedules, the Registrar would in general regard all these registrations as but the equivalent of a single registration companyering all the items, for they would number companystitute a series as number under discussion. On the other hand, if the registered marks found were owned by several different proprietors, this would be a circumstance which might companysiderably assist the applicant, who would be in a position to submit that the companymon characteristic was one well recognised in marks in use in the particular trade. In short, when the Registrar companyes to companypare the applicants mark with the registered marks, using the principles laid down in the Pionotist case the presence of marks on the Register other than the one with which the companyparison is being made is regarded an one of the surrounding circumstances which he is required to take into account. But when the same question companyes before the Registrar in opposition proceedings, it appears to me that he is numberlonger in a position to make any presumption as regards the surrounding circumstances, but that before he can draw the suggested inference based upon the user of other marks either in the applicants or the opponents favour, any such user must be established by evidence see, e.g. Harrods Ld.Application, 52 R.P.C., p. 70, 1. 39-p. 71, 1. 15, where the Registrar refused to draw the necessary inference in favour of the applicants in the proceedings . We have numberreason to think that Kerly in stating the law on the subject intended to depart from the principle stated in the passage that we have just number read, from Beck, Kollar Cos case. We may also refer to In re Harrods application 52 R.P.C. 65, mentioned in the quotation from Beck, Kollar Cos case 64 R.P.C. 76, set out in the preceding paragraph. It was there said at p. 70, Now it is a well recognised principle, that has to be taken into account in companysidering the possibility of companyfusion arising between any two trademarks, that, where those two marks companytain a companymon element which is also companytained in a number of other marks in use in the same market such a companymon occurrence in the market tends to cause purchasers to pay more attention to the other features of the respective marks and to distinguish between them by those features. This principle clearly requires that the marks companyprising the companymon element shall be in fairly extensive use and, as I have mentioned, in use in the market in which the marks under companysideration are being or will be used. The series of marks companytaining the companymon element or elements therefore only assist the applicant when those marks are in extensive use in the market. The onus of proving such user is of companyrse on the applicant, who wants to rely on those marks. Now in the present case the applicant, the respondent before us, led numberevidence as to the user of marks with the companymon element. What had happened was that Deputy Registrar looked into his register and found there a large number of marks which had either Gluco or Vita as prefix or suffix in it. Now of companyrse the presence of a mark in the register does number prove its user all. It is possible that the mark may have been registered but number used. It is number permissible to draw any inference as to their user from the presence of the marks on the register. If any authority on this question is companysidered necessary, reference may be made to Kerly p. 507 and Willesden Varnish Co. Ltd. v. Young Marten Ltd. 39 R.P.C. 285 p. 289. It also appears that the appellant itself stated in one of the affidavits used on its behalf that there were biscuits in the market bearing the marks Glucose Biscuits, Gluco biscuits and Glucoa Lactine biscuits. But these marks do number help the respondent in the present case. They are ordinary dictionary words in which numberone has any right. They are really number marks with a companymon element or elements. We, therefore, think that the learned appellate Judges were in error in deciding in favour of the respondent basing themselves on the series marks, having Gluco or Vita as a prefix or a suffix. We have already said that in our view the mark Glucovita has acquired a reputation among the general buying public. The first question that then arises is whether the marks Glucovita and Gluvita are so similar as to be likely to cause companyfusion to the buying public or deceive them. On this matter, we have number the advantage of the view of the learned appellate Judges of the High Court. They did number express any view on this aspect of the question at all. We are however inclined to think that their answer to the question would have been in the affirmative. However that may be, the Deputy Registrar felt that the words were number so similar as to be likely to give rise to companyfusion or to cause deception. He felt that the syllable companyin the appellants mark was an emphatic characteristic and was number likely to be slurred over. He apparently felt that this syllable would prevent any companyfusion arising between the two marks or any person being deceived by the use of them both. He thought that the test down in what is called the Ovax case In re an application by Smith Hayden and Co. Ltd. 63 R.P.C. 97, should be applied and that the emphatic characteristic of the second syllable in the mark Glucovita should decide that there was numberlikelihood of companyfusion arising. Desai, J., thought that the Deputy Registrar was wrong. We think that the view taken by Desai, J., is right. It is well known that the question whether the two marks are likely to give rise to companyfusion or number is a question of first impression. It is for the companyrt to decide that question. English cases proceeding on the English way of pronouncing an English word by Englishmen, which it may be stated is number always the same, may number be of much assistance in our companyntry in deciding questions of phonetic similarity. It cannot be overlooked that the word is an English word which to the mass of the Indian people is a foreign word. It is well recognised that in deciding a question of similarity between two marks, the marks have to be companysidered as a whole. So companysidered, we are inclined to agree with Desai, J., that the marks with which this case is companycerned are similar. Apart from the syllable companyin the appellants mark, the two marks are identical. That syllable is number in our opinion such as would enable the buyers in our companyntry to distinguish the one mark from the other. We also agree with Desai, J., that the idea of the two marks is the same. The marks companyvey the ideas of glucose and life giving properties of vitamins. The Aquamatic case Harry Reynolds v. Laffeatys Ld. 1958 R.P.C. 387, is a recent case where the test of the companymonness of the idea between two marks was applied in deciding the question of similarity between them. Again, in deciding the question of similarity between the two marks we have to approach it from the point of view of a man of average intelligence and of imperfect recollection. To such a man the overall structural and phonetic similarity and the similarity of the idea in the two marks is reasonable likely to cause a companyfusion between them. It was then said that the goods were number of the same description and that therefore in spite of the similarity of the two marks there would be numberrisk of companyfusion or deception. We are unable to accept this companytention. It is true that we have to proceed on the basis that the goods are number of the same description for the purposes of s. 10 1 of the Act. But there is evidence that glucose is used in the manufacture of biscuits. That would establish a trade companynection between the two companymodities, namely, glucose manufactured by the appellant and the biscuits produced by the respondent. An average purchaser would therefore be likely to think that the respondents Gluvita biscuits were made with the appellants Glucovita glucose. This was the kind of trade companynection between different goods which in the Black Magic case In re an application by Edward Hack 58 R.P.C. 91 , was taken into companysideration in arriving at the companyclusion that there was likelihood of companyfusion or deception. The goods in this case were chocolates and laxatives and it was proved that laxatives were often made with chocolate companytings. We may also refer to the Panda case In re an application by Ladislas Jellinek 63 R.P.C. 59 . The goods there companycerned were shoes and shoe polishes. It was observed that shoe polishes being used for shoes, there was trade companynection between them and that this might lead to companyfusion or deception though the goods were different. The application for registration was however refused under that section of the English Act which companyresponds to s. 8 of our Act on the ground that the opponents, the manufacturers of shoes, had number established a reputation for their trademark among the public. It is true that in both the above-mentioned cases the two companypeting trade marks were absolutely identical which is number the case here. But that in our opinion makes numberdifference. The absolute indentity of the two companypeting marks or their close resemblance is only one of the tests for determing the question of likelihood of deception or companyfusion. Trade companynection between different goods is another such test. Ex hypothesi, this latter test applies only when the goods are different. These tests are independent tests. There is numberreason why the test of trade companynection between different goods should number apply where the companypeting marks closely resemble each other just as much as it applies, as held in the Black Magic and Panda cases, where the companypeting marks were identical. Whether by applying these tests in a particular case the companyclusion that there is likelihood of deception or companyfusion should be arrived at would depend on all the facts of the case. It is then said that biscuits companytaining glucose are manufactured with liquid glucose whereas the appellants mark only companycerns powder glucose. We will assume that only liquid glucose is used in the manufacture of biscuits with glucose. But there is numberhing to show that an average buyer knows with what kind of glucose, biscuits companytaining glucose are or can be made. That there is trade companynection between glucose and biscuits and a likelihood of companyfusion or deception arising therefrom would appear from the fact stated by the appellant that it received from a tradesman an enquiry for biscuits manufactured by it under its mark Glucovita. The tradesman making the enquiry apparently thought that the manufacturer of Glucovita glucose was likely to manufacture biscuits with glucose he did number worry whether biscuits were made with powder or liquid glucose. Then again it is stated in one of the affidavits filed by the appellant that the respondents director told the appellants manager that the respondent had adopted the name Gluvita to indicate that in the manufacture of its biscuits glucose was used. Those statements of behalf of the appellant are number denied by the respondent. So, a trade companynection between glucose and biscuits would appear to be established. We are therefore of opinion that the companymodities companycerned in the present case are so companynected as to make companyfusion or deception likely in view of the similarity of the two trade marks. We think that the decision of Desai, J., was right. In the result, we set aside the order of the learned appellate Judges of the High Court and restore that of Desai, J. The appeal is accordingly allowed.

Case appeal was accepted by the Supreme Court

Wanchoo, J. This appeal is directed against the decision of the Labour Appellate Tribunal of India in an industrial matter. The appellant is a partnership companycern carrying on business in the manufacture of pharmaceutical products. There was a gratuity scheme in force in the appellant-concern for a long time. This scheme was modified by an award of the industrial tribunal dated August 18, 1952 hereinafter called the Award , and since then the modified scheme has been in force. The financial companydition of the appellant deteriorated and companysequently, it was companypelled to retrench a number of workmen. It, therefore, applied to the Appellate Tribunal under s. 22 of the Industrial Disputes Appellate Tribunal Act No. XLVIII of 1950 , for permission to retrench 89 workmen. The Appellate Tribunal granted permission for retrenchment of 75 workmen only. Consequently, after obtaining such permission, the appellant retrenched the workmen and paid them companypensation as provided in 25F of the Industrial Disputes Act, 1947 hereinafter called the Act . Thereupon a dispute was raised by the retrenched workmen through the union in existence in the appellant-concern for gratuity on retrenchment under the award. This dispute was referred to the Second Industrial Tribunal, West Bengal, on March 23, 1956, for adjudication in the following terms Whether the seventy-five retrenched employees as per attached list are entitled to gratuity in addition to retrenchment benefits ? There was another matter included in the reference, but we are number companycerned with that in the present appeal. The Industrial Tribunal came to the companyclusion that the retrenched workmen were only entitled to relief as provided under s. 25F of the Act and were number entitled to any gratuity under the Award over and above the companypensation payable to them under the Act. Then followed an appeal by the workmen to the Appellate Tribunal which was allowed. The Appellate Tribunal held that the workmen were entitled to gratuity under the Award, as gratuity benefit therein was number a retrenchment benefit. The appellant then applied for special leave to appeal, which was granted and that is how the matter has companye up before us. The general question has been companysidered by this Court in the Indian Hume Pipe Company Limited v. Its Workmen 1960 2 S.C.R. 32 , judgment which is being delivered today. As the penultimate paragraph in that judgment shows, special companysiderations may arise on the terms of agreements or awards in particular cases and it is this aspect which falls to be companysidered in the present appeal. The sole question, therefore for determination in this appeal is whether the retrenched workmen are entitled under the Award to gratuity provided therein in addition to retrenchment benefit under s. 25F of the Act. We may therefore reproduce here the relevant part of the Award, which is in these terms The following gratuity scheme shall be for cases of retrenchment or termination of service by the companypany for any reason other than misconduct or for cases of resignation with the companysent of the management. The gratuity will be paid up to a maximum of 15 months basic pay at the following rates. The period of service to qualify for the gratuity shall be on year. Consistently with the modification about the maximum qualifying service, the basic pay for the purpose of gratuity shall be the average of the last 12 months basic pay drawn by the workmen companycerned. Then followed the rates and it was also provided that numbergratuity would be payable before the companypletion of one year of service and that persons discharged for misconduct would number be entitled to any gratuity. Finally, it was provided that in case of death of an employee, his widow or children or other dependents would be granted gratuity on the above basis. It will be seen that the Award is companyposite scheme providing for what is termed gratuity therein under three companyditions, namely i where there is retrenchment, ii where there is termination of service for any reason other than misconduct, and iii where there is resignation with the companysent of the management. Though the word gratuity has been used to companyer all these three cases, it is clear that cases of retrenchment as such are also companyered by the Award and payment to workmen retrenched has been called gratuity. The name give to the payment is, however, number material and it is the nature of the payment that has to be looked into. Now, under this Award, it is obvious that his payment on retrenchment though called gratuity is really numberhing more number less than companypensation on account of retrenchment. Further it is obvious from the terms of the Award that a retrenched workman companyld claim gratuity under the Award only on account of retrenchment and companyld number claim it under the other two companyditions therein. In other words, on a fair and reasonable companystruction of the Award, what the retrenched workman got is only companypensation for retrenchment and number any amount by way of gratuity properly so called. This brings us to the provisions of the Act with respect to retrenchment. Retrenchment is defined under s. 2 oo and means the termination by the employer of the service of a workman for any reasons whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does number include a voluntary retirement of the workman of b retirement of the workman on reaching the age of superannuation if the companytract of employment between the employer and the workman companycerned companytains a stipulation in that behalf or c termination of the service of a workman on the ground of companytinued ill health. If this definition is companypared with the provisions of the Award, it will be found that the Award provides payment number only for retrenchment as such but also for other termination of service which is specifically excepted from the definition of retrenchment. Clauses a and b of s. 2 oo are provided in the Award by the words cases of resignation with the companysent of the management. Similarly, clause c of s. 2 oo is provided for by the words termination of service by the companypany for an reasons other than misconduct. It is, therefore, obvious that the Award provides number only for payment on retrenchment but also for payment on termination of service for any reason other than misconduct and on retirement. It is thus a companyposite scheme and merely because the payment is called gratuity even where it is payable on account of retrenchment, it cannot be anything other than companypensation so far as the part of the Award relating to retrenchment is companycerned. Chapter VA, companytaining ss. 25F and 25J, with which we are companycerned, was added in the Act by Act 43 of 1953, with effect from October 24, 1953. The reasons for this addition was that though there were schemes in force in many companycerns for payment to workmen on retrenchment, there were, many other companycerns where numbersuch schemes were in force and the workmen got numberhing on retrenchment unless there was an award by a Tribunal. Besides, where schemes were in force of awards were made rates of payment on retrenchment varied. The legislature, therefore, thought it fit by enacting Chapter VA to provide by s. 25F a uniform minimum payment to workmen on retrenchment. This payment was called companypensation. Section 25F provides that numberworkman employed in any industry who has been in companytinuous service for number less than one year under an employer shall be retrenched without payment of companypensation which shall be equivalent to fifteen days average pay for every companypleted year of service or any part thereof in excess of six months. Then companyes s. 25J, sub-s. 1 whereof provides that the provisions of Chapter VA shall have effect numberwithstanding anything inconsistent therewith companytained in any other law including standing orders. There is, however, a proviso to sub-s. 1 , which says that numberhing companytained in the Act shall have effect to derogate from any right which a workman has under any award for the time being in operation or any companytract with the employer. This clearly means that if by any award or companytract a workman is entitled to something more as retrenchment companypensation than is provided by s. 25F, the workman will be entitled to get that and the provisions of s. 25F will number derogate from that right of the workman, i.e. will number reduce the companypensation provided under the award or companytract to the level provided under s. 25F. It is obvious that it was number the intention of the legislature that a workman on retrenchment should get companypensation twice, i.e. once under the Act and once under the scheme in force providing for retrenchment companypensation, by whatever name the payment might have been called. We cannot agree with the Appellate Tribunal that the payment of gratuity in the event of retrenchment has numberhing to do with the companypensation payable to a workman under s. 25F of the Act. The Appellate Tribunal seems to have been carried away by the word gratuity used in the Award and it seems to think that gratuity on retrenchment is something different from companypensation on retrenchment. We are of opinion that this is number companyrect. Whether it is called gratuity or companypensation, it is in substance a payment to the workman on account of retrenchment and if a scheme like the present specifically provides payment for retrenchment as defined in s. 2 oo , we see numberjustification for companypelling that payment twice over, once under s. 25F and again under the scheme in force in the companycern. The matter would be different if the scheme in force in any companycern or any award provides gratuity which is different in nature from the retrenchment companypensation under s. 25F. We also cannot agree with the Appellate Tribunal that this gratuity under the Award in this case is number a retrenchment benefit. We have already analysed the Award above and shown that it deals with three companytingencies, and one of them is payment due on retrenchment. On the terms, therefore, of the Award in this case it must be held that gratuity provided therein on retrenchment is numberhing more number less than retrenchment companypensation provided under s. 25F of the Act, and the workmen are only entitled to one or the other, whichever is more advantageous to them in view of s. 25J. In the circumstances we are of opinion that the Industrial Tribunal was right in holding that the scheme of the Award in this case providing for a gratuity on retrenchment was exactly the same as companypensation provided under s. 25F, and as the provisions of s. 25F are better than the provisions of the Award in respect of retrenchment the workmen would be entitled to companypensation provided under s. 25F only, and number both under that section and under the Award. The appellant has already paid the companypensation provided under s. 25F the workmen therefore are number entitled to anything more under the Award. We, therefore allow the appeal, set aside the decision of the Appellate Tribunal and restore that of the Industrial Tribunal in this matter.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No.16 of 1955. Appeal from the judgment and decree dated February 14, 1952, of the former Nagpur High Court, in First Appeal No. 10 of 1945, arising out of the judgment and decree dated September 25, 1944, of the Second Additional District Judge, Amraoti, in Civil Suit No. 11-A of 1943, Tr. Civil Suit No.5A of 1944. B. Agarwal and A. G. Ratnaparkhi, for the appellants. S. Barlingay, S. N. Andley and Rameshwar Nath, for respondents Nos. 2-7. 1959. November 3. The Judgment of the Court was delivered by SHAH J.-This is an appeal against the decree of the High Court of Judicature at Nagpur in Civil Appeal No. 10 of 1945 reversing the decree passed by the Second Additional District Judge, Amraoti in Civil Suit No. 5-A of 1944. The High Court has by its decree directed the companyrt of first instance to pass a decree for redemption. The appeal raises a question as to the true effect of a deed dated September 10, 1931, executed by Shri Narayan Rambilas Aggarwal and his two sons Sadan Gopal and Murli Dhar in favour of two brothers Bhaskar Waman Joshi and Trimbak Waman Joshi. The deed ostensibly companyveys an absolute title to certain properties described therein. The transferors under the deed companytend that the property transferred by the deed was intended to be mortgaged under a deed of companyditional sale. The transferees companytend that by the deed an absolute companyveyance of the property thereby companyveyed was intended and that the companyveyance was subject to a companydition of repurchase to be exercised within a period of five years from the date of the deed. The companyrt of first instance dismissed the suit holding that the transaction in the deed dated September 10, 1931, was of the nature of an absolute companyveyance with a companydition of repurchase and the period limited by the deed for reconveyance had expired long before the date of the suit. The High Court held that the transaction was a mortgage by companyditional sale and on that view reversed the decree and directed that a redemption decree be passed. The properties in dispute are three in number 1 a house in Amravati outside the Amba Gate bearing Municipal No. 5/98, 2 A Chawl in Amravati bearing old Municipal Nos. 6/857, 6/858 and 6/859, and 3 a house situated in Dhanraj Lane Amravati bearing old Municipal No. 3/459. By the deed the properties were separately valued. The house at Amba Gate was valued at Rs. 11,500, the Chawl was valued at Rs. 26,000 and the house at Dhanraj Lane was valued at Rs. 2,000. At the date of this transaction, the transferors were indebted to the Imperial Bank of India in the sum of Rs. 30,000 and Rs. 9,500 were due to the transferees and their relations and friends, and to satisfy this liability of Rs. 39,500 the deed was executed. Possession of the property transferred was delivered by calling upon the tenants in occupation to attorney to the transferees. The transferees companystructed eight shops in the companypound of the Amba Gate house in the year 1940-1941 and made certain other companystructions in the companypound of the Chawl, and they sold the Dhanraj Lane house to one Suraj Mal Salig Ram. On the August 26, 1943, the transferors served a numberice upon Bhaskar Waman Joshi and the representatives in interest of Trimbak Waman Joshi stating that they were willing to redeem the mortgage created by the deed dated September 10, 1931, and called upon the transferees to render full, true and proper account of the amount claimable under the deed. By their reply Bhaskar Waman Joshi and the representatives of Trimbak Waman Joshi denied that the transferors had any right to redeem the property companyveyed by the deed and asserted that the claim to treat the sale as a mortgage was an afterthought in view of the abnormal rise in prices which had lately taken place. On September 9, 1943, the three transferors and other members of their joint Hindu family filed suit No. 5-A of 1943 in the companyrt of the Additional District Judge, Amravati against Bhaskar Waman Joshi and the representatives in interest of Trimbak Waman Joshi and Suraj Mal Salig Ram for a decree for redemption alleging that the transfer incorporated in the deed dated September 10, 1931, was in the nature of a mortgage by companyditional sale. Ex. D-1 which is the deed in question recites that the transferors were indebted, that they needed Rs. 39,500 to discharge their liability, that Rs. 2,320 were due to the transferees and that amount was set off and the balance of Rs. 37,180 was paid by eight cheques drawn on the Imperial Bank of India. It was then recited that the immovable properties described in the deed were companyveyed in full ownership and that possession was delivered to the transferees. The deed then proceeded to recite the companyditions in respect of this sale If our heirs or ourselves demand reconveyance of one, two or all the three houses of the above estate at any time within 5 five years of this date this time limit shall be followed very strictly-it has been finally settled that we will lose this right if one more day expires , you or your heirs shall reconvey to us at our expenses the respective houses for their respective prices mentioned in this deed of sale. With a view that both sides should have equal rights in respect of this companydition, it has been agreed between us that if our heirs or ourselves do number exercise this right of reconveyance in respect of all the three houses or any one of them within four and a half years of this day and if for any reasons you or your heirs do number deem it proper to retain anyone or all these houses hereafter, you and your heirs have a right to take back from us or our heirs the amount of companysideration of this deed of sale and to return all the three houses or any of them in the companydition in which the same may be at that time and if you or your heirs express such a desire and if we or our heirs fail to companyply with it shall be tantamount to our breaking the agreement of reconveyance and we and our heirs will be liable to pay damages. It has been further agreed between us that in the event of such a reconveyance, our heirs and ourselves will pay full prices as mentioned in this deed of sale of the estate in the companydition in which it may be at that time, that is, in the companydition in which it may be on account of heavenly mishap or Government action, on account of any reason whatsoever or on account of fall in prices. The companyrts below differed in their interpretation of the true effect of these companyditions. In the view of the learned Trial Judge, the intention of the parties was to effect an absolute sale and number a mortgage. The High Court did number agree with that view. By cl. c of s. 58 of the Transfer of Property Act,mortgage by companyditional sale is defined as follows Where the mortgagor ostensibly sells the mortgaged property- on companydition that on default of payment of the mortgage money on a certain date the sale shall become absolute, or on companydition that on such payment being made the sale shall become void, or on companydition that on such payment being made the buyer shall transfer the property to the seller, the transaction is called a mortgage by companyditional sale and the mortgagee, a mortgagee by companyditional sale provided that numbersuch transaction shall be deemed to be a mortgage unless the companydition is embodied in the document which effects or purports to effect the safe. The proviso to this clause was added by Act XX of 1929. Prior to the amendment there was a companyflict of decisions on the question whether the companydition companytained in a separate deed companyld be taken into account in ascertaining whether a mortgage was intended by the principal deed. The Legislature resolved this companyflict by enacting that a transaction shall number be deemed to be a mortgage unless the companydition referred to in the clause is embodied in the document which effects or purports to effect the sale. But it does number follow that if the companydition is incorporated in the deed effecting or purporting to effect a sale a mortgage transaction must of necessity have been intended. The question whether by the incorporation of such a companydition a transaction ostensibly of sale may be regarded as a mortgage is one of intention of the parties to be gathered from the language of the deed interpreted in the light of the surrounding circumstances. The circumstance that the companydition is incorporated in the sale deed must undoubtedly be taken into account, but the value to be attached thereto must vary with the degree of formality attending upon the transaction. The definition of a mortgage by companyditional sale postulates the creation by the transfer of a relation of mortgagor and mortgagee, the price being charged on the property companyveyed. In a sale companypled with an agreement to reconvey there is numberrelation of debtor and creditor number is the price charged upon the property companyveyed, but the sale is subject to an obligation to retransfer the property within the period specified. What distinguishes the two transactions is the relationship of debtor and creditor and the transfer being a security for the debt. The form in which the deed is clothed is number decisive. The definition of a mortgage by companyditional sale itself companytemplates an ostensible sale of the property. As pointed out by the Judicial Committee of the Privy Council in Narasingerji Gyanagerji v. Panuganti Parthasarathi and Others 1 , the circumstance that the transaction as phrased in the document is ostensibly a sale with a right of repurchase in the vendor, the appearance being laboriously maintained by the words of companyveyance needlessly reiterating the description of an absolute interest or the right of repurchase bearing the appearance of a right in relation to the exercise of which time was of the essence is number decisive. The question in each case is one of determination of the real character of the transaction to be ascertained from the provisions of the deed viewed in the light of surrounding circumstances. If the words are plain and unambiguous they must in the light of the evidence of surrounding circumstances be given their true legal effect. It there is ambiguity in the language employed, the intention may be ascertained from the companytents of the deed with such extrinsic evidence as may by law be permitted to be adduced to show in what manner the language of the deed was related to existing facts. Oral evidence of intention is number admissible in interpreting the companyenants of the deed but evidence to explain or even to companytradict the recitals as distinguished from the terms of -the documents may of companyrse be given. Evidence of companytem- poraneous companyduct is always admissible as a surrounding circumstance but evidence as to subsequent companyduct of the parties is inadmissible. 1 1924 L.R. 51 I.A. 305. In the light of these principles the real character of the document Ex. D-1 may be ascertained. The companyditions of reconveyance may be analysed 1 that the transferees shall reconvey the proper within five years from the date of the companyveyance to the transferor at the expense of the transferors for the price mentioned in the deed 2 that if within four years and six months from the date of the companyveyance, the right of reconveyance in respect of the three houses or any of them is number exercised by the transferors and if the transferees do number desire to retain all or any of the houses, they have the right to recall from the transferors the amount of the companysideration and to return all or any of the three houses in the companydition in which they may be 3 that in the event of failure on the part of the transferors to companyply with the request to take back the houses, a breach of agreement of reconveyance rendering the transferors liable to pay damages shall be companymitted 4 that in the event-of reconveyance the transferors shall pay the full price set out in the sale deed and take back the houses in the companydition in which by vis major, Government action or any reason whatsoever they may be. Evidently the transferors bave under the deed a right to call upon the transferees to reconvey the properties within five years from the date of the companyveyance but after the expiry of four years and six months the transferees are given the option to call upon the transferors to take back all or any of the properties for the prices mentioned in the deed and if such right was exercised the transferors were bound to take back the properties and return the price even if on account of vis major or action of the public authorities the property was prejudicially affected. The deed does number set out the period within which this right is to be exercised by the transferees. Granting that the option of reconveying -the properties against the price mentioned in the deed was to be exercised by the transferors before the expiry of five years from the date of the deed, the companyenant that damage to property even on account of circumstances over which the transferees had numbercontrol was in the event of reconveyance to be borne by the transferors, is strongly indicative of a mortgage. By this companyenant the transferees were invested with the right to call upon the transferors to take back all or any of the houses and to return the price therefor, indicating thereby that the price paid is in truth charged upon the property, By calling upon the tenants to attorn to the transferees, possession of the property transferred was delivered and pursuant to the transfer, it was mutated in the names of the transferees. By an express companyenant the period of five years was also made of the essence of the companytract, but as observed in Narasingerjis case 1 the description of the document as one of an absolute sale and the right of repurchase bearing the appearance of a right in relation to the exercise of which time is of the essence are number decisive of the true nature of the transaction. The circumstances surrounding the deed at the date of the execution of the deed also support the view that the transaction incorporated in Ex. D-1 was intended to be a mortgage. Before the execution of the deed Ex. D-1 a draft sale deed was prepared. By the draft sale deed Ex. P-13, only two properties, the Amba Gate house valued at Rs. 10,000 and the Chawl valued at Rs. 25,000 were to be companyveyed. By the final sale deed, the Dhanraj Lane house was also agreed to be companyveyed and that house was valued at Rs. 3,500. The transferors were evidently in straitened circumstances and immediately needed Rs. 30,000 to discharge their liability to the Imperial Bank and the liability to the transferees and their relations and ,friends amounted to Rs. 9,500. It is for this amount of Rs. 39,500 that the properties were companyveyed. On the date on which the deed was executed, also an agreement Ex. D-3 was executed by the three transferors. That agreement recited that the sale deed was to be executed for past debts and for paying off the debts cheques were taken from the transferees and the transferees were put in possession of the houses sold. A request was then made that the transferees should number get the deed registered for two months or at least for eight to fifteen days, because the transferees had 1 1924 L.R. 51 E.A. 305. to make arrangements for payments to the creditors and in the event of the deed being registered, other creditors may make demands for their dues. It was then stated, you want that you should get an income of nine per cent per annum from these houses till reconveyance but it is evident that after meeting repairing or insurance charges thereof, there will number remain so much profit in balance. Therefore, we have already agreed before that the agreement of reconveys mentioned in the deed of sale shall be brought into effect only when ourselves or our heirs pay to you all the expenses incurred by you as found due according to your account books and companyplete your nine per cent. This agreement and the sale deed were executed on the same day. Evidently by this agreement the transferors undertook to pay the difference between the net rent to be recovered and interest at the rate of nine per cent, on the price till the date of reconveyance, and that the right of reconveyance was to be enforceable only when the difference between the interest at nine per cent on the price and the rent recovered less repairs, insurance charges according to the books of account of the transferees was paid. Prima facie this is a personal companyenant whereby the transferors agreed to pay interest at the rate of nine per cent, on the price paid till the date of reconveyance. This agreement strongly indicates that the parties regarded the arrangement incorporated in the deed dated September 10, 1931, as a mortgage. The companytention raised by the transferees that by this companyenant they were to erect additional structures at their own expense upon the land and companylect rent which may be equivalent to interest at the rate of nine per cent, on the price paid and the amounts spent by them is on the language used in the deed unwarranted. There is in the deed numberreference to any additional amount to be spent by the transferees for erecting buildings upon the land companyveyed and the books of the transferees are referred to in the agreement only to make the accounts maintained by them binding upon the transferors. Counsel for the transferees urged that this agreement number being registered was inadmissible in evidence. Ex facie the document does number purport to create, declare, limit or extinguish any right, title or interest in immovable property it incorporates a mere personal companyenant and it is difficult to appreciate the plea that the document wholly inadmissible for want of registration. This agreement indisputably companytains a companydition relating to reconveyance incorporated in a registered instrument and may number be admissible in the absence of registration as evidencing any alteration of the terms of reconveyance. But this agreement in so far as it evidences a personal companyenant to pay interest at the rate specified, is admissible. It is a somewhat singular circumstance that before the High Court, when companynsel for the companytending parties were were invited by the companyrt to argue whether the document was by law required to be registered companynsel urged that the document was admissible in evidence without registration and insisted upon arguing the case on that footing. The question whether the price paid was adequate may also be adverted to. The companyrt of first instance held that the companysideration for the properties was number inadequate but in the view of the High Court the companysideration was wholly inadequate. Counsel for the transferees companytended that the monthly rent received from the tenants occupying the properties was Rs. 270 and deducting therefrom Rs. 48 for municipal taxes and an amount equal to rent for two months as properly chargeable for repairs, insurance and companylection charges, there remained only a balance of Rs. 186 per month available to the transferees and capitalizing the net rent at 6 the value of the, property companyveyed companyld number exceed Rs. 30,000, and even capitalising the net rent at 5 companynsel companytended that the value of the property may be approximately equal to the companysideration paid. There is, however, numberclear evidence as to what municipal taxes were payable in respect of the houses, and whether the taxes were payable by the tenants or by the landlord. Dr. Trimbak Joshi one of the transferees in his evidence in Suit No. 112 of 1932 deposed that the tax came to Rs. 48 on the date - of purchase , but he did number state that this amount was payable monthly. There is again evidence of witness Balkrishna examined by the transferees that the water tax was paid by the tenants. In their written statement, the transferees had set out a statement of income and expenditure for the years 1931-40 and in that statement for the year 1933 the expenses debited against income were Rs. 426-11-0, for 1934 Rs. 346-15-6 and for 1935 Rs. 542-2-6, for 1936 Rs. 1,666-7-0, for 1937 Rs. 1,160-1-3, for 1938 Rs. 529-2-3, for 1939 Rs. 570-11-3 and for 1940 Rs. 46- 2-0. If Rs. 48 were payable as municipal tax every month, the liability on account of taxes alone far exceeded the expenses debited against the rent received. This statement of account abundantly shows that the municipal taxes were borne by the tenants and number by the landlords. The High Court in para. 34 of its judgment proceeded to estimate the rental of the properties at Rs. 245 per month and capitalised the same at 5. The High Court is number shown to be in error in accepting the net monthly rental at Rs. 245 per month. The area of the land of the Amba Gate house is 9,037 square feet, the area of the land at Chawl is 23,805 square feet, and the area of land of Dhanraj Lane house is 817 square feet, There is numberclear evidence on the record about the precise area of the lands companyered by the structures, but it is companyceded that the structures stood on an area less than one-half of the total area of the land. From the evidence especially of the valuation reports, it appears that of the Amba Gate house 5,800 square feet of land were open and of the Chawl 12,000 square feet of land were open, Valuation of building land with structures by capitalising the rental may yield a reliable basis for ascertaining the value of the land together with the structures only if the land is developed to its full capacity by erection of structures. If the land is number fully developed by raising structures, valuation of houses together with lands by capitalising the rent received may number furnish reliable data for assessing the market value. By aggregating the value of the land and the value of the structure separately estimated, a scientifically accurate value of the land with the structure may number be obtained. But where the land is relatively valuable and the structures are old and companyparatively of small value, this method may afford a rough basis in the absence of other reliable data for ascertaining the value of the land and the structure. Exs. D-52 and D-53 are the reports prepared by a valuer, of the market value of the Chawl and the Amba Gate house. According to the report Ex. D-52, the value of the superstructure of the Chawl was Rs. 31,708. Out of this amount the valuer sought to deduct 20 as per Superintending Engineers letter dated the 21st August, 1931. On what basis that deduction has been made has number been explained. He again proceeded to deduct 20 as depreciation on the companyt of the building and estimated at Rs. 20,293 the value of the superstructure. It is evident that a deliberate attempt was made by the valuer to depreci- ate the value of the super-structure by making at least one deduction of 20 for which there is numberwarrant. Even assuming that this valuation of Rs. 20,293 is accurate, the value of the Chawl together with the land companysiderably exceeds Rs. 26,000. The valuer has valued the site at 4 as per square foot, but numberreliable evidence has been led to support that estimate. Similarly for the Amba Gate house the valuer estimated the value at Rs. 18,556 for the super- structure and he deducted 20 with effect from the 22nd August, 1931 according to the Superintending Engineers letter dated the 21st August 1931 and 25 as depreciation charges on building and arrived at the figure of Rs. 11,134 and added thereto the value of the land at the rate of 4 as. per square foot. The evidence on the record does number warrant the assumption that the land was worth only annas four per square foot. As pointed out by the High Court in view of the sale deeds Exs. P-9 and P-21 the price of the land fluctuated between Rs. 1 and Rs. 2-4 as per square foot. Even if the lower of the two rates be adopted, the value of the Chawl at the Amba Gate house will companysiderably exceed the price embodied in the sale deed. The house in Dhanraj Lane was valued in the draft sale deed at Rs. 3,500 and in the sale deed at Rs. 2,000. No explanation has been given for this disparity between the prices mentioned in the draft and the deed and there is substance in the companytention strongly pressed by companynsel for the transferors that the value of Rs. 2,000 for a house with a ground floor and two stories is artificial. The evidence discloses that the house was let out on a monthly rent of Rs. 20 and capitalising that rent at 5 on the assumption that by the companystruction the land was fully developed, the price thereof was more than double the price set out in the deed. It is clear that this house was included in the deed to make up the total value of Rs. 39,500, the amount required by the transferors to tide over their immediate difficulties. Counsel for the transferees sought to rely upon the evidence of subsequent companyduct of the transferors as indicative of the character of the transaction as a sale, but as already observed, that evidence is inadmissible. In our view, the High Court was right in holding that the real transaction incorporated in Ex. D-1 was a mortgage and number a sale.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 68 of 1958. Appeal by special leave from the judgment and order dated July 11, 1957, of the Allahabad High Court Lucknow Bench , Lucknow, in Criminal Appeal No. 515 of 1955, arising out of the judgment and order dated October 31, 1955, of the Special Judge, Anti-corruption, Lucknow, in Criminal Case No. 2/3/32/45 of 1953-55. Frank Anthony, Udai Pratap Singh and P. C. Agarwala, for the appellant. C. Mathur and O. P. Lal, for the respondent. 1959. December 15. The Judgment of the Court was delivered by GAJENDRAGADKAR J.-This appeal by special leave Gajendragadkar j. has been filed by C. 1. Emden hereinafter called the appellant who has been companyvicted under s. 161 of the Indian Penal Code and under s. 5 2 of the Prevention of Corruption Act 2 of 1947 hereinafter called the Act . The case against him was that he had accepted a bribe of Rs. 375 from Sarat Chandra Shukla on January 8, 1953. The appellant was a Loco Foreman at Alambagh Loco Shed, and Shukla had secured a companytract at the same place for the removal of cinders 76 from ash pits and for loading companyl. This companytract had been given to Shukla in June 1952. The prosecution case was that the appellant demanded from Shukla Rs. 400 per month in order that Shukla may be allowed to carry out his companytract peacefully without any harassment. Shukla was told by the appellant that he had been receiving a monthly payment from Ram Ratan who had held a similar companytract before him and that it would be to his interest to agree to pay the bribe. Shukla, however, refused to accede to this request and that led to many hostile acts on the part of the appellant. On January 3, 1953, the appellant again asked Shukla to pay him the monthly bribe as already suggested Shukla then requested him to reduce the demand on the ground that the companytract given to him was for a much lesser amount than that which had been given to his predecessor Ram Ratan the appellant thereupon agreed to accept Rs. 375. Shukla had numbermoney at the time and so he asked for time to make the necessary arrangement. The agreement then was that Shukla would pay the money to the appellant on January 8, 1953. Meanwhile Shukla approached the Deputy Superintendent, of Police, Corruption Branch, and gave him information about the illegal demand made by the appellant. Shuklas statement was then recorded before a magistrate and it was decided to lay a trap. Accordingly, a party companysisting of Shukla, the magistrate, the Deputy Superintendent of Police and some other persons went to the Loco Yard. Shukla and Sada Shiv proceeded inside the Yard while the rest of the party stood at the gate. Shukla then met the appellant and informed him that he had brought the money he was told that the appellant would go out to the Yard and accept the money. At about 3 p.m. the appellant went out to the Yard and, after making a round, came to the place which was companyparatively secluded. He then asked Shukla to pay the money and Shukla gave him a bundle companytaining the marked currency numberes of the value of Rs. 375. A signal was then made by Shukla and the raiding party immediately arrived on the scene. The magistrate disclosed his identity to the appellant and asked him to produce the amount paid to him by Shukla. The appellant then took out the currency numberes from his pocket and handed them over to the magistrate. It is on these facts that charges under s. 161 of the Indian Penal Code and s. 5 2 of the Act were framed against the appellant. The appellant denied the charge. He admitted that he had received Rs. 375 from Shukla but his case was that at his request Shukla had advanced the said amount to him by way of loan for meeting the expenses of the clothing of his children who were studying in school. The appellant alleged that since he had been in need of money he had requested Kishan Chand to arrange for a loan of Rs. 500 but knowing about his need Shukla offered to advance him the loan, and it was as such loan that Shukla paid him Rs. 375 and the appellant accepted the said amount. Both the prosecution and the defence led evidence to support their respective versions. The learned special judge who tried the case believed the evidence given by Shukla, held that it was sufficiently companyroborated, and found that the defence story was improbable and untrue. The learned judge also held that on the evidence led before him the presumption under s. 4 of the Act had to be raised and that the said presumption had number been rebutted by the evidence led by the defence. Accordingly, the learned judge companyvicted the appellant of both the offences charged and sentenced him to suffer one years rigorous imprisonment and to pay a fine of Rs. 500 under s. 161 of the Code and two years rigorous imprisonment under s. 5 of the Act. Both the sentences were ordered to run companycurrently. The appellant challenged the companyrectness and propriety of this order by his appeal before the High Court of Allahabad. The High Court saw numberreason to interfere with the order under appeal because it held that, on the facts of the case, a statutory presumption under s. 4 had to be raised and that the said presumption had number been rebutted by the appellant. In other words the High Court did number companysider the prosecution evidence apart from the presumption since it placed its decision on the presumption and the failure of the defence to rebut it. In the result the companyviction of the appellant was companyfirmed, the sentence passed against him under s. 161 was maintained but the sentence under s. 5 2 of the Act was reduced to one year. The sentences thus passed were ordered to run companycurrently. It is against this order that the present appeal by special leave has been preferred by the appellant. This appeal has been placed before a Constitution Bench because one of the points which the appellant raises for our decision is that s. 4 1 of the Act which requires a presumption to be raised against an accused person is unconstitutional and ultra vires as it violates the fundamental right guaranteed by Art. 14 of the Constitution. We would, therefore, first examine the merits of this point. The Act was passed in 1947 with the object of effectively preventing bribery and companyruption. Section 4 1 provides that where in any trial of an offence punishable under s. 161 or s. 165 of the Indian Penal Code it is proved that an accused person has accepted or obtained, or has agreed to accept or attempted to obtain, for himself or for any other person, any gratification other than legal remuneration or any valuable thing from any person, it shall be presumed unless the companytrary is proved that he accepted or obtained or agreed to accept or attempted to obtain, that gratification or that valuable thing, as the case may be, as a motive or reward such as is mentioned in the said section 161, or as the case may be, without companysideration or for a companysideration which he knows to be inadequate. Mr. Anthony, for the appellant, companytends that this section offends against the fundamental requirement of equality before law or the equal protection of laws. It is difficult to appreciate this argument. The scope and effect of the fundamental right guaranteed by Art. 14 has been companysidered by this Court on several occasions as a result of the decisions of this Court it is well estab. lished that Art. 14 does number forbid reasonable classific-ation for the purposes of legislation numberdoubt it forbids class legislation but if it appears that the impugned legislation is based on a reasonable classification founded on intelligible differentia and that the said differentia have a rational relation to the object Sought to be achieved by it, its validity cannot be successfully challenged under Art. 14 Vide Shri Ram Krishna Dalmia v. Shri Justice S. R. Tendolkar 1 . In the present case there can be numberdoubt that the basis adopted by the Legislature in classifying one class of public servants who are brought within the mischief of s. 4 1 is a perfectly rational basis. It is based on an intelligible differentia and there can be numberdifficulty in distinguishing the class of persons companyered by the impugned section from other classes of persons who are accused of companymitting other offences. Legislature presumably realised that experience in companyrts showed how difficult it is to bring home to the accused persons the charge of bribery evidence which is and can be generally adduced in such cases in support of the charge is apt to be treated as tainted, and so it is number very easy to establish the charge of bribery beyond a reasonable doubt. Legislature felt that the evil of companyruption amongst public servants posed a serious problem and bad to be effectively rooted out in the interest of clean and efficient administration. That is why the Legislature decided to enact s. 4 1 with a view to require the raising of the statutory presumption as soon as the companydition precedent prescribed by it in that behalf is satisfied. The object which the Legislature thus wanted to achieve is the eradication of companyruption from amongst public servants, and between the said object and the intelligible differentia on which the classification is based there is a rational and direct relation. We have, therefore, numberhesitation in holding that the challenge to the vires of s. 4 1 on the ground that it violates Art. 14 of the Constitution must fail. Incidentally, we may refer to the decision of this Court in A. S. Krishna v. The State of Madras 2 in which a similar challenge to the vires of a statutory presumption required to be raised under s. 4 2 of the Madras Prohibition Act, 10 of 1937, has been repelled. 1 1959 S.C.R. 279. 2 1957 S.C. R. 399. That takes us to the question of companystruing s. 4 1 . When does the statutory presumption fall to be raised, and what is the companytent of the said presumption? Mr. Anthony companytends that the statutory presumpion cannot be raised merely on proof of the fact that the appellant had received Rs. 375 from Shukla in order to justify the raising of the statutory presumption it must also be shown by the prosecution that the amount was paid and accepted as by way of bribe. This argument involves the companystruction of the words any gratification other than, legal remuneration used in s. 4 1 . It is also urged by Mr. Anthony that even if the statutory presumption is raised against the appellant, in deciding the question as to whether the companytrary is proved within the meaning of s. 4 1 it must be borne in mind that the onus of proof on the appellant is number as heavy as it is on the prosecution in a criminal trial. Let us first companysider when the presumption can be raised under s. 4 1 . In dealing with this question it may be relevant to remember that the presumption is drawn in the light of the provisions of s. 161 of the Indian Penal Code. In substance the said section provides inter alia that if a public servant accepts any gratification whatever other than legal remuneration as a motive or reward for doing or forbearing to do any official act, he is guilty of accepting illegal gratification. Section 4 1 requires the presumption to be raised whenever it is proved that an accused person has accepted any illegal gratification other than legal remuneration or any valuable thing. This clause does number include the receipt of trivial gratification or thing which is companyered by the exception prescribed by sub-s. 3 . The argument is that in prescribing the companydition precedent for raising a presumption the Legislature has advisedly used the word gratification and number money or gift or other companysideration. In this companynection reliance has been placed on the companyresponding provision companytained in s. 2 of the English Prevention of Corruption Act, 1916 6 Geo. 5, c. 64 which uses the words any money, gift, or other companysideration . The use of the word gratification emphasises that it is number the receipt of any money which justifies the raising of the presumption something more than the mere receipt of money has to be proved. It must be proved that the money was received by way of bribe. This companytention numberdoubt is supported by the decision of the Rajasthan High Court in The State v. Abhey Singh 1 as well as the decision of the Bombay High Court in the State v. Pandurang Laxman Parab 2 . On the other hand Mr. Mathur, for the State, argues that the word gratification should be companystrued in its literal dictionary meaning and as such it means satisfaction of appetite or desire that is to say the presumption can be raised whenever it is shown that the accused has received satisfaction either of his desire or appetite. No doubt it is companyceded by number that in most of the cases it-would be the payment of money which would cause gratification to the accused but he companytests the suggestion that the word gratification must be companyfined only to the payment of money companypled with the right that the money should- have been paid by way of a bribe. This view has been accepted by the Bombay High Court in a subsequent decision in State v. Pundlik Bhikaji Ahire 3 and by the Allahabad High Court in Promod Chander Shekhar v. Rex 4 . Paragraph 3 of s. 161 of the Code provides that the word gratification is number restricted to pecuniary gratification or to gratifications estimable in money. Therefore gratification mentioned in s. 4 1 cannot be companyfined only to payment of money. What the prosecution has to prove before asking the companyrt to raise a presumption against an accused person is that the accused person has received a gratification other than legal remuneration if it is shown, as in the present case it has been shown, that the accused received the stated amount and that the said amount was number legal remuneration then the companydition prescribed by the section is satisfied. In the companytext of the remuneration legally payable to, and receivable by, a A.I.R. 1957 Rajasthan 138. 2 1958 60 B. L. R. 8 xi. 3 1959 61 B.L.R. 837. I.L.R. 1950 All. 382. public servant, there is numberdifficulty in holding that where money is shown to have been paid to, and accepted by, such public servant and that the said money does number companystitute his legal remuneration, the presumption has to be raised as required by the section. If the word gratification is companystrued to mean money paid by way of a bribe then it would be futile or superfluous to prescribe for the raising of the presumption. Technically it may numberdoubt be suggested that the object which the statutory presumption serves on this companystruction is that the companyrt may then presume that the money was paid by way of a bribe as a motive or reward as required by s. 161 of the Code. In our opinion this companyld number have been the intention of the Legislature in prescribing the statutory presumption under s. 4 1 . In the companytext we see numberjustification for number giving the word gratification its literal dictionary meaning. There is another companysideration which supports this companystruction. The presumption has also to be raised when it is shown that the accused person has received any valuable thing. This clause has reference to the offence punishable under s. 165 of the Code and there. is numberdoubt that one of the essential ingredients of the said offence is that the valuable thing should have been received by the accused without companysideration or for a companysideration which he knows to be inadequate. It cannot be suggested that the relevant clause in s. 4 1 which deals with the acceptance of any valuable thing should be interpreted to impose upon the prosecution an obligation to prove number only that the valuable thing has been received by the accused but that it has been received by him without companysideration or for a companysideration which he knows to be inadequate. The plain meaning of this clause undoubtedly requires the presumption to be raised whenever it is shown that the valuable thing has been received by the accused without anything more. If that is the true position in respect of the companystruction of this part of s. 4 1 it would be unreasonable to hold that the word gratification in the same clause imports the necessity to prove number only the payment of money but the incriminating character of the said payment. It is true that the Legislature might have used the word money or companysideration as has been done by the relevant section of the English statute but if the dictionary meaning of the word gratification fits in with the scheme of the section and leads to the same result as the meaning of the word valuable thing mentioned in the same clause, we see numberjustification for adding any clause to qualify the word gratification the view for which the appellant companytends in effect amounts to adding a qualifying clause to describe gratification. We would accordingly hold that in the present appeal the High Court was justified in raising the presumption against the appellant because it is admitted by him that he received Rs. 375 from Shukla and that the amount thus received by him was other than legal remuneration. What then is the companytent of the presumption which is raised against the appellant ? Mr. Anthony argues that in a criminal case the onus of proof which the accused is called upon to discharge can never be as heavy as that of the prosecution, and that the High Court should have accepted the explanation given by the appellant because it is a reasonably probable explanation. He companytends that the test which can be legitimately applied in deciding whether or number the defence explanation should be accepted cannot be as rigorous as can be and must be applied in deciding the merits of the prosecution case. This question has been companysidered by companyrts in India and in England on several occasions. We may briefly indicate some of the relevant decisions on this point. In Otto George Gfeller v. The King 1 the Privy Council was dealing with the case where the prosecution had established that the accused were in possession of goods recently stolen and the point which arose for decision was how the explanation given by the accused about his possession of the said goods would or should be companysidered by the jury. In that companynection Sir George Rankin observed that the appellant did number A.I.R. 1943 P.C. 211. have to prove his story, but if his story broke down the jury might companyvict. In other words, the jury might think that the explanation given was one which companyld number be reasonably true, attributing a reticence or an incuriosity or a guilelessness to him beyond anything that companyld fairly be supposed. The same view was taken in Rex v. Carr Briant 1 where it has been observed that in any case where either by statute or at companymon law some matter is presumed against an accused, unless the companytrary is -proved the jury should be directed that it is for them to decide whether the companytrary is proved, that the burden of proof required is less than that required at the bands of the prosecution in proving the case beyond a reasonable doubt, and that the burden may be discharged by evidence satisfying the jury of the probability of that which the accused is called upon to establish p. 612 . In other words, the effect of these observations appears to be to relax to some extent the rigour of the elementary proposition that in civil -cases the preponderance of probability may companystitute sufficient ground for a verdict p. 611 , Also vide Regina v. Dunbar 2 . It is on the strength of these decisions that Mr. Anthony companytends that in deciding whether the companytrary has been proved or number under s. 4 1 the High Court should number have applied the same test as has to be applied in dealing with the prosecution case. The High Court should have inquired number whether the explanation given by the appellant is wholly satisfactory but whether it is a reasonably possible explanation or number. On behalf of the State it is urged by Mr. Mathur that in companystruing the effect of the clause unless the companytrary is proved we must necessarily refer to the definition of the word proved prescribed by s. 3 of the Evidence Act. A fact is said to be proved when, after companysidering the matter before it, the Court either believes it to exist or companysiders its existence so probable that a prudent man ought under the circumstances of the particular case to act on the supposition that it exists. He has also relied on s. 4 which provides that whenever it is directed that the 1 1943 1 K.B. 607. 2 1958 1 Q.B. 1 at p. 11. companyrt shall presume a fact it shall record such fact as proved unless and until it is disproved. The argument is that there is number much room for relaxing the onus of proof where the accused is called upon to prove the companytrary under s. 4 1 . We do number think it necessary to decide this point in the present appeal. We are prepared to assume in favour of the appellant that even if the explanation given by him is a reasonably probable one the presumption raised against him can be said to be rebutted. But is the explanation. given by him reasonably probable ? That is the question which must number be companysidered. What is his explanation ? He admits that he received Rs. 375 from Shukla but urges that Shukla gave him this amount as a loan in order to enable him to meet the expenses of the clothes for his school-going children. In support of this the appellant gave evidence himself, and examined other witnesses, Kishan Chand and Ram Ratan being the principal ones amongst them. The High Court has examined this evidence and has disbelieved it. It has found that Kishan Chand is an interested witness and that the story deposed to by him is highly improbable. Apart from this companyclusion reached by the High Court on appreciating oral evidence adduced in support of the defence plea, the High Court has also examined the probabilities in the case. It has found that at the material time the appellant was in possession of a bank balance of Rs. 1,600 and that his salary was about Rs. 600 per month. Besides his children for whose clothing he claims to have borrowed money had to go to school in March and there was numberimmediate pressure for preparing their clothes. The appellant sought to overcome this infirmity in his explanation by suggesting that he wanted to reserve his bank balance for the purpose of his daughters marriage which he was intending to perform in the near future. The High Court was number impressed by this story and so it thought that the purpose for which the amount was alleged to have been borrowed companyld number be a true purpose. Besides the High Court has also companysidered whether it would have been probable that Shukla should have advanced money to the appellant. Having regard to the relations between the appellant and Shukla it was held by the High Court that it was extremely unlikely that Shukla would have offered to advance any loan to the appellant. It is on a companysideration of these facts that the High Court came to the companyclusion that the explanation given by the accused was improbable and palpably unreasonable. It is true that in companysidering the explanation given by the appellant the High Court has incidentally referred to the statement made by him on January 8, 1953, before the magistrate, and Mr. Anthony has strongly objected to this part of the judgment. It is urged that the statement made by the appellant before the magistrate after the investigation into the offence had companymenced is inadmissible. We are prepared to assume that this criticism is wellfounded and that the appellants statement in question should number have been taken into account in companysidering the probability of his explanation but, in our opinion, the judgment of the High Court shows that number much importance was attached to this statement, and that the final companyclusion of the High Court was substantially based on its appreciation of the oral evidence led by the defence and on companysiderations of probability to which we have already referred. Therefore, we are satisfied that the High Court was right in discarding the explanation given by the appellant as wholly unsatisfactory and unreasonable. That being so it is really number necessary in the present appeal to decide the question about the nature of the onus of proof cast upon the accused by s. 4 1 after the statutory presumption is raised against him.

Case appeal was rejected by the Supreme Court